The government and Auckland Regional Council are going halves in the $40 million purchase of Queens Wharf from Ports of Auckland.

The deal, announced this afternoon, will see the port vacate the wharf by April 1 next year.

It will be developed as a public venue for the 2011 Rugby World Cup, and will also house an international standard cruise ship terminal, which Ports of Auckland will operate.

The sale is a timely funding boost for the port, which is currently undergoing a capital structure review and is expected to ask its council-controlled owner for assistance to pay back a $105.5 million debt facility maturing later this year. 

To put the $40 million into some context, it is more than four times the $9.26 million net profit after tax that Ports of Auckland banked in the six months to December 31 2008.

Ports of Auckland chief executive Jens Madsen says the port will use the sale proceeds to reinvest in replacement cargo-handling capacity and facilities.

It currently uses the wharf for bulk cargo, especially imported cars.

Princes Wharf will continue to be used as Auckland’s primary cruise terminal until a new facility is built on Queens Wharf.

According to ARC’s press release, research carried out for the Government in 2008 found that a cruise terminal on Queens Wharf could generate an additional $713 million in direct spending to the New Zealand economy over the next 10 years.

Each cruise ship visit contributes on average an estimated $1.6 million to the economy.

ARC is funding its half of the purchase price via a drawdown from cash-strapped Auckland Regional Holdings.

ARH is already in danger of not meeting its forecast payouts to the council, which are earmarked for transport and stormwater projects.

The deal has yet to be approved by the Auckland Transitional Authority, which is charged with implementing the "super city" structure, but given the government’s support, it is not expected to be rejected.