Andrew Dickens: Ports of Auckland debate misses the point

Andrew Dickens, Publish Date Wed, 27 Nov 2019, 9:49AM

Photo / NZ Herald
Photo / NZ Herald

Moving the Ports of Auckland is a no-brainer, it’s just a pity that all the discussion so far has no brain and based on the wrong things.

On Tuesday Northland Regional Council’s new chairwoman Penny Smart said relocating Auckland’s port to Northport at Marsden Point will bring strong economic benefit for the region.

No kidding Sherlock. If we just upped the port to Northland then Northland will win even if the idea is a total economic disaster for New Zealand Inc and the entire import/export sector. It also reeks of the limited thinking that all we have to do is just up the port and move it.

This followed the launch of a social media campaign on Monday which gathered the support of Helen Clark and John Key. Mr Key said it was a sensible idea to move the port to Northland while Ms Clark wombled on about the waterfront for the people. Trevor Mallard hopped on the bus as well

If I was a bitchy man I’d say that Mr Key lives in the suburb beside the port, Ms Clark lives beside a football stadium she like to see on the waterfront and Mr Mallard is the guy who first thought of the stadium on the port land. Of course they want it gone. None of their statements were enough to convince me to move to Marsden.

Then we get Mayor Phil Goff on Tuesday saying he wants the Port moved so the people of Auckland can get access to the waterfront. Again not good enough a reason.

Then we’ve got all the people who chant the waterfront should not be a carpark due to the used car import business. Which is true but the least of New Zealand’s problem with this port. The hub of the problem lies to the East of the cars with a port whose size and scale dwarfs the import of 250,000 cars a year.

The Fergusson Container Terminal is Australasia’s third biggest. Reclamation began in the 60s and it cranked up in the 70s. It’s hit expansion capacity in just 50 years. Someone then should’ve known better. It’s a 4 lane Harbour Bridge scenario all over again.

The container port handles 60% of New Zealand’s imports and 40% of its exports. Half of our economy is tied up in that expanse of concrete and as the country grows it’s capacity relatively shrinks. So much so that the Port will be at full capacity in just a few years.

There’s only one reason why we have to move the Port. It’s TOO SMALL. When it’s full half our economy will start to fail. Why do I hear no-one talking about that?

The Northport cheerleaders are doing a terrible job. Slyly ignoring the costs other than just building some wharves and a spur line. Ignoring the transition costs on road and rail links and inland ports and cross Auckland freight avenues.  Ignoring the infrastructure construction capacity constraints. 

Ignoring Whangarei’s capacity to absorb the growth.

Auckland’s port affects a third of the city’s economy. 600 people are employed directly but 200,000 other jobs are directly tied to the port.

Ready for those people to move north, Whangarei?  Got the houses, schools and health care facilities? And the water and waste infrastructure?

Meanwhile Auckland, are you ready to lose this bedrock of your economy?

The only people who have made any sense in this whole thing so far are Steven Joyce and the Government who realise this is a holistic, nationally critical decision with implications for every part of our economy and our infrastructure and our national investment for the next half a century and beyond.

This whole thing is way above the pay grade of some local body politicians, anyone from New Zealand First who have too much skin in the game, same for CEOs of port companies, activists and former politician’s who want to meddle.

Meanwhile what would I start doing tomorrow?

For me the first thing to do is to get a dedicated rail line from the port to the inland facility in Wiri to get as many containers and cars off the wharves as soon as possible to extend the port’s life while we make a transition.

But here’s the thing on that. The only route is Hobson Bay. The home of the Remuera Nimby.

This is a monumental cock up 60 years in the making.

David Farrar: My stance on Ports of Auckland

I have long been of the view that using prime waterfront land in both Auckland and Wellington as an industrial port is not in the best interests of either city.

It was logical for the ports to be there scores of years ago as back then there was no other significant use of waterfront areas. But today in modern cities waterfront areas adjacent to the CBD are the most highly sought after areas for restaurants, bars, hotels and recreation spaces.

So I support the Ports of Auckland moving from its current location.

But that doesn’t mean politicians deciding where it should move to and/or closing it down in favour of other ports.

What I would support is the Auckland Council splitting the land and operations of the Port Company in two. They take back the land and lease it to the Ports of Auckland for say a final 20 year term. Maybe 15, maybe 25. The key thing is you have a definite deadline for the Port to move.

This is a decision that Auckland Council should make. Firstly because they own Ports of Auckland and have property rights over it. They should not be legislated over by central Government. Secondly because as the governing body of Auckland they have an interest in turning the waterfront land into something more exciting.

