Move the Auckland port! A feisty night with Phil Goff and the consultants

Here’s a scene-setter. Every month, on average, six bulk carrier ships arrive at the Auckland port on the Waitematā to unload coal. Those ships carry an average of 35,000 tonnes of coal, all of which is trucked off the wharf and down the Southern Motorway. The coal goes to Huntly for the coal-fired power station and to Glenbrook for NZ Steel.

There are 875 trucks, going there and back, for each ship. Over the month, that’s 210,000 tonnes of coal and 10,500 truck movements.

Is there anybody who doesn’t see what that does to congestion and traffic safety on the city’s roads? Is there anybody who thinks that’s a good use of the city’s waterfront?

It’s not just coal. The port also handles bulk loads of grain, cement and gypsum, plus the containers and breakbulk cargo, and 250,000 cars and other imported vehicles.

All the cars and most of the rest are carried away, on the motorway through the middle of the city, on an endless stream of trucks.

The wharf is also used as a storage depot for empty containers: if they’re stacked more than three high, like that wall of containers at the bottom of the Strand, they’re empty.

Land use is one of the biggest issues in the debate about the Auckland port. Congestion is another. Carbon emissions is a third.

A hundred years ago, the wharves and the land around them were full of warehouses and factories. The brick Saatchi building in Parnell, for example, was built in 1911 for the Ford Motor Company. But as the land became too valuable, the factories and warehouses moved away.

It’s a natural process in the evolution of cities and transport technology. Commonly, it’s led to the removal of the port itself. With new, purpose-built facilities elsewhere, industry and supply chains operate more efficiently, while the city centre land can be repurposed for the public good.

This would almost certainly have happened in Auckland too, if there was an obvious new site for a port. But there isn’t, so for the past 20 years we’ve been arguing about what to do.

A night of debate

That argument came to a head in late 2019, when a Government-commissioned working group presented its Upper North Island Supply Chain Strategy (UNISCS) report.

Its core proposal – addressing questions of supply-chain efficiency, carbon emissions and road congestion – was that over time most freight should be moved to rail. As part of a greatly expanded rail network, it proposed a new inland port, or freight hub, for Auckland’s northwest, somewhere near Kumeu.

But the UNISCS recommendation that generated the most headlines was the proposal to shift most of the operations of the Auckland port to Northport, at Marsden Pt near Whangārei, with a smaller proportion moved to Tauranga. Cruise ships would remain.

The Government was not thrilled. It asked the Ministry of Transport to review the UNISCS report, and that resulted in another study, by the economic consultancy Sapere. It rejected the entire UNISCS report, including the rail focus, and recommended a new port on the Manukau Harbour.

But the UNISCS report is not dead. The working group chairman, Wayne Brown, continues to advocate for it with business groups and others. In the view of members of that working group, the criticisms of the report are parochial, and/or misrepresent their analysis and findings, and/or simply fail to grasp the breadth and depth of the issue.

Who’s right? And what should we do? Almost everyone agrees the port has to move. But where to, when and how, and to achieve what objectives?

At a debate on the future of the port organised last month by the Herald, Auckland mayor Phil Goff said he was “bitterly disappointed” in UNISCS.

“I’ve got to say,” he added, “it’s the worst report I’ve seen in 40 years of politics.”

Why did he say that?

Gary Blick, an economist and one of the authors of the Sapere report, was on the panel, and he provided the critique to back Goff up.

Sitting next to Goff, Minister of Transport Michael Wood did not defend the UNISCS report. But nor did he dismiss it. He didn’t support Goff and nor did he align himself with the previous minister, Phil Twyford, who was openly critical of the Northport plan.

Also on the panel were Shane Vuletich, an economist and a member of the UNISCS working group, and Julie Stout, an architect and the president of Urban Auckland. They had also been members of the year-long Port Future Study, in 2015/16.

Sadly, Ngarimu Blair from Ngāti Whātua Ōrākei was a late withdrawal because of a bereavement.

In the debate, Vuletich and Stout advocated strongly for the UNISCS plan.

They all had quite an argument.

What did the UNISCS report do?

Vuletich said UNISCS had adopted a “design-led and principled approach”. He meant they had identified several principles, or goals, that would guide their work. He also meant they had not looked simply for a new home for the Auckland port, but had tried to design a supply-chain strategy that would fit with those principles.

He listed four principles:

• Efficient and cost-effective movement of freight.

• Separating freight from people. Trying to get trucks off the commuter roads and keep rail freight separate from commuter rail.

