Auckland City

AucklandMay 19, 2017

The Storm in the Port: Why a port sell-off would give Auckland momentum a chance

Auckland City

The Storm in the Port is a new series in which the key players in the debate over the future of the Auckland port put their cases. First up, Auckland Chamber of Commerce CEO Michael Barnett, who argues that selling it off could be one of the best things to happen to the city in a long time.

It’s important we keep an open mind on talk of Auckland Council selling the Ports of Auckland (POAL) but retaining the land.

A number of benefits jump out immediately. The billion dollars or more a company sale could reap will give Auckland Council breathing space to fund critically needed infrastructure and much more.

They could use this lump sum, plus annual rent revenue it will generate from leasing the port land to action other initiatives – to kick-start a programme to implement some of Auckland’s highest priority infrastructure projects, for example, and the feasibility study needed for any future port relocation decision.

The port rent would help cover interest costs while Government and Council undertake the promised work to develop a sustainable ‘user pays’ road pricing scheme, as cities such as Singapore, Oslo, London and others have put in place to deal with traffic congestion.

A port company sale would also give Mayor Phil Goff some debt-to-revenue freeboard by removing Ports of Auckland’s capital requirements from Council’s books.

That’s just one scenario that demonstrates why it makes real commercial sense to sell the port business. I am sure the ideologues and dinosaurs will offer arguments against, but the reality is that Auckland is in a different situation to 10 years ago – there wasn’t the wall-to-wall traffic congestion we now have and our ability to fund growth wasn’t so constrained.

Photo: iStock

We can no longer afford to sit idle while the Auckland ‘boat’ we all love is allowed to sink.

Using the port asset at this time would allow Auckland’s destiny to be brought more into our own hands in significant other ways.

On the commercial front, Auckland has been a port city for its whole history. POAL accounts for around 30 percent of all trade by value (imports and exports) passing through New Zealand’s sea and air ports. About 70 percent of the goods that pass through the Port are delivered to or originate from customers located within 35km of the port.

Auckland only needs to look at the success our neighbor Port of Tauranga has enjoyed since it was partially privatised and became a listed company some years ago. It has gone from being a small provincial port to New Zealand’s largest and worth twice as much as Auckland’s $1.1 billion. The revenue Tauranga generates has allowed the port to reinvest in development – to dredge a channel to attract larger container ships, to modernise facilities and build a competitive and growing import business that is attracting Auckland customers to supplement its large virtual monopoly export trade in dairy products, logs and kiwifruit.

If we liberate the port and it became a listed company we can create a market-led opportunity for it to invest and expand without impacting Council’s books. The company would have more commercial freedom to compete head-to-head with Tauranga and expand its capital programme of building inland ports and developing relationships with other provincial ports.

On the investment front, I’m hearing feedback that Ports of Auckland shares would be popular with ‘ma and pa’ Aucklanders. As we know, there’s a huge amount of private capital available in New Zealand. That our local Ngāti Whātua leaders have already put their hand up is a sign of confidence; the sale also represents a potential investment for our ACC and NZ Super funds, not to mention the opportunity for port employees and other Aucklanders to be part of a new designer ownership.

I am confident that the Council would get a good price. So should the sale be a full or partial sale?

A 100 percent sell down would give the Council the maximum revenue it badly needs, and it would still have full regulatory control. The recently confirmed Unitary Plan makes clear that nothing would change in terms of the port’s permitted activities within its footprint and what processes it has to follow. Nothing changes on that score.

A 51 percent or greater proportionate sell down would still leave Council with a stake, but the value of tying up 49 percent (or less) against the revenue benefits from a full sell-down is debatable.

What matters is that Auckland have the debate – but not for too long. PM Bill English’s comment that he is pleased to see Council looking seriously at what it has to do to fund its share of the city’s infrastructure is a reassuring signal.

The message I take is: “If Auckland shows leadership to take charge of its destiny, Government will come in behind and support it.”

Fuelled by the 800 plus additional people settling in Auckland every week, our housing, infrastructure and traffic congestion crisis is getting noticeably worse by the week.

A port sale creates an opportunity we can ill-afford to pass up. Unless, of course, someone has a better idea – if so I would like to hear it!


The Spinoff Auckland is sponsored by Heart of the City, the business association dedicated to the growth of downtown Auckland as a vibrant centre for entertainment, retail, hospitality and business.

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