Covid 19 coronavirus: Northland port could be economic haven, Shane Jones says

Whangārei Heads and Northport. Photo / File

Just when you thought Covid-19 had sunk any more talk about moving Auckland's port to Whangārei, Infrastructure Minister Shane Jones is breathing new life into the proposal to help in the economic recovery.

If NZ First was returned in the September general election, Jones said a priority would be development of an "economic haven" at Northport, noting the UK's plan to introduce "freeports" in its own economic recovery efforts.

Freeports are secure zones, usually located at seaports, where business can be carried out inside a country's land border, but outside its customs regime. Typically, they allow companies to import parts and raw materials and process them with minimal paperwork and without paying duties.

In New Zealand, the Government has already announced plans to fast-track the RMA process for infrastructure projects to kick-start the Covid-19 economic recovery.

Jones, also Regional Economic Development Minister and a Northland MP, said he and Winston Peters, deputy Prime Minister, NZ First leader and fellow Northlander, have lost none of their enthusiasm for developing Northport to take on Auckland's cargo operations, and for shifting Devonport's ship dry dock there and upscaling it.

Jones said moving the dry dock north assumed new importance given uncertainty over the future of the Marsden Point oil refinery in New Zealand.

Owner Refining NZ is reviewing its operation. Jones is presuming one of the outcomes could be the end of oil refining in New Zealand, meaning all the country's fuel needs would be imported.

"This would have an inordinate impact on employment in Northland and without something as profound as the [drydock] infrastructure development I would have thought thousands will either be made redundant or subsequently out of work, such is the huge enabling effect of the refinery.

"It drives the imperative of an Auckland port relocation and the Babcock [dry dock] proposal."

The dry dock at Devonport has been leased to Babcock Australasia, part of the global aerospace and defence company Babcock, or its legacy companies, since 1994.

The Defence-owned Devonport dry dock is too small to service and hull-clean many modern vessels including the Cook Strait KiwiRail ferries, new navy vessels, and fuel and cement ships. Hull cleaning can be a biosecurity requirement.

Jones said he had been advised by Refining NZ the review would take into account the potential tax costs of New Zealand's climate change legislation.

Jones said he was promoting the dry dock redevelopment as a potential "shovel-ready" infrastructure project to help accelerate economic recovery.

He believed it would be a top candidate for the Government plan to fast-track the RMA process.

The Government has tasked a group of industry leaders to find infrastructure projects ready to start as soon as the construction industry returns to normal. The group is to nominate projects from the private and public sector that are "shovel-ready" or likely to be within six months.

The new projects will be in addition to the Government's $12 billion New Zealand Upgrade Programme and existing $3b Provincial Growth Fund infrastructure investments.

Jones said NZ First would continue to agitate for relocation of Auckland port's cargo operations to Northport.

"But today it is not Government policy - it is marooned in an analytical process in the Ministry of Transport."

Jones said any heavy marine migration north should include the New Zealand Navy base at Devonport.

Regional Economic Development Minister Shane Jones. Photo / File

Cabinet had been due, pre-Covid-19, to make a decision on the future of the Auckland Council-owned Ports of Auckland this month.

This followed Cabinet's decision in December for transport officials to do further analysis of a working party's conclusion that the port was not economically or environmentally viable and that its cargo operations should be moved to Northport.

The Government-commissioned working party estimated the cost of moving port cargo operations to Whangārei to be $10.3b. The investment was expected to be largely commercially funded and driven.

Infrastructure costs to the Crown were estimated at $3-4b, covering development of the North Auckland rail line, rail links to Marsden Point, rail links within Auckland city, and road building.

The working party study was a condition of NZ First's agreement to form a coalition government with Labour.

The Herald asked Transport Minister Phil Twyford for an update on the analysis.

He responded: "Our Government recognises that Ports of Auckland is not viable as the Upper North Island's key import port for the long-term. The further work Cabinet asked for is ongoing. It was originally expected to be finished in May, but has now been delayed due to Covid-19. This was because the officials who do the supply chain work were required to help with responding to Covid-19 and keeping essential freight flowing was critical. Ministers are expecting an update with a new timeframe in the near future."

Northport - half owned by Port of Tauranga and Marsden Maritime Holdings, both NZ-listed companies - was given substantial PGF funding to investigate redeveloping the dry dock at Whangārei.

Jones said before the Covid-19 emergency response, he understood the work and planning was advanced.

Bulk cargo carrier Tokomaru Bay on its way to Northport at the entrance to Whangārei Harbour. Photo / File

Refining NZ, asked to comment on Jones' claim that it was nervous about New Zealand's future climate change taxes, said it had nothing further to add to its April 14 statement to the NZX:

"The Government has approved the making of regulations to bring Refining NZ into the New Zealand Emissions Trading Scheme as an Emissions Intensive Trade Exposed (EITE) business with an industrial allocation of carbon units after the Negotiated Greenhouse Agreement expires at the end of 2022.

"Under the regulations the industrial allocation will be based on 90 per cent of the company's 2006-2009 emissions data, in accordance with the Climate Change Response Act 2002. The Climate Change Response (Emissions Trading Reform) Amendment Bill provides for a 1 per cent per year phase out of rates of assistance over 2021 to 2030, meaning that the applicable rate of assistance at the time Refining NZ enters the NZ ETS in 2023 would be 87 per cent.

"The Government has signalled that further regulatory reforms, as a result of a review of industrial allocation policy and electricity allocation factors, may result in very different allocative baselines in the future, including the amount that the company is ultimately allocated when it enters the NZETS in 2023. Refining NZ will continue to engage with Government during this review process," the statement said.

Jones said in defence of NZ First's post-Covid promotion of New Zealand infrastructure and manufacturing economic "sovereignty", it was a better use of money than consumption spend.

• Covid19.govt.nz: The Government's official Covid-19 advisory website