Robin Gwynn: History, geography ignored in port debate

Robin Gwynn of Napier asks if now is really the right time to sell a minority share of the port. Photo / File

A survey on whether or not to sell the Port, or some part of it, has shown how unpopular that would be.

No fewer than 351 out of 375 responses to a public consultation process opposed the idea.

So did 83 out of 97 meeting attendees, and 99 out of 100 responses to a radio poll.

No, it's not a recent survey. It was conducted in 1992. It's important, though, because it shows that there is absolutely nothing new about what the Hawke's Bay Regional Council is now proposing.

The idea of floating the sale of shares in the Port has been around for more than quarter of a century. It has turned up several times over, and always been rejected.

The 1992 survey shows just how strongly our residents have felt on the matter.

Why, then, isn't there an introductory page in council's recent consultation document which spells out that background and engages with it?

As soon as that question is asked, other glaring omissions in the consultation document come to light.

In the late 1990s, far from having debt, the Port was seeking to distribute $13.75 million of surplus profit.

So what has happened to the Port's profits across the past generation, and how it has come about that the Port now has the $86.6 million debt it has already incurred?

The answer lies hidden in the statistics of the dividend taken by the regional council over the years from the Port's profit, statistics missing from the consultation document.

In rough terms, in the early 1990s about two-fifths of the Port profit was paid as a dividend.

In the later 1990s, it was a little over half. But in the present century, the amount paid out as dividend has sky-rocketed.

In 2001-5 it was not two-fifths of Port profit that was taken as dividend, but double that, four-fifths. In 2006-11, and again in 2016-17, more than two-thirds of the profit was taken.

Only in 2012-15 did the amount paid out fall back to a more sustainable fraction, still more than half even then.

The council has been responsible for the Port's debt. The Port hasn't been left with enough capital, so it has had to resort to borrowing.

That background hardly supports the figures council is putting forward in its assumptions and projections.

'Risk' features largely in council's rationale for its proposals. But there has always been risk, and that risk has always been understood; again, nothing has changed.

At the start of the century, council considered it but decided that no 'value can be added by a minority shareholder and that the presence of an inappropriate minority shareholder might, in fact, have an adverse impact on the regional community'.

'Despite the risk associated with the investment', council concluded then, 'we believe that the community wants the Port shareholding to be retained within the region' as a strategic asset, like Hawke's Bay Power.

Since then, the performance of both strategic assets has shown it was right to keep them in our own ownership.

What, too, of the geographical constraints the Port faces?

There is no discussion of them in the consultation document, and no discussion of where Napier best fits in any consideration of the country's ports as a whole from a national and international viewpoint.

Instead, there is an implicit assumption that the success of the Port of Tauranga is due to its partial share float, so all we need to do is follow the same model.

Truth is, it has been of little significance. Tauranga's rapid growth has been due to much more fundamental features, Its suitability as a deep-water port, its ideal geographical location, and the availability of plenty of adjoining land for infrastructural expansion.

Hawke's Bay really needs a discussion on what role the Napier port is best suited to fulfil, and that needs to take place before any hurried decisions are made about ownership models.

By ignoring our past history and the geographical constraints, the options council presents in 'Our Port: Have your Say' are skewed.

It is reasonable to ask whether the regional council should be so concerned about 'investment'.

Its central concern must be to use sensibly the assets under its immediate control.

Those assets came because of its duty to maintain the environment – not an investment matter – and because it was gifted control of the Port for the common good of Hawke's Bay – again, not primarily an investment matter.

We are dealing with a different scenario of gifting and responsibility.

Council says it believes there would be 'strong market interest' in a share float.

It's probably right. But if so, that will be because financial analysts expect personal advantage from their investment. If they are right, it would be better for the port to remain fully in public hands so our region enjoys the benefit.

Year in and year out over each of the past 40 years at least, the port has been profitable.

Now we're told we are on the eve of some sort of boom. If there was ever a right time to sell, how can this possibly be it?

* Robin Gwynn is an historian and a former Napier city councillor