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

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.

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.”

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.