Verbal Submission from Paul Nicholas

Verbal Submission on Marlborough District Council’s Variation Three

Paul Nicholas, Manager, New Zealand Shipping Federation

Good morning and thank-you very much for the opportunity to present to you today.

The New Zealand Shipping Federation is the industry body representing Toll Shipping (The Interisland Line), Strait Shipping, Pacifica Shipping Limited, Silver Fern Shipping Limited, Holcim New Zealand Limited and the National Institute of Water and Atmospheric Research.

I am here on behalf of these organisations to discuss the broad implications of the proposed Variation - for shipping companies and the shipping industry, and for the regional and national economies.

I will keep this presentation broad as two of the Federation’s members – Toll New Zealand and Strait Shipping – will also be making submissions to you and will be able to answer questions of a technical or operational nature.

I begin by saying that the Federation is opposed to Variation Three. It should be dropped.

We base our view on the fact that our members will be forced to reduce speed in the Sounds and this will reduce the number of sailings each day by one third.

But we also take this view because of the importance of coastal shipping.

Shipping is part of the Government’s transport strategy because it is a fundamental part of the daily operation of New Zealand.

While we have every respect for the views of local communities, the Federation is today upholding the interests of all New Zealanders who use or depend on shipping.

I came here on a ferry. As did fresh produce, meat and ice cream destined for here and further south. Right now, quantities of wine and other freight is stacking up at Picton wharf to go to Wellington, and from there to people throughout the North Island.

Make no mistake. Variation Three will cut all that traffic by one third. That is an unacceptable block on the movement of shipping, commerce and people throughout New Zealand.

This is not just a local issue. The Council will be responsible for a decision with national repercussions.

So, we need to be very certain about the exact nature of Variation Three.

This Rule has the effect of yet again reducing the speed of four ships – the Cook Strait ferries - through the Sounds.

The ships need to travel at around 19.5 knots to get three round trips per day for their vessels to remain economic.

This Variation will add 15 minutes to each leg of Wellington-Picton ship crossings. Over the course of the average three round trips per day, this will delay the ferries by at least one and a half hours.

Organising shipping schedules has become a fine art. There is no room to make up this time loss – if they want to meet safety, passenger comfort and loading practicalities - to keep to the current schedules.

No modern shipping operator will cut those corners.

So the ships will be forced to reduce sailings from three each a day, to two a day.

I am not at all sure that the Council or the residents of Picton and Marlborough have fully considered what this reduction in sailing frequency will mean for your region.

Over the 10 days at the height of the Christmas and New Year period, for example, 27,000 people (or 2,700 people per day) will not be able to use a ferry to cross the Strait.

That is 27,000 less people visiting your cafes, your shops, your hotels and bars and your tourist destinations in the peak Christmas period.

The impact on visitor numbers and through traffic will not be confined to the holiday season.

Cutting daily sailings by one third will have a year-long negative impact on tourism and businesses in the Marlborough region.

But the implications of this proposed Variation will go well beyond this region.

The companies represented by the Shipping Federation play a key role in the distribution of freight between the two islands. Our ships carry the produce, the stock and the daily supplies that consumers simply expect to find in their supermarkets and shops.

The freight quota on Cook Strait vessels is regularly at capacity. Cutting that capacity by up to one third will prevent movement of goods, which will have major economic impacts felt by the whole country.

This proposed Variation will see businesses, supermarkets, retailers and industry – and therefore consumers of all types - waiting longer for the goods and supplies they need.

And these goods will be more expensive – which I will explain in a moment.

I would also like to describe the nature of the shipping business.

The companies represented by the Federation have invested hundreds of millions of dollars in their vessels.

They have based that investment, and in fact the choice of each ship, on being able to maintain current sailing schedules.

Vessels operating the Picton to Wellington run have to be able to withstand the Cook Strait, provide a level of comfort for passengers, carry trains, trucks and cars and, at the same time, provide a tourist facility.

Not one of the passenger vessels currently on the route has been purchased with the view of doing only two sailings per day.

It would be trite to argue that operators should therefore change their ships. We are talking about multi-million dollar investments with long run use expectations built into the purchase planning. No operator anywhere, of any business, would be capable of changing assets to meet regulatory changes such as this.

So Variation Three is an unacceptable regulatory change to their operating environment. It changes the very basis on which they have founded their business.

There is a tight economic formula behind the decision to purchase any commercial vessel.

The cost of buying and running each ship, and the number of sailings it can make on any route, are the basis for setting fees charged to users.

It is almost certain that cutting the capacity of vessels by one third will require substantial increases in fares for both passengers and freight.

These increases will likely be substantial and will flow through the entire national economy.

The actual detail of the Variation is very questionable.

The variation does not consider any vessel that sails under 15 knots and exceeds the wave height criteria. This brings into question the whole rationale for this Variation based on the use of a wave height criteria.

The Variation sets a speed limit of 15 knots as a ‘permitted activity’. Any speed over that requires a Resource Consent.

An approval of a Resource Consent will trigger the Council’s ability to charge ferry operators for any ‘environmental improvements’.

These charges are to apply regardless of whether a ship meets the wave height standards or not.

The only possible rationale of this must be the generation of significant revenue for the Council.

The unique beauty of the Sounds has become a marketing point for New Zealand, and the ferry companies. They are therefore committed to minimising the environmental impacts of their operations on this environment.

The Federation completely understands the need to protect this environment, but this Variation will achieve very little while costing the regional and national economies dearly.

This Council has already passed an extremely effective bylaw which has achieved a very good balance between environmental protection and the use of the Marlborough Sounds by ships.

The council, in its Section 32 report on this Variation, notes that since the introduction of the Navigation Bylaw 2000, which restricted the speed of the fast ferries to the current level, the original disturbance by the fast ferries to the foreshore has recovered or is recovering.

This bylaw is working well for all parties. It is effectively protecting the environment and makes this proposed Variation unnecessary.

On behalf of the companies represented by the Federation, I urge this Council to take a long, hard and objective look at this Variation and conduct a thorough cost – benefit calculation and reassess the environmental impact.

If there are any benefits that will come from this Variation, other than increased revenue for Council, then they are not immediately apparent. The environment is already properly protected.

The costs, on the other hand, are of the utmost concern.

Neither the Marlborough region, nor the national economy, can afford the implications that are behind this proposed Variation. I believe the reason that there is not a national – let alone local – outcry over this Variation is that people are not aware of it.

The Marlborough District Council has taken a strong lead and established a successful balance that allows ships to operate within the Sounds at levels and speeds which provide strong protection for the environment.

Right now the needs of all parties are being met. The environment is being maintained. The balance is right.

This Variation is not required. If passed it will cripple the Marlborough region, damage the reputation of the Council and impact negatively on tourists, travellers and the national economy.

On behalf of the New Zealand Shipping Federation I ask that the Council properly consider the implications of this Variation and drop it once and for all.

ENDS

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