Government has given NZTA an extra $45m after damning ‘wake-up call’ report

Transport Minister Phil Twyford today released the NZ Transport Agency's regulatory review. Photo / Mark Mitchell
Transport Minister Phil Twyford today released the NZ Transport Agency’s regulatory review. Photo / Mark Mitchell
Jason Walls

By: Jason WallsJason Walls is a political reporter for the New Zealand Heraldjason.walls@nzme.co.nz@Jasonwalls92

The Government will inject the New Zealand Transport Agency with an extra $45 million after an independent report concluded it had failed in one of its major responsibilities.

But the Government blames National for the failures in the transport sector that led to Transport Minister Phil Twyford commissioning an independent report investigating NZTA.

The review, undertaken by agency Martin Jenkins, found that previous transport ministers had directed NZTA to “focus on building roads” at the expense of keeping people safe.

The report also found that NZTA had failed to properly regulate the transport sector under the previous Government.

In response to the review, the Government has confirmed it will adopt all of its recommendations and plans to implement them as soon as possible.

The recommendations include:

• Injecting NZTA with an extra $45 million to help bolster its regulatory obligations
• Create a statutory Director of Land Transport who is responsible for carrying out NZTA’s regulatory functions and powers
• Getting NZTA’s board to develop a new regulatory strategy
• Instructing the Ministry of Transport to update the NZTA’s regulatory objectives

Twyford said these changes would help to equip NZTA for the massive transformation the agency will undergo in the coming years.

Ministry of Transport chief executive Peter Mersi welcomed the report and its findings this morning.

“As [the] monitor of transport Crown agencies, we share responsibility for the regulatory failure.”

He said the report was a “wake-up call” for the ministry.

In November last year, Twyford directed the Ministry of Transport to review the performance NZTA’s regulatory functions.

The review comes on the back of a number of concerns which emerged around NZTA’s regulatory function and a backlog of compliance cases that have not been properly managed.

“When this issue was brought to my attention I was seriously concerned about the scope and seriousness of the failures that have occurred,” Twyford said at the time.

The $3.5 billion ‘brake’ on the economy

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Auckland Light Rail plan questioned by National MP

The New Zealand Transport Agency (NZTA) has defended its plans for light rail in Auckland.

The new Government’s decision to scrap roading projects has led to $3.5 billion of state highway infrastructure going unbuilt, which might be a drag on economic growth. Thomas Coughlan reports.

New Zealanders are feeling the pain of billions of dollars in fuel taxes, but not reaping the benefits of better roads, and that could be putting the brakes on the economy. 

With National’s 10 “Roads of National Significance” effectively in a holding pattern, Treasury is concerned that NZTA is unable to spend all the money it taxes, which is dragging down economic growth.

Transport Minister Phil Twyford has shifted investment away from large state highway investment.
MONIQUE FORD/STUFFTransport Minister Phil Twyford has shifted investment away from large state highway investment.

The $2 billion the NZTA collects in fuel taxes is usually spent on building new roads.  

But the new Government’s decision to redirect money into road safety and public transport has meant $3.5 billion less will be spent on new state highways, according to documents released under the OIA. 

It’s also stalled its building programme for “12 to 18 months” while it comes to terms with the Government’s changes. 

The Government says its putting a bigger focus on walking and cycling now.
ROSS GIBLIN/STUFFThe Government says its putting a bigger focus on walking and cycling now.

​Infometrics economist Brad Olsen said the transport spending was a “brake on the economy”.

And Treasury agrees lower spending is concerning. 

It said industry was concerned about the 12 to 18-month stall in construction projects while the new Government was revising its transport priorities. 

There are 12 large roading projects which Treasury says are “market-ready”, but these have been effectively scrapped under the new Government’s pivot away from highway investment, although only two of the ten Roads of National Significance were fully funded before the election. 

Treasury is concerned that when the last of National’s projects wrap-up, there won’t be any new projects ready to replace them.

It said around $4.8 billion worth of “major projects” are due to be completed in the next two years, but there are only $1 billion worth of new projects getting ready to start. 

Economist Brad Olsen is concerned stalled infrastructure spending is putting a brake on the economy.
SUPPLIEDEconomist Brad Olsen is concerned stalled infrastructure spending is putting a brake on the economy.

That means there’s $3.8 billion worth of construction projects that aren’t ready to go when the current round finish. 

This means the workforce on those projects may leave the construction industry, or move offshore, possibly to Australia where the Government has announced a $100 billion transport infrastructure package. 

Olsen said this was particularly concerning, because when the new Government’s projects were finally at the stage they could be built, there might not be the workforce ready to build them.

“Noone will be ready for it,” he said. 