So that is all that needs to and should happen. Then Ports of Auckland will make commercial decisions about what to do – ranging from a new operation in Firth of Thames to working with the Whangarei or Tauranga ports.

But what the Government should not do is commit the taxpayer to $10 billion spending in order to help Shane Jones win a seat by declaring it will move to Whangarei.

I am very dubious that Whangarei can go from one container ship a week to 10 ships a week. Even if it could, it is highly doubtful ship companies would choose to use it over Tauranga. And you can’t even be sensible about Whangarei unless you commit to four laning SH1 up there.

Also Politik makes the point that shipping companies want to use ports that can balance export and import loads. So the talk of Whangarei is desperate stuff to try and win Jones a seat.

If the Government decides it can dictate what happens, it could end in disaster. Our exporters and importers could face huge delays and costs.

So by all means Auckland Council should set a deadline for Ports of Auckland to move from the waterfront. There is better use for that land. But it should be the ports companies working with exporters and importers who decide on future locations, not Phil Twyford and Shane Jones.

Steven Joyce: Plan to move port north to Whangārei just doesn’t stack up

Steven Joyce05:00, Nov 24 2019

OPINION: The case for moving the Auckland port to Whangārei is apparently compelling. So compelling in fact that none of us are yet allowed to see it.

The final report of three in what appears to be a very long softening up exercise was received by the Government around a fortnight ago – and it won’t be released until Cabinet has decided on it. In the meantime we’ve been treated to a round of name calling. The study’s lead author is reportedly calling people who disagree with him ‘idiots’ and ‘vested interests’, while chief lobbyist for the idea, Shane Jones, labels the current port CEO a cowardly renegade.

Respected economists NZIER and Castalia have provided critiques of the proposal, based on the earlier reports. While funded by the current port (cue vested interests attack), they highlight many useful questions like the vulnerability of the proposed new land transport corridors, the big increase in transport emissions caused by the shift, and the true costs involved (over $10 billion).

Northport, near Whangārei, could be set for expansion if plans to move Auckland port activity to the northern city.
SUPPLIED Northport, near Whangārei, could be set for expansion if plans to move Auckland port activity to the northern city.

They rightly ask why Whangarei is the favoured location now when just three years ago it ranked 12th most suitable, according to the last port study that used the same set of consultants.

More basically there is a straightforward reason why we shouldn’t attempt to shift Auckland’s port to Whangārei, and that is geography. It is simply the wrong location.

Firstly, it is too far away. The whole point of ports in port cities is to unload and load the freight close to the action, to reduce land transport costs and delays. Much of the freight that comes across the current port is utilised within 20km of it, much of that south of the Waitemata. Being close makes sense. Berthing it hours away and freighting it in by truck and train doesn’t.

Yes, Sydney and Melbourne shifted their ports, but nothing like as far. Sydney’s container port at Port Botany is 15 kilometres from their CBD. Melbourne’s container terminal is 8km from the CBD. If this project went ahead, Auckland’s port would be over 150km from the CBD.

The second geographic problem is the shape of Auckland city. It is built on a narrow piece of land just a few kilometres wide, hemmed in by two beautiful harbours which, as Aucklanders know, already make it hard to get to work each day.

Imagine instead of all the freight landing by sea near the middle of the city and radiating out from there – you land it out the opposite side of the city from where most people live and work and then use trucks and trains to freight it back down from the north and through the narrow isthmus across already over-worked land transport corridors to places like Onehunga, Wiri, and further south.

We would experience a whole new level of road and rail congestion in the north and west, and no reduction in the centre or south.

The third geographic issue relates to the area south of Auckland. Fully half of New Zealand’s population (roughly 2½ million) lives north of Taupō, around a million outside of Auckland. Only 180,000 of those live in Northland. Currently businesses serving the upper North Island have the choice of two ports each roughly 120km from Hamilton, and competition helps keep freight prices reasonable.

Shifting one of them 150km further away over the other side of Auckland would effectively reduce their options to one, and undoubtedly increase their costs.

It simply makes no sense to spend billions of dollars to reduce the competitiveness of Auckland and the upper North Island in this way.

Northland definitely needs infrastructure investment. It was shamefully ignored for decades. The last government started with the four-laning of State Highway 1 to Warkworth (under construction) and Wellsford (currently abandoned). There was the much-maligned replacement of one-way bridges – four of which have been or are being built, and upgrades to the highways north of Whangārei.

The infrastructure required in Northland doesn’t rely on the excuse of an ill-conceived plan to shift Auckland’s port. The most significant project, the four-laning of State Highway 1 to Whangārei needs to happen anyway, especially through the vulnerable choke points of Dome Valley and Te Hana. Building that over the next 10 years would unlock massive development opportunities for all of Northland, just as the Waikato Expressway has done for its region.

