A readable and rational report on POAL

Revised July 17 in the light of feedback 

The most interesting thing about the Ministry of Transport commissioned Sapere report on the future of POAL’s freight operations, is that compared with the status quo, all options will add costs to the economy.

However Sapere’s terms of reference required it to assume POAL’s freight operations would have to move sometime, so the question was when does this have to happen and where is best?

Surprisingly a new port at Manukau is assessed as the least expensive producing net benefits of -$1,982 million net present value and the Firth of Thames the most expensive at -$7,294 million.  Moving the entire freight operation to Northport (half owned by Port of Tauranga – POT), was estimated to be a net -$6,252 million, POT, a net -$3,703 million and a shared Northport – POT, a net -$6,847 million.

Sapere helpfully provides an explanation as to why its conclusions materially differed from the Wayne Brown led Working Group.  A key point is they took a 60 year perspective rather than Brown’s 30 year.   (See page 15 of the executive summary – Sapere “Analysis of the Upper North island Supply Chain Strategy Working Group Options for moving freight from the Ports of Auckland”.

The good news for the Auckland City Council and the Government, is the decision does not have to be made in a rush.  Sapere thinks we have 10-15 years to make the decision.  Provided it can get the necessary consents, the container terminal may have sufficient capacity for around 30 years.  After that a substantial amount of reclamation will be necessary.

Both the Manukau Harbour and Firth of Thames sites have not yet been rigorously investigated in sufficient depth, to be confident that the indicative costs will prove to be realistic.  The Firth of Thames is favoured by the lines, but is very expensive.   A POAL there would be real competitor for POT.

It is clear from Sapere that neither option could likely be consented under the RMA and thus would require special legislation.  This flows from the Supreme Court decision regarding King Salmon (2014) and how the New Zealand Coastal Policy statement affects RMA applications in the coastal marine area.  Special legislation would be more than challenging for any Government, unless by some miracle commercial, environmental and Maori interests were supportive.  Probably when pigs start flying.

Interestingly Sapere rejected the argument that Manukau would not work because of its harbour and the dredging that would be required.   They took expert advice which did not agree with this widely held view.  Most ports require some maintenance dredging.

Sapere also rejected the claim moving the freight operations out of the current site would materially improve Auckland transport problems, because the new activity on the port land would generate its own traffic and the diverted freight would mostly enter the city through other routes.

And they rejected the claim made by the Wayne Brown report that by using the land for other activities Auckland City would be better off financially.

The politics of POAL’s future are extraordinarily complex.  NZ First desperately wants to be seen as a great advocate for Northland to win a seat, while many in the affluent suburbs of Auckland would like to see the port relocated, and presumably not replaced by high rise office blocks or apartments.

The National Party has not said much.   A majority of its supporters in Auckland want the port moved, but they have not yet seen a definitive cost.   Given POAL is owned solely by Auckland City, the rational response should to say go and lobby Phil Goff and co if you want a change.  The Government should not trample on the City’s property rights.

The Labour Party and Auckland Mayor Phil Goff, have many major transport projects underway. The last thing they need is an extra, very complex and expensive freight transport project to deal with.  Auckland City is not able to fund an entirely new port anytime soon.  In that respect Sapere has done them a favour by kicking decision time down the road.

The option not considered is that POAL remains on most of its current site indefinitely, and the marketplace takes care of the freight growth by greater efficiency at POAL, and more freight going through POT and Northport.  POT is convinced it has a lot room to increase its throughput, that was not recognised by either the Wayne Brown report or Sapere.

Personally I don’t care whether POAL remains on its present site, moved to Manukau or the Firth of Thames, or some deal is done with POT and or Northport.

But having removed the central planner with the Port Companies Act 1988 and established the ports as commercial businesses, I am opposed to any taxpayer money going into any port.   Port investment is for the shareholders, which is mostly local authorities, with a few such as POT, having significant private shareholding.

However as owner of KiwiRail and the roads, the Government has a key role in determining how ports will be linked into the transport network.  Hopefully the Government will take its time on working through these complex issues, and not be influenced by one political party’s needs, or those in the leafy suburbs who want the container cranes out of their sight.

I chaired the 14 member Port CEO Group from 2002-2015.   http://www.barriesaunders.wordpress.com

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