POAL – Auckland (not Wellington) should decide its future

One of the 1984-90 Lange-Douglas government’s most successful reforms is now at serious risk, because of a self-serving political campaign by NZ First, aided and abetted by others driving their own agendas.

In 1988 the Port Companies Act came into operation, which commercialized New Zealand’s ports and required them to operate as a “successful business”.   At the same time the failed New Zealand Ports Authority was disbanded and harbour regulatory functions were left with local government.

The reforms worked extraordinarily well as the port companies became very efficient and cost effective.  Some including the ports of Auckland, Tauranga, Timaru, Napier, Lyttelton and Bluff, ended up at various stages with private shareholdings, but the local authorities typically held the majority of shares, and some partially privatized were later bought back.  Undoubtedly the private shareholding improved the performance of port companies.

This model is now at serious risk because of the Government initiated review of the upper North Island ports, which predictably recommended Ports of Auckland’s (POAL) freight operations end, with the freight going to Northport at Marsden Point and Port of Tauranga (POT), leaving the seasonal cruise business in Auckland.

This is bizarre.  POAL is 100% owned by the Auckland City Council, which has the sole legal right to determine whether or not port freight operations stay as they are, be confined to a smaller space or cease altogether.  Outside parties should simply butt out.

While it might be good for Northland if its Northport was dramatically expanded courtesy of a Government dictate, there is no compelling national interest reason for the Government to trample on the property rights of Auckland City.

If the Government is to decide whether freight is handled at POAL, what will stop it from going further?  The next step might be to determine the South Island doesn’t need five container ports.  That would take us back to the era when Robert Muldoon, then PM and Minister of Finance, selected the engine for Air NZ’s jets and decided we would have inferior Hungarian railway carriages instead of Japanese carriages, because he was brassed off with Japan’s policy towards our beef exports.  Intervention in commerce is a slippery slope – lets not go there.

Of course intervention would please the central planners and the unions who would love to see the state determine the roles of our 13 international ports.  But having Cabinet decide would be even worse than setting up a ports authority, and Labour should rule it out.  The same goes for the National Party – it doesn’t need a POAL policy.

However, as the owner of state highways and KiwiRail, the Government has a real interest in the wider economic implications of port operations.  It should have a non-threatening conversation with Auckland City about its intentions for POAL.  If Auckland City wishes to close or transfer POAL’s freight operations, within say 15 years, the Government will need to reconsider its road building plans and or investment in KiwiRail, to accommodate the changed scenario.

However regardless of that, it might decide further investment in Northland’s roads and KiwiRail is justified on economic and or social grounds.

For its part Auckland City must cease making vague statements about the port moving somewhere else and get serious.   The current policy shambles is largely a result of its schizophrenic approach to POAL.  This policy ambiguity will be demoralizing for POAL staff and seriously irritating for importers, exporters and the international lines.

In thinking about the POAL freight operations Auckland City will need to have regard for the capital cost to it from relocating the port, vis-à-vis the status quo, and determine whether the Government has any interest in financing the road and rail connections to an alternative location.

It should also think about how inland freight to and from the port can be handled more efficiently, to reduce inner city congestion.  It should consult cargo owners particularly importers and exporters.

Auckland City should forget about being compensated by the Government for the cost of closing its freight operations and think instead about how it would use the land in the event it alone made a decision, to either close the port’s freight business or relocate it south of the city.  Auckland City will also need to think about how the seasonal cruise business will operate, because it will need tugs and pilots for just part of the year, and will undoubtedly pay more than at present if freight operations ceased.

The people of Auckland (including the two former PMs John Key and Helen Clark, who want the port moved) will also need to get sober about POAL.   It is claimed 60% of Aucklanders want the port moved, but that question was not presented with a cost.  I am confident that 100% of people renting in Auckland from the private sector, also want lower rental costs and cheaper houses.  I am equally certain 100% of car and truck drivers want less congestion on the roads and 100% of non-drivers want better public transport.

Life’s about priorities – what comes first, more affordable housing and better public transport, or public access to all port land currently used for freight?

