31 Mar 2015

Possible rates rise for Wellington runway extension

6:56 am on 31 March 2015

The Wellington City Council is not ruling out rate rises to help pay for a controversial runway extension at the capital's airport.

Wellington airport drought

Photo: RNZ / Alexander Robertson

The region's mayors have agreed to stump up $150 million to fund the extension, with mostly borrowed money.

But the Government was sceptical, and the national carrier, Air New Zealand, said it had no plans to fly long haul services in or out of the city.

At about a million dollars a metre, the 350 metre extension (up from 300 metres previously) would enable airlines to fly medium-size jets on long-haul flights to hubs such as Singapore, Hong Kong or Los Angeles.

But the mayors' expectation that the government will front up with money for the project, is not shared by the Transport Minister, Simon Bridges.

He expressed reservations about committing public money to a project which would benefit a private company, Infratil, which owns two thirds of the airport.

"Effectively were council and the government to come in, there would be significant public money with a very significant private benefit. And we'd need to work through that, were we in principle to decide it were the right thing to do, very very carefully," he said.

Minister Bridges said he wanted to see the business case for the project, which was yet to be completed.

To date the figures relied on by advocates of the project relate to a report, released last year which estimated the extension could inject between $389 - $684 million into the region's economy by 2060.

Therein lies the problem; the runway extension would not make the airport much money - its commercial value is an estimated $50 million over 40 years.

A plane landing in Wellington.

A plane landing in Wellington today. Photo: RNZ / Alexander Robertson

Infratil's Tim Brown said the airport's investment in the project should reflect that.

"The business case for the airport is that it stacks up that it should pay for some of it, but it can't afford to pay for all of it," he said.

"As an investor in infrastructure, Infratil would have no problem putting money in, but it seems unlikely that it it would be needed to provide additional funding beyond what the airport company can do on its own bat."

Another questioning the economics of the project was Richard Randerson, who represents the Guardians of the Bays, a residents' group set up to oppose the extension.

He said the economics of the project simply did not stack up.

"People are beginning to have doubts about the viability of [the runway extension], and I think as ratepayers now, they're beginning to see that this is something that's going to hit us in the back pocket. It's not just an Eastern suburbs issue, it's a Wellington-wide issue," he said.

Mr Randerson also questioned why the council was pushing ahead with the project when it had no mandate to do so and before the business case had been finalised.

But the council claimed the project's inclusion in the Long Term Plan, which is currently up for public consultation, would give it a mandate.

Wellington International Airport.

Wellington International Airport. Photo: WIAL

But Mr Randerson said that was a "false mandate, because it is not based on sufficient evidence".

"People have expressed that opinion [through LTP submissions] without being in posession of the business case, and that's why I feel it's an uninformed response that ratepayers are making because they don't have the facts on which to make that response," he said.

Wellington City Council deputy mayor Justin Lester said if the project went ahead it would borrow its $90 million share of the $350 million total, but admitted ratepayers would have to shoulder some of the cost.

"It's largely borrowings, because it's CAPEX [capital expenditure], rather than operating expenditure. But ratepayers would naturally have to cover off the interest charges for any new debt," Mr Lester said.

The airport company was confident it would file a request for resource consent by the middle of the year.

The public have until April 17 to have their say on the Wellington City Council's Long Term Plan.

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