Keep Our Port Public

Selling the port still doesn’t float

admin — Tue, 07 Apr 2009 10:21:25 +0000

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10565553&pnum=0

April 7, 2009

Alasdair Thompson of the Employers and Manufacturers Association (Northern) could be forgiven his sentimental journey down memory lane with the election of the National Government.

However, his dream of selling off the Ports of Auckland didn’t float in the glory days of the 1990s when selling off the family silver was in fashion. It is even less likely to meet with success in 2009.

Times have moved on. The tide is running against the privatisation agenda. In case Mr Thompson hadn’t noticed, the global economic crisis brought about by deregulated pirate capitalism is creating something of a backlash.

The general population is coming to the conclusion that their interests are not served very well by handing over control of their economy to a small minority driven by short-term self-interest.

We can point to the local example of the Ports of Lyttelton, where a bungled part-privatisation scheme in 2006 failed after generating major public opposition.

If there is any worse area than ports as a candidate for privatisation, we’d like to hear about it.

The global maritime industry is run by a shrinking group of powerful transnational corporations, whose interest in the New Zealand economy extends to how far they can bleed it.

The Ports of Auckland privatisation plan has, like Frankenstein’s monster, been reanimated from the dead. There are a few mad scientists at work trying to get the project moving again.

A campaign is going on behind the scenes and we have now seen within a few weeks strategically placed articles popping up in the business press, usually from the pens of those who stand to gain from selloffs, or in Mr Thompson’s case, the representative of such people.

However, it is obvious we have learned from the past, and that is why Mr Thompson throws in an entire school of red herrings to try to conceal the real reasons for the selloff.

His complaints about the David Beckham match loss and ARC share investments have no connection to the ports issue.

These speculative ventures have no relationship to important local infrastructure like the Ports of Auckland, and in fact the ownership of a solid, long-term asset like the port is the complete opposite to the get-rich-quick mentality.

Mr Thompson says the Auckland public does not elect the ARC to run an investment company.

How he considers himself to be a representative of public opinion on such matters is curious. Perhaps if he feels the urge for a leadership role of this type he should offer himself for election on a privatise-the-port ticket and see how he fares.

More importantly, the public of Auckland do expect their elected representatives to responsibly manage key public assets and infrastructure for the good of Auckland and the wider economy.

Mr Thompson’s arguments about the future of the port are common ones amongst those who have little or no experience of the maritime sector. The interests of New Zealand are in no way served by selling off ports to global operators.

Around the world this has led to numerous problems including ports of convenience, notorious for the use of short-term labour imported to displace local workers.

Over 99 per cent of our imports and exports as a maritime trading nation move by sea. We have already handed over the bulk of coastal and international shipping to overseas operators who pay no tax.

The last thing we want to do is replicate this disaster by handing over control of our ports to overseas monopolies who can then establish a stranglehold over our economy.

In fact, the Maritime Union has argued for the establishment of a “KiwiPort” where public ownership of ports is combined with a national ports plan to ensure New Zealand’s interests are served.

Ports occupy a vital strategic place in our national transport and logistics infrastructure and should be operated for the benefit of industry and the wider community.

We could be excused for disregarding Mr Thompson’s heartfelt pleading that money obtained from the hocking off of public assets like the Ports of Auckland could be spent on “public transport”.

Please, enough already. If the proponents of port privatisation think the public are going to buy that one, they’re dreaming.

What they are after is getting their hands on the profit from privatised enterprises, and perfuming the whole smelly deal with a bribe of a short-term cash fix that will quickly evaporate and leave us with the same third-rate infrastructure as before.

Mr Thompson may not mind being a tenant in his own city and country. The Maritime Union has a different perspective and argues that public ownership of our ports should be extended.

* Denis Carlisle is president of the Auckland Waterfront Branch, Maritime Union of New Zealand.

NZ Herald: MPs worried by port review

admin — Sat, 14 Mar 2009 06:30:40 +0000

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10561238

A review of the capital structure of Ports of Auckland is proving controversial even before options are recommended to its public owners.

One possible recommendation could advance private ownership in the port company.

This was yesterday seized on by the Greens, who linked any such move to local government reforms that could eliminate the port’s ultimate owner, the Auckland Regional Council.

A report in the Herald yesterday incorrectly attributed to the Ports of Auckland chairman, Gary Judd, discussion of a possible sale and had him suggesting the time was right to consider privatisation.

He had instead acknowledged a reporter’s suggestion that a public sharemarket listing could form part of the review team’s recommendations.

“I suppose we could make a recommendation to that effect, but it is not our decision to make,” Mr Judd said.