• Working to a 100-year timescale.

• Optimising the use of land.

Goff countered that he thought the UNISCS group had treated the council very badly. Consultation was inadequate and requests for more information after the report’s release were “turned down point blank”. He said Treasury had been treated the same.

“You talked to us once,” he said to Vuletich. “But we are the shareholders. It was bad faith at every turn.”

Goff felt insulted. Vuletich acknowledged that. “But,” he said, “we need to separate process from the underlying work that was done. Let’s put process aside because I think your issues are largely with process.”

But wait. UNISCS barely talked to council, but did it not talk to Treasury either?

In 2019, the future of the port was in the hands of a cabinet committee called the UNISCS Ministers group: Minister of Finance Grant Robertson, Minister of Transport Phil Twyford and Minister of Infrastructure Shane Jones.

On November 7, 2019, after the UNISCS report came out, officials from Treasury and the Ministry of Transport reported to those ministers that they had “engaged with the Working Group, which has provided further insights into its thinking”.

That’s not being “turned down point blank”.

An official minute reveals the officials told the ministers: “We see there are potentially some good strategic arguments to support further examination of a port move from Auckland. Perhaps the most important of these arguments is the potentially significant city-shaping and congestion-reduction benefits in Auckland, and land value gains.”

They said the UNISCS working group itself had identified that “more detailed work is needed to support particular areas of its proposal”.

The officials recommended that the ministers direct them “to develop a joint work programme, with central and local government, port companies and private enterprise, to address these uncertainties as well as options and issues related to implementation. This work would enable Ministers to be in a better position to take decisions in relation to the UNISCS and the Working Group’s final report.”

The ministers said no. Instead, MoT was asked to commission a critique of the UNISCS report. That led to the Sapere report, which cost $2 million. UNISCS itself, a far larger exercise, had cost only $800,000.

The can got kicked further down the road. Everyone got busy doing nothing.

The crude explanation is that Robertson and Twyford, both Labour, were not prepared to let Shane Jones, from NZ First, win a good deal for his core constituency in Northland. But is that really all it was?

What did Sapere do?

Gary Blick said Sapere was asked to look at five options: expanding the existing port at Northport, doing the same at Tauranga, using Northport and Tauranga together (the UNISCS option), and building a new port in the Manukau or in the Firth of Thames.

They set a “gateway test”: did the options have the capacity to take freight for 60 years and beyond? Blick said Northport does not have that capacity, and even working with Tauranga, he said, it still doesn’t.

The option with the best cost-benefit analysis was the Manukau, followed by the Firth of Thames.

Julie Stout accused Sapere of not having “done the hard mahi”. The important criteria were not just economic, but were also environmental, social and cultural.

If you look at the depressed economy of Northland, she said, “can anyone begrudge an area like that more help?”

Blick accepted this. “We’re not advocates,” he said. “We were asked to do a cost-benefit analysis (CBA) and alongside that make a capacity assessment.”

He also noted that “there are no easy options in terms of mana whenua”.

But the UNISCS ministers didn’t ask just for a CBA and capacity assessment. A briefing report released under the Official Information Act identifies “eight objectives for further investigation”, including regional and social development, iwi interests, environmental issues, traffic congestion and traffic safety.

How good is the Manukau harbour?

Goff said he couldn’t understand why UNISCS had dismissed the Manukau and Firth of Thames when they had both been recommended by the Port Future Study of 2015/16.

Vuletich responded that UNISCS did consider those two options. The Manukau, on the wild west coast, was “discarded fairly early because it was extremely challenging. There’s an engineering principle: you don’t want to be complicating things and you certainly don’t want to be fighting nature.”

But Blick said Sapere had concluded, on expert advice, that an annual dredge of the bar would be sufficient to keep the port open and safe. He said “large modern container vessels with bow thrusters” would not have a problem.

The potential of the Manukau did not, however, turn on engineering and safety issues.

Currently, ships arrive at Auckland and unload, but because Auckland is not an exporter, they have to go down to Tauranga to pick up a new cargo. As Vuletich said, “If they have to arrive on the west coast, then they’ll have to sail all the way round. It creates more sea miles. All the logic is flawed.”

The next issue was land use. “In South Auckland,” he said, “land is becoming more valuable.” Education, technology and other sectors are growing, creating higher value jobs, and “where the port goes has massive implications for this”.

He added, “South Auckland deserves to be more than a dumping ground for containers. But if we’re not careful we’ll design a port system to lock that in for the next 100 years. That is not visionary.”

