Dileepa Fonseka is a political reporter based in Wellington who covers housing, infrastructure, immigration, transport, local government and the Provincial Growth Fund.

Transport

Jones threatens Auckland Port CEO

Shane Jones threatened Ports of Auckland CEO Tony Gibson in a heated meeting in the Beehive last week as the port launched its own campaign dismissing the New Zealand First-instigated proposal to move it to Whangarei. Dileepa Fonseka has the exclusive.

Infrastructure Minister Shane Jones warned Auckland’s port boss Tony Gibson at a closed-door meeting last week to stay away from the ports debate.

But Ports of Auckland Ltd (POAL) is pressing ahead, commissioning two studies questioning the work of a working group looking into moving Auckland’s port 165km north to Northport, the results of which were released on Thursday morning.

“My advice to you as a chief executive is do not put your head in a political noose.”

A report from the working group that considered the move is currently making its way through Cabinet.

At a meeting in Finance Minister Grant Robertson’s office last week with POAL CEO, Jones said: “My advice to you as a chief executive is do not put your head in a political noose.”

Economists and consultants are questioning the data behind moving Auckland Port north. Photo: Lynn Grieveson

Jones confirmed his comments in an interview with Newsroom. He said his words were meant as a warning to the CEO not to enter the “political fray” of the ports debate.

Others at the meeting told Newsroom Jones boasted that both he and Deputy Prime Minister Winston Peters were top political operators and ports CEO Tony Gibson would be making a mistake if he decided to take them on.

“Now I will deal with him, in the time before the election, in a very political way, I love that, that’s the sport I’m paid to engage in.”

Jones said his warnings that the decision to move the port was “as much about politics as it is about economics”. Newsroom spoke to Jones after hearing of the heated meeting from sources within the Government.

“Don’t fudge any words, the leaks that you’ve been given are a reflection of the warning that I gave.”

Jones said now that discussions around the meeting had leaked he considered Gibson a “political combatant”.

“Now I will deal with him, in the time before the election, in a very political way. I love that, that’s the sport I’m paid to engage in.”

The exchange took place after Robertson left the room, leaving Jones, Minister of Transport Phil Twyford, and Gibson - along with a number of other staff - in the meeting.

Robertson said it was “an interesting meeting” with an “exchange of views” over the port study.

“Funnily enough, I actually had to go and deliver a speech in the house and so I was there for the beginning of it, but I wasn’t there for the end of it,” Robertson told Newsroom.

Twyford characterised the meeting as “good-natured”.

A debate split along coalition lines

Jones acknowledged questions around POAL’s future divided along coalition lines and the only mandate from the coalition agreement around the port issue was for a port study.

“There is an inevitability that the port moves...but at the same time it’s not lost on me that this report and the scaremongering around the report has led to vein-popping responses from Phil Goff.”

Grant Robertson says colleagues will have questions around other options for the port move. Photo: Lynn Grieveson

Finance Minister Robertson acknowledged the Government had a number of questions after receiving the report.

“I do think among some of the questions we’ve got are around assessing this idea of Northport against other options.”

Robertson said “clearly” there would be a debate around other locations the port could be moved to.

He noted the report had “looked” at some of those options.

“I know that there are some people who argue more could be done there.”

Twyford said Cabinet would consider whether additional work would need to be done on investigating the other options for the port move.

“I think consideration of other options is one of those things they’ll be looking at,” he told Newsroom.

Questions from economists

Economists and consultants are questioning the data behind a port move north, but the chair of the working group behind those studies said the need for the move is “obvious”.

International consulting firm Castalia and the New Zealand Institute of Economic Research have been commissioned by POAL to look into issues around a second port report released in October.

NZIER said the benefits - even the ability to convert Auckland waterfront land into prime residential land - were all speculative.

And Castalia highlighted problems with the assumption that all of POAL’s business would move to Northland rather than Tauranga.

'12th best option jumped to first'

Economist Lawrence Kubiak of NZIER said the study hadn’t followed Treasury business case standards, which required analysis through “a number of different lenses...to determine whether the proposal is beneficial to NZ Inc”.

Kubiak said the value of the waterfront land freed up by a port move would differ markedly, depending on whether it was used for a stadium, housing or commercial.

“Twelfth best option has jumped to first best option with no explanation at all of the reason for the change.”

With regulations around height restrictions by the waterfront, he said it wasn’t a given the land would deliver as high a rates take as forecast by the second ports report.

He has questioned whether companies would choose a port where 70 percent of cargo could only be moved by rail.

A third port report by the Upper North Island Supply Chain working group is making its way through Cabinet.

“We don’t have 30 years to stuff around."

'We could force Auckland to move'

Chairman of the group, Wayne Brown, said the changes between the second and third reports were more on the “how” behind a Northport move.

That would involve a 12-month period of negotiation between Auckland Council and the Government with legislation to force the Government’s hand if the council didn’t settle.

“We don’t have 30 years to stuff around,” Brown told Newsroom.

One of the major concerns Kubiak had was that the same company behind the economic analysis in the second report - Ernst & Young - had concluded Northport was the 12th best option in a report they finished just two years earlier.

“Twelfth best option has jumped to first best option with no explanation at all of the reason for the change.”

$1b of compensation would be needed

An NZIER presentation on their findings said the second interim report was “thin on detail”.

“It’s not easy to understand why it feels able to draw such strong conclusions from such limited analysis.”

Castalia’s analysis said Auckland Council would need $1 billion in compensation from the government to not come off worse off after such a move.

Get it early – This article was first published on Newsroom Pro and included in Bernard Hickey’s ‘8 Things’ morning email of the latest in-depth business and political analysis. Get it early by subscribing now or starting a 28-day free trial.