By: Mike Yardley | Saturday, May 26, 2012 9:00 AM

I admit it, I’m not blinded by ideology. In fact, when it comes to asset sales, I am positively agnostic. Maybe that is why the notion of a partial selldown of council-owned commercial assets doesn’t strike me as an incendiary call to arms.

The Government is piling the pressure on the Christchurch City Council to broaden its horizons and consider putting some assets on the block to ease the burden on ratepayers. All of the well-rehearsed arguments have gushed forth with grim warnings that assets sales are simply a short term sugar-hit, you can only sell them once, ratepayers won’t benefit long-term from the sale and that retention keeps rates rises low.

Well this year’s rates rise, at four times the rate of inflation, is a most peculiar definition of low. What’s more, a cursory appraisal of the much-vaunted returns from the council’s current asset portfolio leads me to the conclusion that the benefits are grossly over-stated.

The council’s commercial arm, CCHL, has an asset base valued at $2.3 billion. In recent years, the annual dividend payment from those commercial entities has been an anaemic $35-38 million. That amounts to a 1.4% annual return, which in anyone’s book is surely pathetic. My goodness – even those tight-fisted trading banks would reward the ratepayer with double that amount in interest, if the value of those assets was cashed up and deposited. Why are the dividend payments that supposedly keep a lid on rates increases so woefully meagre? And they are not forecast to get any fatter. CCHL issued a warning to the council in October to expect even smaller dividends in the next few years.

Why don’t we consider emulating the Government’s mixed-ownership model, whereby a minority stake of some commercial assets is rationalised in a bid to raise some funds? Sell down a 25% stake in the likes of the airport, port and Orion, and raise $500 million to instantly fund big ticket infrastructure projects like a covered stadium and community pools. Would that really be a great evil?  

Meanwhile former deputy Mayor Carol Evans called my radio show to cast doubt on the ability of city councillors to make an open-minded, detached judgement call on asset sales given most of them personally profit from these council-owned companies by way of their plum directorships. So who can make an objective decision?

Local Government Minister David Carter appears to be playing a longer game. He has made it patently clear that annual rates increases of 7.5% are completely intolerable. Under proposed legal reforms, which may come into force as soon as next year, he will have the ability to stop council’s bilking ratepayers by insisting on a partial asset sell down.

Photo: Christchurch Airport, one of the council's key assets (Edward Swift)