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Infrastructure New Zealand says the proposed port move would be New Zealand’s largest ever infrastructure investment and will have long-lasting impacts

Location, location, location

The working group charged with recommending a future strategy for the upper North Island supply chain has released its final report– but not everyone has welcomed its findings.

The latest in a long list of studies into the upper North Island supply chain and how to cope with the region’s rising freight demand, the report titled ‘Transforming Auckland, Transforming Northland: Final Report of the Upper North Island Supply Chain Strategy (UNISCS) Working Group’ was released by the Government in late November.

The review delivered a freight and logistics strategy for the upper North Island, including a feasibility study to explore moving the location of Auckland’s port, with serious consideration to be given to Northport at Marsden Point in Northland. The report includes priorities for investment in rail, roads and other supporting infrastructure, with the goal of creating a robust supply chain that will deliver the region’s freight task for the next 30 years. 

According to the Ministry of Transport report ‘Transport Outlook: Future State’ (September 2017), New Zealand’s domestic and international freight needs are projected to grow by 55% by 2042, from 237 million tonnes in 2012/13 to 366 million tonnes in 2042/43. 

An independent working group of experts, chaired by Wayne Brown, produced the UNISCS report for the Government, with the Ministry of Transport, the NZ Transport Agency, and the Ministry of Business, Innovation and Employment (MBIE) providing support.

Along with a natural deepwater channel, Northport’s most significant advantage is space – the port’s co-owner, Marsden Maritime Holdings, has 180 ha of greenfield development land at Marsden Point, more than twice the area of the 77 ha available at Ports of Auckland

The working group makes the following recommendations:

  • – Ports of Auckland’s CBD freight operation is no longer economically or environmentally viable, and is constrained by landside infrastructure failure. It is in the interests of taxpayers and ratepayers that it be progressively closed and the land it currently occupies be progressively rezoned for higher and better uses.
  • – Northport should be developed to take over much or all of Auckland’s existing and projected future freight business.
  • – Port of Tauranga’s existing expansion plans should proceed to accommodate growth.
  • – Auckland’s cruise ship terminal should be modernised and the Waitemata become a commuter, tourism and recreation harbour.
  • – The new two-port configuration should be supported by a rejuvenated North Auckland rail line and spur to Northport, and a new inland freight hub in northwest Auckland to complement and be connected to MetroPort in the south.
  • – This transition should begin immediately and be fully completed by no later than 2034, with a stretch target of 2029.
  • The working group states: “Our recommendations envisage a port configuration designed for 21st century rail rather than an overloaded 20th century roading network that emerged from the horse-and-coach era of the 19th century. Along with planned government investments in commuter rail and other public transport, they would significantly reduce congestion in Auckland. Congestion would also be reduced on the Northland roading network, based on the principle that inter-city highways should predominately be for people and railways for freight.
“Our understanding and analysis of how global supply chains operate and consumer prices are set indicates there would be no consumer price effect in Auckland or New Zealand shops. Auckland and Auckland Council would be enriched by around $6 billion, and it would lead to the creation of thousands of jobs in Northland.”

Significant growth 

Understandably, Northport has welcomed the findings and recommendations of the report. “Northport has a very clear vision of the role it can play in the economic growth of Northland, Auckland and New Zealand. Significant growth is possible here. We have been clear for many years that we stand ready to assist in any way we can to support Auckland’s growth and the aspirations that Aucklanders have for their waterfront,” says Northport chairman Murray Jagger.

“We have been making headway with plans to enhance our ability to handle a substantial increase in the volume of container traffic crossing our wharf, while working on a vision for the total overhaul of the new and used-car business model, at the heart of which stands the immense amount of development land on our doorstep.”

Northport chairman Murray Jagger: “Northport has a very clear vision of the role it can play in the economic growth of Northland, Auckland and New Zealand”

Mr Jagger says Northport has also been working closely with MBIE and the NZ Defence Force to develop a concept for a shipyard and floating drydock facility to support the maintenance requirements of both the Navy and commercial shipping.

“None of this, however, is viable without absolute acknowledgement from central government that the transport infrastructure of the upper North Island needs to change almost beyond recognition,” he adds. “The report, along with its recognition of the need for improved transport infrastructure, means that we can now speak with confidence about the potential opportunities that exist.”

A business case, not a cot case

The final report has not been welcomed by the Auckland Business Chamber, with chief executive Michael Barnett calling it ‘a cot case’. “It provides absolutely no information, has glaring omissions, and a list of assumptions without evidence on how the supposed costs and benefits are estimated, apart from some vague references to a ‘multi-criteria assessment’ framework. We don’t get to see that framework though. We don’t get anything to help us – the Ports of Auckland public owners – see how the conclusions were reached,” Mr Barnett says.

