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”.

 

 

 

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Wellington shafted by two Auckland “greenie” Ministers

Wellingtonians have been shafted by two “greenie” ministers from Auckland, along with our current very weak city and regional council leaders.  This group signed up to a plan that prioritises a so called “rapid transit” tram/trackless service to the airport, which could be completed in 10-20 years.  They relegated a much needed second Mount Victoria tunnel, the plan says might happen in a decade or so.

They have miserably failed the people of the greater Wellington region.

The current two way Mount Victoria tunnel was built in 1931 when Wellington had very few vehicles and decades before air travel became popular.   As someone who has lived in Melbourne, London and New York, and Wellington for more than 40 years, I have some sense of where trains, trams, busses and cars fit in consumer preferences and what works.

We do need better access to the airport and also better public transport to the eastern suburbs, but they are not the same thing.  Flyers generally want fast, frequent services.   I simply don’t believe that a rapid, frequent (say 10 minutes apart) service from Wellington station to the airport, would be viable.   Greater Wellington has one tenth the population of Sydney and Melbourne.  Let’s get real.

How on earth do the supporters of this proposition think people are going to get to this tram/bus at Wellington station or central Wellington?  Do they contemplate large car parks at the station and other stops on the way?  The more stops of course the slower the service will be.  Trying to incorporate the needs of flyers with the people of Newtown, will inevitably result in neither being satisfied.

Looking at the Cabinet paper and the vague way it describes the rapid transport system, and how long it takes New Zealand to undertake major transport projects, only a true optimist could believe it would open within 15 years.   The very slow start to the Auckland CBD – airport light rail proposal, should give everyone a reality check on timing.

The underlying problem is these Ministers and many others, have an absurd religious type obsession with rail over road and private cars.  This is conflated with concerns about CO2 emissions and climate change.   Co2 emissions can be ignored because by 2050 virtually all forms on land transport will be powered by sources other than fossil fuels.

What our next local government leaders should do acquire the courage to relitigate the package to make the second Mount Victoria tunnel and the widening of Ruahine Street, the priority over so called rapid transit.  This has a price tag of $700 million.  It would also allow for other proposals to speed up travel through the Te Aro area.

No doubt the two ministers will say it is a take it or leave it proposition but I have no doubt a heavy duty campaign can “persuade” the Government to change its mind.  And if not this one the next.

 

 

 

 

 

 

 

 

 

Name changing nuttiness

Can we get any nuttier in our capital city, with the proposal, to change the name of the internationally well-known cricket ground, the “Basin Reserve”, to, “Support Women’s Sport Basin Reserve?”

The promoters of this cultural and sporting vandalism are seeking $100,000 to change the name for just two years, as part of a naming rights deal.   The Mayor Justin Lester supports it as does Councilor Fleur Fitzsimons, both of who are on the Basin Reserve Trust.

Fortunately there are some people with a sense of humour who are also raising money to change the name to, “Crickety McCricketface”.  However Councilor Fitzsimons says “Crickety McCricketface” is unlikely to be approved.  As trustees both Justin and Fleur should absent themselves from any decision about naming rights, because there may well be other bids, possibly from a yet to be formed “Basin Reserve” group, and they would be seen as prejudiced assessors.

How on earth would comedian John Oliver handle this?

Name changing lunacy is actually rather too prevalent in the capital.   We had a Vice Chancellor, from Auckland, who tried to change the name of Victoria University of Wellington, but was blocked by Education Minister Chris Hipkins.

It would be great if the same Minister wearing his State Service hat, stopped the Government from changing the names of government departments.   In my working life time we have had the Department of Agriculture become: the Ministry of Agriculture and Fisheries, the Ministry of Agriculture and Forestry (Still MAF) , the Ministry of Agriculture, Forestry and Fisheries, become the Ministry of Primary Industries, as ministries were created, merged and demerged.

There was the Department of Industries and Commerce become Trade and Industry, then the Ministry of Commerce, then the Ministry of Economic Development and finally this mouthful, the Ministry of Business, Innovation and Employment (MBIE)

Then there was the “Child, Youth and Family (CYF), (New Zealand) agency, which became the Ministry for Vulnerable Children and then renamed “Oranga Tamariki – Ministry for Children,” all within a matter of months.  Aside from the massive costs of these politically driven name changes, there is also the massive confusion they create in the public mind.

In sharp contract in the USA they basically keep names such as the USDA, their department of agriculture, which was founded in 1862, and their foreign affairs State Department, established in 1789.

Our Parliament recently changed the Education Act so any university wanting to change its name must first get a Parliamentary vote, a tough test.

I suggest an Act should be passed that prohibited state agencies names being changed unless there is a super majority in Parliament – say 60%.  That would cut down on endless mergers and demergers and name changes as well.  A big win for taxpayers!!

Master class in mismanagement

Is it a branding refresh or name change by stealth?  The VUW Vice Chancellor Grant Guildford should not be surprised many are deeply suspicious of his so called branding refresh.  In respect of the name issue there is widespread lack of confidence in his judgment both inside and outside the university.

What we are witnessing is a master class in mismanagement.  The VC has converted a small problem into a monumental one.  The small problem is that for prospective Asian students, the full name – Victoria University of Wellington – is necessary for them to associate VUW with Wellington, New Zealand.   Adding the words New Zealand on the end solves any remaining doubt.  VUW should not have wasted tens of thousands of dollars on Colmar Brunton dollars on proving the obvious.

