Brian Rudman: Mayor's paralysis in port dispute leaves role of leader vacant

5:30 AM Friday Mar 9, 2012

Under the new Super City model, Mayor Len Brown is supposed to provide the united voice Auckland so long lacked. But when the bosses of the city-owned port company went feral and fired nearly 300 workers, where was our leader?

He's stricken with a case of political laryngitis, able to mouth nothing but meaningless slogans like, "I am on only one side in this dispute. The people of Auckland," and wringing his hands about his "powers to intervene" being "severely restrained by legislation".

Yesterday Gary Swift, the chief executive of Auckland Council Investments Ltd (ACIL), the council's holding company that oversees Ports of Auckland Ltd (POAL), tried to divert the growing wave of criticism over the mayor's fence-sitting.

"It's ACIL, not Auckland Council, which has the obligations for the governance of POAL," he said. "The council's role is to appoint a board of directors for ACIL and establish a yearly statement of intent."

This, of course, is true. But that doesn't mean the mayor must stand mute and powerless in a crisis situation like this, where two council organisations gang up in an ideological crusade to rid themselves of the unionised workforce.

When push comes to shove, it's the mayor and councillors who own the port company on behalf of Aucklanders, not Mr Swift and his unelected board.

With the inevitability of armageddon between the union and POAL becoming increasingly obvious over recent weeks, and ACIL apparently happy to let it happen, it was up to the owner - the mayor and council - to either stand aside and signify consent or bang heads together to defuse the situation.

Given it was an open secret that the port company was itching to deunionise its work force, it was monumentally short-sighted of the union to head straight into the trap being set for it.

But that doesn't make it right for the victors - which in the end includes you and me - to now strip the workforce of their terms and conditions of employment, and invite them to try their luck with one of three private stevedoring companies being set up to oversee the workforce in future.

In a now widely circulated memo of January 27 to councillor Richard Northey, Mr Swift argues that POAL was conducting "good faith" negotiations with the union on its expired collective agreement, while at the same time examining the idea of putting the workplace on a contract basis.

He emphasised that the POAL board "is very experienced in labour relations matters and they are being closely advised by company's lawyers on their legal obligations".

A cynic would ask why bring in the lawyers to shadow every step of the negotiations unless you wanted to ensure your trail was squeaky clean when you headed off on the deunionise trail, which was the real goal.

What's most dispiriting is that the only likely winners in all of this are the international shipping giants like Maersk - last employer of POAL's chief executive, Tony Gibson.

Exempt from the fair trading provisions of the Commerce Act, the shippers are able to work in concert, or alone, to play one New Zealand port off against the other, in order to screw the best price deal possible.

The result is a desperate contest for survival between the country's ports, with workers' wages and conditions the first casualty.

In Auckland, there's the added pressure of the council's insistence the rate of return on its port company investment over the next five years double from 6 per cent to 12 per cent.

In his memo, Mr Swift attributes the 12 per cent goal to council chief executive Doug McKay.

This is despite Port of Tauranga chief executive Mark Cairns telling the 2007-2009 Royal Commission on Auckland Governance that because of an excess of ports, the New Zealand port industry "performs very poorly from a financial perspective" with the fierce competition leading to "considerable over-investment" by local government-owned port companies, leading to returns "well below the cost of capital".

These comments were echoed by the recent report of the Productivity Commission.

Of course, the shippers love the interport competition. In Australia in 2009, it cost them around $400 to process a container. In New Zealand, they've forced the price down to an unsustainable $260.

Mr Brown wants a return of 12 per cent. Instead of trying to squeeze it out of the workers, just upping the handling cost of each container about $20 would achieve the same end.