The NZTA’s accounts also show that it’s struggling to spend all the money it collects. While it’s managed to collect nearly $1.5 billion in fuel taxes this year, it has struggled to spend anything near what it planned to.

The Government's Auckland light rail plan will not be considered by Cabinet until 2020. This is an artist's rendition of what light rail in Auckland could look like.
AUCKLAND TRANSPORTThe Government’s Auckland light rail plan will not be considered by Cabinet until 2020. This is an artist’s rendition of what light rail in Auckland could look like.

Why this matters

New infrastructure investment acts as economic stimulus, as the money spent works its way through the economy and better infrastructure improves productivity.

But if the Government collects this money in taxes without spending it properly, it acts as a drag on the economy, slowing growth. 

New infrastructure also helps to absorb the impact of a growing population. This is something New Zealand has struggled to do for a decade.

Research by ANZ found that new infrastructure spending for each additional 1000 people New Zealand adds to its population fell from $142 million in 2011/12 to just $37m in 2016/17.

The Government has tried to respond to this by building an “infrastructure pipeline” which essentially lists the projects it wants to build so that they’re ready to go when needed. It’s also committed to spending $42 billion on infrastructure over the next five years. 

Transport Minister Phil Twyford said that the Government was planning to spend more on transport than the last Government.

Twyford says the Government is delivering a different mix of transport projects.
ALDEN WILLIAMS/STUFFTwyford says the Government is delivering a different mix of transport projects.

“Our Government is spending more than ever before on transport – around $4 billion a year,” Twyford said.

He said the new Government was delivering a “different mix of projects”.

“Because of our commitment to rebalance transport spending and invest more in safety, local roads, rail, public transport and walking and cycling, and demand more value for money, there are fewer new four lane expressways planned than was the case under the former government.

“Under our Government, there is a bigger infrastructure pipeline in place with more capital spending, it’s just a different mix of projects,” he said. 

But while the Government had promised more spending, it was having difficulty getting the money out the door.

Olsen said the problem isn’t so much the money that’s been promised, it’s the lack of projects that are ready to go.

National's Transport spokesperson Chris Bishop is concerned for the country's economy.
KAI SCHWOERER/GETTY IMAGESNational’s Transport spokesperson Chris Bishop is concerned for the country’s economy.

He said there needed to be more emphasis on getting projects “shovel-ready”.

“Where is the plan for now?” he said. 

The Government’s announced on Thursday that its Auckland light rail plan will not be considered by Cabinet until 2020, which means construction on the $6 billion project will be pushed out beyond the current Parliament. 

National’s Transport spokesperson Chris Bishop said that the slashing of the state highway budget was starting to have real effects on the economy.

“Important projects, many of them ready to go, have been pushed off to the never-never – all for a light rail project the start date for which has been delayed yet again,” he said. 

Government won’t budge on Business Council’s demand for roads: Twyford

Transport Minister Phil Twyford says the Business Advisory Council's call to privately fund a dozen on-hold roads is
Transport Minister Phil Twyford says the Business Advisory Council’s call to privately fund a dozen on-hold roads is “bad policy”. Photo / Mark Mitchell

The Government and the Prime Minister’s Business Advisory Council see eye-to-eye on a lot when it comes to fixing the country’s infrastructure woes, Transport Minister Phil Twyford says.

They are at an impasse when it comes to roads.

In a damning letter released to The Herald, the council said New Zealand was at an “infrastructure crisis point” and lacked a national master plan to fix the issue.

Chaired by outgoing Air New Zealand chief Christopher Luxon, the group excused the current Government, saying the issue was intergenerational and added there was “no overarching vision or leadership in New Zealand for infrastructure development”.

“This means there is no nation-building narrative upon which to build a strategic direction,” it said.

It also called for a financing mechanism that would allow for long-term, debt-funded or investable opportunities and said incentives between central and local government are misaligned.

Twyford said there was a lot the administration agreed with.

“The Government shares the view of the Business Advisory Council that it’s past time for us to really lift our game in the way we plan and fund and finance infrastructure,” he said.

He points to the Infrastructure New Zealand’s wish list and says almost every item is already being addressed, through projects such as the planning reform, the establishment of an infrastructure commission, ongoing work on a variety of new financing streams, including infrastructure bonds for urban growth.

But the agreement ends at roading.

The council has called on the Government to proceed with the 12 roading projects presently on hold or under review and to open them to private investment.

“These projects are investment ready, provide the beginnings of a pipeline of investable opportunities and would be an effective use of the roading capability developed in New Zealand over the last 20 years,” the letter said.

Twyford said the Government was looking for a more balanced approach to modes of transport.

“It would be really bad policy to do what they’re advocating in that particular area,” he said

“If we were to do what the Business Advisory Council was saying, it would mean spending a great deal of money, more than $12 billion, on projects that have very low economic value.”

