Brian Rudman: Ratepayers shouldn't have to bear burden of costly Shed 10 renovation

The Cloud and Shed 10 on Queens Wharf. Photo / Sarah Ivey

Over the past three years, Auckland politicians have been tempted by Queens Wharf cruise ship terminal plans ranging in price from a basic, once-over-lightly tart-up of historic Shed 10 for around $6 million, through to a $467 million "world-class" landmark, complete with a national convention and exhibition centre thrown in for good measure.

In this context, Mayor Len Brown's latest proposal for a $28.7 million refurbishment of Shed 10 seems positively restrained. That said, it still fails to address two basic questions.

The first is, why are ratepayers being asked to fund a strictly commercial enterprise such as a seaside passenger terminal, when Auckland Council already owns the port company whose task is to run that side of the city's business.

Ports of Auckland doesn't come running cap in hand to you and me each time they need a new container straddle crane, or pilot boat, so why now, when they need to convert an old wool shed into a venue for processing flocks of modern-day sheep?

Second, if, as the port company argues, the new terminal will be required by them for only about 100 days a year, and for the rest of the time will revert to public use, then why is the council seeking, first and foremost, "expressions of interest ... towards progressing a preferred design to meet the cruise strategy of the Waterfront Plan".

The documentation also refers to it doubling as a "multi-purpose event space", but if holding events is to be the main function for more than two-thirds of the year, shouldn't that be the prime focus of the design brief? We should be seeking ideas for a profitable event space first which can also act as a cruise ship terminal.

Admittedly, today's politicians are painted into a corner by the sales deal struck in 2009 when the port company sold Queens Wharf to the Government and Auckland Regional Council for $20 million apiece. The politicians agreed to build a cruise ship terminal at no cost to the company. In return, the port company agreed to allow public access to the wharf as long as it didn't affect cruise ship activities. It also agreed to cover the costs of the long-term maintenance of the under-wharf structure, and for dredging and berth maintenance. Ratepayers were lumbered with the annual operating costs for the wharf of $4.1 million.

The port company now says it will pay the operating costs for the new Queens Wharf terminal when it is being used as a cruise ship base. It will also pay the "several million dollars" cost of a permanent gangway structure.

But that's it. The ratepayers can pay to build the terminal and for its upkeep the rest of the year. A spokesman says "that's fair because it's the region that gets the majority of the economic benefit", which is cold comfort for the ratepayer with an expanding rates bill.

With 153,921 cruise ship passengers landing in Auckland in the past year, there is another potential source of income, one used by airports to fund exactly the same function.

Auckland airport charges each passenger arriving or departing overseas a service charge of $12.44.

In the past year this raised $78.7 million to maintain and build terminal and other passenger-related infrastructure. Airlines are also charged landing fees and fees covering security, air traffic control and the like.

Like the port company, the airport also claims to create huge economic benefits for the Auckland region, but it resists the temptation to come knocking for a ratepayer handout when it needs a new passenger lounge.

Like the airport company, the port company levies shipowners' charges to recover the costs of tugs, pilots, port navigation facilities and the like. There are also berthage fees to recover, such costs as wharf maintenance and dredging. When it comes to passenger ships, there's a levy to cover the costs of processing the passengers.

The odd man out in this user-pays system is the cost of the terminal. For some inexplicable reason, the ratepayer has to pick up the tab. By my calculations, an airport-sized passenger service charge would raise $3.8 million a year, which would at least cover the ongoing upkeep of the $28.7 million terminal. Or half the full cost, if we revert to Mr Brown's more modest $6 million mid-year plans.