Auditor-general to study airport alliance

The Office of the Auditor-general has begun a study concerning the controversial strategic alliance between Queenstown and Auckland airports, to "seek learnings" from existing council-controlled organisation models.

Queenstown Lakes District Council chief executive Debra Lawson said representatives of the Auditor-general began the project in September. It would include other councils with council-controlled organisations.

Assistant Auditor-general, local government, Bruce Robertson said the governance and accountability arrangements between councils and council-controlled organisations were of "ongoing interest to the Auditor-general", and it was timely to look at "learnings" as these arrangements evolved.

The office had opted to start with the Queenstown Airport issue because of the level of public interest and "the lessons that could be drawn from the example".

"This is not an inquiry or an attempt to re-litigate events.

"We are looking to draw out principles and lessons that are relevant to the local government sector as a whole around governance and the management of subsidiaries."

In July last year, Queenstown Airport announced it had created and sold a 24.99% shareholding to Auckland International Airport Ltd for $27.7 million in the alliance. This became one of the most contentious issues in the district.

The matter was taken to the High Court at Invercargill with the Queenstown Community Strategic Asset Group and Air New Zealand originally seeking a judicial review and an injunction to stop any further shareholding.

At the time, the Office told the Otago Daily Times it had planned to investigate the transaction but this was postponed once the High Court proceedings were filed.

The matter was to be heard in Queenstown in May, but just days before it was due to begin, the strategic asset group and Air New Zealand withdrew their cases.

Air New Zealand deputy chief executive Norm Thompson said it had become clear it would be a "long and expensive battle" which could costs "millions of dollars for all involved, including the Queenstown community".

In the 11 months to June this year, it cost the council more than $560,000 in legal fees and litigation costs, along with a PricewaterhouseCoopers report costing $85,000 which investigated the fairness of the transaction.

Mayor Vanessa van Uden said the council welcomed the opportunity to participate in the Office's project.

"The share sale was not only a high profile case, it also amounted to a significant investment in council time and money. This project is a means of ensuring that ratepayers, both locally and nationally, can receive some value from our experience."

The council looked forward to the "learnings".

"I am sure our experience can benefit the rest of the country," Ms van Uden said.

Representatives from the Office had met the council, the Queenstown Airport Corporation and other stakeholders to reflect on the share sale.

Ms Lawson said the council had always been open to the prospect of "reviewing the challenges around what was a commercial decision on the part of a community-owned subsidiary".

The Office hoped to have its findings by June.