Allowing private investment into the roads didn’t make sense either, he said.

“Borrowing money is not the problem here. It’s never been cheaper to borrow money than at the moment … It’s actually having the revenue to be able to service that debt.”

That money could only come from the National Land Transport Fund, or tolling, he said.

“None of those roads have enough traffic on them to generate anything like the kind of revenue you would need to pay for them, to service the debt. It’s just not realistic.”

The June 26 letter, signed by the Business Advisory Council chairman on behalf of the 13-strong council, raised a number of recommendations.

They include the establishing a Ministry of Cities, Urban Development and Population, a Prime Ministerial Taskforce or Commission of Inquiry should be established to undertake a comprehensive review of NZ’s planning laws and local government system, including the Resource Management Act, Local Government Act and Land Transport Act.

Waikato Expressway a year late as road refocus drives workers offshore, says MP

A government axing of big roading projects is sending workers offshore and has put the Waikato Expressway finish a year behind schedule, a Hamilton MP says. 

The final segment of the $2.1 billion expressway is now not expected to be finished until middle or late 2021.

The New Zealand Transport Agency has put the delay down to “resourcing levels for the contractor in a constrained construction market and unseasonal weather of the 2016/17 summer.”

National's Hamilton East MP David Bennett puts the delayed completion date for the Waikato Expressway down to people heading offshore for job security.
CHRISTEL YARDLEY/STUFFNational’s Hamilton East MP David Bennett puts the delayed completion date for the Waikato Expressway down to people heading offshore for job security.

The incoming Labour-led government called a halt to National’s plans to carry expressway work south of Cambridge and Hamilton East National MP David Bennett contended the delay was due to workers heading to Australia for better job prospects as work here dries up.

“The workforce here know they don’t have any roading projects to go on with. It’s very difficult to get people to do this kind of work in this type of infrastructure now because the Government has cancelled future projects on the Waikato Expressway. And that doesn’t give certainty for staff and so they are making their own decisions and they are deciding to move before that work finishes.

David Bennett also doesn't believe the wet weather of 2016/17 summer being a valid reason for the delay.
CHRISTEL YARDLEY/STUFFDavid Bennett also doesn’t believe the wet weather of 2016/17 summer being a valid reason for the delay.

“They’ve got a very strong signal in front of them from the Government that post-2020 there is no work for them in this field, the Government has shifted their transport funding and infrastructure funding to Auckland rail and it hasn’t given the ability for people to build roads.”

Bennett also doesn’t believe the wet weather of 2016/17 summer is a valid reason for the delay. 

“We’ve had a drought this summer in the Waikato. There is no real excuse weather-wise, they could have picked up the work and finished that. The Huntly bypass has been confirmed that it will be finished in 2020 and there were no weather issues there and that’s in the same region.” 

NZTA realised last month that they would no longer be able to deliver the final section of the expressway on time.
DOMINICO ZAPATA/STUFFNZTA realised last month that they would no longer be able to deliver the final section of the expressway on time.

The Hamilton section is the seventh and final part of the 102km expressway which runs from the Bombay Hills to just south of Cambridge. 

The 21-kilometre-long section includes 17 new bridges, walking, and cycling links.

The $632 million project began in 2016. It has been designed and built by a group comprising Fletcher, Beca, Higgins, and Coffey, in alliance with the NZ Transport Agency.

Then Prime Minister John Key and Transport Minister Simon Bridges turned the sod on the Hamilton section of the Waikato Expressway in March 2016.
MARK TAYLOR FAIRFAX NZThen Prime Minister John Key and Transport Minister Simon Bridges turned the sod on the Hamilton section of the Waikato Expressway in March 2016.

A review is currently underway around the delay and when completed in June it will give NZTA a better idea of expected completion dates. 

Transport Minister Phil Twyford declined to comment, calling the issue an operational matter.

Darryl Coalter, NZTA Delivery portfolio manager, said a staffing issues weren’t because of people heading overseas for better job security. 

A review will be completed in June and it should provide an idea of a new completion date for the Waikato Expressway.
CHRISTEL YARDLEY/STUFFA review will be completed in June and it should provide an idea of a new completion date for the Waikato Expressway.

“You can take it from the context of the 2011 earthquakes – our resources have been used up by significant rebuild projects. If you add in Auckland’s CRL [City Rail Link] they are pretty enormous projects for New Zealand’s size so all of those things add tension to keeping people in the market.

“2020 is still a fair way away, you just don’t know what could happen in the interim, what projects could come out. I think there is still plenty of work around if you look in the  GPS’s [Government Policy Statement on land transport ] and national transport portfolio. There is still plenty of work and plenty of investment in the assets, Coalter said. 

