The Government has decided the Auckland port must close. Photo / Brett Phibbs
COMMENT:
In a terrible week for New Zealand, it's been a good few days for the future of freight and for Auckland, Northland and Tauranga. The Government has decided the Auckland port must close. It's also asked the Ministry of Transport, supported by Treasury and the Infrastructure Commission, to report by May on the logistics of moving the port operations elsewhere. Cheap champagne all round.
All else being equal, over the next 15 years or so the Port of Tauranga will expand, Northport will too, and it will be connected to the Northland railway by a new spur line. A new inland freight hub will be built in Auckland's northwest and the rail and road links between Whangārei and Auckland will be strengthened. Tauranga will reach capacity and eventually Northport will become the country's largest port.
Planning will begin soon on a new ownership structure, who will bear the costs and benefits of the changes and what will happen to the Ports of Auckland land.
All else being equal. The cost, logistics, engineering and more will throw up difficult problems. So will the politics, and the saboteurs of the plan are busy. Still, we live in hope.
The most pernicious thing being said by opponents is that the plan is not supported by an "evidence-driven, robust and independent" business case analysis (BCA). I'm quoting Auckland Mayor Phil Goff, who claims he supports the port moving, but in 20-30 years, and not the way that's been proposed.
That is the same as saying it shouldn't move. Goff is now the leading politician standing in the way of moving the Auckland port.
READ MORE:
• Auckland port decision to be made in first half of next year
• Ports of Auckland has to move, says Prime Minister Jacinda Ardern
• Premium - Port in a Storm, part 2: Why move the Auckland port?
• Barry Soper: Auckland Port relocation decision could be a coalition breaker
Why is it pernicious to say we need a better business case to tell us whether we should proceed? Because a business case is not what people think it is.
It can tells us, to a degree, what things will cost and if that cost will return a net benefit. That's important. No one is saying it's not. But it's not the whole picture.
A BCA considers non-economic factors, too, but it does so by giving them economic values and that's not always useful. There's no business case for doing anything about the traffic on a summer weekend on Tamaki Drive, because there's no economic loss involved. But something should be done.
BCA doesn't even capture all the economic factors. It doesn't go wide enough or, usually, look more than 30 years ahead.
Take the harbour bridge: the only way it could achieve a "good business case" was to put a toll gate on it. Yet almost every economic development north of the bridge has been made viable in the past 60 years by the bridge.
Economists in the 1950s could be certain of very little of that value. They knew there would be progress, but when it came to putting a number on it, they might as well have used a dartboard. The politicians, rightly, knew the bridge would be great for the city. Wrongly, they underestimated how good, and didn't make it big enough. A braver Government would have had more faith in the future.
A business case for moving the Auckland port won't factor in the tourism potential of the improved railroad – because nobody knows yet what that is. It won't allow for the upstream exports: all those Northland companies that will be able to get their goods to market more cheaply.
KiwiRail CEO Greg Miller believes Kaikohe will become as prosperous in the future as Te Puke in the Bay of Plenty is now. No business case for the port can include that, because it's too long-term and there are far too many variables.
A business case won't ask if wharfies should be helped to make better lives for their families by moving with the port, or just be made redundant.
It won't consider the opportunity costs: the value we don't get because assets are used for one thing and not another. There's enormous opportunity cost in the port land, and also in Grafton Gully and on those parts of State Highway 1 currently clogged up with freight.
How much of the port land will be used commercially and at what price? Ports of Auckland says the land is worth less than a billion dollars, so the reports it commissions from consultants reflect that view.
But others say it's worth much more. The Upper North Island Supply Chain (UNISC) working group settled on $6 billion, but said they'd been advised by property developers it was worth anything from $3b to well over $20b. Whoever does a business case will have to chose a figure, and everyone else will dispute it.
What about the non-commercial uses of the land? How valuable will new beaches and parks be? What about the improved sailing on the Waitematā?
How do you measure the value of the mana that will accrue to Ngāti Whātua Ōrākei if, as they want, they buy their way into a leading role in the whole enterprise, and therefore into a leading role in the economic and social life of the city?
And then there's electric rail. It's not even proposed by UNISC, which merely notes that the environmental benefits would be greater than with diesel-powered rail. But the heart of the UNISC plan is that over time 70 per cent of our freight be carried by rail. Currently it's just 12 per cent.
That proposal has the potential to make the entire rail network electric, and if that happens it will be one of the most valuable of all outcomes when we move the port. Think carbon emissions, think long-term financial benefits.
And there's more. This project opens the door to any of the really big waterfront projects we might want to embrace. A museum on the waterfront? A stadium? There will be room to build big now, without crowding out everything else.
Many people have raised relatively small and solvable problems about the Northport plan. Of course they all need to be worked through. But the underlying thinking that reveals – we can't do this because the idea isn't perfect yet – is an enemy of progress.
The plan challenges us to make big changes for the better. It doesn't guarantee them, it enables them. We still have to make them happen.
Others ask, why the rush? But nobody's telling the port to clear out by the end of next week. The working group proposed a "progressive" withdrawal. The railway will develop in stages, over several years: tunnels made ready on the single line, more passing bays, eventually double tracking and new tunnels; diesel and then electric; new spurs and connecting lines. It will be similar at the ports: a staged expansion over several years at Northport and Tauranga, and a staged withdrawal at Auckland.
But we needed that commitment now to close, to stop Ports of Auckland wasting money with its own expansion plans: dredging the harbour, building a hotel on the land and so on.
This is what wrestling with the threats and opportunities of the 21st century looks like. Climate change, population pressures, enduring poverty and more require transformational policies. They're all difficult and they all require ambition and courage.
Knowing the cost of things is important. Believing the business case will tell you everything is for the small minded.
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