What is truly amazing to me that VUW is so disconnected from central government, just a few weeks ago it triggered a unanimous fast tracked change to the Education Act, requiring any university that wanted to change its name to get a Parliamentary vote. That would not have happened but for the outrage caused by VUW’s attempt at a name change.  In my many years dealing with the Government as a consultant I cannot recall anything like this.

When the VUW Council decided a few days before that to abandon the name change it said there would instead be a brand refresh and we now have some details on what’s proposed.

The VC appears to have an obsession with “Queen Victoria”, who along with another nineteenth century Brit, the “Duke of Wellington”, has strong links to our capital city.  Having failed with a “big bang” approach it seems the VC wants to achieve his objective with many small steps to make “Victoria” simply fade away, leaving us with Mount Victoria, a CBD street and one statue of her on Cambridge Terrace, while still keeping the Duke’s name.

All the damaging angst and major costs of the past 18 months could have been avoided by making sure the full name is always used when promoting itself overseas, as well as the country name, because Wellington is not nearly well enough known internationally as the capital of this country.  Whatever logic they may have, the other costly and confusing sub-brand and URL changes etc are unnecessary and most should be abandoned.

Ironically twenty years ago VUW minimised the word Wellington in its branding so it could claim national status.   All other universities have added “New Zealand” to their names because independent research shows it is important.

Let’s see whether the VUW Council reins in this VC who chooses, I am told, keeps his primary residence in Auckland.

Conservatives, climate change and zealots

One of the mysteries of life for me is how so many “conservatives” blithely dismiss the scientists who believe human created climate change is a real problem that must be addressed on several fronts.

As a non-scientist I retained a healthy scepticism for some years until the evidence piled up about greenhouse gasses and their likely impact on the climate and sea levels etc.   I think a true conservative would be seriously interested in conservation and thus alert to environmental threats.  I expect a conservative would be prepared to take precautionary action, even when the risk is not proven beyond all doubt.

Fortunately in New Zealand the climate debate has not gone off on the extreme tangents seen elsewhere.  The difference here between National and Labour is not great.   But in Australia and the USA and elsewhere this is not the case, which is a tragedy for the environment and bad for democracy also.

In New Zealand we do have climate zealots who are another mystery for me.  Our contribution to greenhouse gasses is I think about 0.17% of global emissions.  This means if all mammals, including humans disappeared from this country, the global impact would be very close to zip.  People should stop pretending if only we take drastic action the climate would be stabilised.  It won’t and adults should not lead children to believe otherwise.

I think New Zealand should be an internationally responsible citizen and do its bit.   We don’t need to be world leaders but can and should be somewhat better than average.  But at a practical level given the indifferent performance of most countries, we should place more emphasis on mitigating the effects of climate change, particularly rising sea levels.

 

 

 

The upside of contradictory polls

Hopefully the absurdly contradictory opinion polls featured on TV 1 and TV 3 Sunday night, will result in the public switching off both the pollsters and those few political journalists obsessed with them.  The recent Australian experience where the polls failed to predict the Morrison Government victory, should cause everyone to discount this meaningless poll driven journalistic frenzy.

A few years ago I heard a World Bank Economist William Easterley, at a Wellington venue, saying life is about incentives, the rest is commentary.   For some political journalists, clearly their well being will be enhanced by as much political instability as possible, because that’s what creates their news opportunities and job security.   Leadership challenges whether real or imaginary are wonderful fodder for creative minds.

One TV journalist seems to think its her role to topple the National leader Simon Bridges. As everyone knows being leader of the opposition is seriously tough – I worked as press secretary for the late Bill Rowling.  During that time there was significant, but less fevered speculation, about his tenure on the office, which he held until David Lange took over several years later.

I am interested in public policy which requires hard work.   I read we are to spend $1.9 billion on mental health services over four years.   Where is the report saying how much more that it is compared with the last four years, exactly how will the money be spent, and how will we know whether it achieves the sought goal?

There are a few journalists who do credible public policy work.   They include Hamish Rutherford, Pattrick Smellie, Fran O’Sullivan, Brian Fallow, Liam Dann and Simon Collins.   However most of what comes out Parliament is about the “Game of Politics”, not news and analysis of real public policy issues.

I accept the Game of Politics is legitimate territory but the balance between that, the serious business of Government is hopelessly out of balance.   I would like to see a halving of coverage of the Game and a quadrupling of national affairs and public policy writing.   The future of our democracy depends on an informed electorate.   The mass media, which I well know is struggling financially, is presently falling well short.

 

 

Kiwibuild – a simple fix

The underlying problem Kiwibuild is trying to fix, is that houses simply cost too much because the land is too expensive, and we don’t have enough scale builders to build affordable housing.

The land cost issue is essentially regulatory and requires the Government to confront this reality and amend the relevant statutes including the RMA.   I don’t believe we need a Housing Urban Development Agency (HUDA), if a quality job is done the regulatory environment, and maybe better policies to handle the associated cost of providing the infrastructure.

If the Government wishes to continue with Kiwibuild, a simple fix would be to simply commission the houses in line with current policies, and then sell them at market prices to anyone who wants to live in them.   Many first time buyers don’t want a new house, they want one at a reasonable prices in an area that suits.

This approach would help develop the scale building industry and level off house prices.  However it ought to be phased out after say about seven years, leaving the market to take over.  It took 40 years of poor housing policies to create the current over priced sector.   A few years of quality Government action is required fix it.   But let’s not make it too complicated.