He did not call for a sale and did not float the idea as stated in headlines yesterday. The errors are regretted.

Mr Judd said the port company board believed the time was right to consider the “best thing to do” in unprecedented economic times.

The review would look at how the port might be affected by the changing financial environment, and the board would then look at how to structure the company’s balance sheet.

The company is owned by Auckland Regional Holdings, the investment arm of the regional council.

The ownership of Ports of Auckland could become a matter for an Auckland-wide super city if, as expected, the Royal Commission on Auckland Governance recommends giving regional assets to a super city.

The port company’s capital review will run in parallel with the royal commission recommendations for any change of ownership for the port.

Green Party local government spokeswoman Sue Kedgley claimed moves to disestablish the ARC would open the way for privatisation of assets such as the port or the water supply.

Labour Party local government spokesman Shane Jones said neither Mr Judd nor the Auckland Regional Holdings chairwoman, Judith Bassett, seemed to be advocating privatisation, but he was worried about Local Government Minister Rodney Hide.

“As [Mr Hide is] the minister responsible for the Auckland governance reforms, it is a case of the fox being in charge of the hen coop.”

NZ Herald: Should the ARC sell its stake in Ports of Auckland?

admin — Sat, 14 Mar 2009 06:24:14 +0000

The prospect of New Zealand’s largest port operation being sold to private owners has been raised as a result of the global economic situation.

Ports of Auckland board chairman Gary Judd suggested it could be the right time to consider privatisation after the company’s half-year result showed a sharp drop in profit.

But the future of that owner – the Auckland Regional Council which owns 100 per cent of the ports company through its investment arm, Auckland Regional Holdings – is in doubt as the Royal Commission of Inquiry on Auckland Governance considers the local political structure.

Should the ARC sell its stake in Ports of Auckland? Here is the latest selection of Your Views:

http://blogs.nzherald.co.nz/blog/your-views/2009/3/11/should-arc-sell-its-stake-ports-auckland/?c_id=1501154

NZ Herald: Profit plunge sparks talk of city’s port sale

admin — Sat, 14 Mar 2009 06:20:37 +0000

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10560985

The prospect of New Zealand’s largest port operation being sold to private owners may be explored as a result of the global economic situation.

Ports of Auckland board chairman Gary Judd said it was the right time to review all possibilities for the port’s structure. His comment came after the company’s half-year result showed a sharp drop in profit.

Any suggestion of sale, though, did not get support from the public owner yesterday.

The company’s half-year result showed a 26 per cent drop in profit from the same period last year to $9.3 million, and the board deferred payment of an interim dividend to Auckland Regional Holdings.

The dividend for the same period last year was $9.5 million.

Managing director Jens Madsen said executive salaries had been frozen, and he hinted at possible job losses among the company’s 600 staff.

Dividends from the port company are one of the ARC’s main sources of revenue, helping to pay for public transport and other civic developments worth more than $1 billion.

They include rail electrification, an integrated ticketing service and the Tank Farm development on the western edge of central Auckland.

Mr Judd yesterday acknowledged that capital structure review could recommend selling the ports into private ownership through a public share listing, although that was for the owner to decide on all possible scenarios.

The board would not be doing its job if it did not look at appropriate action in the unprecedented global economic times, he said.

Asked about the possibility of looking at a public listing, Mr Judd said: “I suppose we could make a recommendation to that effect, but it is not our decision to make.”

While the port is owned by Auckland Regional Holdings the regional council would have to make the decision.

ARC chairman Mike Lee, who pushed for buying the last 20 per cent of privately owned port shares in 2005 for $170 million, said the high degree of interest in public ownership meant there was no political will to sell the port company.

Besides, now was the worst possible time to be selling assets.

Regional Holdings chairwoman Judith Bassett said the investment arm never had a closed mind on any options to do with its assets, “but selling Ports of Auckland is not on our agenda”.

She said that even though the global recession was hitting investment returns, ARH was still able to make a $155 million cash contribution to the ARC this year.

This is largely because ARH has $210 million in cash.

The future ownership of Ports of Auckland could become a matter for a super city if, as expected, the Royal Commission of Inquiry on Auckland Governance recommends regional assets come under a super city.

- Information in this story has been corrected from an earlier version.

“Key South Island Ports looking to join for sustainable future”

admin — Thu, 06 Nov 2008 11:09:43 +0000

Joint statement from Port Otago Limited Chairman, John Gilks and Lyttelton Port Company of
Christchurch Chairman, Rodger Fisher, 30 October 2008

“Port Otago Limited [POL] and Lyttelton Port Company of Christchurch [LPC] have today announced
that a Memorandum of Understanding has been signed to explore a merger of their respective port
operations.