So I have a suggestion. Let’s re-start the Northland expressway project and maybe even start shifting the Navy up to Whangārei (which has far fewer ramifications for the wider economy). Let’s build the third main railway line at Wiri, sort out the Grafton interchange with the current port, and crack on with a third harbour crossing. Then come back and talk about the port again in a decade’s time. There is a lot to get on with now without this hugely expensive poorly argued diversion.

Steven Joyce is a former minister in the last National government.
STUFFSteven Joyce is a former minister in the last National government.

Jones calls Port CEO ‘cowardly renegade’

Please note – Cubic does not support Mr Jones’ comments, or the proposal to move the port to Northport.

Shane Jones has called the Port of Auckland’s CEO a ‘cowardly renegade’ over the Port’s lobbying against New Zealand First’s plan to shift the port to Northland. Dileepa Fonseka also reports on the pros and cons of instead building a mega-port in the Firth of Thames.

Trucking industry leaders, infrastructure planners and port operators want an evidence-based debate on the upper North Island’s port strategy and are concerned the official study has focused on New Zealand First’s preferred option of moving the Port of Auckland to Northland. Instead, they want the idea of a new ‘greenfields’ port at the Firth of Thames considered for the long-term. 

Ports of Auckland CEO Tony Gibson told Newsroom New Zealand Inc should consider a new “mega-port” if it truly believes Auckland is not big enough to handle future freight growth.

But Infrastructure Minister Shane Jones is having none of it, and has instead ramped up his personal attacks on Gibson and threatened to take his complaints to Gibson’s board.

“To privatise the Firth of Thames and build a Singaporean-style port out there you need the mandate of the people,” Jones told Newsroom.

“The Ports of Auckland can’t even get a mandate from the majority of Auckland’s,” he said.

Singapore Port: Jones says a “Singaporean-style” port in the Firth of Thames isn’t feasible. Photo: Lynn Grieveson

Gibson said he wanted to correct “mistruths” in the port debate.

“What we’ve advocated all along is as New Zealanders, as New Zealand Inc, we want the most cost-effective productive supply chain – and that’s not Northland.”

A number of economists and consultants, some commissioned by Ports of Auckland (POAL), have questioned the conclusion of an Upper North Island Supply Chain Strategy (UNISCS) report making its way through cabinet. 

“If the evidence is there and you follow the process that is best practice then we would absolutely support good well-founded investment decisions.”

The report concludes the government should get POAL to give up its central city port site and invest close to $10 billion prepping Northport to take its place.

Road Transport Chief Executive Nick Leggett thinks the working group asked the wrong question with its study and said the Northport move was a “solution looking for a problem”, while Infometrics economist Brad Olsen believed the port debate showed the need for an overall infrastructure strategy with less “cherry-picking” of individual projects. 

But Infrastructure NZ CEO Paul Blair, who questions the analysis in the port report, said Northport was “the better of the options on a prima facie basis”.

“If the evidence is there and you follow the process that is best practice then we would absolutely support good well-founded investment decisions.”

Mega port versus Northport

In a world of 3D printing and sensitivity around emissions Gibson said there was every possibility freight loads would experience low growth.

New Zealand needed to plan for a number of “freight futures,” including one where its freight load increased. 

In such a scenario he said the option of building a “mega port” in the Firth of Thames could fill that gap – in 30 or 40 years time. 

“We need to take a much, much longer-term approach.”

Nick Leggett says New Zealand too quickly jumps to specific projects before asking what’s needed. Photo: John Sefton

A Firth of Thames port would be located close to Auckland – the port’s consumers – and not that different to the Northport option in cost, Gibson said.

It’s a view at odds with UNISCS chairman Wayne Brown’s own view. He said the latest report had examined the Firth of Thames option, but found too many infrastructure costs associated with it.

“This is why New Zealand gets caught in this infrastructure predicament because we jump to specifics and locations and projects before we ask what’s needed.”

Jones agreed and said a “Singaporean-style” mega port in the Firth of Thames would need a much larger government investment than Northport would. 

However, Jones said he accepted concerns Twyford and Robertson had raised that more analysis than UNISCS’ current set of reports were needed.

“We’ve got at least a year to do that.”

Leggett questioned whether a port move in either direction was needed at all.

“This is why New Zealand gets caught in this infrastructure predicament because we jump to specifics and locations and projects before we ask what’s needed.”

Even rail upgrades to Northport – which Brown said should go ahead immediately – might not be justified if you looked at the greatest rail infrastructure needs of New Zealand as a whole, Leggett said.

“I don’t think this is where you would start that, you would be improving the main [rail] trunk line between Auckland and Wellington.”

