NZ Productivity Commission questions port ownership in NZ

NZ Productivity Commission poses 'provocative' questions on port ownership

July 13 (BusinessDesk) - Local government ownership of New Zealand's ports may add cost to the nation's trade, according to an issues paper from the Productivity Commission.

Chairman Murray Sherwin says the commission wants to be provocative in the paper, which calls for submissions to go into a draft report by the end of the year, with a report back to the next government on April 1 next year.

Transport Minister Steven Joyce has said there's enough competition between ports to ensure exporters and importers aren't disadvantaged, meaning no need for the government to intervene to force consolidation or more cooperation to bring down costs.

Despite several attempts between Ports of Auckland and Port of Tauranga Ltd. in the North Island and Lyttelton Port Co. and Port Otago Ltd. in the south, port companies haven't consolidated. Big customers such as Fonterra Cooperative Group have led change by shifting cargoes between ports.

Competition has emerged as ports built facilities within each other's catchments, such as Tauranga's MetroPort in Auckland. As recently as May 19, Port of Tauranga chief executive Mark Cairns denying media reports if new approaches from Auckland.

Among the questions raised by the commission's report is whether council owners "bring considerations into their thinking that go beyond the issues of the customers," Sherwin told BusinessDesk. "Port ownership emerges as an issue. Every one majority owned by local government - are they investing too much or not enough."

The commission will "pull the shutters down" at the end of the year to compile its recommendations to the government. "We hope we can provoke a more effective outcome in the sector - better service at lower cost," Sherwin said.

The commission estimates exporters and importers spend some $5 billion a year on freight. If transport costs could be reduced by 10%, it could boost annual trade by $1.25 billion a year, the commission’s issues paper says, citing international comparisons. Shaving just one day off transport times for exports and imports would yield $670 million a year, it says.

The call for submissions, which is sure to generate some strident responses, is to include opinions on the major sea and air freight carriers and the special grace they receive from competition rules.

Sea and air freight carriers have “enjoyed long-standing exemptions from the pro-competition provisions of the Commerce Act.”

(BusinessDesk)

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