Consolidating the future ownership of the Upper North Island’s ports needs serious consideration according to Associate Minister of Transport Shane Jones.
He says creating one entity to own controlling stakes in the Ports of Auckland, Northport in Whangarei and the Port of Tauranga has to be investigated and he wants to get a mandate to do it.
The Government established the Upper North Island Supply Chain Strategy working group last year to look at the development and delivery of a freight and logistics in the country’s Upper North Island. It has also been tasked with investigating the feasibility of relocating the Ports of Auckland to Northport in Whangarei.
The working group released an interim report on its work to date on April 27.
The New Zealand First MP says both the Ports of Auckland and the Port of Tauranga have shares in Northport and he says this leads to a lack of co-ordination between them.
“As the minister involved in this study I don’t have the mandate to coalesce the parties into forming one entity,” Jones says. “But as God is my witness as we move towards the next election that’s something we’re looking at campaigning on. To create a mega-holding [port] authority we will need a strong mandate from the electorate. But next year is election year and our party has been a long-time supporter of port rationalisation.”
The working group’s interim report says the ownership structure of the three upper North Island ports is complex and is characterised by significant local government and cross-port ownership.
The Ports of Auckland is wholly owned by Auckland Council. While Northport is a 50/50 joint venture company between Marsden Maritime Holdings and Port of Tauranga. Marsden Maritime Holdings is a publicly listed company and its two largest shareholders are the Northland Regional Council (56.3%) and the Ports of Auckland (19.9%). While the Port of Tauranga is owned by the Bay of Plenty Regional Council (54%) and by the public (46%).
The report states:
“The interwoven nature of port ownership has restricted ports from developing in New Zealand’s best interests. Current decisions tend to be made in isolation which some believe has led to inefficiencies and duplication of resources.”
Jones says he’s not talking about nationalising the ports of Tauranga and Northport, but is instead keen to see if it is possible to consolidate the stakes held by the Bay of Plenty Regional Council, Auckland Council and the Northland Regional Council. He says looking at the three ports the majority of them are directly or indirectly owned by local government.
“So moving forward I’m keen to see what the major options are. Would New Zealand be better served by rationalising the ownership interests in those ports?”
He says while the Commerce Act would be a stumbling block it was previously circumvented to create Fonterra and he says it could be again. Both Marsden Maritime Holdings and the Port of Tauranga are listed on the NZX.
“All of these ownership options are things to look at in the future,” Jones says.
Jones has previously stated his support in seeing Whangarei’s Northport grow and he’s keen to see the transfer of economic activity from the Ports of Auckland further north.
He says forming one port owner in the Upper North Island could also allow for greater investment.
“The creation of such a powerful entity could be a shot in the arm for New Zealand equity markets as well.”
Port of Tauranga chief executive Mark Cairns says Jones’ proposal would face some major legal hurdles.
“It would fail all of the competition thresholds in the Commerce Act,” Cairns says. “And it would create a dominant monopoly in the Upper North Island.”
He says it also wouldn’t help foster competition in the industry.
“Competition has been a good thing for our ports. It has moved us from the low productivity we had in the 1970s to the much higher productivity we have now.”
But Cairns is quick to say he’s not opposed to the working group’s efforts.
“The Port of Tauranga welcomes the study which is putting some sunlight on the Upper North Island supply chain. We’re looking forward to meeting the working group before they release their next report in June.”
Marsden Maritime Holdings chief executive Felix Richter says he can’t comment on Jones’ comments.
“That would be a response for our shareholders [to make] and I can’t really comment on that. Not at this point.”
The working group will deliver another update report on its progress in June, before a final report setting out its conclusions and recommendations for the next five years will be presented in September.
The group is being chaired by former Far North Mayor Wayne Brown and includes KiwiRail chairman Greg Miller, who Jones describes as an international expert in logistics, as well as Susan Krumdieck, Shane Vuletich, Sarah Sinclair and Noel Coom.
No one from the Ports of Auckland was available to comment for this story.