Brian Rudman: The people win lottery over control of the waterfront

May Day came a month early on Friday with the announcement that Auckland Regional Holdings plans to return Ports of Auckland to 100 per cent public ownership by buying the 20 per cent of shares it doesn't own.

Deliciously, this landmark reversal in the 20-year fad for privatisation of publicly owned assets is being promoted by Act-supporter Judith Bassett, as chairwoman of ARH. It has widespread support across the political spectrum, apparently gaining unanimous approval from regional councillors at the secret meeting called to approve the move.

ARH and its advisers, who are charged with husbanding the region's $1.3 billion asset portfolio to raise income for roading and stormwater projects and the like, say the $169.6 million purchase price will provide a great return in terms of providing extra cash for the drain-pipes and bitumen. I have to take their word on that.

To me, the best return in this deal is that it ensures the public can now have control over the future development of the city's invaluable waterfront front door.

It means that last year's expensive fiasco, in which the Government and Auckland city ratepayers were forced to pay the port company $54 million to save iconic Westhaven Marina from overseas developers, will never be repeated.

Indeed the $169.6 million seems cheap when you consider that after the Westhaven scandal, the John Banks-led Auckland City Council came up with a $400 million rescue plan to buy up key port properties, such as the tank farm reclamation east of the harbour bridge, to ensure orderly development took place. That conservative-dominated council even drew up a secret contingency plan to buy the 20 per cent of privately owned port shares currently under offer, as a cheaper alternative to buying the land outright.

As a result of Friday's announcement, Auckland ratepayers will be spared these expensive investments. For which we should all give praise.

Roads enthusiasts are muttering darkly that if there's spare cash around to invest in shares, it should be going into new tarmac and bridges. But ARH says the cash for the share purchase is not coming from income, but from capital currently invested elsewhere in bonds or cash deposit at lower rates of return than can be expected from the larger port company investment.

As for the role of ARH in the future development of the waterfront, that can be traced back to ARH's establishment legislation. This requires it to prudently manage the region's assets in the long-term interests of the region having regard for principles of sustainable development and with consideration for a broad range of social, economic, environmental and cultural issues. Rather a wider brief, you have to admit, than just roads, roads, drain-pipes and more roads.

I'm delighted, as one who argued last year for a return to full public ownership, that the proposed purchase was driven by hard-nosed business and investment advisers, not by ideology. Right-wing ideologues will be left flat-footed to discover it was the independent board of ARH, Mrs Bassett, Peter Hubscher, Joce Jesson and Susan Paterson, aided by glass-tower investment advisers, who put the proposal to the final decision-makers, the politicians of the ARC, not the other way round.

Left-leaning regional council chairman Mike Lee must have hardly believed his luck.

As to whether it's a good investment in purely return-on-capital terms, I'll leave to the gurus of the business pages. But throw in the opportunity it gives for public control of future development of the city's waterfront as well, and it seems to me to be like buying the winning Lotto ticket.

Though if past performance is anything to go by, it's not such a bad investment either. Writing just over a year ago, Herald sharemarket expert and port company shareholder Brian Gaynor was full of praise for the port's performance. Auckland regional ratepayers, he noted, "have done very well from the privatisation of Ports of Auckland".

In 1989, as part of local government reforms, Auckland Regional Council inherited 80 per cent of the port shares; Waikato region, 20 per cent. In 1993, at the time of stock exchange listing, Waikato sold its shareholding for $64 million. Mr Gaynor says Waikato ratepayers should be grumbling as those shares, at the time of writing, were by then worth $275 million, including dividends and capital repayments. As for Auckland's 80 per cent shareholding, its value had risen from $245 million to - with the additional pay-outs - $1.1 billion.