War of words

Jones accused Gibson of being an “anti-NZ First CEO” who had gone “totally renegade” with his actions around the port study.

“When our caucus meets I will seek their mandate to demand an explanation from their [POAL’s] board as to why they have mandated this recreant to show such animus towards New Zealand First,” he said.

A ‘recreant’ is defined in the Merriam-Webster dictionary as someone who is cowardly or a deserter.

Leggett said there wasn’t a place for “threats or intimidation” in an infrastructure debate:

“It flies in the face of what is needed: evidence, data and asking what’s best for the greatest number of people.”

“What I explained was I’m not entering a political debate, I’m entering a practical debate.”

The stoush started at a meeting in Minister Grant Robertson’s office last week where Jones warned Gibson off venturing into politics.

Gibson said that meeting began with him asking why there were differences between conclusions reached from a first Ernst & Young report – which had ranked Northport 12th – and moved on to allegations from Gibson that UNISCS had moved away from its terms of reference. 

“What I explained was I’m not entering a political debate, I’m entering a practical debate.”

Gibson said the UNISCS was a “missed opportunity” to look at the supply chain as a whole. 

“I can’t understand why this recreant would believe that our Cabinet ministers wouldn’t skilfully work through these unresolved issues.”

“What NZ Inc deserves is a supply chain and a supply chain based on cold, hard facts based on a proper business case,” he said. 

Jones said it was always understood that more work would need to be done on the reports making their way through cabinet. 

“I can’t understand why this recreant would believe that our Cabinet ministers wouldn’t skilfully work through these unresolved issues.”

“Those are decisions made by politicians they’re not made by unelected renegade CEOs.”

Olsen said infrastructure decisions for the nation should fall somewhere between a purely technical analysis and a political call.

This was especially true in the ports debate where he said you could “make the numbers talk whichever way you want” at this stage.

“I don’t think we can have a purely technically-driven evaluation of infrastructure…where the balance needs to be is that we need to be able to pick ideas that are well integrated,” Olsen said.

“At the end of the day the public have charged politicians with the ability to spend public money.”

Auckland Port move: CEO decries ‘made up facts’ by pro-move group

Todd Niall 15:50, Nov 22 2019

Ports of Auckland CEO Tony Gibson
SUPPLIED/POALPorts of Auckland CEO Tony Gibson

The chief executive of Auckland’s port company has broken his silence and joined a public war of words over the case being promoted to shift the port to Northland.

Tony Gibson has described arguments being promoted by Wayne Brown, the chair of a government-funded working party, as a “jumble of made-up ‘facts'”. 

Brown chaired the Upper North Island Supply Chain Strategy (UNISCS) group, being driven by New Zealand First, and which recommended closing Auckland’s port and expanding Northport at Marsden Point, at an estimated cost of $10 billion.PlayMuteCurrent Time0:17/Duration Time1:32Loaded: 0%Progress: 0% FullscreenSTUFFPrime Minister Jacinda Ardern on the future of the report looking at Auckland’s Port

Gibson said he was not against an eventual move of the port from Auckland’s waterfront, “but can we at least move it somewhere sensible”.

Brown has been promoting to media, arguments in favour of the move, following the delivery to the government of the final, and still-confidential report which refines the “move” recommendation of the interim report released in October.

Northport at Marsden Point is recommended by a working group for expansion to replace Auckland's port
SUPPLIEDNorthport at Marsden Point is recommended by a working group for expansion to replace Auckland’s port

“This is the fifth port study in my eight years as CEO of Ports of Auckland, and, well, let’s say it’s not the best,” said Gibson.

Ports of Auckland this week released reviews it had commissioned by two consultants, which were critical of an economic analysis produced by Ernst and Young for UNISC, which had backed the move and estimated the benefits to be double the costs.

One review by NZIER said the “move” recommendation should treated “with a high degree of caution”, while Castalia argued the true extra cost of moving could be nearly four times EY’s estimate.  

An email purportedly sent by the New Zealand First party, seeking donations by making a link to its port-move policy
TWITTERAn email purportedly sent by the New Zealand First party, seeking donations by making a link to its port-move policy

“In their 2016 study (for Auckland Council), EY said that Northport in Whangarei was almost the last place they’d move Auckland’s port to, yet in this recent study they say it’s the best,” said Gibson.

He disagreed with Brown’s argument that with 30 per cent of Auckland’s imports currently arriving via Port of Tauranga, they cost no more to deliver than imports that come across Auckland’s own wharves.

“That’s because Ports of Auckland is still here so if Port of Tauranga charged more than us, they wouldn’t have a business. Close Auckland’s port and watch prices rise,” said the CEO.

