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.

 

 

 

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