A steering group representing both companies has been established to work with an independent
advisor to explore the potential benefits and recommend a path forward. The interests of all
stakeholders will be considered throughout the process.

This is a major step forward, however, whilst there is much support for this process from the two
Boards, it must be emphasised that this is the first stage and there is significant work to be done.
The focus is on operational integration to strengthen the performance and future of both companies.

The Boards believe that significant efficiencies and other benefits that could not otherwise be achieved
will result from the proposed integration.

A key element with any future structure is that each port will retain ownership of its core physical
assets [such as wharves and land]. This is recognised as being of significant importance not only to
shareholders but to local interests.

Core port assets will remain in local control. To achieve this, the structure being considered involves
the legal separation of the infrastructure assets from the operations and commercial activities that
occur at each port.

Key stakeholders including staff, unions and shareholders are being briefed and will be kept informed
on progress.

The integration of the operations of POL and LPC would result in:
• Co-ordination of future expenditure to avoid duplication
• Reducing the environmental impacts through co-ordinated road and rail use
• Increased productivity at each port
• Joint development of new services
• Significant efficiencies being achieved

The need for port rationalisation within New Zealand has long been recognised. This investigation
takes up that challenge. It will address both the interests of stakeholders and any legal obstacles to
integration.

An operational merger such as this could help future proof both ports and it is important for both LPC
and POL to continue contributions to the economy at the same or better level than currently.

Customers have specific requirements that necessitate long-term infrastructure worth millions of
dollars and an operational merger could potentially allow for co-ordinated port development.

POL Chair John Gilks and LPC Chair Rodger Fisher are confident that there is a robust process in
place to ensure both companies give serious consideration to how they could work together in the
future in the interests of all stakeholders.

The Chairmen of the two companies are enthusiastic about the signing of the MoU, which is the first
stage of this process. They are also committed to investigating all the options; the potential
challenges and benefits, and then recommend an appropriate path forward.

It would be inappropriate for the companies to make any further public comments during the
investigation process.”

Lyttelton sale rejected

admin — Sun, 15 Jun 2008 11:15:30 +0000

The Otago Daily Times reports:

The Otago Regional Council has rejected a suggestion Port Otago sell its 15.5% stake in rival Lyttelton Port Company, worth about $35 million, in preferance to borrowing $37.5 million to fund Dunedin’s proposed stadium.

Financial research by brokerage ABN Amro Craigs had suggested Port Otago, 100%-owned by the regional council, could sell its stake to fund the council’s share of the Awatea St stadium funding.

Regional council chairman Stephen Cairns rejected the suggestion when contacted yesterday, saying it “was never an option”.

He reiterated that Port Otago maintained a long-term view to holding the stake, which it bought in 2006.

Port Otago last year received $977,000 in LPC dividends, based on a 6.3c per share payout.

In the past year, the dividend had fallen to 4.2c per share, equating to a $664,000 dividend.

Based on yesterday’s share price, the Port Otago stake in LPC is worth $34.9 million.

The expected return of income through dividends compared with investment is 2.8% – negative, because inflation is almost at 4%, at a time when New Zealand has the highest interest rates in the developed world.

Mr Cairns agreed the investment was “not flash on that basis” but suggested any further comment on the holding should come from the port company.

Port Otago chairman John Gilks was unavailable for comment, but has always maintained the LPC stake was taken with a long-term view.

Government limits foreign stakes in South Island assets – including ports

admin — Sun, 09 Mar 2008 23:14:32 +0000

The Press reports that foreign investors seeking a major stake in key South Island assets such as port companies and airports are likely to be blocked under new rules to protect strategically important infrastructure.

The Government moved late on Monday to effectively block the sale of Auckland International Airport to the Canadian Pension Plan Investment Board (CPPIB) by instituting a new national interest clause in legislation governing foreign ownership of major assets on sensitive land.

The move sent Auckland airport’s share price tumbling 48c yesterday, before recovering slightly to close 30c down.

CPPIB vowed to press ahead with its bid for a stake, saying it was not interested in a controlling interest in the airport.

However, Finance Minister Michael Cullen said a controlling stake could still be possible with less than majority ownership.

The pension fund wants about 40 per cent of the airport. Foreign shareholdings above 24.9%, or $100 million, already require approval from the Government.

Monday’s rule change is the first time effective “control” of an asset has been added as a consideration.

It follows tightening of overseas investment last year after an outcry over the sale of large tracts of South Island high-country land to foreign investors.

Cullen said nothing in the change ruled out the acceptance of any overseas investment application.