Stuff understands Gibson was told a week ago by Associate Transport Minister and New Zealand First MP Shane Jones – the main proponent of the “move” case – not to put his head in “a political noose” by taking part in public debate.

Jones told Stuff he was aware of differing views over EY’s work, but considered the criticism “part of the consultancy gossip chain”.

Gibson disputed Brown’s claim that the land occupied by Port of Auckland, could be worth $6 billion if freed up.

“We’re required by the Auditor General to value the port land as if it was in its ‘highest and best use’. Every time, skilled and experienced valuers say the land is worth less than a billion dollars.”

Gibson’s comments today had been provided in advance, to Ports of Auckland’s owner the Auckland Council, but the mayor Phil Goff is in Australia on leave and was not available for comment.

Goff and Brown have previously clashed publicly, over the direction of the study, and whether Auckland would be compensated if it’s port was moved.

Whether New Zealand First’s policy to re-locate the port goes beyond the completion of the UNISCS report, will depend on cabinet when it considers the report next month.

Completion of the government-funded study was part of the 2017 coalition agreement between New Zealand First and Labour.

“I am not going to make commitments beyond receiving the final report because we need to see what evidence has been compiled, and what the report tells us,” Prime Minister Jacinda Ardern, told Stuff in October. 

Stuff has been trying to confirm the authenticity of a fund-raising email sent out in the name of the New Zealand First party, which uses its policy on moving Auckland’s port as encouragement to donate.

A spokesperson for Shane Jones said the minister had no knowledge of it, and the party leader’s office referred Stuff to MP Darroch Ball, who has not responded.

Stuff

Auckland Port move criticised in two reviews

Todd Niall 09:54, Nov 21 2019

Ports of Auckland would face a "managed closure" under the recommendations of the UNISCS working group
DAVID WHITEPorts of Auckland would face a “managed closure” under the recommendations of the UNISCS working group

An economic argument for moving Auckland’s port to Northland has been harshly criticised in two reviews by economic consultancies.

Both reviews say an economic analysis by Ernst and Young for a government-funded working group, failed to provide a credible basis for making a decision on the move.

The reviews released by Ports of Auckland, and a third briefing paper by its owner Auckland Council, are part of a push-back against the port-move proposal, which goes to cabinet next month.

New Zealand First MP, and Associate Transport Minister Shane Jones, who is championing the relocation case, said he was aware of differing views but considered the criticism “part of the consultancy gossip chain”.

One assessment, by consultants Castalia, said the true extra cost of relocating Auckland’s port, and building the necessary infrastructure, could be nearly four times EY’s estimate.

An expanded Northport at Marsden Point should replace Auckland's port operation according to a government-funded working party
NORTHPORT An expanded Northport at Marsden Point should replace Auckland’s port operation according to a government-funded working party

The other review by the New Zealand Institute of Economic Research (NZIER) said EY had “failed to address the feasibility question with sufficient transparency”.

The Upper North Island Supply Chain working group recommends the best future for the ports of Tauranga, Auckland and Marsden Point, is for Auckland to close, and its business re-locate to Northland.

An economic analysis by EY, accompanying the second of three reports by the group, supported the idea, and said there would be $2 of benefits for each $1 spent.

Cabinet will in December consider the group’s, third, final, and still-confidential report.

EY said the additional cost of the relocation, compared with costs that would still be incurred if the three major upper North Island ports, including Tauranga, continued on their present paths was $1.8 billion.

The analysis of EY’s work by infrastructure consultancy Castalia, put the additional cost far higher, at $6.7 billion.

“The first and the most obvious point to make is that the report entitled ‘Economic Analysis of Upper North Island Supply Chain (UNISC)‘ is nothing of the kind as it provides absolutely no information on how the supposed benefits are estimated, apart from some vague references to multi-factorial analysis,” said Castalia.

The cost of extra roading was undercooked, it found, and the development value to Auckland of clearing the port from the waterfront did not take into account the time and cost of finding new uses for the 77 hectares.

“Given important cost omissions and flawed logic, EY’s cost benefit analysis might fail to provide a credible basis for informing a decision – on the relocation,” the Castalia review concluded.

Consultancy NZIER assessed EY’s work using Treasury criteria, and listed 13 findings which it considered either “surprising” or “concerning”.

NZIER said when EY produced the “Port Future Study” for Auckland Council in 2016, Northland ranked only 12th on the list potential relocation sites.

“The same consultancy three years later moved Northport from the twelfth most preferred option, straight to number one, with no explanation,” said Laurence Kubiak, the chief executive.

Other findings NZIER considered “surprising” included the assumption by EY that 70 per cent of the freight between Northland and Auckland would be by rail, when rail currently had 5.6 per cent of the freight market.

