Port of Tauranga takes aim at ‘parochial’ decisions
Local government owners of New Zealand ports are still inclined to make “emotional and parochial” investment decisions even though the Ports Act requires them to manage port facilities so they return more than their cost of capital, says Port of Tauranga chair David Pilkington.
He was talking at a ceremony to mark the port’s milestone of handling 1 million containers in a year, which was reached this month. Port of Tauranga is one of only three ports that have shares held by the public, with both Auckland Council and Christ- church City Council having delisted their port businesses.
Pilkington said the arrival of larger vessels meant it was inevitable there would be fewer hub ports in New Zealand, supported by “second-tier feeder ports” because the amount of capital and freight volumes required meant it wasn’t feasible “to replicate in 13 regional container ports across the country”.
“Unfortunately there are ample signs that this is not yet fully grasped,” Pilkington said.
“Ports in general sit in local government ownership and are viewed emotionally as essential to regional development. We continue to see plans to pour ratepayers’ capital into ports that has little chance of returning the cost of that capital,” he said. “While the Ports Act specifically references the need to manage port facilities to achieve a return over and above the cost of capital, emotional and parochial behaviour threatens to prevent good strategic long-term planning around regional infrastructure to support efficient feeder services,” he said. Port of Tauranga is 54 per cent owned by Bay of Plenty Regional Council.
New Zealand’s port sector generated earnings before interest, tax, depreciation and amortisation of about $500 million in 2016, according to advisory firm Rockpoint..