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Port relocation is a once-in-a-century decision

21 November 2019
Port relocation is a once-in-a-century decision that needs a comprehensive Better Business Case

“Relocating Auckland’s freight port is one of the biggest decisions this country will ever make and needs a full assessment of all the challenges and opportunities,” says Infrastructure New Zealand CEO Paul Blair.

“We recommend that the Upper North Island Supply Chain Strategy (UNISCS) reports be upgraded to a fully compliant Better Business Case, with independent oversight from the Infrastructure Commission.

“New Zealand Cabinet Rules and NZ Treasury advocates use of the Better Business Case for all significant investment decisions involving whole of life costs of more than NZ$15 million.

“Infrastructure New Zealand welcomes constructive debate on the critical transport infrastructure of the Upper North Island supply chain.

“We applaud UNISCS Working Group for shining a light on this important sector, but think this is the start of the discussion, not a conclusion.

“Infrastructure Victoria, the state’s equivalent of our new Infrastructure Commission, led a detailed and independent assessment of Victoria’s port strategy in 2017, which considered a new port to supplement or replace the existing Port of Melbourne.

“Infrastructure Victoria highlighted two critical factors for an efficient and effective port, based on global best practice. Ports should be as close as possible to their customers to minimise land transport costs and have a balance of imports and exports to avoid the costs of shipping empty containers to the next port.

“Infrastructure Victoria’s independence, use of global port experts, and wide consultation produced an evidence base which removed the political heat that surrounded Victoria’s port future. We believe a similar process should be used in New Zealand.

“We have five major questions that we expect a future Better Business Case would fully consider.

“First, additional freight costs need to be fully addressed. 80% of Ports of Auckland’s goods are currently delivered by truck within 20 kilometers of the port gates. Even if 70% of freight arrives back in Auckland by rail, it will arrive at an inland port somewhere in West Auckland and still need to move 20-30 kilometres to its final destination. In addition to financial costs, the report is silent on the substantial carbon emissions and potential road and rail safety issues from freight travelling through the crowded Auckland isthmus.

“Second, if Ports of Auckland is forced to close and the government builds a new port 140 km north, how confident are we that freight companies will go to Northport?

“Shipping companies will go to ports where they can balance export and import loads to minimise the number of vessel calls. Northland does have a growing export base, but it is substantially less than Auckland’s import volume. Even if the freight did follow the investment to Northport, we may all be paying much more to have empty containers moved from Northport to our main export port in Tauranga.

“Third, we need to consider what the issues are that we are trying to solve and what’s the best way to achieve them.

“If we want to revitalise Northland, is this $10+ billion investment the best bang-for-buck? If we are aiming to decongest Auckland, will this move really solve the city’s transport woes? We call for further investigation of revenue-neutral road pricing as a tool to unblock traffic congestion.

“Fourth, we need to understand who pays for this move and who benefits. The UNISCS report gives us an overall cost-benefit ratio, but individuals and businesses will be impacted in significant and divergent ways. Moreover, the analysis is heavily influenced by which projects are included in it.

“If Aucklanders want a low-density parkland waterfront, are they willing to pay for that in higher rates, taxes, and higher costs on their goods?

“Lastly, each of the ports in question (Auckland, Tauranga, and Northport) have different ownership and governance structures. Taxpayer investment of $10+ billion will produce costs and benefits for individuals, councils and private investors. Rationalisation of the governance of our ports would be complex but must be considered given the amount of money involved.

“The proposed port move would be New Zealand’s largest ever infrastructure investment and will have long-lasting impacts on New Zealand.

“The Infrastructure Commission was established precisely to provide an independent evidence base for these kinds of infrastructure decisions.

“We should use their independence and expertise to make sure this once-in-a-century decision is the right one,” says Blair.

ENDS

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