However, Forsyth Barr head of research Rob Mercer said the change made major foreign shareholdings in strategic assets more difficult.

Asked whether the rule change was likely to impact on South Island infrastructure, Cullen quipped: “The whole of the South Island is a strategic asset.”

He named major ports “and other significant assets” among infrastructure that could be included in the new test.

That could include Lyttelton, which has been the target of overseas ownership speculation on several occasions.

Last year, Danish shipping giant A. P. Moller-Maersk Group said it was interested in buying port terminals in New Zealand.

And in 2006, the Christchurch City Council attempted to tie up the port with Hong Kong operator Hutchison Port Holdings. The deal failed when Port Otago took a blocking stake in the company.

The city council also owns 75% of Christchurch International Airport, the country’s second-largest airport. The balance is owned by the Crown, which has previously attempted to sell its stake.

National leader John Key said Labour was changing foreign investment rules for political purposes and the move would impact on inflows of foreign capital.

“I would have thought the international community would be a little bit nervous.”

However, Key struggled to answer if National would block the sale of Auckland airport or other significant infrastructure assets if it was the government.

“If National is the government, majority control won’t be going to foreigners for strategic assets,” he said.

Key would not say what “majority control” meant, however, or whether that meant National would allow up to 49% foreign ownership.

He said the Canadian plan was not for a majority stake in any case and he was not opposed to the fund’s plan to take a stake in the airport.

Cullen said the decision was in response to overwhelming public opposition to New Zealand assets falling under foreign control.

Cullen rejected suggestions other strategic assets such as Telecom could be subjected to foreign ownership restriction, saying the move was not nationalisation.

“It only applies to those areas which involves sensitive land.”

New Zealand First and the Greens welcomed the change, although New Zealand First leader and Foreign Minister Winston Peters said more could be done to protect the country’s other important assets.

Green MP Sue Kedgley labelled the rule change a victory for the Green Party, and said she hoped it would have the effect of blocking the sale of other key assets as well.

However, Bruce Sheppard of the Shareholders’ Association, slammed the move as asset theft by the Government.

“What this does is undermine the effectiveness of our capital markets and it also increases the risk of investing in New Zealand if you are a foreigner.”

CAFCA congratulates Government – But Don’t Stop Now

admin — Fri, 07 Mar 2008 04:03:24 +0000

The Campaign Against Foreign Control of Aotearoa (CAFCA) congratulates the Government for its moves this week to prevent strategic assets on sensitive land from being sold into foreign ownership. Our only question is â€“ what took you so long? Itâ€™s been glaringly obvious for many months that the NZ public is up in arms at the prospect of Auckland Airport being sold overseas, be it to Dubai or Canada. And we expect to see these new overseas investment criteria used to block any renewed attempt by the Christchurch City Council via its holding company to sell the Lyttelton Port Company overseas.

And for those â€œexpertsâ€ who endlessly lecture that NZ must become more like Australia to â€œbe competitiveâ€, weâ€™re pleased that the Government has listened and partially adopted the Australian prohibition of foreign ownership of airports. Except that Australia prohibits foreign ownership of all airports, not just international ones or â€œstrategicâ€ ones. So CAFCA is happy to join the â€œexpertsâ€ in urging the Government to become more like Australia and ban foreign ownership of any airport.

But donâ€™t stop now. Weâ€™re delighted that the Government, which rammed through the 2005 Overseas Investment Act, is finally starting to see sense about the whole foreign â€œinvestmentâ€ scam. Itâ€™s never too late to admit your mistakes and make good the damage done by decades of slavish adherence to this fundamentalist cult which has reduced us to tenants in our own home.

Thereâ€™s plenty more stolen property to be reclaimed. The Government is dropping hints that it might be about to resume ownership of the nationâ€™s railways system (it had the chance only a few years ago when TranzRail finally fell to bits, but got cold feet and let Toll buy the trains and ferries while it bought back the track network). Good, and the sooner the better we say. The sticking point with Toll is about money. Why? The country has just waxed indignant about the very likely possibility of the thieves of the Waiouru Army Museum medals being paid all or part of the reward money, thus profiting from their crime. The suggestion of having to buy back what belongs to the people of New Zealand, namely former public assets, raises the same question. Why should those who are in possession of stolen property be allowed to profit from that fact? Take them back.

For those who wring their hands saying â€œwhere will we find the money now that all the foreign investors have been frightened offâ€? (not that weâ€™ve noticed any sudden stampede to the first class departure lounges), how about using the billions accumulating in the Super Fund to actually be invested in this country rather than playing, and currently losing, on foreign stockmarkets. Now thereâ€™s a radical thought â€“ using New Zealandersâ€™ money to develop New Zealand.