NIWA and Waikato Regional Council figures show while the end of 2016 was quite dry, the big impact came from a string of ex-tropical cyclones in 2017, Coalter said.

“There were enormous rainfalls and effectively what happened then was the groundwater on the site rose between one and three metres.  Unuseable material because of silt also meant more soil had top be moved, adding time.

“It’s a reality sometimes when you can’t account for all ground conditions, you can’t take account of the weather sometimes. I would love every project to come in early but sometimes you are in the lap of the gods,” Coalter said. 

NZTA had realised in within the last month that they would be no longer able to deliver the project in the predicted timeframe. The Hamilton section remains on budget. 

The Longswamp section is on schedule to be completed in 2019 and Huntly next year. 

Stuff

Twyford won’t answer road building claims

(from http://politik.co.nz/en/content/politics/1552)

: Transport Minister Phil Twyford and Finance Minister Grant Robertson with officials at last year's Infrastructure NZ Conference.

30 April 2019 By Richard Harman

Transport Minister Phil Twyford is not responding to arguments put forward yesterday by the country’s infrastructure industry calling for more road building to reduce road accidents.

A spokesperson for Twyford told POLITIK that the reports cited by Infrastructure New Zealand were at least two years old.

Therefore he would not respond.

And in Parliament, the Prime Minister said the Government’s focus was on making roads safer when she was asked by Opposition Leader Simon Bridges when a number of delayed road construction projects would go ahead.

But infrastructure New Zealand yesterday produced two reports which showed a much more complex background to New Zealand road deaths.

New Zealand’s road safety performance, as measured by road deaths, steadily improved from the 1980s right through until 2013.

A report produced in 2017 by Deloittes shows that the improvement was significant, with some 12,300 lives between 1990 to 2012 ‘saved’ due to the reduction in annual road deaths over these 22 years.

However, from 2013, the road toll began to turn, and after several decades of improvement, more people started dying each year.

In 2017, the Ministry of Transport contracted Deloitte Access Economics to investigate why safety had started to deteriorate.

They made two key findings: that economic activity and vehicle kilometres travelled (VKT)  were related and that for every one per cent increase in vehicle kilometres travelled there was a more than one per cent increase in crashes.

They also found that a one per cent increase in vehicle kilometres travelled was associated with an increase in the rate of serious injury crashes two point nine per cent and and fatal crashes one point nine per cent.

“This could be the result of changes in the nature of VKT (such as more travel on rural roads),” the report said.

And the report quoted New Zealand and overseas studies which showed that as employment increased so did vehicle kilometres travelled; in other words, there was more driving taking place when the economy was buoyant.

The report also found that an increase in motorbike registrations correlated with the increas4e in fatal smashes.

And the report quoted a Ministry of Transport study which showed that an analysis of overseas driver crashes found that approximately 77% were short-term visitors to New Zealand, between 2011 and 2015. The prevalence of overseas drivers involved in crashes also varied by region, with a quarter of all crashes in tourist areas on the South Island involving an overseas driver.

Infrastructure NZ CEO, Stephen Selwood, believes the report shows that there are too many cars on New Zealand roads.

“If we really want to lower the road toll we need to look at the volume of traffic (vehicle kilometres travelled, or VKTs) on New Zealand roads and whether these roads adequately provide for all users,” he said.

“The amount driven has increased substantially in recent years.

“Over a billion kilometres extra were travelled on our roads in 2017 versus 2016 – an increase of 5 per cent in just one year.

“We’re driving 13.3 per cent more than we did a decade ago.

“In the same ten year period, the length of sealed and unsealed road increased by 2 per cent.

“Many more vehicle kilometres travelled on roughly the same amount of road increases risk-taking.”

Selwood said that a priority for turning around New Zealand’s road toll must be to ensure investment in the road system was keeping pace with growth in traffic volumes.

“The current funding model requires fuel charges to cover the majority of transport spending, from walking and cycling to public transport, as well as our road network.

“Additionally, we expect investment in roads and rail to improve competitiveness, grow the economy, unlock land for housing, improve environmental outcomes and provide access to isolated communities.

“The system cannot cope. A complete overhaul of how and why we fund transport is required, not only to improve safety but to progress much broader economic, social and environmental objectives,” he said.

POLITIK referred his comments and the Deloitte report to Transport Minister Phil Twyford, but a spokesperson said he wouldn’t comment because the report was two years old.

Meanwhile, in Parliament Opposition Leader Simon Bridges asked the Prime Minister, Jacinda Ardern, whether she thought  her Government was delivering “when not a single new road has been started under her Government?”

Ardern listed six roads that are to be started by the Government.

“But the thing is, under the context of road safety issues, I think the issue I’d rather highlight is that between 2013 and 2018, the number of deaths and serious injuries on our roads increased by 55 per cent, and yet that Government did not change their spending plans and put them into road safety,” she said.

