Auckland Council, port relationship needs work, better oversight: deputy mayor

Ports of Auckland, the country's main gateway for imports, is under fire for its health and safety record, productivity performance and disappointing financial results. Photo / Brett Phibbs

The relationship between the Ports of Auckland and its Auckland Council owner hasn't been good enough, says Deputy Mayor Bill Cashmore, who is "determined" to lift the standards of oversight and port accountability.

Speaking to the Herald after a closed-door session on Tuesday between port leaders and the council-controlled organisation oversight committee he chairs, Cashmore said the council hadn't "spent enough time with the ports".

"I'm determined as chair of (that committee) to lift the level of accountability and oversight in its relationship with the ports. We've started a bit of a journey and we need to continue it.

The port, the country's main gateway for imports, is under fire for its health and safety record, including fatal accidents, productivity performance and disappointing financial results - Auckland ratepayers did not get a 2021 interim dividend and according to the council, no further dividends are forecast for the rest of the year.

A sense of the distance between the ports and the council is highlighted in Cashmore's admission that this week was the first time he had met Bill Osborne, a director since 2017 and now port chair after the recent exit of Liz Coutts.

On the port company's controversial container terminal automation project, a capital investment since 2016 but still not fully implemented, Cashmore said Osborne had told councillors the project cost "landed within the budget set by the board".

He declined to say what that budget was. Sector observers suggest the capital investment so far is well north of $400 million. Chief executive Tony Gibson will only say it is much less than that. The freight sector blames the failure of the automation project so far for the current supply chain logjam, because Auckland wasn't ready for the container shipping upsurge generated by consumer spending in the pandemic.

Councillors, before going into the confidential session - for "commercial sensitivities" reasons said Cashmore - had formally received the port company's half-year financial report showing a $10 million fall in revenue on the previous period, and quarter two results for key performance indicators in the ports' 2020-2023 statement of corporate intent, against 2021 annual targets.

Auckland Deputy Mayor Bill Cashmore, left, with Mayor Phil Goff and Councillor Chris Darby. Photo / Doug Sherring

Quarter two results showed four lost time injuries against an annual target of zero; a crane rate (container lifts on and off a ship an hour) of 24.6 against an annual target of 32; a ship rate (containers moved on and off ships per hour) of 37.5 against an annual target of 75; a revenue increase of -6.8 per cent against an annual target of 0.3 per cent.

Net profit after tax in quarter two was $9.5m against an annual target of $20.4. Return on equity performance indicators exceeded annual targets.

Earlier this month unaudited figures for the six months to December 31, showed a 20.8 per cent decrease in net profit after tax to $13.6 million, a 7.3 per cent fall in revenue to $114.1m, and a 12.4 per cent reduction in container volumes to 416,173 TEUs compared to the same period last year.

Cashmore said in the closed discussion councillors were told productivity had started to lift, more improvement was forecast next month and again mid-year. By the end of this year productivity would be "back up".

"Container lift is currently not as high as it once was but it's still higher than most ports in New Zealand and Australia."

Asked how councillors would hold port leaders to those undertakings, Cashmore said through the statement of corporate intent the company signed up to each year.

"First and foremost, we want to see a dramatic improvement in health and safety and all the measures to maximise people's safe work practice and the oversight of safe work.

"Second, productivity ... we want to see measures introduced that the port said (today) they were going to be doing."

If the promised improvements don't happen?

"We can't instruct the port, only the board of directors. But we can give the board fairly terse opinions and our thinking.

"More importantly there's got to be a better relationship between the board and the council. We've seen two directors leave and two new directors appointed this year so there's been quite a change in the board.

"That's where council's big lever is - the only one we've got under the legislation the port operates under."

Cashmore said a lot of work at governance level was about relationships "rather than strict rules and ticked boxes".

"It's about human interaction not political point-scoring."

Challenged that governance was also about commercial outcomes, Cashmore agreed.

"It hasn't been as good as it should have been but there are real reasons for that and the ports haven't got everything right. The biggest challenge has been Covid ... and they didn't lay off any stevedores over that period.

"They're now working with stevedores to lift freight productivity using all the things open to them including technology, which is where the new automated straddle carriers play a big part."

Asked if his committee took any responsibility for the ports' issues, Cashmore said "we should have stepped up earlier, but we're doing it now".

"Communications weren't great and I'm determined to improve the relationship."

He hadn't met Osborne before because the committee only met with the previous chair.

"That's how we did things. We need to spend more time at the port with senior management to get a better understanding of operations.

"I think that's been a key weakness on our part."

He said it was "a fair statement" that oversight of the port company had not been as good as desirable.

"We should have done a better job but the circumstances of the (port) legislation make that sometimes challenging."