I am personally skeptical that either Manukau or the Firth of Thames will stack up as a viable alternative for the current site.  The Manukau is on the wrong side of the North Island for the international lines, and has harbour depth challenges.  The Firth of Thames may well be far too expensive, but should be thoroughly investigated.

There is in fact an option that enables Aucklanders to have much better access to current port land, without destroying the port.   This involves confining freight to the Bledisloe and Fergusson Wharf areas, leaving the rest for cruise and ferry vessels.   The Wynyard wharf (formerly Tank Farm) has been successfully redeveloped and that formula could be carried through to the wharves west of Bledisloe.

This formula works very well in Wellington, where the public has access to many wharves previously used for port operations.   Aucklanders – its up to you to decide.

Declaration:  I chaired the 13 member Port CEO Group from 2002-2015 and all ports mentioned were clients.

 

 

 

Public broadcasting mystery

Heaps of speculation this week as RNZ reported on the options and recommendation of the well known but secret group, reviewing broadcasting policy, for Minister Kris Faafoi.  A decision is expected before Christmas after Cabinet consideration.

Public broadcasting, whether through state owned entities, or via NZ On Air funded programmes for privately owned operations, is a matter of real interest to all New Zealanders.

At present we do not know the names of this group, which is appalling.  I struggle to identify any other group previously engaged by the Government in this way.   If the members were paid to participate, that would be even more appalling.  So much for transparency!

If the Cabinet decides there is a range of options which should be subject to public input before a final decision is made,  the process could regain some respectability.  If however the secret report is followed by a Cabinet decision, then we are looking at a totally disgraceful process, regardless of the merits of any decision.

There are many vested interests at play.   First and most obvious is MediaWorks, which simply wants the Government (ie the taxpayers) to limit its competition by making TVNZ at least partially non commercial.   They say the competition is unfair because in the near future TVNZ won’t pay a dividend, as it invests its cash reserves into more Kiwi content.  The Government will allow this to happen, just as MediaWorks ownership of its commercial radio network, allowed it to run TV3 for years at a loss.

The playing field for commercial TV has not changed because of Government policy, which is three decades old, but the hoovering up of advertising revenue by the likes of Facebook and Google, who contribute zip to Kiwi content.

MediaWorks should be careful what is wishes for, because the logic of making TV 1 non- commercial could be an end to NZ On Air funding for other TV channels.

The other main vested interest are the academic and public broadcasting elites who want to replicate the ABC or the BBC by having a non commercial channel producing what they see as good “public broadcasting programmes”.   Some of these people hark back to what they see as a glorious era of the 1970s.

The often confuse good quality Kiwi content which the public wants with the need for a non-commercial TV channel, strangely at a time when more of us are watching video when we choose, whether through Netflix or the likes of TVNZ On Demand.

The wider public is not getting a look in at the moment.

The RNZ model is viable indefinitely as long as it continues to be funded at a reasonable level.  I believe it would lose from any forced merger with TVNZ because of massive cultural differences and the inevitable disruption, which results from any merger of well established organisations.  Maori TV is heavily subsidised and TVNZ can look after itself for a while without immediate Government action.

TV3, owned by American and Australian commercial interests, is for sale, which I expect will happen sometime in the next year.  A new Australian owner is a likely prospect, either their channels 7 or 10.  No doubt a sale would be helped by clarity as to our  Government’s overall policy, but that policy should not be driven by the needs of foreign commercial interests.

I will await the Cabinet announcement before commenting on any proposals or decisions, but given the secrecy around the process so far, am not feeling confident we are heading for a better place.

Disclosure:  I have worked for the NZBC, the ABC, the BBC and was for six years a director of TVNZ.

Massey assaults free speech

Words totally fail me for what is going on at Massey University and it is not alone in the world of universities for this type of behaviour.

In my time at VUW in the “terrible” 1960s student organisations simply booked rooms for their speakers in the Student Union Building.  It did not matter at all whether they were communists, business people, politicians  or anarchists.   If you didn’t want to hear them you didn’t go.

Anyone today who cannot live with “unacceptable ideas” being promoted on campus should not be at a university.

The evidence of the real world shows that many young people don’t need to go to university at all, to have a meaningful life and work.  Some are better off at ITPs or simply going straight to work or starting their own businesses.  When you see lunacy of the type going on at Massey, one realises that its time for a reassessment of tertiary education because too many institutions are losing the plot.

