Todd Niall 09:54, Nov 21 2019
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.
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.
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.
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.”
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.”
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.”
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.
An economic analysis backing the move of the Port of Auckland to Northland has been panned as inadequate, poorly drafted, and full of padding.
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.”
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.
Regional Economic Development Minister Shane Jones marks the announcement of funding for the North Auckland Line
The New Zealand government’s decision to invest $94.8 million to improve the rail line between Swanson and Whangarei in Northland underlines the clear vision it has for rail in New Zealand.
Announcing the funding in September, Regional Economic Development Minister Shane Jones described rail as a crucial part of building a modern transport system, connecting people and regions, efficiently moving freight around the country and helping to take trucks off the roads.
However, he added, rail has been left to languish over the decades, receiving only a fraction of the investment needed to deliver an efficient and reliable network.
The North Auckland Line is a prime example of that. It is worn and prone to flooding, and the infrastructure will fall apart in the near future without proper maintenance. As a result, there are speed restrictions on many parts of the line, so trains have to travel slowly, and freight services are too easily stopped by weather events and derailments.
Tunnel 2, the one closest to Helensville, has already had steel ribs installed to ensure it stays safe in the short term. Without this work the North Auckland Line would have had to be closed within one or two years.
A long history
Rail has a long history in Northland. What became the North Auckland Line was built in sections from the 1870s, with the link between Helensville and Whangarei being built progressively between the 1880s and 1920s. The line north of Kauri (north of Whangarei) to Otiria (near Kawakawa) and the Dargaville branch line are currently mothballed.
The line now running between Swanson and Whangarei is approximately 181 km long and includes 13 tunnels, 88 bridges and 950 culverts. Used predominantly to transport freight, trains have carried logs and woodchips, china clay, dairy products, coal, cement, limestone, fertiliser, livestock, and general freight. Commuter services have never proved sustainable in the long term, and now run only between Auckland and Swanson.
In 2000 almost a million tonnes of freight a year was transported in the region by rail, marking the highest point of its popularity. With the move of Whangarei Port to Marsden Point in 2007, however, this dropped away significantly, and had fallen to 300,000 tonnes by 2008.
Other factors affecting usage include the poor condition of the rail line, resulting in slower trains and delays. Now, only 116,000 tonnes of freight is currently carried on the North Auckland Line a year.
KiwiRail runs one freight service to and from Whangarei each week day, carrying processed dairy products from Fonterra’s Kauri plant to MetroPort and on to Port of Tauranga; a small volume of high-value china clay between Whangarei and Metro- Port; and woodchip from Whangarei to Kawerau.
However, even this reduced tonnage is still equivalent to more than 8000 truck trips avoided each year. This means that if the line closed, Northland would see increased congestion, higher road maintenance costs, and higher transport emissions.
The investment announced by Minister Jones will allow us to offer more reliable and timely freight services and work to grow freight volumes, which will give Northland businesses/exporters more options to move their produce, and help take more trucks off the road.
While this work is about maintaining what is already there, we are also looking at improvements to the line. Principal among them is lowering the existing tunnels so that hi-cube containers – which are an industry standard for export goods – can be carried on the line.
As part of the strengthening work on the tunnels, KiwiRail will be investigating what would be needed to lower the tunnels (to take hi-cube containers) in preparation for this work to be done later. For most of the tunnels, the works are expected to be relatively straightforward, but lowering Tunnel 2, which has been a problem almost from the day it opened, presents some challenging engineering problems to resolve.
The Ministry of Transport has completed the North Auckland Line Business Case for rail in Northland, and an Upper North Island Supply Chain Strategy study is underway which will focus on the respective roles, opportunities and options for Northport, Ports of Auckland and Port of Tauranga. An improved and extended North Auckland Line and Marsden Spur could play a key role in that, opening the way for freight to flow to and from Northport by rail.
KiwiRail has held a designation for a 20 km Marsden Point rail spur for several years, and we have investigated the design and potential construction methods for the link, as well as costs and timeframes. However, the government is yet to make a decision on a rail line to the port.
The entrance to Tunnel 2, the Makarau tunnel, north of Helensville – the tunnel is one of the longest on the North Auckland Line
Reinforcing ribs inside Tunnel 2 now support the tunnel lining – KiwiRail has nearly completed the work to strengthen Tunnel 2
The work KiwiRail has currently been funded to undertake on the North Auckland Line includes the following.
