30 Nov 2015

Christchurch Council to sell $136m business

7:45 pm on 30 November 2015

Christchurch City Council has started its controversial programme of asset sales, announcing plans to sell 100 percent of City Care.

City Care vehicle in Wellington.

City Care is valued at $136 million and employs about 1500 people around the country. Photo: RNZ / Alexander Robertson

The construction, roading and parks maintenance business - valued at $136 million - is just one of many the council wants to sell to meet a shortfall in its budget for repairs to earthquake-damaged infrastructure.

City Care employs just over 1500 workers around the country and is the largest council-owned company of its type in the country.

Canterbury Chamber of Commerce chief executive Peter Townsend.

Canterbury Chamber of Commerce CEO Peter Townsend Photo: thebuildingintelligencegroup.co.nz

Canterbury Chamber of Commerce chief executive Peter Townsend said it would be an attractive asset for some buyers.

"A company that is involved in facilities management, civil construction, building construction and so on has got to be an attractive proposition," he said. "Probably buyers will be already involved in that area in some form or another, and this would be a good opportunity for them to scale up."

City Care is not classed as a core asset and can therefore be sold without any public consultation.

Mr Townsend said those that were considered core assets, including the port, the airport and lines company Orion, would also be sold off - but only partially and not before next year's local government elections.

"As the council gets further into other asset sales, there are some that are particularly sensitive, particularly their core assets which they have determined they want to retain control of.

"If they want to sell down part of those to raise capital, then we might see a bit of fun, and that will probably happen post-election."

Job loss fears

Keep Our Assets spokesman Murray Horton said the eight council members who voted in favour of asset sales had gone against the wishes of voters and would be punished at next year's elections.

"They do not have a mandate," he said. "Nobody who is currently on the Christchurch City Council was elected on a platform at the 2013 local body elections of selling assets."

Mr Horton said the sale of City Care would result in job losses and a reduced level of service for ratepayers, and pointed to Serco's takeover of some prisons.

"There's a good cautionary negative example of what happens when public assets and services are sold off into private ownership... Costs are cut, staff are cut, service drops - quality drops by the new private owner wanting to recoup fast what they paid to get that asset."

Christchurch City Council

Christchurch City Council aims to sell some of its assets to meet a budget shortfall. Photo: RNZ

Christchurch City Council chief financial officer Peter Gudsell said the fate of the company's 1500 staff would rest with City Care's buyer.

"We expect that most of the interest is likely to come from companies that actually want to acquire the specialist skills of City Care," he said.

"So given the majority of staff are needed to deliver those contracts on the ground, companies that actually want to acquire those skills will make the choice when they've acquired the company."

Mr Gudsell said the sale of City Care would leave the council on track to deliver the $200m it was aiming for this financial year from asset sales and the restructuring of council-owned companies.

A further $500m would be raised over the following two years, he said.