Editorial: Let the ports compete commercially

Beware the political photo opportunity. Transport Minister Steven Joyce plainly enjoyed himself when he jumped on a digger to turn the first sod of a railhead for Ports of Auckland's container terminal at Wiri this week. The project has received $6 million from taxpayers, delivered by the previous Government two days before its election defeat, so that more freight may be moved through Auckland by rail rather than road.

At first glance, this may seem a worthwhile public investment. The fewer containers hauled into central Auckland by truck the better for all concerned. The port company has spent more than $20 million developing an "inland port" in South Auckland but for reasons best known to itself, could not spend an extra $9 million for connections to the nearby railway. So the proud new owners of "KiwiRail" have met the bulk of the cost.

The only problem with all of this is that there is already an "inland port" for Auckland, up the road at Southdown. It happens to be owned by Port of Tauranga, the country's nearest and largest competitor with Ports of Auckland. Metroport, as the Tauranga company calls its Auckland terminal, was established with connections to the national rail network at no cost to the taxpayer when the railway, like the Tauranga port, was in private ownership.

New Zealand has too many seaports, a legacy of public ownership when parochial harbour boards jealously resisted rationalisation. Privatisation was designed to make them more amenable to mergers and takeovers, which probably would have happened by now if all had been floated on the sharemarket.

But port shares were vested in local bodies and some, such as the Auckland Regional Council, were taken over by campaigns to "save the port". The ARC subsequently bought all outstanding shares in the company. It regularly forswears selling the asset and recently stymied a proposed merger with Tauranga. It was probably instrumental in convincing the previous Government to subsidise its company's duplication of Tauranga's Auckland terminal.

It is easy to lose sight of the public interest when a local body becomes a jealous guardian of a commercial asset. Nationally, the public interest lies in ensuring that internal transport and port charges do not add unnecessarily to the costs of sending goods to and from this remote corner of the world. Locally, in a city such as Auckland, the public interest lies in amenities such as a more pleasant, accessible waterfront and less congestion on the roads.

If shareholders of a port in another city are willing to pay for a rail connection that reduces road haulage, and threatens the growth of the Auckland's port company operations, there is no good reason for national or local government to interfere. But when they become business owners, their interests change. The ARC uses freight dividends from the port to cross-subsidise public passenger transport. The National Government, thinking as a rail company owner, sees profits from another inland terminal.

Mr Joyce should have paused on his digger to consider the damage he might be doing to the genuine public interest. Tauranga's Southdown terminal is one of the spearheads of its attempt to prosper at the expense of Auckland's port. It is a contest for the preference of big international shipping lines which are looking for cargo hubs in this part of the world.

Auckland, still far and away the country's largest freight gateway, may be the most likely hub but there is no reason for the Government to favour it. Let the ports compete without public assistance and we can be reasonably sure the survivor will be the most efficient we could find.