Aurora needs to be sold and soon.

Jess Pen as below has accurately made the rational case for selling Aurora, but has not highlighted two main reasons why Aurora needs to be sold soon.

1 – the DCC is in far too much debt to finance and optimise the enormous potential of Central Otago development of Aurora.

The 9 Year Plan for DCC debt is to be paying 5% interest every year on approximately $1BILLION DEBT, costing $1 MILLION EVERY WEEK just in interest with no pay-back plan.

Aurora itself is so indebted it is unable to raise the development finance required itself and is losing its grip on lucrative Otago expansion of the grid to outside competitors like Southland’s Powernet.

Aurora needs an owner with deep pockets to buy and then further invest vast sums to realise Aurora’s full expansion value.

Dunedin citizens can consequently only get Aurora full value by selling it.

Dunedin can not afford Rolls Royce maintenance costs but needs a number of Toyotas to keep the DCC moving.

2 – Aurora should be sold soon for an optimum price as there is currently a lot of international money looking for a safe haven like a NZ lines company.

There is also the possibility of Aurora being taken over by Central Government, as was attempted when Labour’s Minister Mahuta tried to take control of DCC Water Infrastructure for less than 10% of its worth.

Strong public and elected representative opposition to selling Aurora was based on the public not understanding these debt/development/underfunding issues, not understanding the extreme financial vulnerability that Dunedin has to uncontrollable interest rates on unsustainable debt levels, and an understandable lack of trust in Councillors just wasting the sale proceeds.

Jess Pen

What was proposed was not to spend the proceeds from the sale of Aurora, but to establish a long-term investment fund that would generate returns for generations to come. The idea was to follow the model of large investment funds (think ACC who has 49 billion under investment) and invest the capital in a well-diversified portfolio of assets, and use the earnings to fund key services, infrastructure, or reduce rates. Had the DCC established such a fund, the benefits to the people of Dunedin would have been significant over many lifetimes:

– Lower rates over time, with investment returns supplementing revenue.

– Financial stability, protecting the city against economic shocks or future budget shortfalls.

– Long-term funding for core infrastructure, without increasing debt or deferring essential upgrades.

– Intergenerational equity, ensuring today’s $’s would continue benefiting future residents, not just the current council budgets.

Instead of a one-off spend, this approach could have laid the foundation for Dunedin’s version of a future fund working for the people. Who wouldn’t want that?