Kubiak said the benefit side of the equation done by EY was “a bit amorphous”.

“The benefits set out in the (EY) report hinge on the potential value uplift in land used by Ports of Auckland – but it doesn’t address the dis-benefits and risks of massively extended logistics and supply chains of moving the port to Northport,” said NZIER’s review.

NZIER said a freight hub proposed in northwest Auckland had not been costed, and EY’s $1 billion estimate to build a rail line from Avondale to Southdown, compared with previously-published costings elsewhere, of $2.5b to $3.5 billion. 

Ernst and Young was approached for comment but declined.

New Zealand First had campaigned on moving Auckland’s port prior to the 2017 general election, and under the coalition agreement with Labour, secured the commissioning of a report on the feasibility of the idea.

“I am not going to make commitments beyond receiving the final report because we need to see what evidence has been compiled, and what the report tells us,” the Prime Minister Jacinda Ardern, told Stuff in October.

The trucking industry organisation, The Road Transport Forum said the two reviews “blow the cost-benefit ratio touted by supporters of the port move out of the water,” and that the relocation made little economic or logistic sense.

“With the billions of dollars that will be required to build the appropriate road between Auckland city and Northport, we are concerned no money would be left to spend on the rest of New Zealand’s road network, which is in immediate need of investment,” said Nick Leggett, the chief executive.

“Ports of Auckland is a critical piece of New Zealand’s infrastructure and before any moves are made, it is essential to look at all the evidence and for decisions to be based on facts, not politics and empty promises to the people of Northland,” he said.

Stuff

‘Surprising and ‘concerning’ conclusions in report on moving Auckland port

Economists are concerned that a draft report ignores important issues. Photo / File
Economists are concerned that a draft report ignores important issues. Photo / File

NZ Herald – BusinessDesk By: Pattrick Smellie

A draft report favouring the expansion of Whangarei’s Northport to replace the port on Auckland’s city waterfront is full of “surprising” and “concerning” conclusions, a lot of “padding”, and appears to ignore major factors for such a decision.

Those are some of the conclusions from one of two damning reports written for Ports of Auckland by respected economic consultancies, the New Zealand Institute of Economic Research and Castalia, critiquing the draft report of the Upper North Island Supply Chain Study, published in April.

A final version of the study has been delivered to Cabinet, with media reports last week that it recommends a shift to Northport at some time in the next 30 years.

However, both NZIER and Castalia question how the latest study, which sought advice and modelling from accounting firm EY, could come to such a different conclusion to the EY-led 2016 Future Ports Study.

The 2016 report ranked Northport, near Whangarei, as 12th out of 14 options and pinpointed options in the Firth of Thames, Manukau Harbour at Wiri, and Muriwai as the three best alternatives.

While in no hurry to move, Ports of Auckland favours the Firth of Thames option and is releasing the NZIER and Castalia assessments of the UNISCS draft report today after a round of intense central and local government lobbying against the Northport option in recent days.

“For a report that claims to be assessing the costs and benefits of transport options, it is very light on detail,” say slides from the NZIER critique of the April draft study, which was led by its chief executive, economist Laurence Kubiak.

It asks “where’s the transport economics” and challenges the “hard-coded assumption” that 70 per cent of all freight coming to and from Northport would be transported by rail. It says there is “no empirical basis provided for this assumption” and compares it with rail’s 11.6 per cent national market share by tonne/kilometre.

Rather than being likely to cost $1.7 billion to move the port north, as the UNISC draft study suggests, NZIER says it would cost around $6 billion and even then is “likely to be significantly under-costed.”

The Castalia report is as critical of the draft report as NZIER, with lead author and chief executive Alex Sundakov saying the study’s claim to be an economic analysis “is nothing of the kind.”

“It provides absolutely no information on how the supposed benefits are estimated, apart from some vague references to multifactorial analysis and a claim that EY has used its rail benefits model for the exercise.

That would be “inappropriate”, says Castalia, “as similar modal shift can be achieved at PoAL with appropriate (and lower cost) rail upgrades.”

However, while it would be “useful and interesting to understand how EY calculated the economic benefits,” Castalia concentrated instead on demolishing the financial and cost assumptions in the proposal and questioning whether benefits from the shift had been appropriately framed.

Castalia also says the $1.7 billion estimate cost of shifting is “materially under-estimated” and that the EY-led analysis makes “three fundamental and very basic errors” to achieve that outcome.

It ignores the time value of money, competitive drivers for container terminal operations, and “misunderstands the costs involved in the base case scenario compared to the relocation scenario.”

