It’s becoming urgent.

Auckland mayor Len Brown must step up and announce his expectation that Ports of Auckland (POAL) progressively move its Auckland waterfront container business elsewhere over the next 20 years.

POAL has failed for a quarter century to modernise its workforce. Today, its crane rates are the same as Karachi’s while its recent ham-fisted attempts to improve productivity have seen both Maersk and Fonterra desert it.

Now, in collusion with John Dalzell, boss of Auckland Council’s mafia-like Waterfront Auckland, POAL is demanding a doubling of its operating area, plus high-rise buildings for second-hand Japanese car imports at the sea’s edge. It proposes reclamation that would transform the Waitemata from harbour to river, and insists ratepayers spend over $2 billion on new roading, rail and dredging.

This for a port that barely makes money, never will, and which can’t possibly meet the imminent needs of shipping lines, exporters or importers.

If Mr Brown won’t stop this nonsense, he should be kicked out next year, as should any councillor – centre-left or centre-right – who refuses to say stop.

1.3% ROI
The port, 100% owned by the council, claims a 6% return on investment based on an annual profit of $24 million from equity of $401 million.

The claim is nonsense. The port values its land at just $260 million and its wharves at just $147 million, much less than $1000 a square metre. The truth is its land is the most valuable in the country.

The council itself values nearby land at about $3000 a square metre. The Ferry Building land, adjacent to the port, is valued at over $10,000 a square metre.

There is no doubt that the true value of all the port’s land, which is roughly the same size as the business area around Queen Street, is over $1.7 billion.

Were this accurately recorded in the port’s balance sheet, its return on investment would be a measly 1.3%. Ratepayers could get nearly triple that buying risk-free 10-year government bonds.

None of this stops the port from brazenly demanding more from ratepayers.

Its current expansion plans demand ratepayers invest $1 billion in new roads (including a monstrosity through Grafton Gully that would cut Parnell off from the CBD), $700 million for triple-track rail and over $300 million to dredge the harbour. None of this would appear on its balance sheet. Ratepayers would just wear it.

Nonsensical claims
Port bosses claim all this is essential for New Zealand to have the port capacity it needs to be part of the global economy. For at least four reasons these arguments are as nonsensical as the port’s financial analysis.

First, their models assume the physical size of tradable products will increase faster than their value, which is at odds with everything known about human development. It suggests their kids play ghetto-blasters rather than iPods.

In any case, Auckland has always overwhelmingly been an import port. Now, with Fonterra having walked, it will barely deal in exports at all.

The worst that might happen if its business flowed through Northport and Tauranga is that San Pellegrino might cost a cent or two more a litre in Ponsonby cafes and $290 Hugo Boss shirts might cost $295.

Even that is improbable.

Second, POAL doesn’t publicise that half of the container movements through Auckland are either empties or transhipments heading to another New Zealand port. POAL is so inefficient it actually pitched to become a big player in this low-value business.

If the business were spread more evenly throughout Australasia, the port at Auckland could already have twice the space it needs.

Third, Auckland will never be able to properly accommodate the new S class vessels that are nearly twice the size of older ships and will soon become the norm.

Even with the $300 million in ratepayers’ money for more harbour dredging, it’s likely the new vessels will only be able to arrive at high tide. They will then have to wait twelve and a half hours for the next high tide before departing.

Serious shipping lines seek turnarounds of as little as three hours.

Fourth, Auckland can never meet demands from importers and exporters for specialised distribution centres right next to where the ships berth.

A classic example of what importers and exporters want is the new London Gateway at Thurrock.

While Waterfront Auckland bizarrely cites Thurrock in support of its POAL allies, the truth is that the new facility is being constructed in the countryside, 45km from London, with enough space for big distributors to build depots right next to the wharves.

Auckland’s luddite managers argue that ships should berth in the CBD and importers and exporters use trucks and trains to get containers to and from their distribution centres.

The argument would be absurd even were the port, instead of ratepayers, the ones expected to pay for the new roads and rail.

Sob story
Auckland’s final sob story – that without it New Zealand won’t have the export capacity it needs – is perhaps the most pathetic but probably most likely to appeal to Wellington transport bureaucrats.

The truth is that even with its vandalous expansion plans, Auckland would add just 18 hectares to New Zealand’s port space, just a fraction of the growth capacity at Northport and Tauranga.

Northport alone has 200 hectares available for expansion Thurrock-style.

Unlike Auckland, it’s also a deepwater port, already able to cater to the S-class vessels Auckland will never be able to sensibly accommodate.

Despite all this, Mr Brown’s Labour Party staffers argue that Auckland needs a port at the bottom of Queen Street to keep blue-collar jobs in the central business district.

Tolerating a failing commercial entity, which already despoils the city and which wants to despoil it more, seems quite a high price to keep the Maritime Union happy.