Track, sleepers and ballast ($40–$50 million)
Works will target improving track resilience and reducing wear on track and rolling stock. Approximately 30% (54 km) of the network will be either upgraded or replaced, particularly worn areas where there are bends, turnouts and steep grades. This equates to around 80 linear kilometres of new rail. Approximately 80,000 sleepers are expected to be replaced and 50,000 cu m of ballast added.
Replacing five of the 88 bridges on the line ($15–$20 million)
These mostly wooden bridges will be replaced with concrete structures due to their deteriorating structural condition.
Repairs to 13 tunnels ($7–$10 million)
KiwiRail has nearly completed the work to strengthen Tunnel 2, north of Helensville, one of the longest on the North Auckland Line. This has included installing steel ribs to support the tunnel lining in an area of deformation. Work will also be done on the other 12 tunnels, including plaster repairs, crack filling and drainage improvements.
As part of the maintenance work on all the tunnels, below-ground conditions will be investigated in preparation for later work to lower the ground level in the tunnels (to fit the larger, modern hi-cube shipping containers).
Clearing drains and culverts ($7–$10 million)
Trackside drains along the 181 km stretch of line will need to be cleared. A quarter (237) of the 950 culverts (drainage pipes) on the line are in poor condition and will be remediated as required. Maintaining the drains and culverts is crucial for ensuring the stability of the rail line and managing flood waters during weather events. Many have not been looked at for decades.
Culvert and drainage work will protect the track condition, reducing clay and mud build-up in the track ballast, which makes the track more susceptible to movement.
Work stabilising the slopes on nine embankments ($3–$5 million)
This work will include drainage improvements and widening the embankments. There will be ongoing monitoring of the embankments to determine if further civil engineering work is required over the longer term.
Vegetation control along the rail line ($1 million)
In recent years, vegetation clearance has been limited to removing fallen trees and branches from the track. A significant amount of vegetation needs to be cleared from the sides of the track, which will protect the track and rolling stock, as well as improving access to worksites.
Review and make improvements to the Whangarei Rail Yard ($2–$3 million)
Changes will be made to improve safety and make freight handling and storage more efficient. For example, disused track that used to go to Whangarei Port could be removed.
A huge project
We are excited by the changes this will bring to our abilities to offer Northland businesses a better deal. We will be able to lift some of the speed restrictions, reducing the rail freight journey time to Auckland by approximately 1.5 hours. And we will be able to make rail services more resilient and reliable, reducing the number of line outages.
Where possible, KiwiRail will be using Northland-based contractors and sourcing materials from Northland. This will see millions of dollars going into Northland’s economy and help boost the region. If KiwiRail takes on any more permanent staff, we will look to Northland first.
This huge project will be structured into a mix of larger and smaller jobs making up the overall programme of works, and we have taken steps to ensure the local industry is aware of the opportunities, not just for large companies, but also for smallerscale contractors. Recently, in Whangarei, we held a briefing for about 40 contractors about future work opportunities. We have ensured that where possible the work is broken into bite-sized pieces suitable for smaller contractors.
We are delighted that the work is already underway, with the majority of it targeted for completion by September 2020. The investment is the first step in setting up the line to deliver for KiwiRail, for the region and for the country.
David Gordon is KiwiRail’s chief operating officer – capital projects and asset development; he oversees KiwiRail’s strategic capital projects and leads KiwiRail’s collaboration with the government, its agencies and local government on transport policy and investment issues
Auckland has placed among the worst cities in the world for public transport and road taxes in a new global rankings index.
The meta-analysis also found the cost of parking in New Zealand’s biggest city is comparable to Los Angeles.
According to a new rankings index, it’s worse than Mongolia and Nigeria’s biggest cities.
A transport expert says there are two key reasons why.
“We need more rapid transit, more busways, more rail lines, more light rail, more of those projects, and cheaper fares in comparison to other options,” said Matt Lowrie from Greater Auckland.
Auckland has the 11th worst public transport, according to the new index, which gave scores based on accessibility, reliability, and affordability.
The best are the ones you’d expect — New York, Singapore, London, and Tokyo.
“You need good public transport so people have more options so people aren’t stuck in a car because every person who’s on a train or bus or ferry is someone who’s not on the road, in your way and causing congestion,” said Lowrie.
Published by an auto retailer, which is part of the French car group that makes Peugeot and Citroen, the research pulled together data from trusted sources like the World Bank, the United Nations, and the OECD.
Auckland Transport says it doesn’t agree with the findings. It pointed to another recent study that ranked Auckland 3rd in the world a measure called urban mobility.
The French rankings found Auckland drivers are out of pocket too – the city ranked as the 8th least affordable in terms of road taxes.
