It will be a costly exercise but moving Ports of Auckland north has great economic potential.
The question now facing the government and Aucklanders with the final report from the Upper North Island Supply Chain Strategy working group is whether it will achieve that efficiency and increase our sluggish productivity as a nation. The report, which recommends moving the Ports of Auckland (PoA) from the city's waterfront north to Marsden Point, is now in the hands of Cabinet ministers to be scrutinised but Prime Minister Jacinda Ardern told the AM Show this week it was not a question of if, but when.
PoA's southern competition, Port of Tauranga, last week took aim at the “historic financial underperformance of some port companies”. It’s not hard to figure out that the partially publicly-listed port company is referring to PoA, which in its last annual report detailed an abysmal result. Statements by the competition are usually taken with a grain of salt but this poor performance hasn’t gone unnoticed by the working group. The group and Port of Tauranga are absolutely right to point this out.
The report misses that PoA's historic financial underperformance is thanks to the Port of Tauranga’s deft positioning of itself, especially as it owns half of Northport at Marsden Point already. That positioning is obvious to anyone looking at a map for the upper North Island, where over half of all New Zealanders now live. Port of Tauranga’s own footprint from Mount Maunganui to Sulphur Point in Tauranga is massive. In their annual report, they cheekily included a picture of PoA’s operations in an inset picture so you are in no doubt Tauranga is the bigger port. With its MetroPort service, the port directly links the Bay of Plenty with Auckland’s southern industrial zone with regular and dedicated freight trains. MetroPort has been such a huge success that it is no surprise Port of Tauranga wants to replicate it again with Northport. Then there are the alliances with the major importers and exporters, driven by dairy, forestry products and general import-export freight.
Then there is Northport itself. Located at the heads of Whangarei Harbour next to the Marsden Point oil refinery, Northport’s advantageous position for shipping companies, along with the Bay of Plenty container port, puts PoA into a literal pincer movement between Port of Tauranga’s operations. With strong competition in the north and south and lacking space for future development, PoA has been trapped both ways. Port of Tauranga has both geographic and financial advantage over Auckland. And now PoA has to deal with a government determined to shut it down and move its operations there.
Discussion of the ownership of Northport is scarce in the debate around moving the port. Even the report only briefly mentions the fact that it's 50 percent owned by Port of Tauranga and Marsden Maritime Holdings. Commercially, there will need to be an agreement between the government and Auckland Council on what happens with PoA. A merger or share swap, bringing the super city council into the mix as a part-owner of the super-port company are all options. Recently re-elected Auckland Mayor Phil Goff appears to be keen on a straight compensation payment. Auckland Council could keep the land the Auckland city port sits on, thank you very much, and most likely receive more in commercial rates for the property than the port currently generates in dividends.
Whatever the commercial arrangements, it’s clear the major winners from moving Auckland’s port will be Port of Tauranga and the Northland region. The infrastructure investment that will follow, with new road and rail links, will provide a huge boost to the region and Port of Tauranga’s bottom line. Relocated Auckland port workers will also provide a boost to Northland, bringing with them their paycheques to spend. The regional implications for the port outside of Auckland will be long-lasting.
This is not simply an Auckland issue and it’s also not simply an upper North Island issue. The report points to greater efficiency and productivity by moving the port; significantly, of the scenarios canvassed, only the full move of PoA had net economic benefits to the country. The report claims this is to a total of $1.4 billion; the country as a whole would be better off. The government has a big challenge on its hands – and one that no doubt will continue to dominate the public agenda as we head into the 2020 general election.