“We may have the most expensive car park in the world on our waterfront, but the port is efficient, profitable and growing. How it evolves in the future to keep on being competitive and profitable demands new thinking, imagination and a will to invest in infrastructure and sustainable practices. We have to lift the game constantly to be in step with international best practice, the revolution to automation, emergence of inland hubs, and consideration of public expectations on environmental impacts,” he adds.

“Other international destinations have implemented new models, building a network of inland ports and connected transport systems, for instance. That’s an idea we should be investigating because it would enable jobs and revenue to still be generated from and for Auckland. 

“Moving the freight operations to Northport or anywhere else is a major strategic decision, with huge economic, social and environmental ramifications for the whole country. Any decision on the future of our port and the container terminal must be based on a credible and substantial business case, not political spin. And we do not have available a sound business case with figures, assumptions and analysis that can be trusted or used to make an informed decision. We want a business case – not a cot case.”

Negative impacts

Ports of Auckland commissioned its own report from independent economic consultancy NZIER, which looked at what would happen if Auckland’s port was closed and freight had to be delivered to Auckland from distant ports.

Titled ‘Location, Location, Location: The value of having a port in the neighbourhood’, the study found multiple negative regional and national impacts, such as over $1.2 billion a year in reduced GDP nationally, fewer exports (putting jobs at risk) and less investment. NZIER found that closing Auckland’s port would increase the cost of imports by between $533 million and $626 million a year – a cost that would fall on all Aucklanders.

The study also found that closing Auckland’s port would increase carbon emissions because freight would have to travel further by land to reach the market in Auckland. CO2 emissions would rise between 121,000 and 212,000 tonnes annually.

Ports of Auckland CEO Tony Gibson: “We believe a decision on the location of the port for our nation’s largest city should be based on facts”

Ports of Auckland’s CEO Tony Gibson says: “Some people claim that closing Auckland’s port would not increase prices, but this is not true. Currently, the price of imports through distant ports like Tauranga is kept low by competition. Think of it as the ‘Gull effect’ for ports. Just as opening a Gull petrol station lowers prices at stations nearby, having a port in Auckland keeps import prices low,” he comments.

“I am also very concerned about the increase in carbon emissions that would be caused by using distant ports to handle Auckland’s freight. This does not seem to be in line with the aims of the Zero Carbon Act, nor does it seem wise. given the urgent need to tackle climate change,” he adds.

“Ports of Auckland is releasing this report because we believe a decision on the location of the port for our nation’s largest city should be based on facts.”

A once-in-a-century decision 

Relocating Auckland’s freight port would be one of the biggest decisions New Zealand would ever make and needs a full assessment of all the challenges and opportunities, says Infrastructure New Zealand CEO Paul Blair. The country’s peak infrastructure body is recommending that the UNISCS report be upgraded to a fully compliant better business case, with independent oversight from the Infrastructure Commission.

“The New Zealand Cabinet rules and the NZ Treasury advocates use of the better business case for all significant investment decisions involving whole-of-life costs of more than $15 million. Infrastructure New Zealand welcomes constructive debate on the critical transport infrastructure of the upper North Island supply chain, and we applaud the UNISCS working group for shining a light on this important sector, but think this is the start of the discussion, not a conclusion,” say Mr Blair.

“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,” he adds.

“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.”

Five major questions

Mr Blair says Infrastructure NZ has five major questions that they expect a future better business case would fully consider.

“First, additional freight costs need to be fully addressed. Some 80% of Ports of Auckland’s goods are currently delivered by truck within 20 km 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 km 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?” Mr Blair asks. “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.

Infrastructure New Zealand CEO Paul Blair: “Ports should be as close as possible to their customers to minimise land transport costs”

“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 our 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,” he says.

“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.”

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

Next steps

Associate Transport Minister Shane Jones says that Cabinet’s position is that freight operations on prime land in downtown Auckland are no longer viable, and the Government will now embark on a short work programme to enable decision-making in the first half of 2020.

“To maintain momentum on this work, ministers have instructed the Ministry of Transport to undertake further work on funding and financing options, governance and commercial considerations, land use planning, legislative and regulatory considerations, as well as some additional transport and logistics analysis,” Mr Jones says.

“I expect this analysis to consider environmental effects, including on New Zealand’s overall greenhouse gas emissions, and consideration of government infrastructure investments in roads and rail – for example, building a rail spur to Marsden Point.

“Ministers have also requested that officials work with the newly-established Infrastructure Commission to ensure we’re taking a holistic view of our logistics network and the major infrastructure needs of New Zealand,” he adds.

“Shifting Auckland’s port will be a huge undertaking and, if done right, will have benefits for all of New Zealand, not just Auckland and Northland. This is a once-in-a-generation project and widespread buy-in is important, as is the need to make the best decisions for the long-term prosperity of our supply chain.”

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