Goff strongly rejected this. “Wiri is one of the biggest employment and industrial areas in the country,” he said. “I can’t understand why you think putting a port there would be dumping on Auckland. It’s close to the airport, close to where most freight is going, and it’s part of the golden triangle.” That’s the area bound by Auckland, Hamilton and Tauranga.

Vuletich: “In 20 years we’ll be saying, ‘Why did we use that land this way?'”

He said there was a parallel with waste. “We did this with landfills many years ago. We don’t dispose of our waste near source anymore.”

Goff: “But it’s industrial land.”

Vuletich: “It’s only industrial land now. Phil, the port is industrial land. Wynyard Quarter was industrial land 10 years ago and look at it now.”

Goff: “If you know Wiri, you’d know that’s going to be industrial land for a very long time. It’s the industrial centre of Auckland.”

Vuletich: “That’s just at the moment. Show some vision. We’re talking about 60 years, Phil.”

Goff: “Vision is wonderful, but –”

Vuletich: “I’m not interested in the status quo, I’m interested in how South Auckland can be.”

Goff: “And you’re telling me we won’t need industrial land?”

Vuletich: “No. I’m saying find the right place.”

Later, Goff said, “I don’t know if the Manukau is viable but at the very least it should have been considered and it wasn’t.”

As for the Firth of Thames, there was no disagreement that a new port could be built there, on an artificial island with a causeway. The Auckland Business Chamber has recommended this, with a dedicated rail link to South Auckland.

But engineering is not the problem. As a virgin site, it will need new consents for everything: power, water, sewage and a range of environmental issues on land and sea.

Vuletich: “The Firth of Thames is technically feasible and there are some elegant solutions. But they’re subject to mana whenua constraint, which is a very high hurdle. And environmental constraint, which is a very, very high hurdle. And cost, which is an extremely high hurdle.”

No one disagreed with that.

“The best way to do nothing,” Vuletich said, “is to propose an impossible option.”

What's wrong with Northport?

Northport is a natural, deep-water functioning port, with a large hinterland that’s already consented for port-related use. And Northland is the fastest-growing population in the country, with a rapidly expanding, export-focused economy centred on forestry, kiwifruit and other horticulture.

In fact, Vuletich said, the economy of Northland today is “strikingly like” the economy of Tauranga 50 years ago, at the start of the kiwifruit boom. What happened in the western Bay of Plenty is about to happen in the north.

The main trunk line between Auckland and Whangārei has been upgraded to carry containers, but it doesn’t run to the port. A 21km spur is consented but has never been built. When that happens, and when the main line is upgraded to Moerewa, as recommended by UNISCS, Northport’s export potential will be unlocked.

Minister Michael Wood said, “Regardless of where we land on this, there’s a bright future for Northport. And in my view we should have that rail connection.”

He also talked about the possibility of the Navy moving from Devonport and a dry dock being built there.

Vuletich said the key issue with a supply chain strategy is not where the port goes, but how the movement and storage of freight inland happens. In his view, the UNISCS proposal addressed that.

The debate canvassed several other objections to Northport.

Extra cost for customers? Blick said the 150km distance meant “you’re embedding cost into the supply chain”.

Goff was also concerned about that. “What are the implications for business of the extra costs?”

But Vuletich said most of the cost of importing goods is in shipping. The journey from port to warehouse is a tiny component, especially if it’s on an upgraded rail network, even if it’s 150km long.

Is rail really an option? An NZIER report for Ports of Auckland pointed out that rail has only “5.6 per cent of the freight market”. It called the UNISCS proposal to convert most freight to rail “surprising”.

Sapere took the same view. It decided the Northport option would require $3.5 billion in new roads spending.

Vuletich was plainly annoyed about that: “We were very clear Northport should have a rail-dominated system. But Sapere costed in a four-lane highway and we were very clear in our study that we did not want freight on roads, we wanted it off roads.”

In the debate, Blick didn’t argue the point. He said we should “look beyond the costs to the externalities. There are extra emissions.”

Vuletich: “But the freight is on rail.”

Michael Wood jumped in. “Freight will grow by 50 per cent over next 30 years,” he said. “And it’s going to be a mammoth task to decarbonise, but that’s what we have to do. If we don’t take action, freight becomes the biggest carbon emitter by the 2040s.”

“Double track, double stack,” said Vuletich. That’s the hope for rail: the lines fully double tracked, carrying wagons with containers stacked two up.

