Editorial: Auckland Council needs to reconsider ownership of the city's under-performing port

After capital spending of $550m over five years, net profit at Ports of Auckland is down 57 per cent. Photo / Michael Craig

Editorial

EDITORIAL

Auckland Mayor Phil Goff's treatment this week of a request for comment on Port of Auckland's disappointing financial results showed why calls are growing for the council - and ratepayers - to be relieved of at least partial ownership.

His written response was a cut and paste job - an old response to Herald ownership questions with the addition of a new paragraph that said because of Covid-19 and the port's major investment last year in cargo automation, it was entirely expected that the dividend to the council would be significantly reduced.

His office was upfront about the lack of effort - the mayor has already made his support for council ownership clear. Move along please.

But what of the financial results, which weren't just about the dividend to the city - squeezed by 60 per cent on last year at $4.9 million, but anticipated after being signalled last year?

Net profit was down 57 per cent, revenue was down 6.7 per cent and all cargoes, including the port's lifeblood vehicle imports, were down. The port's capital spending in the past five financial years now totals $551.6m.

Even allowing for their import/export focus differences, for the second year in a row, the performance of Auckland's port had been shamed by the part-listed Port of Tauranga, 51 per cent owned by a regional council.

With the Auckland Council itself also a casualty of Covid and trying to plug a multibillion-dollar infrastructure hole, a mayoral nod to the concerns of ratepayers - residential and commercial - seemed appropriate.

Instead the response underlines what is seen as a major problem with the port - lack of rigorous financial scrutiny.

Not only would a return to a partial listing of the port on the NZX raise much-needed money for council coffers, its return on investment would go under a market microscope.

As respected market commentator Brian Gaynor recalls, the port company was "reasonably dynamic" under mixed private/public ownership between 1993 and 2005 when 20 per cent was listed on the NZX. It was delisted after a local authority takeover.

Importantly, its performance was much more transparent; now "it just continues to under-perform", he says.

Port chief executive Tony Gibson doesn't shy from the charge the performance was again disappointing.

The port should be much further ahead with its automation project - a New Zealand port first - which will have a positive impact on cost structure, he says, but Covid has been hugely challenging to progress.

An annual report promise that automation will be full throttle by the end of this year has already gone by the wayside - it'll likely be March now.

Also in the annual report, a caution not to expect too much this financial year.

The outlook is for uncertainty, Covid's economic impact could continue to be significant and it's anticipated cargo volumes will be flat.

But there's one certainty: calls for a rethink of the council's ownership of the port won't go away and Mayor Goff may have to spend more than a paragraph of his time considering them.