Govt recall of airport share ‘costly to users’

Press, 27 January 1987, Page 1

Govt recall of airport share ‘costly to users’

By

MARGARET BAKER

The loss of the Government’s $4.4 milion half-share in the cash reserves of Christchurch airport could necessitate increased borrowing, higher debt servicing costs, and higher costs to airport users.

At a special meeting of the Christchurch City Council yesterday the airport director, Mr Hugh McCarroll, said that up -to $3.5 million might have to be borrowed this year if the Government’s demand was met.

“The airport’s current five-year capital development plan anticipated a requirement to borrow $7.2 million in the 1987/88 financial year. Any money withdrawn by the Govern-

ment would need to be offset by additional borrowed money to maintain the current development plan. This could be up to $3.5 million,” said Mr McCarroll. He said that because of the known capital development requirements for the airport, the loss of any money would mean increased borrowing, and higher debt servicing and user costs. The Government de-

mand came in a letter sent to the council on January 12. It asked that the amount of reserves be confirmed within two or three days and a cheque for the Government’s share sent by March 15. Under the new Airport Authorities Amendment Act, the partners in joint venture airports are allowed to withdraw their shares of reserves. Christchurch, along with most of the country’s airports, is a joint venture between the Government and the local council. They share equally the costs of running the airport. The letter, written by the Acting Minister of Civil Aviation, Mr Rodger, said that the Crown intended to implement a new system of funding airport capital expenditure.

Mr McCarroll said the letter was the first formal communication from the Government that there was an alternative method of funding proposed.

“We haven’t discussed the new method. If the Government takes its halfshare surplus out it has to have a new method of funding, but we don’t know what this is,” said Mr McCarroll.

The City Treasurer, Mr Bob Lineham, said.it was

essential the airport had a certain amount of working capital readily available.

“The amount of funds we have available is reasonably small in terms of the total capital work programme ahead of us. We already know in two years we will have to borrow for major works.” Cr Morgan Fahey described the letter as arrogant and said the airport fund should be used only for the airport.

“Do we want to convert a debt-free airport into one heavily in debt? The net effect of withdrawing the funds will be additional borrowing to fund capital works programmes,” he said.

Cr John Burn said the request was put in “very terse terms” and suggested it had “all the subtlety of a grocery list.”

Cr Charles Manning said it was reasonable that the Minister should be able to use his share, but the council -should have guarantees in return to ensure the Government met its funding obligation and had money available for development and other airport needs.

The council decided to seek urgent discussions with the Minister over the matter.