Murray Horton
Secretary/Organiser

CAFCA
Campaign Against Foreign Control of Aotearoa
Box 2258, Christchurch, New Zealand
cafca@chch.planet.org.nz
www.cafca.org.nz

Christchurch City Council pressing on with selling Lyttelton Port Company? Quiet and ominous moves behind the scenes

admin — Fri, 22 Feb 2008 02:21:48 +0000

The Keep Our Port Public (KOPP) coalition notes with alarm the fact that Christchurch City Holdings Ltd (CCHL), holding company for the Christchurch City Councilâ€™s trading assets, has been quietly buying up shares in the Lyttelton Port Company (LPC) and has passed the significant mark of 75% ownership.
To quote the City Councilâ€™s own Website (where this increased shareholding is an agenda item for next week): â€œIn terms of the Companies Act a 75% shareholding enables a shareholder to control any special resolution of the company and while there are limited occasions when special resolutions are needed they are always to do with major transactions or issues and in these circumstances CCHL and the Council need to be certain that their substantial shareholding can be used effectivelyâ€.
In 2006, out of the blue, the City Council via CCHL moved to buy 100% of Lyttelton Port Companyâ€™s shares and then sell 50% of it to Hutchison Port Holdings Ltd of Hong Kong.
By law they needed to get 90% of the shares to force the other 10% to be compulsorily acquired. Public opposition (of which KOPP was proud to be an active part) made that look unlikely, so they lowered their target to 75% (whereby a â€œscheme of arrangementâ€, often a merger, can be done with the consent of 75% of the shareholders, without requiring the agreement of the remaining shareholders). Of course, in 2006, the City Councilâ€™s plan was thwarted by Port of Otago buying a blocking stake in LPC which left CCHL just short of the magic 75%. Hutchison took its bat and ball and went elsewhere.
Now that, two years later, CCHL has reached the 75% ownership mark, the question to ask is: what is going on behind the scenes? Is there another would be transnational buyer waiting in the wings to snap up LPC? If so, who is it? The processes are now in place to enable the City Council via CCHL to sell our publicly owned port company. The public of Christchurch and surrounds, the owners, are entitled to answers from the City Council and CCHL. Whatâ€™s the story?
We very specifically call upon those Councillors and Community Board members who signed the Public Ownership Pledge during the 2007 local body election campaign to give this issue their highest priority.
As to why selling LPC into private ownership, whether foreign or New Zealand, is a bad thing, the best succinct summary is in the April 2006 joint statement by a number of local Ministers and Government MPs:
â€œWe have serious concerns about both the process and the potential outcome of the proposed sale into the private sector of the majority shareholding in the operational arm of the Lyttelton Port Company. In holding these serious concerns we also believe that the current competitive situation and price gouging actions of New Zealand Ports is unsustainable in the longer term.
â€œThe current situation, which is a direct result of the so-called â€˜Shipping Reformsâ€™ of the 1990s, leaves all New Zealand Ports vulnerable to the whims of the Shipping Companies. These reforms have also resulted in New Zealand Ports competing against each other, and often price gouging in order to attract business. This pricing regime is not sustainable, which will mean that some of our Ports will fold.
â€œOne alternative to this current unsustainable situation is indeed that proposed by Christchurch Holdings. Their proposal could possibly give Lyttelton a competitive advantage over other New Zealand Ports and could strength Lyttelton Port. But it may be at the cost of current employment security and involves the loss of a public asset.
â€œA stronger and more competitive Lyttelton Port, with protected employment security, could be achieved in another way; by much closer collaboration between New Zealand Ports. New Zealand Port companies need to get a strong message that they cannot continue to compete if they want to survive. Port reform needs to move to another stage where New Zealand Ports collaborate to compete internationally. So â€“ we have two messages:
â€œThe first is that that we cannot continue as we are and expect all New Zealand Ports to survive. We have to collaborate to compete internationally. The second message is the sale of the operational arm of the Lyttelton Port Company is not the only option or the best option, and therefore it should not be supported. It is the sale of a strategic asset and it should be kept in public ownership in New Zealandâ€.
That says it all.

Murray Horton, Spokesperson
Keep Our Port Public
Box 2258, Christchurch, New Zealand

Send a message to Port of Napier CEO Garth Cowie

admin — Thu, 29 Nov 2007 20:24:42 +0000

You can now send an automatic email message to Port of Napier CEO Garth Cowie to tell him that you think his company has a responsibility to ensure secure local jobs at the Port of Napier.

International trade union website Labour Start are promoting this email campaign at their website – send a message here!