Democracy Matters

Airports, growth and visitor levies have been debated to death (by boredom) this election, but we’ve forgotten to ‘have it out’ over perhaps the most important issue of all: our local democracy is heading down a very slippery slope and it’s time we dared to talk about it.

Some of you might think that process doesn’t matter if things are getting done – and recent comments suggest the Mayor might agree with you – but you’d be wrong.

Turn your mind to Canterbury for a minute.  In 2010 the region lost the right to be governed by elected regional councillors.  They also lost the right to appeal the decisions of Nick Smith’s commissioners, whose job was to get things done.  They cleared the way for huge irrigation schemes to ensure intensive dairying could spread across those leaky soils.  And it did.  Back then, those who benefited, and plenty of others, didn’t blink an eye.  This will be the first fully democratic election in a decade.  The big election issue is water – the polluted and dried up rivers and aquifers which were once the pride of Canterbury.  The big corporates and the banks made their money, the Government took the tax, and the farming communities are left with nothing but debt and dirty water.

Democracy matters and it doesn’t take the ousting of elected reps to lose it.  Where there is big money to be made and pressure to grow an industry, it might be enough if councillors are underpaid, kept out of the loop, are poorly advised or simply fall silent when they should be speaking up in the public interest.  Unfortunately, it’s fair to say QLDC is suffering from all the above…

The bed tax and the Spatial Plan

We’re told we must all want a bed tax because 81% of us who voted in the referendum ticked ‘YES’. Even though it was pitched as a veiled threat (‘tick yes or watch your rates rise’) and there were no options.  There was no options assessment and neither the bed tax option nor the referendum question was signed off by councillors.  But my greatest concern is that the levy seems to be linked to the mysterious ‘Spatial Plan’ and that we voted not really understanding the connections or the consequences. The Plan is being developed by staff and Central Government – councillors have been excluded. Does it plan for tourism growth and is it a condition of the levy?  The cone of silence around this Plan means we can only speculate but the ODT’s reporting suggests this is about partnership with Government and that it’s the Spatial Plan that would enable QLDC to investigate a visitor levy:

“The council has been clear that the ability of the district’s community to support growth in Queenstown Lakes through rates alone is simply not possible.

“Such a cost threatens to undermine the wellbeing of our communities.”

The council was seeking a partnership with Government that would consider long term growth and development, investment and future funding in Queenstown.

“Such an initiative recognises the unique role that Queenstown Lakes District plays in the international and national reputation of the country, and the stress that this popularity places on our local communities.”

The work would be centred on a 30 year spatial plan for the country’s fastest growing district and would enable QLDC to investigate a new funding model to enable new infrastructure investment based on a visitor levy.

The government has said it recognises our district’s challenges are exceptional, and that if there is clear support expressed through a referendum it would consider our proposal for a sustainable growth partnership, and legislative change to allow a visitor levy to fund the infrastructure the town desperately needs.”

Also: https://www.odt.co.nz/regions/wanaka/airport-depends-qldc-‘spatial-plan’

The Airport Statement of Intent (SOI)

Emails released under the LGOIMA show that in March there was a clear steer from the councillors to QAC not to extend the existing airport noise boundaries. So why the rather strange game of SOI hot potato? The released documents shed some light on that – they suggest that the Council’s Chief Exec Mike Theelen might have crossed a line. The CE assumed a governance role of sorts, penning the Council’s way forward via the Mayor’s Wanaka speech without the guidance of councillors. He worked closely with Colin Keel on the SOI, but not the councillors, and discouraged councillors from directing the CCTO. Along the way, through all the mess, he’s neatly managed to avoid ruling out expansion of noise boundaries in Queenstown. 

The Wanaka Airport lease and Project Pure

And then yesterday, QLDC released the Wanaka airport lease agreement between QAC and the Council.  It was the first time all councillors had laid eyes on it because the lease was negotiated under the delegated authority of the the Mayor and Councillors Hill and McLeod.    

It includes some fairly scary provisions to allow for airport expansion, provisions that never went back to the council for discussion or sign-off.  Those include the 100-year term and the ability for QAC to prevent the expansion of or demand relocation of Wanaka’s wastewater treatment plant and discharge field:

The Lessor [QLDC] will not carry out any future development of Project Pure, including any expansion of capacity of Project Pure, whilst it is situated on the Original Project Pure Site without obtaining the Lesseers [QAC] prior written consent, such consent not to be unreasonably withheld or delayed. The Lessor acknowledges and accepts that the following reasons would be reasonable for the Lessee to deny consent:   if the Lessor is proposing to develop closer to the Lessee’s planned runway;

  1.    if the Lessor is proposing to develop closer to the Lessee’s planned runway;
  2. if the Lessor’s proposing to develop new buildings or plant above the height of existing buildings or plant in Project Pure as the Commencement Date; and/or
  3. if proposed development materially conflicts with any regulatory and /or operational requirements of Wanaka Airport.

