Port of Auckland occupies 77 hectares of waterfront land. Photo / Brett Phibbs.
Auckland mayoral hopefuls say selling the port isn't the answer to the city's dire financial squeeze - but they have plenty of ideas for the prime land on which it operates.
Selling or publicly listing all or part of the ratepayer-owned port - which mayor Phil Goff says has been underperforming for eight years at least - is not a new suggestion, but is topical again with the council's revelation that because of the pandemic's impact on its income, the money is running out to operate transport and services.
Goff has told the Herald the council is looking to improve the port's financial performance and secure a better return on the capital it has invested, with options including separating the port and the land it sits on, requiring rent instead of dividends and leasing out management of the port. Goff is not contesting this year's mayoral election.
The Herald asked mayoral aspirants for their views on selling the port operation, in full or in part to raise funds for the city's coffers. The port, its location, its future location, and its operations have been the subject of several official studies, costing millions of dollars, with no decisions made.
The 77 hectares on which the port operates is not owned by Auckland Council, so the council cannot give an up-to-date valuation on the waterfront land. A council spokesperson said the land was owned by the port company, of which the council is 100 per cent shareholder. The port company's 2021 annual report gave a 2019 freehold land net value of $378.9m and wharf assets of $313.2m.
The mayoral candidates responses, in alphabetical order:
Viv Beck said the current council already planned to sell $250 million of council assets.
"But council does need to look at the value it's getting from these assets. The CCO [council-controlled organisation] review in 2020 commented that council had no property strategy to guide this. I would make this happen. I would love to see our prime waterfront land used in a way that Aucklanders can enjoy it, that enhances our region's appeal as well as having a higher-value use for the land.
"Retaining ownership of the land and leasing all or part of it for higher-value purposes may well help Auckland deliver more of the transport and other infrastructure we need."
Beck said the bigger the decision on the port, the government would need to take the lead because of the scale of the investment involved.
Wayne Brown said the council should require the port to produce a 6.5 per cent return on the value of the land it operates on - at least $400 million a year.
"That will immediately force changes. The port's not worth anything but the land is. No other part of Auckland has people on $6 billion of land who don't pay at least a $400m return. That's equivalent to what the Port of Tauranga pays a year for using the space."
Brown said Auckland ratepayers were subsidising the port by $500 each a year for a 2022 financial year mid-year dividend of $2.1m.
"It's a straight commercial [proposition]. You're on $6 billion of land, give us a 6.5 per cent return, start now. Then watch what they do. The most valuable land in New Zealand has a layer of used cars on it.
"It will mean changing ownership of some parts of it. Car importers get three days of free parking on the wharf [for example].
Efeso Collins supported public ownership of strategic assets, so did not favour selling off part or all of the port.
"I am open to considering how Northland, Tauranga and Auckland ports can work together for maximum efficiency and coordination.
"I keep a close eye on council finances but I don't believe that selling off assets in a panic or slashing services is a way to address any financial challenges - and it often increases unemployment or drives down workers' terms and conditions.
"The Covid-19 pandemic has shown the importance of maintaining supply chain oversight and infrastructure, and I also want to see strong ongoing engagement with the workforce and their union, as well as with the board of Ports of Auckland."
Craig Lord said he hated the idea of "selling the family jewels".
"It sits badly with me [but] if economists and accountants could convince me and Auckland citizens it is the right thing to do I'd have to listen to them.
"To me Auckland is a port city and I want it to remain so."
To the suggestion the port is not a jewel in terms of financial performance, Lord said "the question has to be asked why?".
"Is it because the wrong people are running it or because it is a bad business to be in?"
Lord said he was concerned at being told the port had become "very unionised".
"It's gone back to the 60s and 70s and that's really changed the operational processes and it's going to get worse. We need to do a full audit on how the port operates."
Leo Molloy said it was "a sad day when we are having a conversation about selling the family jewellery just to continue operating".
He said the land occupied by the port earned no rates and was the "most valuable asset we have around the fringe of the harbour".
"It never should be operating that space. It should have been moved long ago because it is occupying 77 incredibly valuable hectares of land."
Molloy advocates leases in perpetuity being offered for the land - on the same basis the Viaduct Harbour space is successfully operated.
Auckland ratepayers had received at times no, or little, return on their investment, "on something arguably worth around $13 billion", he said.
He based that figure on the value of the 77ha using the Viaduct Harbour model of price per 10,000sq m, which added up to around $8 billion, plus the $4.4b market capitalisation of Port of Tauranga, which he called "a bit of a shining star".
"I know it's an export port as opposed to import but it's a good comparison for the Auckland operating company, so that's around $13 billion, let's call it $12 billion. Do we really want to free up $12 billion for this council?"
Under his plans for the port land, the port would need to retain a few hectares for operation "in the medium term at least".
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