Serious consideration of Northport as the preferred alternative to Auckland was a key element of New Zealand First’s coalition agreement with Labour when the current government was formed in 2017.

Two of its most senior MPs, leader and Deputy Prime Minister Winston Peters and Regional Economic Development Minister Shane Jones, hail from Northland and the party may need the backstop of winning a Northland electorate to remain in Parliament after the 2020 election.

The supply chain study group was led by former Far North District Council mayor Wayne Brown, who this week hit out at accusations he was a “friend” of Jones’s. The group also included Greg Miller, the chief executive of KiwiRail who parachuted into the chairmanship last year and was Jones’s preferred candidate to become chief executive, in May.

The NZIER report says the Northport option would also create a “400 per cent increase in carbon emissions” and would make the transport supply chain into the country’s largest city less resilient than it is now.

Northport involves “very long freight routes through difficult, easy-to-disrupt terrain, versus a central port or the Firth of Thames option”, says NZIER, which points to the South Island supply chain disruption caused by the 2016 Kaikoura earthquake. It notes that the Northland line, currently undergoing remedial repair to prevent its closure, has 88 bridges and 13 tunnels.

Castalia estimates the net cost of moving the port north at $4-to-$5 billion, which means that “even if we accept the black box benefit number of $3.5 billion (in the EY UNISCS draft), the net benefit is likely to be negative.”

“The key question then is whether releasing some land for more apartment/commercial development closer to Auckland CBD is worth spending this much taxpayers’ money compared to all other social objectives.”

Jones threatens Auckland Port CEO

Shane Jones threatened Ports of Auckland CEO Tony Gibson in a heated meeting in the Beehive last week as the port launched its own campaign dismissing the New Zealand First-instigated proposal to move it to Whangarei. Dileepa Fonseka has the exclusive.

Infrastructure Minister Shane Jones warned Auckland’s port boss Tony Gibson at a closed-door meeting last week to stay away from the ports debate.

But Ports of Auckland Ltd (POAL) is pressing ahead, commissioning two studies questioning the work of a working group looking into moving Auckland’s port 165km north to Northport, the results of which were released on Thursday morning.

“My advice to you as a chief executive is do not put your head in a political noose.”

A report from the working group that considered the move is currently making its way through Cabinet. 

At a meeting in Finance Minister Grant Robertson’s office last week with POAL CEO, Jones said: “My advice to you as a chief executive is do not put your head in a political noose.”

Economists and consultants are questioning the data behind moving Auckland Port north. Photo: Lynn Grieveson

Jones confirmed his comments in an interview with Newsroom. He said his words were meant as a warning to the CEO not to enter the “political fray” of the ports debate.

Others at the meeting told Newsroom Jones boasted that both he and Deputy Prime Minister Winston Peters were top political operators and ports CEO Tony Gibson would be making a mistake if he decided to take them on.

“Now I will deal with him, in the time before the election, in a very political way, I love that, that’s the sport I’m paid to engage in.”

Jones said his warnings that the decision to move the port was “as much about politics as it is about economics”. Newsroom spoke to Jones after hearing of the heated meeting from sources within the Government.

“Don’t fudge any words, the leaks that you’ve been given are a reflection of the warning that I gave.”

Jones said now that discussions around the meeting had leaked he considered Gibson a “political combatant”. 

“Now I will deal with him, in the time before the election, in a very political way. I love that, that’s the sport I’m paid to engage in.”

The exchange took place after Robertson left the room, leaving Jones, Minister of Transport Phil Twyford, and Gibson – along with a number of other staff – in the meeting.

Robertson said it was “an interesting meeting” with an “exchange of views” over the port study. 

“Funnily enough, I actually had to go and deliver a speech in the house and so I was there for the beginning of it, but I wasn’t there for the end of it,” Robertson told Newsroom.

Twyford characterised the meeting as “good-natured”.

A debate split along coalition lines

Jones acknowledged questions around POAL’s future divided along coalition lines and the only mandate from the coalition agreement around the port issue was for a port study. 

“There is an inevitability that the port moves…but at the same time it’s not lost on me that this report and the scaremongering around the report has led to vein-popping responses from Phil Goff.”

Grant Robertson says colleagues will have questions around other options for the port move. Photo: Lynn Grieveson

Finance Minister Robertson acknowledged the Government had a number of questions after receiving the report. 

“I do think among some of the questions we’ve got are around assessing this idea of Northport against other options.”

Robertson said “clearly” there would be a debate around other locations the port could be moved to.

He noted the report had “looked” at some of those options.

“I know that there are some people who argue more could be done there.”

Twyford said Cabinet would consider whether additional work would need to be done on investigating the other options for the port move.

