Rex Graham says the "clock is ticking" when it comes to decisions on the port's future. He chats to Mark Story.

Until recently, most of us thought the port was chugging along nicely. What sparked the sudden code red?

The port is chugging along very nicely – there's no "sudden code red". We've been working through how to fund the port's growth for nearly two years, talking about it publicly for almost a year and a new wharf has been in planning for several years.

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In the past year the port hit an all-time record of five million tonnes of cargo and it is starting to struggle to cope with the demands of our thriving economy. It's turning away bigger ships and cruise ships every year and productivity is being impacted.
It has requested the regional council provide a funding solution. The funding solution is what we're consulting the people of Hawke's Bay on now. A new wharf needs to be built and in operation by 2022, with three years to construct and commission, so there's no code red, but the clock is ticking.

Selling a minority stake is council's preferred option. Why is this the best way forward?

A minority sharemarket listing retains majority community ownership and control of the Port, provides the funds the Port needs to grow and protects ratepayers from having to pay for it.

The regional council, on behalf of all ratepayers, will retain a majority portion of a strong commercial asset and Hawke's Bay people will have the potential opportunity to invest in our Port. In addition to Hawke's Bay shareholders, we expect much of the remaining shareholdings to be held by the superannuation and KiwiSaver funds of thousands of everyday working Kiwis. What we're proposing is the same ownership model as the Port of Tauranga in which the council owns 55 per cent and the remainder is listed on the NZ stock market.

Do you think there's a conflict in council as the region's environmental guardian -spearheading economic growth and capital raising for the port?

The regional council is the region's primary agency responsible for protecting and enhancing our natural environment, but there's alignment of interest rather than conflict. The council works to ensure the natural resources of the region are not only protected but also managed to provide for sustainable economic, social and cultural wellbeing – this is required by the Resource Management Act.

Supporting the region's productive sectors to make best use of our natural resources, and our competitive advantages as a region is as important in how we manage land and water, as it is in enabling the export of increasingly higher value exports through our Port.

Currently more than three quarters of the regional council's revenue-generating assets are tied up in the Port. If the Port was badly damaged or closed, through something like a natural disaster, there would be demands on ratepayers at the same time as the regional council would also be required to respond to a range of infrastructure and environmental requirements. A minority share float represents sensible risk management.

Under Option A - retaining 100 per cent ownership and control of the Port - the council would have to borrow $86 million to give to the Port and recover this via rates. That's a valid option, but it's a lot of money to borrow and some ratepayers will struggle to
pay for it. Doing this would take the regional council's debt close to its maximum level and reduce its flexibility to respond to unforeseen circumstances, such as a natural disaster. Not pursuing an alternative funding strategy, such as that proposed by the council, will constrain the council in undertaking its core functions.

In 50-100 years, doubtless the Port will again be too small by global standards and the ever-larger mega carriers. Do we upsize then too, or should there be a time where the environmental concerns usurp the regional economic dividend?

Napier is never going to be a huge, deep-water port but it does need to be able to adequately service our region and our economy. Hawke's Bay's abundance of land, water, sunshine, and large productive land area, means we have a very strong future as an exporter of food and fibre to an increasingly populated and developed world.

The long-term outlook for our region's produce is very strong and we need a port that will efficiently move produce out of the region. The value of Hawke's Bay cargo will continue to bring shipping lines to Napier Port.

You've said the issue has too many nuances for a public referendum. Is that a hard sell, given it suggests the unenlightened need saving from themselves?

That couldn't be further from the truth! There's a huge amount to consider in thinking about the future of our Port and how we choose to pay for it.

There are implications with every option for our Port, economy, ratepayers, jobs. It is the issues and options that have too many nuances for this to be a box ticking exercise - this issue requires submissions and hearings, not a simple vote count.

We're engaging vigorously on this and we've bent over backwards to promote good quality information and reach people via multiple channels: consultation documents, submission forms, supporting analysis on-line, social media, print and radio advertising, public meetings and drop in sessions, media like this.

An issue of this significance deserves this level of attention and people are responding. People are reading about it and they're making sensible comments, suggestions and asking good questions. We think this is the right way to make decisions like this. We have not made up our mind on any option and we want to hear from as many people as possible about what they think.

* Rex Graham is Hawke's Bay Regional Council chairman.