“The signals were all there, which is why we’re investing a record $1.4 billion over three years to upgrade over 1,500 kilometres of our most dangerous roads. If that member is only interested in new roads rather than safe roads, then I can’t help him.”

Selwood would argue that National’s policy was the way to reduce road fatalities, but he does have a vested interest. Infrastructure NZ represents the companies that build and maintain roads.

However, his view, while it will be rejected by the Greens, is likely to be shared by NZ First.

But whether they have the clout to change the Government’s track on road building is doubtful which maybe explains why NZ Infrastructure is keen to get a debate going.

Rail-centric view does Northland no favours

“The Upper North Island Supply Chain Study has focussed solely on rail and this does Northland no favours,” says Annabel Young, Executive Director of the NZ Shipping Federation, talking about the Interim Progress Report of the study group. “Their rail-centric view has blinded them to the opportunities available to Northport that are not dependent on rail.”

A dry dock in Whangarei would be a win-win for both the city and New Zealand as a whole; but in the interim report it gets a scant one-line mention. The lack of a dry dock is hurting this country due to the environmental and financial costs that have to be incurred when our coastal shipping operators are required to dry dock their vessels off-shore in Singapore or Australia. There are already cases where overseas ships are avoiding New Zealand due to the toxic combination of high biosecurity cleanliness requirements for a vessels hull and secondly, the inability to clean a ship in a dock that does not fit in the Devonport dry dock.

We note that the interim study assumes that cargo landed in Northport would need to be moved by rail which ignores the obvious possibility of movement by sea, as is done now in many other parts of the world using smaller domestic coastal ships and barges.

This first report sets up a paradigm where rail is deemed to be the only answer. The Federation believes it may be asking the wrong questions.

Notes

The New Zealand Shipping Federation began in 1906 and is the key representative body for New Zealand’s coastal ship operators.

Government approach on roading as bad as Kiwibuild, Simon Bridges says after horror month of crashes

Following a spate of resignations and a halt to major road building, National Party Leader Simon Bridges is calling out the Government for the state of New Zealand’s transport system.

After an horrific crash in Taupō yesterday in which eight people died, Mr Bridges called on the Government to improve roading for safety.

Mr Bridges told TVNZ1’s Breakfast today Labour had not built any roads since being in Government, and said they had “skewed” wrongly the previous work put into the sector.

“People go on about Kiwibuild and, you know, they should – it’s an absolute fiasco – but what’s happening in transport is every bit as bad.”

The New Zealand Transport Agency, which is the Government’s arm in making decisions about New Zealand’s roads and transport, is in “complete disarray”,” Mr Bridges said.

“Anyone who’s anyone has resigned in the last few months, you’ve got serious staff retention issues – what all of this means though is you’ve got nothing happening, you’ve got no plan.

“Not a single new road built under Labour so there’s no plan, no action. What would I do? I’d get back into it,” he said. “I’d make sure National was a party of infrastructure across housing and transport.Head-on collision near Taupō leaves eight dead, only one survivorPlay Video01:54The two vehicles collided in Atiamuri, leaving a scene of utter devastation. Source: 1 NEWS


“I think most New Zealanders would say you need good, strong highways and a roading network and we need to do more on that.”

“When you think about safety you’ve got the people factor, it’s the technology, it’s the cars, and it is the roads. I think the one where you can make the most gains is fixing the roads.”

Associate Transport Minister Julie Anne Genter says the Government is working to make the roads safer and improve the safety of vehicles, but drivers also needed to be responsible.

West Auckland ‘inland port’ among new transport options

NorthPort today. Photo / File.
NorthPort today. Photo / File.

BusinessDesk By: Gavin Evans

An inland port in west Auckland and a vehicle importing and servicing centre at Northport are among a dozen potential transport investments a working group is considering to improve freight handling in the upper North Island.

The group, formed last year, has spent the past eight months talking with users and imagining how the existing ports at Auckland, Marsden Point and Tauranga – and the road and rail links between them – could be reconfigured to provide the best options for long-term growth.

It plans to report back to the government in June with options and complete more detailed costings and recommendations in September.

“There are a large number of infrastructure options that may have a part or full place to play in changes to the upper North Island supply chain which will be considered,” chair Wayne Brown says in a progress report filed with Cabinet’s Economic Development Committee earlier this month.

“For example, in evaluating one of our options that involves moving some of Ports of Auckland’s freight task to Northport, we will consider potential infrastructure that may be required to support this,” the group says.

