One day after Newsroom revealed talks were underway to split the Ports of Auckland operating company from its land holdings, Mayor Phil Goff has confirmed the restructure is on the cards.
Once a split occurs, the Auckland Council would have the option of selling the operating company and pulling up to $500 million out to spend on city infrastructure needs. The Government is applauding the council’s newly pragmatic approach but Labour has warned potential buyers it would not let a sale jeopardise a full review of upper North Island ports.
This morning the usually well-informed website Politik.co.nz is reporting the Government is thought to be be dangling an extra $1 billion in funding for four transport projects if the council agrees to some asset sales.
Goff initially told Newsroom on Tuesday he had not been presented with any specific proposal for the port company, which the council wholly owns through Auckland Council Investments Ltd. His staff emphasised yesterday no agreement had been reached, no decision taken and stated the obvious in saying the Council, not mayor, would have to decide in any case.
But yesterday the port company issued a statement saying Goff and its executive met on Tuesday afternoon – around the time Newsroom broke the story.
They discussed long-term matters on the possible future relocation of the port and, critically, the statement said: “We also discussed work that was started under the previous council to evaluate the potential to split the port land from the operating company. This is the first time these matters have been discussed with the current mayor.”
Newsroom’s story had reported the mayor’s office raised the possible split and sell off of the operating company at closed door meetings – not necessarily with the mayor himself and not necessarily with the port company directly.
Then last night Goff appeared on John Campbell’s RNZ Checkpoint programme. To a direct question of whether he was looking at the port company as a way “to cash some cheques”, he answered:
“I think the port company is probably looking at that. That is not my starting point.” (A well-practised political line. Politicians often say something is not their starting point when it can be, in fact, their accepted finishing point).
He added: “Probably where we reach agreement is they see some value in separating the port into an operating company and a land company.’
Campbell: “So this is on the cards?”
Goff: “Yeah. I think it is, particularly around the relocation, particularly if the ports decide to relocate out of Auckland.”
The mayor and his staff had been at pains to say he was one vote of 21 around a council table and this process was not driven by him. But Goff was talking very much in the first person on any port relocation and land sale downtown. “I’m not going to have the ports sell off the land to the highest commercial bid in order to relocate because that will not guarantee the social, economic and environmental outcomes that I want for Auckland.”
News of the possible company-land split, and the fact Goff was briefed on Tuesday by the company, will now see the full council taken into the port company’s confidence at a workshop. Goff said he wanted a briefing for the councillors. “What the options are; what the evidence based solutions may be to the challenges the port faces.”
Ports of Auckland Ltd had an estimated value of $1.04 billion in 2014, with its 77 hectares of land estimated by a property company to be worth between $300m and $600m at that time.
Goff is searching for alternative revenue sources for the council to fund Auckland’s growth, as the central government has turned down a regional petrol tax and the mayor has promised to keep rate rises to an average of 2.5 percent across his term.
On Wednesday he received backing from Prime Minister Bill English for his and the council’s efforts to find new funding – but saw his former colleagues in the Labour Party come out firmly against a sell-off of the port company.
English said in Tokyo: “He’s trying to come up with his share of funding. It is good to see the council there is working pretty hard on that. The taxpayer is making some quite big contributions in Auckland and the rest of the country want to see Auckland being positive about its growth and funding its fair share of the costs of infrastructure.”
Asked if he was surprised the port operations could be on the block, the Prime Minister said it was not clear yet what would happen, but backed a pragmatic approach. “I think people are much more interested in getting some actual solutions when they are sitting stuck in traffic.They are less interested in political arguments about how they might happen. I think between the government and the council if we are open to a whole lot of solutions then we are going to get there.”
While the government was helping “fill in some of the gaps” in infrastructure now, “in the long run they need to be able to fund it.”
But Labour’s Auckland spokesman Phil Twyford said any potential buyer of the port company operations needed to know an incoming Labour-led government would not support a sale.
“Labour would strongly oppose the sell-off of the Ports of Auckland to fix a short-term cash crisis caused by the Government’s blocking the city’s requests for new ways to fund infrastructure.”
He said “the usual cheerleaders for privatisation are telling the council to flog off the port company to fund the infrastructure deficit. Of course the merchant bankers and the international investors will be salivating at the chance to sink their teeth into the port but let’s stop for a second and think about what’s good for New Zealand.”
Labour wanted a national freight strategy first, looking at the upper North Island ports of Tauranga, Auckland and Northport before any sale proposal put that in jeopardy.
Twyford said: “Any potential buyers of the Auckland port company need to factor that into their due diligence.”