MEDIA RELEASE
Massey deprives students with new free speech/external speaker policy

12 November 2019
FOR IMMEDIATE RELEASEResponding to the launch of Massey University’s new policy and code regarding free speech and external speaker, Free Speech Coalition spokesman Dr David Cumin says:

“Massey’s new external speaker code is a bureaucratic nightmare, and its “free speech” policy is an Orwellian absurdity.”

Each event organiser, and any external speaker, is expected to read twelve new pages of code and policy.

The event organiser needs to fill out a form to help university officers conduct a ‘risk assessment’ of the speaker and topic, including the likelihood of ‘mental harm’ and ‘negative media coverage’. This must be submitted three weeks prior to the event.

The speaker is expected to express ideas that university officers consider ‘meaningful’ and ‘mana-enhancing’.

And finally, if after the event the University deems that the speaker breached these terms, it can take disciplinary action against the event organiser.

“The broad, inscrutable language of Massey’s new policy gives university staff enormous discretion to shut down speech according to their own biases, or those of would-be protestors. The ‘thug’s veto’ which saw the cancellation of recent events will be as effective as ever.”

“Most importantly, Massey has completely failed to understand the chilling effect of its anti-speech policies. The bureaucracy, delay, uncertainty, and threat of punishment all serve to discourage students from inviting any external speakers onto campus. Massey is choosing to deprive its students of the rich educational experience they deserve.”

ENDS

Media contact:
Dr David Cumin
021 369 282

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Media and National’s social services paper and 58 propositions

It has been described as “Labour lite” by ACT and “punitive” by some media.

I find it hard to believe that any fair minded person, who has actually read the long, detailed and slightly tedious discussion document, could possibly regard it overall as punitive.

The knee jerk comments of some journalists reinforces the views that mainstream media so often cannot be relied on to present the facts in an easy to read or absorb format.  Comment or extreme partisan reaction far too often comes ahead of the facts.

All up there are 58 propositions in the questionnaire which invites the reader to agree or disagree and some provide space for comments.  I ploughed my way through and answered most of the questions.   Not sure how many people will have the energy or inclination to do do this, as some require significant knowledge of the existing system.

I think 90% of the population would agree with the vast majority of propositions and questions contained in this paper.  They are so plain sensible and vanilla like, to become almost boring to read.

Even the slightly controversial propositions are hardly radical.  What rational person would disagree with P 12.  “National will ensure gang members and associates cannot exploit taxpayer support?”  Or, P 13 “National proposes to improve the way agencies work together to support people exiting prisons to ensure they have a best chance at independence and lower the risk of them reoffending?”

There are dozens of propositions like this.

While there are some overarching statements about the purpose of the social welfare system it lacks clarity on the obligations of citizens and parents, to do their best to minimise the costs they create for their fellow citizen taxpayers.  As, for instance, we don’t require a licence to produce children the state needs to reinforce a community expectation that people will be self sufficient wherever practicable.   The so called “right” should not be shy about stating this clearly.

It has also got to be practical.  Proposition 7 says National will return the sanction for sole parents who don’t name the liable parent, usually the father.   I agree with the sentiment but many of us know fathers who pay for children outside the social welfare system, because any other payment ends up in the consolidated fund.  And who wants the child to suffer because either the mother doesn’t know for sure who the father is or because he simply doesn’t want to pay?

Unless they are criminal or generally thuggish it is good for fathers to have a role in the upbringing of their children, even where they don’t live with the mother.  I think some truly fresh thinking is required here to create a benefit/tax system that encourages two parent responsibility in a workable manner.

P 39  “National proposes to extend money management to all beneficiaries under the age of 20, and those up to the age of 25 who don’t fulfil their obligations”.  Can this really be called punitive?  Some people are hopeless at financial management and as it is the taxpayers money, why shouldn’t they be managed and held accountable?   if their parents were giving them money they certainly would make sure it wasn’t wasted.

I give the 58 propositions and comments 7 out of 10, but just 4 out of 10 for the media’s response.  As with so many complex public policy issues, there is no substitute for reading the original proposition.

