Com­mer­cial in­ter­ests dom­i­nate

CHB Mail - - Talking Point - BY GRENVILLE CHRISTIE

Is Rex be­ing reck­less?

The head­lines said “Grow­ers play­ing with fire”. Well they cer­tainly will be if the coun­cil goes with a 55/45 split share­hold­ing in the Hawke’s Bay Port.

Port users — farm­ers and grow­ers — will have to stump up the same as if user- pays was ap­plied. This be­cause any pri­vate cap­i­tal will de­mand a com­mer­cial rate of re­turn and once they’ve squeezed all they can out of port work­ers, all they have left to squeeze are port users.

A 55 per cent ma­jor­ity share­hold­ing is not con­trol, and there will be lit­tle the coun­cilap­pointed di­rec­tors could do.

Un­der com­mer­cial law ports must act in what is deemed the best com­mer­cial in­ter­ests of the busi­ness. Pri­vate in­vestors can in­sist on that backed up by law.

The div­i­dend re­turn will come first.

It won’t mat­ter if or­chardists are hav­ing a hard time — hail one year, late frost the next — they will still be in the fir­ing line if it’s in the com­mer­cial in­ter­est of the port to put up user charges.

Shane Jones didn’t un­der­stand this when he tack­led Air NZ about no longer pro­vid­ing a ser­vice to some of our smaller re­gions. He thought a Govern­ment ma­jor­ity share­hold­ing would win the day, but no.

He was told it wasn’t in Air NZ’s best com­mer­cial in­ter­ests and to get lost which he had to do.

Rex Gra­ham, in a con­ver­sa­tion with Bruce Bis­sett and my­self was clearly un­aware of the im­pli­ca­tions of part pri­vati­sa­tion and the neg­a­tive im­pact that could be­fall his vot­ing base, the Here­taunga grow­ers.

Why hadn’t HBRC CEO James Palmer alerted him?

While we have 100 per cent own­er­ship we have to­tal con­trol.

Cur­rent di­rec­tors are un­der the same obli­ga­tion to put the port’s com­mer­cial in­ter­ests first but there is wrig­gle room.

This wrig­gle room is pro­vided be­cause HBRC can hand­pick who they choose to be a di­rec­tor.

As Rex con­fessed, a ques­tion was put to coun­cil­lors a short while ago “do you know any of the port di­rec­tors? “and the an­swer was “No” .

The board of di­rec­tors should have a strong makeup of all port stake­hold­ers.

This would ce­ment the ar­gu­ment that the health of our ex­porters is im­por­tant for port prof­its.

This can be achieved by pick­ing the di­rec­tors with care and by re­tain­ing own­er­ship the HBRC can quite legally re­place di­rec­tors at will.[ Port Com­pa­nies Act 1988]

With 100 per cent pub­lic own­er­ship we can find a bal­ance be­tween the port users, ratepay­ers de­sire for a fair re­turn on their as­set and en­sur­ing the port has enough re­tained cap­i­tal to go about its busi­ness and not be pres­sured into mis­treat­ing the peo­ple who keep the whole thing work­ing. So what to do?

If ratepay­ers were to help port users out, our costs could be more af­ford­ably spread over the life of the in­fra­struc­ture. Not just 10 years.

We also need to know all the op­tions the HBRC has not in­formed the pub­lic about.

One is the 2008 Seachange pa­per now be­ing dusted off by our cur­rent govern­ment.

This doc­u­ment has a po­ten­tial na­tional strat­egy with coastal ship­ping tak­ing some cargo to one or two hub ports, or cen­tral ports, as well as some di­rect ship­ping as we have now. This means we wouldn’t have to lay out the large amount of cap­i­tal needed to build a deep­wa­ter port for mega ships as the coun­cil is ad­vo­cat­ing.

The mega ships want a quick turn­around to empty and fill up as soon as pos­si­ble. Na­tion­ally, if we have too many deep­wa­ter ports, it won’t work for them as no sin­gle port would have enough cargo. Hence the need for bulk cargo con­cen­trated in just a few hub ports.

If this doesn’t hap­pen there is ev­ery chance the near­est hub port could be Melbourne or Syd­ney and our new ex­pen­sive Port could be un­der used.

The mega ships could still come but they will dic­tate the terms and con­di­tions.

When I quizzed the port CEO on his knowl­edge of this he sidestepped my en­quiry and said some­thing to the ef­fect of “the Govern­ment said we’re an in­de­pen­dent com­mer­cial en­tity and we can make our own choices here in HB”.

When the same ques­tion was put to Rex his an­swer was “we won’t be told by Govern­ment what to do”.

I think what CEO said is closer to the truth but we will cer­tainly be told what to do if we have pri­vati­sa­tion and/or over­cap­i­tal­i­sa­tion of an un­der­used as­set.

Un­der the Govern­ment sce­nario, there would be ex­tra han­dling costs. How­ever, in the 2008 pa­per there is a sug­ges­tion of some Govern­ment fund­ing.

The cost of what the Govern­ment is sug­gest­ing needs to be stood up against what our coun­cil is pre­sent­ing so we can all see what would be the best eco­nomic deal for all.

I sup­port a ref­er­en­dum be­cause we need more time to think this through. It’s too im­por­tant to be rushed.

Ar­gu­ments from both sides can go out with the ref­er­en­dum pa­pers so there’s no rea­son to say peo­ple won’t know which box to tick.

Napier port — The div­i­dend re­turn will come first.

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