And:

The Lessee may on giving a minimum of 3 years prior written notice to the Lessor, require the Lessor to relocate Project Pure. In the case of the disposal fields, the notice can be given any time after the second anniversary of the Commencement Date. For the remainder of Project Pure, the notice can be given any time after the fifth anniversary of the Commencement Date.

These provisions should have been a consideration when councillors were mulling over the draft SOI;  the Mayor and Councillors Hill and McLeod should have highlighted the risk to that vital piece of infrastructure, if unlimited airport expansion was not written out of the SOI.  But they didn’t. 

And perhaps we should be asking whether they even had the authority to negotiate those provisions under delegation.     

Conflicts of interest

Finally, there’s the issue of whether the Mayor’s potential and perceived conflicts were appropriately managed.  He is Chair of Wayfare Group, the largest tourism company in the region if not the South Island, and yet he has been deeply involved in each of the above matters, all directly related to our ability to grow tourism in this district. A complaint has been laid.

Summary

If I had to sum this up, I’d say that under this Council’s leadership the management team has become very skilled at manoeuvring in the grey areas at the margins of democratic process. That’s the nicest way I can put it. And it’s something to be very concerned about.

If we don’t want to end up like Canterbury’s farmers – reliant on numbers to claw back the debt that enabled unbridled growth – we need to need to ensure that industry lobbies and corporate agendas can’t have an undue influence on decision-making. And to ensure that we need to do better than operating at the margins.

So, as councillors continue their public silence in the face of all this, let’s get behind those in the community (Wanaka Stakeholders Group take a bow) who are willing to stand up and challenge poor process.  Naturally, those with a lot to lose will push back and try to belittle, marginalise or discredit the threat – that’s PR 101.  As for the rest of us, it’s time to ditch the apathy, think about the consequences of continuing as we have been, and support those determined to wrestle our democracy back up the slippery slope.   

How not to lose control of QAC

With Queenstown Airport Corporation gunning for a massive expansion, it’s time for Queenstown Lakes District Council to wake up and assert some control over the CCTO’s spending.

Queenstown Airport Corporation (QAC) has lined up its ducks nicely. Thanks to the Council, the company has doubled its landholding.  It’s also obtained Requiring Authority status under the RMA and it almost clinched a Statement of Intent (SOI) with the objective to grow to meet demand. Fortunately, due to massive community opposition, that document (the last duck) was not accepted at August’s Council meeting.

QAC’s enterprise value is worth somewhere between $466 and $483 million. QLDC has a 75.01% share in that and Auckland International Airport (AIAL) has the rest. Current debt is $62.7 million but the company plans to spend unspecified millions on the purchase of Lot 6 and $400 million expanding Wanaka Airport.  All at a time when the future of aviation and the global economic situation are somewhat uncertain.

Until now QAC’s growth and spending have been constrained by location, but with the new Wanaka lease it finds itself without limiting noise and land boundaries and (here’s the thing) still with no constraints on its transactions or borrowings i.e. there remains nothing in its Statement of Intent or its Constitution that allows QLDC to control its spending.

All of this should raise a few questions. Like, how is QAC planning to fund a half billion dollar expansion? What would happen if QAC couldn’t meet debt repayments? What happens if there’s a downturn in the aviation industry and we’re left with a $400 million stranded asset? Could it come down to a choice between liquidation and a share sale? Could QLDC end up with less than 51% of the shares? You get the picture.

But as it turns out we have been so focussed on the noise and ‘over-tourism’ implications of QAC’s expansion plans that we haven’t, and Council hasn’t, considered the risk these plans pose to QLDC’s largest investment and its strategic majority shareholding.

Of course, neither QAC nor AIAL would shed a tear if the Council lost its hold over the company’s strategic direction – because QAC and the communities it serves are no longer on the same page. The Council should keep that in mind because history tells us it’s not beyond a QAC Board to resort to sneaky (if legal) tricks – in the name of doing what’s best for the company.  More on that later.

In hindsight, the Council should have assessed the risk to its investment even before it signed the Wanaka lease agreement, and certainly before considering the new draft SOI. But it didn’t.  Interestingly, when I looked for QLDC’s (s105 LGA) Investment Policy – to establish how the Council has resolved to assess and manage the risks to its investments – I couldn’t find it.  And when I asked the Chair of the Audit and Risk Committee, he told me he hasn’t seen it either.  I asked the CE for a copy last night but have so far had no reply.

