Phil Goff calls John Tamihere's proposal to sell Ports of Auckland "bizarre" because the Government is reviewing its future. Actually a sale of the company (not the site) is about the only one of Tamihere's headline policies that makes perfect sense.
The port of Napier was partially privatised thismonth. The Port of Tauranga has been in joint council and private ownership for decades and it is one of the strongest performers on the sharemarket.
Northport at Marsden Point, where some in the Government want the port of Auckland to go, is half owned by Port of Tauranga, and Ports of Auckland has a stake in it too.
The Auckland Council's total ownership of its port is the only "bizarre" arrangement among three northern terminals and its exclusive holding is not doing much good for Auckland or New Zealand.
Mayoral candidate John Tamihere has outlined plans to sell Ports of Auckland. Photo / Dean Purcell
Councils tend to be passive owners of commercial property, content to accept whatever dividend the business decides to pay. The Auckland Council has just accepted a drastically reduced dividend for the next two years while the port undertakes a development of dubious merit.
Councils take little interest in commercial decisions unless they cause a political ruction.
When that happens a sole-shareholding council is seriously conflicted, as has been well illustrated by Ports of Auckland's repeated attempts to extend its wharves further into the Waitematā.
If the port company was even partially privatised, the council would probably have less difficulty standing unequivocally for the public interest.
In fact if the port company was even partially privatised wharf extensions probably would have been off the table long ago. Commercial shareholders would have ensured the company faced the fact the port had reached its limits of political acceptance and found another way to accommodate the latest cruise ships.
More than likely a partial float would see Port of Tauranga buy into the Auckland company as it has at Marsden Point and all three ports would co-operate to take some pressure off Auckland.
Phil Goff calls John Tamihere's proposal to sell Ports of Auckland 'bizarre'. Photo / Michael Craig
I should declare I have a few shares in Port of Tauranga but I'm not sure that advocating closer commercial oversight of Ports of Auckland is in my personal interest. Port of Tauranga has been doing very well as things are.
However, just about everyone agrees the national interest would be better served by some sort of rationalisation of the country's ports and ultimately the national interest is of more financial value to each of us than any company dividend.
One way to pursue the national interest is to let competing companies find out what each can do most economically. The other way is to let politicians decide what's best for their priority, be it job protection, the environment, regional development or some other.
The only bizarre element in the Auckland port discussion is the review Goff awaits. Any day now the Government is going to release a report it has received from a panel called the Upper North Island Port Study Group.
Chaired by a former mayor of the Far North, Wayne Brown, it was set up in response to Winston Peters' truly bizarre proposal to move the whole port to Marsden Point.
Since that would require a major upgrade of the rail to Northland, the panel of five includes the chairman of KiwiRail and a former TranzRail group general manager as well as a representative of the Society for the Protection of Auckland Harbours.
In April they issued an interim report that signaled fairly clearly where they were going.
They said they would envision a reconfiguration of the whole upper North Island supply chain on the basis of "If we owned it, what would we do?" Heaven forbid.
At that stage they had visited Northport and Ports of Auckland but not Tauranga, whose success they confidently ascribed to pre-existing rail infrastructure in the Bay of Plenty. They wondered if similar investment in Northland would provide similar results for that region.
Mark Cairns says Port of Tauranga has met rail costs of $267 million from its own capital since 2010. Photo / George Novak
Port of Tauranga's chief executive, Mark Cairns, pointed out the company had met rail costs of $267 million from its own capital since 2010. He could have added that it has set up an "inland port" (railhead) in South Auckland among other things.
Ports probably make our most efficient use of rail. It would make more sense to invite port executives to rejig the country's railways than put rail managers on a port review.
But port companies could certainly rationalise their own operations if Auckland's port was floated. Sadly, without a full ticket of candidates supporting a port sale, Auckland is likely to get another council afraid to sell anything.
Regional Economic Development Minister Shane Jones has suggested setting up "a new entity" to own the council stakes in all three northern ports. That might be the only way to loosen the Auckland Council's fearful grip and let commercial sense prevail.
