Port of Auckland privatisation would cost local economy - Maritime Union

The Port of Auckland could be sold to an overseas investor.

Opinion

OPINION

Privatising Auckland’s port is not as good a deal as it looks, writes Maritime Union of New Zealand national secretary Craig Harrison

A million dollars a week to ratepayers. That’s the rate of return the Port of Auckland claims it can deliver within three years. But if we let the council privatise it that will quickly turn into $3 million a week going into the pockets of some offshore private equity fund.

If the Australian experience is anything to go by – and it is the same players there who are now hungrily circling our port – that extra $2m will come out of the pockets of Auckland businesses, and ultimately Auckland consumers.

That’s the conclusion drawn in the recently released report we commissioned – The Costs and Risks of Privatising Ports of Auckland operations. The report identifies the likely minimum price the port can be privatised for, what kind of returns that will require for the company that buys it, and where that money is likely to come from.

At the risk of spoiling a good read, the sale price that has been floated is at least a billion dollars, and the additional revenue needed to pay that down and provide a standard industry return is $70m. Where ports have been privatised in Australia that’s been paid for by increasing container charges on customers from single digit rates to more than $100 a unit.

This is the minimum cost scenario. Because there is no competition for the port, freight customers will have no choice but to pay whatever is asked. The two nearest competitor ports are hundreds of kilometres away from Auckland, are already running near capacity and are connected by road and rail networks that are far from resilient.

And this opportunity for price gouging will run year after year after year. In Australia these privatisation leases have terms of 50 years, some are closer to 100 years. Long after the sugar hit of an extra billion dollars has worn off, the people of Auckland would still be paying the price.

That price isn’t just the extra cost of getting a container into or out of Auckland, it’s also the downstream cost of the drag this creates on the economy. Like our roads, or our electricity network the port is infrastructure. It is important the port pays its way, but nowhere near as important as its role in ensuring Auckland’s businesses and wider economy flourishes.

And when the port doesn’t work for Auckland it doesn’t work for the country. Only recently Professor Tim Hazledine calculated the failure of the port’s automation project, and the subsequent delays and tariffs, cost the national economy more than a billion dollars. The negative impact of privatisation wouldn’t just be an Auckland problem.

It is, however, we the ratepayers of Auckland, who are picking up the bill to prepare for privatising our port. We don’t know how much they are paying, or what plans are being drawn up, we don’t even get to know how many documents have been paid for or what they are called because Mayor Brown wants to keep that secret.

That’s despite his office claiming the numbers in our report don’t stack up. I don’t see how you can have that both ways. Surely you don’t get to keep your reports and numbers secret while calling for an “informed debate”.

That’s probably why this week, the mayor’s office has tacitly admitted that it thinks the rates being charged to importers (and I assume exporters too) are too low, by stating “The port also did not have a mandate to subsidise importers with artificially low charges.”

This unnamed Mayoral spokesperson also claimed that the Mayor and councillors want to see port charges increase. This is probably a surprise to many councillors who I doubt want to have to tell businesses and consumers in their wards to suck it up for the good of offshore profits.

But just to be sure we will be asking these councillors to be very clear about their support (or not) for privatising the port and the subsequent impact on Auckland’s businesses and citizens. It is a decision that would impact Auckland for generations to come.