The Family silver: the sale of Wellington Airport (TEACHING NOTES) 2009-77.4

At 3 pm on Thursday 30 July 1998, the Wellington City Council met in special session to consider the sale of its 34 percent shareholding in Wellington International Airport Ltd (WIAL), the company that owned and operated Wellington Airport. The New Zealand government held the other 66 percent of shares. Government’s long-standing policy was to divest such assets; its coalition partner since 1996, New Zealand first, was challenging this policy. Moreover, public consultation had become dominated by opposition to the proposal. In the first, Councillors voted eleven to seven for the Council “to inform Government in making its decision that its preference is not to sell the Airport at this stage.” The Mayor, who had been convinced he had the numbers, was not yet ready to concede defeat. The Government had still to officially decide whether it would sell its own shares. On 14 August the Prime Minister announced the sale of the airport shares, saying that the Treasurer had approved the deal. A couple of hours later, she announced that he had been sacked. At the Council, the Deputy Mayor made a last attempt to revive sale discussions, while Letters to the Editor pages were kept busy with Councillors clarifying why – or how – they had voted.

This case has been prepared for class discussion on the interplay between politics and rationality in public decision-making. The teaching note has been designed to discuss the relationship between rationality and politics in local government decision-making. it includes some key questions on immediate and basic issues, with suggested student assignments and responses, and recommended reading.