 

 

 

Why is Labour struggling to deliver?

The two year media reviews of the Labour led coalition agree it is struggling to get enough runs on the board.   Why is this so?

After nine years of opposition it can be expected there would be a running in period.   However that doesn’t adequately explain why they are delivering less than they had hoped.

While it is natural to expect Labour would have a modest understanding of how business works, it was a surprise to me also, that far too few Ministers actually understand how Government works.  So many don’t understand the mechanisms of government which means they failed to make best use of their time in opposition.   Not only that, its apparent they don’t understand the most important law of all – the law of unintended consequences.

In opposition I had several meetings with Phil Twyford and found him to be personable and passionate about his policy areas of transport and housing.   As a Minister however he has come across as arrogant, dismissing Treasury officials early on for their questioning of his Kiwibuild targets.   “Wet behind the ears” he said.   That may or may not have been true, but it is now apparent Treasury wasn’t pessimistic enough.

The Auckland tram (or light rail) project is a true “train wreck” in public policy making.   Good journalism from Stuff and others including the Herald’s Matthew Hooton, reveal a picture of chaotic decision making.   Early on Transport Minister Twyford transferred responsibility for the City-airport link from Auckland Transport to NZTA.   Then an “unsolicited bid” for a quite different proposition emerged from the NZ Super Fund together with a Canadian infrastructure fund (CDPQ Infra), jointly known as NZ Infra, which NZTA was asked to evaluate.

Apparently NZTA decided this proposal lacked merit and continued with its tram project along Dominion Road.  Various business entities invested in the NZTA concept in anticipation of bidding for work.

The situation now is the Ministry of Transport and The Treasury are going to evaluate both concepts and Cabinet will decide their preference early next year.  They will need to also get NZ First on board, because the project is not part of the coalition agreement.

To further complicate matters Hooten claims that the recently appointed NZTA chair Sir Brian Roche, was informally involved with the NZ Infra proposal along with Sir Michael Cullen at its beginning.   He is said to be very enthusiastic about it.

While Brian Roche (a personal friend) is well qualified to navigate his way through this quagmire, the integrity of government procurement processes have taken a serious reputational hit.

Minister Twyford has criticised previous NZTA actions regarding NZ Infra.   However it appears NZTA officials repeatedly asked the Minister to clarify the project’s objectives as to whether the focus was in getting to and from the airport in the fastest possible manner or having a tram/train to the airport, which would allow for housing densification.

Twyford thinks we can have both and has referenced London’s tube service from Heathrow to London.  I have used the regular tube from Heathrow to the city, which was a nightmare after a long flight and takes about 50 minutes.  There is a fast 15 minutes service from Heathrow to Paddington which leaves every 15 minutes from Heathrow and has no stops until it reaches Paddington.

I doubt a service every 15 minutes from Auckland going non stop to say Britomart, would be justified by the numbers of customers, so he really need to make up his mind about what’s required.  And while its very easy to publicly slag off officials who cannot publicly answer back, I think it is an unwise practice.  Officials can find ways of biting Ministerial critics.

The billion extra trees, which may or may not be additional to what the private sector would have planted, has also created picture of confused policy making.   The main justification appears to be to create carbon soaks to help NZ achieve the net carbon emission goal by 2050.

As I understand it pine forests will only buy us time over the first 30 years because once harvested they will have to be replanted.   Many in the rural sector don’t like the idea of the landscape being dominated by pine trees and say it will destroy local communities.

Both NZ First and Labour don’t like land being sold to foreigners, but we now have this strange situation where the Green Minister Land Information has allowed Japanese company Pan Pac Forest Products to buy around 20,000 hectares of land for forestry blocks.  This decision followed from a 2018 law change which allowed the Minister to by-pass the Overseas Investment Office, the agency responsible for regulating foreign direct investment into New Zealand.  Other land has being sold to foreigners who want to take advantage of this Government’s policies in respect of climate change and forestry.

As National’s Paul Goldsmith said: Foreign investors can’t buy farm land to farm, or to convert to horticulture or vineyards, but they can buy productive farm land on a massive scale to put into forestry blocks”.  He said “this is creating massive distortions in land use decisions in rural New Zealand”.

