COMMENT: Port companies and their owners are bracing themselves for radical recommendations — including a potential nationalisation of two or more industry players — to give effect to proposals to remove Ports of Auckland from the city's waterfront.
The speculation has been running hot among the Auckland business community since late last November that nationalisation may be on the agenda after Auckland Mayor Phil Goff made it clear that it would be the council — not a Government-appointed working group — which decided when, if and where the council-owned port should move.
Finance Minister Grant Robertson is understood to have let it be known he won't be writing a multi-billion-dollar cheque to effect a "merger" anytime soon.
But loose talk in political circles has refuelled speculation.
In part, this is due to the tardiness of a Government-appointed working group to report on its brief to advise how to create a robust supply chain action plan that "delivers on NZ's interests over the next 30 years".
This includes the long-term future of ports in the upper North island, with a particular focus on Ports of Auckland and Northport, and priorities for investment in rail, roads and other supporting infrastructure.
Statements made by NZ First leader Winston Peters on the campaign trail in August 2017, where he gave a "cast-iron commitment" to move container operations from Ports of Auckland if his party was in a position of influence after the election, are also a factor. So too, the positioning of Regional Development and Associate Transport Minister Shane Jones (an NZ First MP), the working group's Cabinet sponsor.
Also the fact that if Auckland Council puts its foot down, the Coalition would likely have to resort to legislation to acquire the company to give effect to what Goff considers a pre-ordained strategy.
Again, a Herald exclusive spelling out that "Peters wants legislation to move all container operations to Northport at Marsden Pt near Whangārei by the end of 2027" is being mentioned.
Officially, the five-person working group — chaired by businessman Wayne Brown — is undertaking a comprehensive upper North Island logistics and freight review.
A Cabinet briefing paper noted it had been asked to report by December 2018 on three specific issues — the most significant was a feasibility study exploring options to relocate Ports of Auckland, including giving "Northport serious consideration".
Shifting Ports of Auckland from the Waitematā Harbour would be popular with a large number of Aucklanders. The difficulty is that the council's preferred options are the Firth of Thames or the Manukau.
The problem is that there are multiple agendas at play: the Coalition Government, NZ First, the different port companies, council owners and shareholders will all have different perspectives.
For a start, the ownership interests and issues are complex:
• Ports of Auckland is 100 per cent owned by Auckland ratepayers through Auckland Council, which (so far) is intent on retaining ownership and access to the company's dividend stream.
• Ports of Auckland is also a 19.9 per cent shareholder in Marsden Maritime Holdings, whose major shareholder is the Northland Regional Council (53.61 per cent) but also includes other minor shareholders such as ACC (2.18 per cent).
• Marsden Maritime Holdings and the publicly listed Port of Tauranga each own 50 per cent of Northport.
• Port of Tauranga — worth some $3.5b on the NZX on yesterday's share price — is majority controlled by Quayside Securities with 54.14 per cent (this company's shareholder is Quayside Holdings, which is 90.92 per cent owned by the Bay of Plenty Regional Council). It is one of NZ's best publicly listed companies with some 13,000 shareholders who have done well from their investments.
Merging the varying combinations of such interests could spark takeover code thresholds and would inevitably trigger the Commerce Act through the merged entity having dominance of the container shipping sector.
Which is where legislation comes into play.
It is a major issue which deserves debate from many perspectives.
The Coalition Government also announced it would spend $600 million on rehabilitating the North Auckland Line and building the Marsden Point Branch, the long proposed rail extension to Northport at a cost of $200m; the total works to cost $800m.
Peters and NZ First also envisage that the area around an enlarged Northport could be a tax-free zone (including duty and GST) to form a Special Economic Area.
Time for the working group to report and the debate to begin.