It hasn’t worked though. Councillors from both the left and right and the business community know that DP World and other multinational port operator firms aren’t charities. If a firm is willing to pay billions for the right to operate the port for 30 years, it’s because it reckons it can squeeze that money, plus a healthy profit, out of the port’s users.
When you run the numbers, as the Maritime Union has, you see a private operator would need to pull out over $100 million a year more in profit from the port than it’s paying now. Where’s that extra money going to come from?
Not from higher through-put – the port is already at capacity and its bid to expand into the harbour has been rejected by the Environment Court.
Not from cost-cutting – the previous chief executive tried to cut labour costs with automation and it resulted in the port being slower, more expensive, and less safe.
No, it would come from higher charges on businesses using the port. Over $100 more per container, the union estimates.
That’s not some far-fetched hypothetical. It’s already happened across the Ditch. Australia brought in private port operators and since then charges on port customers have exploded.
Just last November, DP World increased export container charges in Melbourne by 52 per cent to $176 per container. Compare that to Fremantle, still owned by the state government, where the fees are only $50.
Higher port charges are serious costs that would get passed on to Kiwi consumers and make our exports less competitive overseas.
These multinational port operator firms don’t want to control a piece of critical transport infrastructure like Port of Auckland because they care about Aotearoa and our economy. They see it as a chance to push up prices and squeeze profit out of us.
They’re not going to pour billions into new facilities. They’re going to spend as little as possible and sweat the existing infrastructure for all it’s worth. We saw it when the railways were privatised. We don’t need to learn that lesson twice.
Credit where it’s due, since Brown took office, the performance of the port has improved. It seems to be over the worst of the automation disaster and is posting healthy, growing dividends.
So, why mess with a good formula? As it stands, we have a port that’s relatively affordable for businesses to move goods and is paying a modest, sensible dividend to the council.
Privatisation would be a sugar-rush of money for the council, ultimately paid for by Auckland businesses through higher port charges for decades to come. It might make the council’s books look better for a few years, but at a cost to the Auckland economy.
As for the idea that the money from selling the port could be put into some investment fund – is it the council’s job to be making high-risk investments? I’d say, no.
Its job is to ensure Auckland has the infrastructure and services we need to function as a prosperous city. Infrastructure like an affordable port.
Rather than flogging them off, we need to be investing in our ports, and in coastal shipping – the greenest and cheapest form of transport there is.
The amount of cargo we need to move around the country continues to grow as the population rises and the economy expands. And we don’t want all that cargo in trucks, clogging our roads and creating potholes.
A 40-tonne truck does 2500 times the damage to the road that a 2-tonne car does. So, the more cargo we move by coastal shipping (or rail) the better shape our roads will be in. No potholes on the blue highway.
Unfortunately, the Government is getting it wrong, planning to cut the trivial $20m a year that is being invested in underwriting ships to carry cargo on our coast and putting that money into roads instead. Ironically, that just means more trucks in your way when you want to drive and more potholes damaging your car.
We’re a maritime nation, dependent on shipping for our economic survival.
We shouldn’t be running down and selling these assets out of our control. We need to keep our port in public ownership and invest in getting more cargo off our roads and onto ships.
· Shane Te Pou (Ngāi Tūhoe) is a commentator, blogger and former Labour party activist.
