The consequence was that the average person lacked the spare cash and the shares were purchased by large companies, mostly Australian owned.
The purpose of local government is to provide for their constituents. While I understand there is an urgent need to expand the port, and nobody wants to nearly double rates to raise capital internally, the proposed partial-sale lacks long-term vision.
The port accounts for 76 per cent of revenue for the council, which subsidises rates by $10 million a year. Selling 49 per cent of the port would mean a loss of half of that revenue. As well as this, Napier's port is one of the most profitable in New Zealand.
The growth acquired through the expansion would mean more income generated–profit that the people of Hawke's Bay would lose ad infinitum.
The idea of privatisation has, overall, been a failure. Public ownership means responsible ownership – which I can speculate is the reason the other options were rejected, and governance oversight (including maintaining a vote on the board's director appointments) by the regional council is a stipulation in the preferred option.
However, this is a small comfort. Shareholders are driven by the demand for profit; which is understandable given they are investors seeking the highest dividend possible. But this adds pressure in the operation and vision of the port which may not be in the interest of the people.
While the regional council will govern with the best intentions, previous experience of this model has had mixed success. Backroom negotiations are neither transparent nor accountable.
Other options have been floated – namely of a "user-pays" model or a referendum.
The user-pays model is proposed by councillor Paul Bailey, that the regional council borrow the required amount to expand, isolate this debt from the port's balance sheet and establish repayment through a levy on freight while using existing assets as guarantee, while maintaining 100 per cent public ownership.
The main criticism of this model is that any additional charges could potentially scare away port users – although this is a common argument used when discussing privatisation and in many cases does not eventuate.
The port is critical for many industries and it seems equitable that there is financial input from those who will use the infrastructure.
A referendum is a great idea; and it is genuine engagement rather than simply consultation.
While I trust that the regional council will be considerate of opposing views and constructive in its approach, it is only fair that the current stakeholders (the people) have a say in what happens to a strategic asset.
Personally I find the arguments that the sale is too complex an issue to put to a referendum is undervaluing people's ability to make decisions and extremely patronising.
The Port of Napier is invaluable to the city.
Public ownership creates accountability, impetus on social governance, low rates of interest on debt and generates long-term profits for people. Selling shares for short-term gain fails to see the big picture. We should not short-change future generations.
As part of the preferred option the council would retain governance oversight and the ability to determine the make-up of the board by voting on director appointments.
The port has been wholly-owned by ratepayers through the council since 1989, and makes up about 76 per cent of the council's revenue-generating investment assets. The port contributes about $10m a year in a dividend to the council, resulting in a lower rates bill.
The council, which owns the port on behalf of ratepayers, said the port needed $320-$350m over 10 years for it to support the growing Hawke's Bay economy.
* Damon Rusden is a Green Party member who ran as a candidate in the 2017 election.