Enough berth length? Gary Blick from Sapere said that Northport would need to build an extra 2.2km of wharf, out into the harbour past residential areas.

“I think,” responded Vuletich, “that was a copy and paste of the Ports of Auckland report when they were trying to stay where they are.”

He said Northport did not need to extend into the harbour at all. “There are so many hectares of land at Northport, you can just cut into it. You create berth length by turning land into ocean.”

Declamation, not reclamation.

Will it help congestion? Julie Stout pointed out that Sapere had claimed the UNISCS proposals would have little impact on congestion, but that was because it assumed truck movements through the city would continue.

Blick said an inland port in northwest Auckland, even with rail, would still mean “double handing all of that freight onto trucks” for final delivery.

Goff agreed: “If you bring everything in through Kumeu, then you go through Auckland, you’re not making the congestion problem better, you’re making it worse.”

Vuletich said this reasoning didn’t reflect how things actually work. Containers will always travel from wharf to freight hub, where most goods are then loaded into smaller vehicles for the final delivery. “Double handing” is inevitable.

“We said you can use rail to bring the freight to the northwest and microdistribute from there.” That relieves congestion because it takes the container trucks off the road.

And, he added, to send freight from Kumeu south, there is already a designated rail line from Avondale to Southdown. That line just needs to be built and it will also relieve congestion, for the same reason.

Shock of the night: Northport wins the Sapere analysis

In the Sapere analysis, Northport ranked fourth out of five. But in perhaps the biggest provocation of the evening, Vuletich said that by Sapere’s own analysis, Northport should have ranked first.

Sapere, he said, had made two big mistakes. First, it was wrong to claim berthing capacity was limited. That meant the port would have a much longer life than Sapere assumed.

Second, Sapere added an extra $3.5 billion in costs, to pay for a four-lane highway that wouldn’t be needed.

Take those two mistakes out, said Vuletich, and Northport “becomes the best performer on Sapere’s cost-benefit basis”.

Goff stuck to his guns. “No it doesn’t,” he said. “It says Northport was fourth out of five.”

“Because of the road costs,” said Vuletich, “when we said it should be a rail port.”

Michael Wood stepped in to say, “This cannot be a process that is led by sectional interest or by regional interests. It has to have a national-interest focus.”

Why so angry, Mr Mayor?

What made Goff so angry with UNISCS? He was treated badly. But beyond that, does he see the Northport option as a threat to Auckland?

Despite the chance to ease congestion, despite the potential of that waterfront land, despite the employment opportunities it offers in the northwest?

Goff: “The hard reality is that if the port moves out, and it costs $10 billion, it will be almost impossible for Auckland Council to maintain ownership because where would we raise $10 billion? And if the Government fronts up with the cash you better believe they won’t leave us with majority ownership. Besides, frankly, if I had $10 billion there are a whole lot of other things I’d prioritise.”

Good point. Except is it relevant?

Ports of Auckland already owns 19.9 per cent of Northport. It could increase that shareholding, so council became a significant shareholder in Northport while freeing up its existing port land for better use. There are big wins for the city in that.

Now what?

Currently, the ports compete against each other, which allows the shipping companies to play Auckland and Tauranga off against each other.

Goff said: “None of the studies has tackled whether having competitive ports or a more collaborative approach is better. I don’t have a firm answer on that.”

But Wood did. “Across key ports, we need an NZ Inc focus. At the moment they are isolated fiefdoms with a primary purpose to return to shareholders. That is not any way to have a resilient system serving the whole country.”

He didn’t say it, but in Auckland’s case the fiefdom doesn’t even return anything to the fief. Ports of Auckland no longer pays council a dividend.

“I’m not sure what the solution is,” said Wood, “but we need to sort it.”

He announced that the Government will begin work on a national ports and freight strategy soon, to be finished late next year.

Wood said he hoped the port land would become “a beautiful public realm with great housing, affordable housing, great public spaces, educational institutions and wonderful economic activity”.

Julie Stout said the opportunity was to rethink “how we might be as a Pacific city, to completely change our thinking away from a colonised city and instead be a bicultural city”.

Goff said we probably have 30 years to sort it out.

Vuletich said it’s much less. “And the optimum time to move is not the latest time to move. We should be working on it now.”

Goff said, “I believe very strongly that any decision we make must be evidence driven. I have no axe to grind.”

The debate was hosted by the Herald’s head of premium, Miriyana Alexander, who managed questions from the audience. She summed up a common theme: “The time for talk is over and the time for action is here.”

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