The case for moving Auckland’s port business to Northland does not fit the criteria of the working group proposing it, says a new analysis.
A review by Auckland Council said it is not satisfied the move option, recommended by the New Zealand First-driven group, justifies the estimated $10 billion of investment needed.
The council review described an economic case advanced by Ernst and Young as “inscrutable”, because it lacked detail on how it found the re-location made sense.
The work by the council, which owns Ports of Auckland and the 77 hectares of waterfront land it operates from, is the most detailed criticism yet of the controversial proposal to wind down the port and transfer its business to Marsden Point, perhaps within a decade.
“The preferred option appears to be an extremely expensive way to relocate jobs to Northland from Auckland,” said the council analysis.
The council analysis is of the interim report by the Upper North Island Supply Chain Strategy working group, released in October along with an economic analysis from EY, of the future options for the ports at Marsden Point, Auckland and Tauranga.
The group, backed by EY’s findings, recommended re-locating Auckland’s port to Northland, reflecting New Zealand First’s 2017 election policy, before getting agreement from Labour in the coalition agreement to conduct the UNISCS study
The final report has just gone to the Government and will be considered by cabinet in December.
Analysis of the interim report by Auckland Council’s chief economist unit and its strategy and research department said the re-location option did not meet the principles which the working group established for itself.
It said instead of “cost efficiency”, costs would rise, “maintaining the level of competition” would not be achieved, and removing a key supply point for Auckland would not “maintain or improve the resilience of the supply chain”.
The review disputed the working group’s conclusion that clearing prime waterfront land would be an economic windfall through higher rates for Auckland Council.
“There is no evidence for this – any new activity on the waterfront will likely displace activity elsewhere in the city,” it said.
The council also said the economic case did not seem to take into account the significant spending before any benefits might flow.
“Investment in Northland required to handle Auckland’s freight volumes would need to be complete and operational before any managed closure (in Auckland).
“This means the net benefit is probably much lower than estimated in the report,” said the council review.
The council said the assessed impacts on employment were inconsistent, suggesting few jobs would be lost in Auckland, but 2000 created in Northland.
“A $10 billion project to relocate 2000 jobs is a very expensive way to relocate jobs (roughly $5 million per job),” said Auckland Council.
It also questioned whether the rail infrastructure that would be needed to run more than 100 freight trains a day through Auckland, as well as the truck traffic generated by a freight hub near Kumeu, had been fully assessed.
Another analysis of the EY economic impact report, seen by Stuff, but with the name of the author not disclosed, believed EY and the group might have over-estimated the net economic benefit of the move by nearly four times.
New Zealand First MP, and Associate Transport Minister Shane Jones who is championing the case to relocate to Northport, said he was aware of the differing views.
“There was always doubt about EY’s work (on the move) – but I just consider that to be part of the consultancy gossip chain,” Jones told Stuff.
The UNISC working party was chaired by Jones’ friend and Northland neighbour, businessman Wayne Brown, who took part in a television interview on TVNZ’s Q&A on Monday night in which several lines said to be from the final report, still unseen by cabinet, were put to him.
Stuff asked Jones whether the interview was appropriate.
“I don’t think it’s disproportionately unorthodox,” said Jones, who had been informed the interview would take place, but said he had not discussed with Brown what should or should not be said.
“Wayne Brown is someone my leader (Winston Peters) and I regard as an incredibly successful businessman, interested in Northland – but he is his own man,” Jones said.
The Government had made no promises on whether the idea proposed by New Zealand First in 2017 will progress.
“We undertook that we would complete the study, and we will,” Prime Minister Jacinda Ardern told Stuff in October.
“I am not going to make commitments beyond receiving the final report because we need to see what evidence has ben compiled, and what the report tells us,” Ardern said.
The conduct of the working group’s study has created tension between it and Auckland Council, with sparring between Brown and Auckland Mayor Phil Goff who favoured the gradual redevelopment of the waterfront, but insisted there would need to be a price negotiated.
Ernst and Young was approached for comment, but declined.