They include: “a spur to Northport, which we understand the current government is investigating; upgrades to the existing North Auckland Line; potential short-term operational changes, such as moving freight through Auckland on the commuter network at night; potential long-term new infrastructure requirements such as a new rail line out west of Auckland to avoid congestion in the Auckland public transport rail network and connect through to the current inland freight terminals; and the potential establishment of new inland freight terminals.”

The Upper North Island Supply Chain study was the result of a pre-election pledge by NZ First to move container operation from Ports of Auckland to Northport by 2027.

While there is broad consensus that Auckland’s port will be increasingly constrained by the city’s development around it, there is no agreement as to how soon change is needed, how much freight could be redirected through Tauranga or Northport, and how that would be achieved.

As recently as 2016 a study group recommended work start assessing Manukau Harbour or the Firth of Thames as long-term replacement options for Auckland. Last August, Port of Tauranga chief executive Mark Cairns said there wasn’t yet sufficient freight volume in Northland to warrant the relocation north. Port of Tauranga owns half of Northport.

Auckland and Tauranga are the country’s two largest container ports. With Northport, they handle about half the country’s exports and two-thirds of its import volumes.

Tauranga and Auckland, controlled by Bay of Plenty Regional Council and Auckland Council respectively, compete for freight. They considered a merger in 2006 but talks collapsed the following year. Ports of Auckland has a 20 percent stake in Northland Regional Council-controlled Marsden Maritime Holdings, Tauranga’s partner in Northport.

The working group noted submitters’ views that the “interwoven” nature of the three ports’ ownership had prevented them being developed in New Zealand’s best interests and had resulted in some inefficiencies and “duplication” of resources.

“We will be considering the current ownership structure of ports and whether a change may be needed to ensure interests are aligned to deliver the best outcome for New Zealand,” the group says.

“Councils were somewhat open to a change in port ownership as long as they preserved their income and value of the port to their community.”

Ports are long-term businesses. The working group is canvassing issues in 10-, 25- and 50-year timeframes.

Scope is also important. Freight operators argue Northport, west of the Marsden Point oil refinery, could meet growth on Auckland’s North Shore, rather than replacing Ports of Auckland entirely.

Short-term options could include establishing a distribution centre at Silverdale or Orewa; imports and Northland products could be trucked there overnight – avoiding congestion on SH1 – for day-time delivery into Auckland.

Northport already plays a similar role. Structural components for some major Auckland building projects are stored there for just-in-time delivery to avoid congestion in the CBD.

Car imports have already been identified as a potential early change. Ten hectares of new space at Northport could provide storage for 10,000 cars. Auckland currently receives about 300,000 cars annually, each of which spends close to three days on its wharves.

Northport started operating in 2002 and is largely a blank canvas. Its 49-hectare footprint can be expanded to 75 ha, while its berth length can be more than doubled to 1,390 metres. The port lies next to 180 ha of commercial and industrial land controlled by shareholder Marsden Maritime.

But it has limited capital for development and no rail link. KiwiRail and the Ministry of Transport are investigating a $200 million, 20-kilometre spur line, but that is probably more than six years away even if there was a prompt decision to proceed.

The existing line from Swanson to Fonterra’s Kauri dairy plant north of Whangarei also needs upgrading at a cost of another $500 million to carry larger and heavier container traffic. KiwiRail has previously estimated the total bill – including upgrading rail capacity from South Auckland – at about $2 billion.

The working group noted its “fundamental” belief that there is “no point making further investment in Northport without investment in, and development of, the train line to Auckland.”

Loss of Auckland ports could cost ratepayers extra 4 per cent a year

The location of Ports of Auckland has prompted public debate about whether there are better alternative uses for the prime waterfront land. Photo / Jason Oxenham
The location of Ports of Auckland has prompted public debate about whether there are better alternative uses for the prime waterfront land. Photo / Jason Oxenham

By: Natalie AkoorieNZ Herald reporter based in Hamiltonnatalie.akoorie@nzherald.co.nz@NatalieAkoorie

Moving some or all of Auckland’s port out of the city and revitalising Northland’s port including building a rail line between the two are some of the options canvassed in a new report.

However, Auckland Mayor Phil Goff has warned against the potential loss of income from Ports of Auckland if it were moved or downsized, saying if the annual $50 million dividend was lost it could lead to a 4 per cent rate rise.

The first of three progress reports by a working group tasked with investigating New Zealand’s upper North Island supply chain strategy outlines key information about the country’s three main ports: Ports of Auckland on the city’s waterfront, Northport at Marsden Point near Whāngārei and Port of Tauranga.

The ports are critical to New Zealand’s freight task and together account for half of the country’s total export volume and two-thirds of its import volume, in tonnes.

Port of Tauranga handled the highest volume of all New Zealand ports (in tonnes) and was the most successful of the three upper North Island ports having capitalised on rail infrastructure provided to the Bay of Plenty region by the Government.