It’s not all bad, though; Aucklanders are apparently comparatively calm drivers – ranked 17th for road rage.
And the air quality was found to be the fourth-best — something that could get even better if more people swap cars for public transport.
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.
Duncan Garner 05:00, Nov 16 2019
OPINION: So now Winston Peters and his Government want to move the Ports of Auckland to Whangārei.
Such a small little thing to do that will barely cause much disruption at all. Said no-one ever.
Does anyone have any idea how ginormous this pie-in-the-sky promise really is?
Why? When? Where does the cargo go in the meantime? Has it been done before anywhere in a sane Western nation?
I applaud ambition usually, but this Government doesn’t appear to have a master plan at all. It has a series of massive work plans and ideas whose time may never come.
They being an expert panel who probably have no real idea, but call it a panel and it gets serious. Seriously, with Shane Jones’s wacko performance to farmers and now this out-there port wind-up, no wonder business is rightly nervous.
This port idea is shamelessly the work of Jones and Peters. It’s not just economic nationalism but is regional parochialism at its best – or worst, depending on how the future pans out.
So will the roads be upgraded north of Auckland, and what trains are needed, and how can it be done when we can’t get a passenger rail system to Auckland Airport?
Peters has spoken publicly about the port report like it’s a done deal, and the money will come shortly. But how can this happen so easily if the same Government couldn’t build a few houses for the middle class? Taking the build out of KiwiBuild since election night 2017.
Also no gain like a capital gain, as in the tax that sunk confidence but never went anywhere. And while we are at it, so much for ETS for farmers, because Labour suddenly froze.
Anyway, the prime minister would hardly say boo about sinking the ports of Auckland into northern waters for fear of saying the wrong thing.
She hadn’t seen the report, but an hour later Winston was word for word all about it. So why was he all over it and the country’s most high-profile Auckland MP, who happens to be the PM, didn’t know anything. Is it deliberate and, if so, let’s drag her deep and demand answers.
It’s not a Government scared of trying anything and everything. Something has to work soon, if not in education, then health. If those then fail, maybe it’s in tax reform, but we know that answer, so maybe it’s on climate reform. Oh yes, the Zero Carbon Bill. That’ll do it.
I think this Government is dreaming, even on some of the small stuff. Standards and credibility matter, and they need to get busy, but they need to be believable.
Their eyes are bigger than their stomachs, and I wonder how much voters can digest if it’s a repeat next year.
A leaked report has found that the Ports of Auckland should be moved to Whangarei.
The report details how the freight operation at Ports of Auckland is no longer economically or environmentally viable. It also says that if Auckland and Northport can’t reach a commercial agreement within 12 months, then the Government should introduce new legislation to force the move.
That’s a big call. A really big call.
To recreate a wharf operation 150 kilometres away from where it already exists is going to cost a pretty penny. It makes dams and tunnels and trains that we’ve built so far look like children’s sandcastles.
To make it work for the next 100 years would require road and rail upgrades in the billions. Wharves and cranes in the billions. Processing and inland ports in the billions. It would exponentially increase the traffic and congestion between Auckland and Whangarei.
Yet the executive summary tries to suggest it would cost just $10 billion.
Now I understand the capacity constraints the Auckland wharf is under and as the city continues to expand its population that capacity constraint will be exceeded uncomfortably. But this suggestion seems half-baked.
And considering its implications you have to wonder who decided that this extreme course of action is needed and that if it doesn’t happen then the government has to step into commercial companies and tell them how to run their business.
Well the working group that is making this huge claim is chaired by former Northland Mayor Wayne Brown. Now Mr Brown is a very skilled technocrat who has produced reports on all sorts of state organisations, and I’m not suggesting that he has cooked this report to suit his region.
But appearances are important and having a Northland politician advocating that the biggest infrastructural investment in New Zealand should happen in his patch still has to be taken with a grain of salt.
Auckland Chamber of Commerce head Michael Barnett didn’t swallow that this morning on TV either, calling the idea political and not business. And we know politics always ruins and slows our infrastructure which is why our infrastructure is so bad and compromised.
That’s why an Infrastructure Commission has been formed. It has a chairman in Alan Bollard and announcements shortly will come on how it will operate and what its remit will be.
When it comes to things like moving ports, the thinking needs to be free of any stain of politics whether real or implied. It needs to make sense now, in 10 years’ time, in 50 years’ time and in 100 years’ time. It needs to be made by unbiased experts not local body politicians
This is why I’m not buying this idea at this time.