Council weighs selling chunk of port shares
Iwi has ‘major concerns’ that ‘some control’ over port could be lost
ABay of Plenty iwi has “major concerns” New Zealand could lose “some control” over economic juggernaut the Port of Tauranga as its majority shareholder proposes almost halving its shares.
The Bay of Plenty Regional Council has recommended divesting its majority shareholding in the port, worth about $2.3 billion.
Nga¯i te Rangi chief executive Paora Stanley said he believed the council should divest but that buyer interest from overseas investors in New Zealand’s biggest port was “a major concern”.
The council’s draft Long-term Plan 2024-34, currently out for community consultation, proposes its investment arm, Quayside Holdings, reduce its 54.14 per cent port shareholding to a minimum of 28 per cent over time. This was considered low enough to address risk concerns but large enough to block any potential takeover.
Quayside is a council-controlled organisation with the second-largest investment portfolio of any New Zealand regional council.
It is also one of the Bay of Plenty’s largest investors. Its shareholding in the port is considered a strategic asset and delivers the region’s ratepayers an annual rates subsidy.
The value of the council’s holding has increased by more than 50 times since it took a majority stake worth $44.2m when the port listed on the sharemarket in 1992.
The port handles a third of New Zealand’s cargo, nearly 40 per cent of exports and nearly half of all shipping containers.
Iwi backs bid to divest, but has concerns
Stanley said he wanted to see the shares taken up by New Zealand companies.
“We need to make sure we maintain some control over it, and not be influenced by overseas companies.”
Stanley said he was aware of “lots of interest from overseas companies” and said this was “a major concern for us”.
“It’s a worry. All the [big four] banks are controlled outside of here. I know we are a small country but we can’t let go of everything.”
Nga¯ i Te Rangi did not own any port shares but Stanley hoped it could be “front of the line” should it decide to buy any.
The iwi was undecided on this for now, he said.
Since Nga¯i Te Rangi’s 2013 Treaty of Waitangi settlement of $26.5m plus interest, it had invested in commercial properties and significantly grown its social services and education arms. By 2022, the iwi’s investments had grown to about $60m.
The iwi believed the council should divest and would make a submission reflecting this, Stanley said.
“The main reason why iwi believe regional council should be selling, we are concerned the Port of Tauranga is adding to the pollution and
destruction of our pipi beds and regional council is supposed to look after it but regional council own half of the port.”
In his view, the council needed “to get out of it”.
Stanley said money from the potential sale could contribute positively towards better stewardship of the local environment.
The iwi was one of several to oppose the port’s consent application to extend its container terminal wharf. A December Environment Court interim decision conditionally granted consent for the first stage of work and reserved its decision on the second stage.
In response to Stanley’s comments, a council spokesperson said it encouraged all ratepayers and residents to have their say on the draft Long-term Plan, including whether it should sell its port shares.
“Councillors will then consider these submissions, which includes a hearings process [where submitters can speak to their submission] during May, prior to making final decisions on what’s included in the Long-term Plan in late June.”
A Port of Tauranga statement said the port was serious about its commitment to protecting the environment.
“Harbour water quality, sediment and kaimoana are monitored.
“We welcome scrutiny of our performance by regulatory authorities at a local, regional and national level.”
Community’s ‘simmering discontent’
In 2022, the Tauranga Business Chamber called for the council to look at how it used its port dividends, stating there was a “simmering discontent” in the community about the port’s increasing demand on roads, space and growth.
At the time, the chamber’s Anne Pankhurst said the community did not feel supported by the port.
In response, port chief executive Leonard Sampson said it provided hundreds of jobs and business opportunities and invested heavily in air and stormwater quality plus carbon emission reduction. It also helped subsidise local rates, he said.
The council’s consultation document stated there was potential for an increased subsidy of rates and greater regional benefit in the future.
The port shares comprised 80 per cent of Quayside’s portfolio and this level of concentration presented risk.
In 2023-24 the council received a
dividend of $45m from Quayside, making up 24 per cent of the council’s annual revenue. An average rates reduction of $380 per household was funded entirely from the port shares dividend.
Region could benefit from sell-down — report
A Divestment Case authored by independent advisers PWC stated Quayside would continue to pay annual dividends to the council from the remaining port shares, other investments and savings.
The report stated the existing investment portfolio was “not optimal” and “inconsistent” with managing an intergenerational fund. It was also “limited” by not being able to realise capital gains because of legislative constraints around strategic assets.
“Headwinds” around increased costs and infrastructure needs were also challenges, the report stated.
The council consultation document stated proceeds from the proposed sale of the shares were expected to repay $200m used from Perpetual Preference Shares, with the remainder invested into a diversified portfolio.
Perpetual Preference Shares have no maturity date and pay dividends to investors for as long as an organisation remains in business. Through these shares, the council has helped fund the set-up of Tauranga’s University of Waikato campus, O¯ po¯tiki’s harbour transformation and the Tauranga Marine Precinct. The council could save $9m a year in interest costs by repaying these.
Proceeds could also help establish a regional benefit fund.
In a statement council chairman Doug Leeder said there were “weighty choices” to be made that would impact ratepayers for generations to come.
The consultation period ends on Tuesday.
Kiri Gillespie is an assistant news director and a senior journalist for the Bay of Plenty Times and Rotorua Daily Post, specialising in local politics and city issues. She was a finalist for the Voyager Media Awards Regional Journalist of the Year in 2021.