Introduction
Auckland faces challenges because of its geographical remoteness (which is also a strength), small local economy (which produces independent and confident children), and small scale of businesses (which is useful in building start-ups which can then spread internationally). These words are partly drawn from the Auckland Council Draft Economic Development Strategy document section: Where Our Challenges Lie (Pg 27), which is the most honest and clear section of this narrowly focussed document. The document starts with a broad vision (Page 4), which then gets narrowed on Page 31 to a vision which requires: “…a step change in exports and internationalisation…”
No other economic development visions are articulated. A vision based around a “step change in exports” necessarily involves an expansion in Port facilities. However there are other economic development visions which are not considered in this strategy. There are significant costs and dis-benefits associated with this single economic development vision, because of its narrow emphasis on Port expansion, which have not been articulated in the present draft economic development strategy. The following submission primarily relates to the Ports technical document entitled Waterfront Plan_Working Paper-Port (WPP).
New Zealand needs a National Port Strategy – before Auckland agrees POAL's expansion plan
There are many acknowledgements in the WPP of the infrastructural issues confronting New Zealand Inc of proceeding with uncoordinated development of New Zealand container handling capacity. That risk is container handling capacity in every port, price-cutting competition in every port, massive duplication in investment, and exporters and shipping companies laughing all the way to the bank. Section 4.2 of the WPP admits to: “Potential for duplication of infrastructure if investment is not co-ordinated…”
This is a major problem for New Zealand and for Auckland. Arguably, the cost of port infrastructure is at least as important as roading infrastructure, whose development is closely coordinated by New Zealand Transport Authority. The WPP states at Pg 9 “…there is intense competition for container trade between POAL and Ports of Tauranga (POT)…”
I can atest to that from my experiences as a Councillor on Auckland Regional Council (which owned POAL through its subsidiary Auckland Regional Holdings while I was a councillor from 2004 to 2010.) I received regular confidential reports outlining the negotiating strategy which was pursued by POAL and ARH, in the price war that emerged between POT and POAL in trying to gain the Maersk contract which was heavily driven by Fonterra’s desire to drive down the costs of its milk fat freight logistics supply chain. Their priority had no regard for the public cost of meeting that objective.
The final price that was offered by POAL to Maersk was little more than $200/container, close to cost, and significantly lower than the handling charges over the Tasman which were nearly twice that. I well remember the justification for this cut-throat price from those in support of it: “it’s all about volume…”. However, whether it’s one million containers/year, or two million containers/year, the mathematician in me is acutely aware that one million times bugger all is still bugger all. The subsidy is born by the owners of POAL, and by those who need to share the transport corridors with all of these containers - many of which are empty, and by those of us who believe the uses of the Waitemata should be very carefully balanced.
The WPP notes the existence of an ARH report prepared in 2009 which calls for: “a need to rationalise our port sector expansion, adopt a coordinated approach to infrastructure planning…”. |
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