“We will therefore be considering whether similar investment in Northland would provide similar results for the region and Northport,” the working group said.

The report, released by Associate Minister of Transport Shane Jones, noted that overall imports are expected to increase across all upper North Island regions while exports will increase initially before declining at Northport and Port of Tauranga, largely because of projected decline in log exports.

Northport from the air with the Marsden Point Oil Refinery in the background. Photo / Supplied
Northport from the air with the Marsden Point Oil Refinery in the background. Photo / Supplied

However, it said roading and rail in the Northland region was so lacking that the working group “fundamentally believe there is no point making further investment in Northport without investment and development of the train line to Auckland”.

“… it is generally agreed that the lack of rail infrastructure and connectivity to Northport has hindered Northland’s economic development.”

Ports of Auckland occupied 77ha of Auckland waterfront with a book value of $735m, though this was thought to be well below valuation of comparable industrial land.

“This excludes the massive social, cultural, environmental and economic value that would be created by transforming this property into a globally iconic waterfront,” the working group said.

Stakeholders including the ports, shareholders and the road freight and shipping industries named several issues surrounding the current port system including:

• They are competing and not co-operating;

• Lack of rail infrastructure and port connectivity had been a brake on Northland’s economic development;

• Unanimous support for a fully functioning rail system to the ports;

• Concerns over duplication of port and inland port assets;

• Congestion was the main problem for freight operators.

Options to make the three ports work better included the Northland to Auckland rail spur, a second route between Auckland and Tauranga, a freight corridor through West Auckland, a West Auckland inland port, an expanded or moved Southdown inland port, a new mega port in the Firth of Thames, a vehicle servicing and import facility at Northport and a New Zealand dry dock.

Goff welcomed the report but said it did not present an analysis of options, the business case for each and the impact of each option on Auckland, the region and the country.

“The relocation of the Port out of Auckland’s city centre has some clear advantages.

“It would ultimately open up 77 hectares of central city and harbourside land and wharves for alternative and potentially more valuable uses.

“As in other international cities, it could enhance the attractiveness of Auckland as a place to live, work, enjoy and to visit. It would also reduce congestion caused by freight movement and pollution from associated activities.”

A cruise ship docking at the Port of Tauranga. The port is the most successful for freight volumes in the country which many put down to a rail link. Photo / Alan Gibson
A cruise ship docking at the Port of Tauranga. The port is the most successful for freight volumes in the country which many put down to a rail link. Photo / Alan Gibson

However, he said as a city of 1.7 million people making up 35 per cent of New Zealand’s population, Auckland needed to have the most cost-effective and efficient way of delivering goods and services to its people.

“Vital to the decision of moving Auckland’s port is the impact of each alternative location on Auckland consumers and businesses.”

Aucklanders needed to know whether and how much alternative port sites added to costs for the city, Goff said.

“We also need to ensure that the working group on the supply chain strategy considers the value of the investment Aucklanders have made in their port and the dividend return they get from it which in past years has been $50 million – equivalent to a 3 to 4 per cent rate increase if that dividend is lost.”

Port of Tauranga chief executive Mark Cairns said the progress report identified well-known issues such as the need for increased investment in road and rail networks and the historic financial under-performance and inconsistent reporting by some ports.

He said Port of Tauranga challenged some of the “facts, assumptions and implications” in the interim report, and were hopeful they will be addressed before the next report.

“For example, the report states that the Bay of Plenty and Waikato have benefitted from rail infrastructure and investment provided by the Government at no capital cost to the end user.

“This ignores the $267 million in rail costs paid by Port of Tauranga since 2010.”

National’s Transport spokesman Paul Goldsmith claimed the interim report showed a “thinly disguised preference for massive investment in rail between South Auckland and Northport, leading to a shift of activity away from the Ports of Auckland to Northport”.

“It also seems to be peddling the concept of a nationalised ports monopoly in the upper North Island. There is no evidence or analysis to back up the suggestion that such a nationalised monopoly would be more efficient than current arrangements.

“There is no evidence to suggest the billions it would cost to upgrade rail from Auckland to Whangarei, plus building a new spur to Marsden point and a new freight line across Auckland, would be the best use of scarce transport resources and would lead to a better outcome for exporters or consumers.”

Goldsmith said the Government was “quite right” to be inquiring into the efficiency of freight movements across the NOrth Island and planning for the long term future.

“We support careful and considered planning of future investment. Which is why National has supported the Government’s planned Infrastructure Commission to advise on such things. The direction of this report, however, undermines the Infrastructure Commission approach.”

A second report outlining advantages to changing from the status quo, international comparisons and a long-term view will be presented to Cabinet in June.

The final report with recommendations for future development and strategy will be presented to Cabinet in September.