In defence Winston Peters said forestry is good for marginal land.   But it’s is not clear all the sales to foreigners are for land that is marginal for pastoral farming or horticulture.   Meantime Shane Jones has indicated he is sensitive to rural concerns about the impact of forestry on their communities.

This saga indicates a Government that is not thinking through conflicting goals in a rigorous manner.   If a National Government had made these forestry decisions there would have been a ballistic response from the parties now in the coalition.

 

 

 

 

 

Vested interests fill broadcasting policy vacuum

I am looking forward to seeing the Government’s new public broadcasting policy expected before Christmas.   The policy vacuum is being filled by vested interest groups, particularly MediaWorks largely owned by Oaktree, an American investment company, which is clearly tired of subsidising TV3 with its profitable commercial radio operation.

Using its journalists to campaign in the interests of its shareholder is certainly novel, but I see NZ Me owned NZ Herald has also climbed in with self serving editorial comment.  The theme seems to be TVNZ (of which I was a director) has an advantage over TV 3 because its shareholder is us the taxpayers.

The reality is both TVNZ and TV 3 operate in the same seriously difficult commercial environment, with advertising revenue being drained off to largely America based multinationals who provide no real NZ video content.

While TVNZ may make a loss of $17 million this financial year to build up its NZ content operation, that will be financed using its balance sheet with loans as required – no new taxpayer funds will be going to the company.   The playing field is level in that both TVNZ and 3 compete for NZ On Air funding for NZ content.

The suggestion that TV One become non commercial thereby in theory gifting advertising revenue to the likes of MediaWorks and Sky is truly absurd, and unlikely to achieve the anticipated result.  In the event TV One became non commercial TVNZ could well retain most of its advertising revenue by reshuffling programmes within its network and beefing up its Duke channel.

Much as I like both the ABC and the BBC, the idea of creating a Kiwi equivalent at this stage seems like dreamland.  The future is with the internet and video on demand – not linear TV which is why RNZ was very wise to reject Clare Curran’s idea they should set up public service channels.  Kiwis over the age of 50 should forget about their romantic view of what TCV was like in the 1970s and 1980s – that era is not coming back.

What matters is NZ content and it being available in a form that suits all generations.  It may well be the state should invest a little more in supporting Kiwi content.   I hope the Government is not seduced by the notion somehow merging entities such as TVNZ, RNZ and Maori TV will result somehow result in much better and more cost effective NZ video content.  Each state entity has seriously different cultures that won’t easily meld together.

Mergers in both the public and private sectors usually achieve much less than anticipated and the transitional costs are typically greater.   It would be much better for all three entities more effectively work together at an operational level, without actually merging.

 

 

 

 

NZ First sponsored port study deserves rigorous scrutiny

The proposal all of Ports of Auckland’s (POAL) freight operations move to Northport, adjacent to the Marsden Point refinery, should be taken seriously and rigorously scrutinised.

The Wayne Brown led working group report resulted from an agreement between NZ First and the Labour Party as part of their coalition agreement.  NZ First proposed in 2017 the cars be moved to Northport by the end of 2019, and the rest of the freight by 2027.  This is a politically driven proposition, not one arising from a neutral study required to properly assess all the options.  A final report is expected before Christmas and at some point the Labour Party will have to determine its view.

The essence of the Brown team’s proposal is: (1) the rail line from Auckland north be upgraded to take high cube containers and a lot more rail traffic; (2) there be a spur rail line to Northport at Marsden Point; (3) a new inland road/rail port in north-west Auckland; (4) a four-lane highway from Auckland to Whangarei; and, (5) a major expansion of Northport to accommodate the extra containers, cars and other freight.

Their seven-page report is accompanied by an 88-page EY analysis, which claims there is a net national economic gain from the proposal.   This claim should be subject to rigorous scrutiny by people with no vested interest in the outcome.

It’s interesting EY’s support for the move contrasts with their report to the Auckland City in 2016 which said: “Relocating multi-cargo to Northport would have a considerable impact on the supply chain for these goods, and associated negative costs for suppliers and freight operators, as most of would have to be transported back to the Auckland region and further south”.

