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Council Credit Ratings Claim Questioned

26 May 2024 – Wellington

Claims that ratings agency Standard & Poors will downgrade Wellington City Council’s credit rating if it doesn’t sell the shares in Wellington airport is “questionable”, says Mayoral Candidate and Wellington City Councillor Ray Chung.

On Thursday last week, City Council chief executive Barbara McKerrow briefed councillors on the sale of the Wellington Airport shares. The Post newspaper reported that Ms. McKerrow told councillors “a non-sale could trigger a drop in the council’s credit rating”.

Mayoral candidate Ray Chung said today the credit-ratings claim is questionable in light of Standard & Poors November 2023 outlook, and said evidence needed to be produced that proved the veracity of Ms. McKerrow’s statement.

“Show me the communication from Standard & Poors where they say they’ll downgrade the city’s credit rating if the airport shares remain in public ownership. I think that statement is questionable and would hope that it’s not just scaremongering of councillors and the Wellington public,” he said.

“The fact is that S&P says the long-term rating remains negative because the council is spending too much money and holding too much debt on its books.”

In its November 2023 outlook, S&P states that: Wellington will deliver an 18% deficit in fiscal 2025 followed by a 9% deficit in fiscal 2026, given that growth in rate revenues will outpace expenses, according to our forecasts. About 70 percent of the council’s income is from taxing property owners. 

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“This statement should be of major concern for all property owners in Wellington city. S&P tells it straight – taxation on property owners is the only thing that can reduce the deficits that the council is running,” Ray says. “It is fiscally negligent and unsustainable for the council to continue with its tax and spend policy simply because it has the legislative power to levy money from property owners. Rates increases will drive the city bankrupt and result in an exodus of biblical proportions.”

He said it was disturbing that council continued to cling to the ridiculous claim the city’s population will increase by 80,000 over the next 30 years, especially when in reality the city is facing a loss of more than 4,500 public service jobs because of Government funding cuts.

Ray said that it’s time for the council to cut new cloth when Ms. McKerrow’s contract is up for extension next February.

He regrets that he was unable to attend the CEO’s briefing last Thursday due to a previously confirmed meeting.

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