private or public debate rumbles on

One factor in crystallising the debate is the New Zealand Productivity Commission’s report on international freight transport services which suggested ports should be run as successful commercial operations and that local authority councillors should be precluded from being directors.

Councils should consider selling some shares so that open market discipline can be brought to bear on the port’s operations. And even if they don’t go for the share sell-down, councils should consider landlord port models in which land ownership is separated from port operations.

The commission says: “Council-controlled port and airport companies should concentrate on increasing productivity and maximising shareholder value … Port and airport companies are likely to be more productive and profitable with narrower, primarily commercial objectives and a governance structure to suit.”

Further suggestions from the commission are that port companies should regularly publish economic value-added analyses of their operations, and that to support benchmark competition between port companies, the Ministry of Transport should regularly publish an independent assessment of comparative financial performance between ports.

Port ownership has also become a focal point of the long drawn-out Ports of Auckland stevedoring dispute, where the port management has been seeking to get the Maritime Union of New Zealand to agree to much more flexible working arrangements.

The management has considered contracting out, thereby avoiding MUNZ involvement.

In response, MUNZ and the Council of Trade Unions have sought to bring political pressure on the port’s owners. The union argues that the Auckland Council is the parent of Auckland Council Investments Limited (which directly owns the port) and the union has therefore tried to pressure councillors and the mayor to replace the port board and management.

In Parliament, the Labour Party unsuccessfully launched a Private Member’s Bill aimed at defining port companies and their subsidiaries as council-controlled organisations, making them subject to official information requests.

These two very different views are contributing to an ongoing and hot debate.