Shifting port locations is not revolutionary and clearly technically it could be done.  Northport has the land and if need be it could buy more, but it should be noted it does not have compulsory acquiring authority as do major airports.   The harbour has reasonable depth but its likely more capital dredging would be required along with somewhat more berthage.

The key questions are:

Will exporters get a better deal in terms of price and service?

Very doubtful unless the government is prepared to subsidise the rail, which raises other issues.   The reality is land transport in NZ costs more than the cheaper sea journeys, which is why low value products such as logs typically go out through their closest port.

Will importers, including motor vehicle importers, get better prices and service?

For general importers the rail option is impossible until the line is upgraded and the spur to Northport built.   Given how long it takes New Zealand to get these projects designed, consented and built, we are looking at around 10 years.  Without a government subsidy it is very hard to see how freight import costs would be cheaper than the POAL, because of the greater land freight distance.

Car importers prefer road because there is less damage to the cars and is more cost effective than rail.

Importing POAL’s 300,000 motor vehicles through Northport would create major challenges.  It would mean more than 800 vehicle trucks going south a week, assuming they have six vehicles each.  Double that for the return journey empty.   Road works presently make the journey slow – so what would more than 1600 car trucks do every week of the year.  Clearly the four-lane motorway would have to be built before that could be contemplated.

Industry estimates are that the Northport option would add anything from $260 to $500 per motor vehicle onto import costs, significant for used car imports, whose buyers typically don’t have much money.

The EY report appears to be silent on how 500,000 tonnes of cement imports would be handled.  Auckland is a major user of cement.  It appears to be largely silent also on other bulk, heavy vehicle imports, project cargo and break-bulk.

Will the Auckland traffic problems be eased?

Port trucks are a small percentage of traffic, which is mostly private vehicles.  Port trucks are estimated to be 7% of all traffic up Grafton Valley.  Pressure would be eased around the port area if it was closed.  However with a massively enlarged Northport sending 30% (EY estimate) of its freight down route one, even with a four-lane highway, there would be congestion issues on route one.  Truck movements in Auckland would not be reduced – they would shift to other areas west and south.

Auckland’s road traffic problems are the result of growth and the modern practice of parents driving their children to school.  The remedy is going to be a mix of more roads, more rail and congestion charging.  The CO2 issue can be set aside because by 2050 very few if any motor vehicles will be powered by oil.

Will the alternative uses for the POAL land produce a higher dividend than POAL or will the people of Auckland discount money for better access to the port area as has been done with Wynyard wharf?

There will be a 1001 ideas on what to do with the freed up POAL land and in good Kiwi style this is likely to create major controversy.  Clearly a high rate of return would be achievable but that might involve structures somewhat higher than POAL’s cranes.

Other issues include the net greenhouse gases impact? – higher because rail and road emit more than ships.  Not a great green solution to a vexing problem.

Also, will the Commerce Commission have a view on the concentration of market power given that Port of Tauranga (POT) owns 50% of Northport and POAL has a smaller indirect holding.

The report rather blithely says the cruise vessel business would remain in Auckland.  As with many ports, cruise visits are seen as marginal extra business, made viable only by the fact that other trades cover the fixed costs including wharf maintenance, dredging, pilotage and tugs etc.  Without the mainstream trades, the cruise vessels would have to cover all costs, unless the Auckland City Council wants to use ratepayers’ money to subsidise them.

There are some other options.   POAL could in conjunction with others work harder to reduce the road traffic congestion outside the port and the Grafton Valley area by making more use of the nighttime.   It could also move more containers faster by rail down to its inland ports at Wiri and the Waikato.  The port is constructing a building to temporarily accommodate the “on wharf” cars, which seem to upset some Aucklanders in the wealthy suburbs.  It could also move faster to free up the wharfs closer to the CBD area, which is included in its plans.

Clearly for so long as it operates from the current site POAL will be space constrained, but that’s not the end of the world.  In the very long run, say 50-100 years, it may be determined that POAL should be in another place.  In the meantime the well managed and successful POT has significant room for growth.

It would be very unfortunate if a quick decision was driven by the political requirements of NZ First, which wants to secure its position in the far north.   That would be “pork on steroids”.