So what next?

Councillors are right now (we hope) considering how to amend the draft SOI that sets out, amongst other things, what QAC can and can not do over the next three years. They need to get this right.

First off, I’m going to suggest they should not forget how councillors have been blindsided by QAC in the past. That was back in 2010 when the company had plans for a share sale and strategic alliance with AIAL.  In case you’ve forgotten or weren’t around for that particular drama, QAC didn’t trust councillors with the information about the share sale and sought legal advice about blindsiding them.  It was apparently considered legal.  In late June, QAC presented Council with a new draft SOI for signoff. It included a vague statement about looking to raise capital: “The company will consider the need for and source of capital subscriptions as may be required.”  That seemingly innocuous statement inserted into the SOI was all it took to enable a 24.99% share sale 2 weeks later.  The councillors found out about it just hours before the transaction.  Turns out the Mayor and CE knew about it but were gagged by confidentiality clauses. 

Given the communities’ current opposition, it’s not hard to imagine a similar scenario playing out over the current expansion plans. Sneaky ‘tricks’ with the SOI, confidentiality clauses – all legal but not quite fair play.

Regardless, vague statements in an SOI are clearly risky. This time QLDC needs to make the document crystal clear and without conflicting objectives.  It must state that there will be no work on expansion (including borrowing) until the economic and social assessments are complete and consulted on and council has signed off on a new and detailed SOI. 

Councillors must also reassess the appropriateness of the SOI, QAC’s Constitution, and the Board itself with a view to managing the risk to its investment, protecting its majority shareholding and retaining its ability to shape the future of this district.

And QLDC must add a clause or statement requiring shareholder approval for large transactions.  Auckland Council requires it for transactions over $10 million and so should QLDC. There’s too much at stake here to rely on trust, good intentions and fair play

Vote Niki Gladding for QLDC

For more about why I’m running for QLDC:

http://bit.ly/NikiMountainSceneInterview

https://www.facebook.com/NIKIforQLDC/?modal=admin_todo_tour

No ordinary extraordinary meeting

It was a case of community 2, Queenstown Airport Corporation (QAC) nil, today in Queenstown’s Council Chambers.  Item 1 was Queenstown Airport Corporation’s Statement of Intent (SOI) – the SOI sets the objectives for the Airport Corporation, 75.01% of which is owned by QLDC.

Council Chambers was bursting at the seams and anticipation was high.  Public forum offered up a string of passionate speeches, a prophetic image, and a goose bump inducing ballad for the finale.  Thank you Craig Smith.

The decision that followed was riveting stuff;  QAC held its ground, the Mayor tried to calm doubts, and the councillors’ comments weren’t promising.  We were glum.  But then Alexa unleashed (at her absolute best), Penny at the last minute proposed a motion to get rid of “all the stuff about growth” and Quentin, in a stroke of genius, requested that each point within the motion be voted on separately.  And then to everyone’s surprise the ‘’Nos” were dropped like dominos. And the crowd went wild.  Almost unbelievably, QLDC’s councillors had made the decision to, once again, not accept QAC’s draft Statement of Intent with its ‘we will grow to meet demand’ objectives.

It was the right decision and it feels like a battlefield victory – in the middle of a war. 

What next?  Both communities have repeatedly and convincingly stated they don’t want more international flights, more noise, more tourists, more pollution.  We recognise that a $400 million airport expansion will mean massive debt that will, at best, lock us into tourism growth and at worst could lose us control of QAC and our future direction.  Successful profitable businesses can operate within growth boundaries – it just depends on how we define success.  Right now, success means meeting social and environmental bottom lines that can’t be achieved with expansion and growth in numbers.

So now the question is will they stop playing hot potato with this SOI – will QLDC have the gumption to take charge and direct the Airport Corporation as it is required to by law?      To comply, the council must draft a resolution to amend the SOI in line with the aspirations of the community, consult the QAC Board, then give notice and require it to comply.  It’s as simple as that – the consultation’s been done and QLDC has the mandate to stop any expansion. 

But there should be another motion carried at the next meeting: that the community be consulted on the terms of reference for the economic and social assessments QLDC has agreed to commission. 

The Mayor’s suggestion that neither the community nor the council should have input on the TORs just gives substance to the argument that these assessments are merely a way to get around community opposition and straight back to growth.  Without a mandate from the community on those TORs, the assessments will be meaningless and the battle to protect this place will continue.