Upper North Island ports by the numbers

Northport

• Exported 3.25 million revenue tonnes in one year, mostly logs as well as kiwifruit, steel and woodchip;

• Imported considerably lower amount of 311,000 tonnes to June 2018.

Port of Tauranga

• Accounted for 43 per cent of New Zealand’s total export volume in year to June 2018;

• 55 per cent of exports are wood and paper products, majority of which are logs.

Ports of Auckland

• Second largest container port after Tauranga, Ports of Auckland is significant for imports because of the population it serves – 35 per cent of New Zealand’s population.

• Largest importer of vehicles. In year to June 2018, Ports of Auckland handled almost 300,000 cars, a 43 per cent increase from 2014.

• Ports of Auckland and Port of Tauranga have an import-export imbalance – Auckland has higher imports and Tauranga higher exports. It means about 40 per cent of 20-foot containers stand empty.

Ports of Auckland could become a make-or-break issue for the Coalition

An artist’s impression of a port-less Auckland. Graphic/Stop Stealing Our Harbour

An artist’s impression of a port-less Auckland. Graphic/Stop Stealing Our Harbour

New Zealand First appears as closed-minded on the Ports of Auckland as the other vested interests, who are either opposing change or advocating for alternatives.However dysfunctional those charged with providing vital transport infrastructure can be, they somehow always manage an instant massed-wagon-circling at the very mention of reform.

The Government is about to receive reports on both the future location of the Ports of Auckland and the feasibility of upgrading Northland’s rail. Labour’s support partner, New Zealand First, is fervently committed to moving some of Auckland’s port business to Northland, saying it will relieve our biggest city of congestion and bring much-needed growth to the north. For the coalition, this could become a make-or-break issue.

Unfortunately, NZ First appears as closed-minded on the issues as the other vested interests, who are either opposing change or advocating for alternatives, such as Tauranga, the Firth of Thames or Manukau Harbour.

Because of the complex governance and ownership issues of Ports of Auckland and other potentially affected ports and public entities, any Government changes will be extremely hard to negotiate. The choices available will also be sandbagged by the virtual impossibility of getting any case for new or restored rail to stack up financially.

However, the biggest hurdle will be patch protection – not just from commercial interests, but also from public agencies who too quickly forget the wider obligation that their state-conferred monopoly status puts on them.

Chief interested party is Auckland Council, which owns 100% of the Ports of Auckland. It has consistently defended its right to the port’s undiminished annual dividend of more than $50 million – to the point of vowing to build a multistorey waterfront car park for more revenue.

Mayor Phil Goff is adamant the port is essential to Auckland’s future. However, this assertion is debatable, given that a city such as Sydney survives very well with its harbour reserved for cruise ships and cargo sent to Port Botany, Wollongong or Newcastle.

Loss of port revenue would, however, doubtless force Aucklanders to pay for the loss with even higher rates, for benefits mostly accruing outside its boundaries. This would be unfair, especially to those on low incomes, and so politically dangerous that no sane administration would cause it to happen.

Perhaps a better starting point would be to regularise, even centralise, the haphazard patchwork of ports ownership. This would inevitably land the Government with a fat compensation bill, but the existing potpourri of local body, port-specific and private shareholders is a barrier to efficiency. Intra-agency competition and multiple interests – Auckland part-owns Tauranga’s and Northland’s port as well – further occlude the picture.

The National Party’s policy of treating the ports as discrete commercial entities immune from state interference is recklessly hands-off. But, by the same token, Aucklanders may be incensed at seeing their port asset commandeered, especially with NZ First so blatantly using Northland as its electoral base.

Yet, Auckland’s port must somehow be restored to being part of the national ports network. Aucklanders, used to the city’s infamous congestion, would be the first to agree it remains an international embarrassment that a prime waterfront site is used to store second-hand cars. Moving the port would unlock 77ha of superb shore land.

Northland’s Marsden Point tempts as an existing deep-water port, which, with a suitable rail spur from the Auckland line, could handle the business. Tourist and even commuter growth could ensue. Yet, there are other considerations, including the likelihood that moving the port to Northland would hugely increase congestion in Auckland, since most goods exported out of it are produced south of the city and would have to pass through it. Even if some of the goods went by train – and the expense of building rail tracks could itself prove prohibitive – the trains would be more frequent and longer, causing frustrating delays at level crossings. There are also the climate-change considerations, with increased emissions from transporting freight over longer distances.

In New Zealand, 99.7% of all imports and exports travel by sea, so the ports issue is not trivial. Any changes to these assets will affect, for better or worse, numerous other sectors and projects, not least the still-uncosted light rail to Auckland Airport. The sheer complexity and political risk may simply end in inertia. But everyone concerned has a duty to approach this debate with the country’s best interests at heart.