Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.Launch Radio player
On the surface, Auckland Council Investments had a good year.
The council-controlled company – which owns 100% of Ports of Auckland and Auckland Film Studios, and 22.4% of listed Auckland International Airport – posted an after tax surplus of $91.3 million for the year ended June 30, an increase of 8.6% on the previous year.
Its dividend to the council was $45 million, 45% more than budgeted – thanks to higher dividends from the port ($26.1 million, 30.5% more than forecasted, thanks to a previously reported tax sidestep) and the airport company ($35.1 million, 22% ahead of budget).
Burrow into its accounts further – to page 53, to be exact – and you’ll discover a financial curiosity; a incredible lesson, it seems, in abstemiousness.
On the remuneration page – which lists the salary bands for people paid more than $100,000 – the number of people within the ACIL group of companies paid more than $200,000 has dropped from 36 in 2012 to 15 in 2013, with the highest paid earning between $670,000 and $680,000.
(For the record, the number of people paid between $100,000 and $200,000 went from 116 in 2012 to 140 in 2013.)
NBR ONLINE raised this curious drop in highly-paid staffers with Auckland Council Investments chief executive Gary Swift.
“I don’t know the precise answer,” he says. “That’s fundamentally the port – because within the parent company there’s only one person paid more than $100,000.
“That’s a question I can get the port to address.”
(Mr Swift is the only person in ACIL paid more than $100,000, and he gets between $320,000 and $330,000.)
Ports of Auckland spin doctor Matt Ball explains the decrease in high-earners using one word – “reorganisation”.
“Part of the bump up in numbers in the previous year is more than likely down to redundancies – if you’ve been working a long time or you’re a highly-paid stevedore you get a commensurate payout.”
Some “less straight-forward” restructuring is the other side to the explanation, he says.
Because new contractual arrangements are more favourable to the company, employees have been paid out for giving up their old working conditions.
Ports of Auckland provided a copy of its full financial statements for the year ended June 30, which showed its 2013 salary and wage bill actually climbed to $49.8 million from $48.6 million in 2012 – while restructuring costs and termination benefits declined from $2.8 million in 2012 to $2.4 million in 2013.
Wages depend on port activity
The statements muddy the waters, don't they? There have been big payouts and redundancies in 2012, yet the wage bill actually went up in 2013?
Mr Ball says the increase is because of a combination of matters as opposed to one big reason.
Those include pay rises, increased activity, staff being recompensed for moving to new contracts, improved remuneration in a PortPro union collective agreement, and new staff appointments – including new staff, some part-timers being made full-time and some casual staff becoming permanent employees.
Mr Ball argues the wage bill, which increased by 2.5%, depends on how busy the port is and he says the reorganisation only finished at the end of the last financial year.
Also, if the port company captures more services and productivity is improved, its returns increase, he says. More bang for their buck, as it were.
The backdrop to this is the port company’s aim to sign a new collective agreement with the Maritime Union – negotiations for which started two years ago – and raise productivity so it can lift its owner’s return on equity to 12%. This year’s ROE was 7.6%, not taking into account its use of corporate structures to minimise tax.
The theory goes, if it can lift productivity Ports of Auckland will be a more attractive to shipping lines, attract more services, and reverse Port of Tauranga’s gains – particularly in container services – which were made during a series of strikes and lockouts in the 2011-2012 summer.
ACIL's annual review, penned by chairman Simon Allen, and Mr Swift, says most of the port company’s stevedores have accepted a new shift and roster system and its key productivity figures – crane rate, ship rate and vessel rate, measured in container moves per hour – are ahead of ACIL’s targets.
Maersk’s Southern Star service, which was lost to Port of Tauranga in December 2011, returned to Auckland in July, with bigger ships – although Auckland will be bypassed by the sister service, the Northern Star.
Two new services linking New Zealand to Australia and South East Asia start calling at Auckland this month.
The industrial dispute remains unresolved, however, and further gains can be made.
Can Ports of Auckland hit 12% return-on-equity without a new collective agreement?
“No, it’s a key ingredient, undoubtedly,” Mr Swift says.
“The benefit you’re seeing in those productivity figures, what you’re seeing there is an average. When you’ve got half the team working the efficient, 12-hour shifts and you’ve got the other half working the inefficient, old 8-hour fixed shifts there’s still considerable room for improvement.”
This article is tagged with the following keywords. Find out more about MyNBR Tags
- 'I guess I'm back to piracy' — Auckland man as HBO NOW follows through on cut-off threat
- Dollar heads for 1.7% weekly decline after Reserve Bank rules out rate rises
- Lubricant deal slips away as Commerce Commission nixes merger
- Carry on: 250 A320s for EasyJet, lower Changi fees and more
- Rodney Hide is wrong on climate change