Stop bailing out port's debts - Swney

Ratepayers' money should be spent on a waterfront structure, says Heart of City chief Alex Swney. Photo / Greg Bowker

The cost of public money propping up Auckland's port could equate to building an iconic structure on Queens Wharf, says Heart of the City chief Alex Swney.

Auckland Regional Holdings, a public owner of Ports of Auckland, is stumping up $40 million to $60 million to help the company repay a bank loan of $105.5 million by December.

The port company, which yesterday reported a sharply reduced annual profit, began restructuring its debt early this year as the economic downturn started to hit cargo volumes.

Mr Swney said the budget for the Queens Wharf redevelopment is about $85 million, of which $35 million is below the water and $50 million above, so the cost of supporting the ports could exceed the cost of building something iconic in time for the 2011 Rugby World Cup. He has long campaigned against the port's spreading harbour presence and for a more vibrant and connected city centre.

"This issue of more ratepayers' subsidisation, in tandem with their [the port's] aspirations to sprawl further over our waterfront is a very difficult pill to for Auckland ratepayers to have to swallow. When are we going to say enough is enough?"

Mr Swney said the ports and its owners needed to feel some heat over the asset's "mismanagement" especially in light of calling for large sums of ratepayers funds to help them.

Angst over debt is thought to have led to the ousting in May of former company chairman Gary Judd, QC, who said then that in the absence of an explanation he believed his dumping came after he gave ARH "information and advice it did not wish to receive".

Besides the contribution from ARH, the company is using $40 million from the sale of Queens Wharf to make the December payment.

ARH is the commercial arm of the Auckland Regional Council.

Its chief operating officer, Peter Casey, said at June 30 there was $120 million in cash reserves designed specifically for events such as helping the port company out.

Mr Casey said the Auckland Super City transitional agency had approved the payment to the port company, $40 million following the issue of new shares to ARH and a loan of up to $20 million.

At a briefing yesterday, Ports of Auckland emphasised that during the past five years it had paid dividends or transferred land to ARH worth $522 million.

Company chairman John Lindsay said: "Commercial organisations have ups and downs as far as capital requirements are concerned. Ports is a long business with large capital requirements from time to time, and the shareholder understands."

Ports chief financial officer Wayne Thompson said that after the capital restructuring, debt would be reduced from around $550 million to between $300 and $330 million.

"It was prudent given the economic downturn ...to strengthen the balance sheet."

The port yesterday reported a $5.4 million net profit after tax in the year to June 30, down from $21.1 million last year, but that was after writedowns on investment property and Northland Port Corporation shares, as a result of international financial reporting standards, of $10.3 million.