Is reform ahead for Auckland port as council tackles financial squeeze?

Auckland’s port could pay rent instead of dividends to the city and its management be leased out under options being considered by Auckland Council.

Mayor Phil Goff said the council is looking at options for a step-change improvement in the council-owned port’s performance and how to get a better return on capital it has invested in the port, which he said had underperformed for the past eight or so years.

The council is “keeping in mind” it won’t have the money to invest in infrastructure for any future relocation of the port “which means the council’s shareholding in any new port will be severely diminished”, he said.

Goff was responding to Herald questions about whether it was time the council divested all or part of the port to raise funds and ease the burden on ratepayers after last week’s revelations council money is running out to fund transport and services.

Auckland Transport said it was running out of funds to operate the city’s buses, trains and services and was looking to delay the introduction of new public transport services and timetables.

In a statement, Goff said he had no choice with his latest budget but to cut services and push back projects due to rising construction costs, supply chain constraints and falling revenue.

Goff told the Herald the council was committed to retaining ownership of the land on which the port operates. It was also committed to ensuring the port performed more effectively and provided better returns to the council and ratepayers.

“Council is working in alignment with the Government to determine the best future location of the port following the government’s Sapere report and its rejection of the supply chain study delivered by Wayne Brown,” Goff said. (Brown headed a 2019 study which supported relocating the port to Northport. The Sapere report in 2020 backed Manukau for a new port.)

The council was also looking at options to improve the port’s performance and secure a better return on capital invested, he said.

“A range of options will likely be looked at, also keeping in mind that Auckland Council will not have the equity to invest in infrastructure for a relocated port, which means that the council’s shareholding in any new port will be severely diminished.

“Options such as separating the port from the land it sits on and securing an income from the port company by way of rent rather than dividends, and a lease on management of the port company and other issues are likely to be considered through this process.”

The port was important to the council for several reasons, Goff said.

“Firstly, for a city that represents 38 per cent of New Zealand’s GDP and over a third of its population, it is vital that we have a port which meets the needs of people and businesses to effectively and efficiently supply the goods that the city needs to function.

“Secondly, the land on which the ports currently reside represents over 77ha of prime central city land which, following the relocation of the port in coming decades, offers exciting opportunities for people to regain access to the harbour-front and for recreational, commercial and residential development.

“Thirdly, the port in the past has offered dividends of around $50 million which the council has used for the benefit of the city, and which offsets rates which would otherwise be paid by ratepayers.”

Goff said the long underperforming port company had lost container trade share and provided “poor” returns on equity and dividends to Auckland Council.

“Significant changes have been made to the board and management … to turn around this performance and an appalling track record on health and safety.”

An independent review of health and safety at the port last year found systemic problems in relation to critical health and safety risk management and organisational culture relating to health and safety.

Former chief executive Tony Gibson, who left in June last year, is facing court charges in relation to the death of a port worker in 2020.

The port is still working to implement all the recommendations of the independent health and safety report, which was commissioned by the council.

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