“I think consideration of other options is one of those things they’ll be looking at,” he told Newsroom.

Questions from economists

Economists and consultants are questioning the data behind a port move north, but the chair of the working group behind those studies said the need for the move is “obvious”. 

International consulting firm Castalia and the New Zealand Institute of Economic Research have been commissioned by POAL to look into issues around a second port report released in October. 

NZIER said the benefits – even the ability to convert Auckland waterfront land into prime residential land – were all speculative. 

And Castalia highlighted problems with the assumption that all of POAL’s business would move to Northland rather than Tauranga. 

’12th best option jumped to first’

Economist Lawrence Kubiak of NZIER said the study hadn’t followed Treasury business case standards, which required analysis through “a number of different lenses…to determine whether the proposal is beneficial to NZ Inc”. 

Kubiak said the value of the waterfront land freed up by a port move would differ markedly, depending on whether it was used for a stadium, housing or commercial. 

“Twelfth best option has jumped to first best option with no explanation at all of the reason for the change.” 

With regulations around height restrictions by the waterfront, he said it wasn’t a given the land would deliver as high a rates take as forecast by the second ports report. 

He has questioned whether companies would choose a port where 70 percent of cargo could only be moved by rail. 

A third port report by the Upper North Island Supply Chain working group is making its way through Cabinet. 

“We don’t have 30 years to stuff around.”

‘We could force Auckland to move’

Chairman of the group, Wayne Brown, said the changes between the second and third reports were more on the “how” behind a Northport move. 

That would involve a 12-month period of negotiation between Auckland Council and the Government with legislation to force the Government’s hand if the council didn’t settle. 

“We don’t have 30 years to stuff around,” Brown told Newsroom.

One of the major concerns Kubiak had was that the same company behind the economic analysis in the second report – Ernst & Young – had concluded Northport was the 12th best option in a report they finished just two years earlier.

“Twelfth best option has jumped to first best option with no explanation at all of the reason for the change.” 

$1b of compensation would be needed

An NZIER presentation on their findings said the second interim report was “thin on detail”. 

“It’s not easy to understand why it feels able to draw such strong conclusions from such limited analysis.”

Castalia’s analysis said Auckland Council would need $1 billion in compensation from the government to not come off worse off after such a move.

Northland port study mocked as inadequate

An economic analysis backing the move of the Port of Auckland to Northland has been panned as inadequate, poorly drafted, and full of padding.

AUCKLAND - JULY 12 2018:Freight ship in Ports of Auckland. its New Zealands largest commercial port handling more than NZ$20 billion of goods per year

Ports of Auckland. Photo: 123RF

The final report of a working party looking into the proposal was delivered to the government last week, giving its backing to a $10 billion move to Whangārei’s Northport, with the economic justification for the move contained in a report by advisory firm EY.

But Auckland’s port company has had the EY report put under the microscope by two economic consultancies – the New Zealand Institute of Economic Research (NZIER) and international firm Castalia.

Both studies said the EY report was short on numbers, made simplistic assumptions, and underestimated the costs of the plan while overestimating the benefits.

“The first and the most obvious point to make is that the report entitled ‘Economic Analysis of Upper North Island Supply Chain’ is nothing of the kind as it provides absolutely no information on how the supposed benefits are estimated,” the Castalia report said.

“The report is poorly drafted and contains almost no supporting evidence.”

WHANGAREI,NZ - Ship, wood logs and cranes in Northport

Northport in Whangarei. Photo: 123RF

Castalia said the EY study appeared to underestimate the cost of shifting the Port of Auckland to Northland by up to $3bn, while it overstated the benefits to Auckland City from freeing up waterfront land, and seemed to ignore that a shift north would likely see importers and exporters in the region put their business through the Port of Tauranga.

The NZIER analysis said the EY study was full of padding and speculation.

“The report has failed to address the feasibility question with sufficient transparency to provide a credible basis for advice to ministers.”

It also noted that EY had been involved in a 2017 report on the future of the port, which concluded the Firth of Thames or Manukau Harbour were best options for relocation and ranked the Northport option lowly.

Head of the Upper North Island Supply Chain working group, Wayne Brown, said the counter-review by the Ports of Auckland was “rubbish” and about “job preservation”.

The report given to the government relied on much more than the one EY report, with the group consulting 80 organisations, he said.

And he disputed the suggestion that carbon emissions would be greatly increased, saying Northport was closer for ships to get to and would use more rail and less roading than Auckland.

Ports of Auckland management declined to be interviewed but it a statement said the reviews spoke for themselves.

“They [the reviews] show that there are major problems with the EY study and that the idea of moving Auckland’s port to Northland is seriously flawed,” a port spokesman said.