“Clumsy” was how Sir Kerry Burke described the Christchurch City Council’s (CCC) handling of the privatisation of the Lyttelton Port Company (LPC) at the April public meeting opposing the action. He was being diplomatic. I am still waiting for a coherent explanation of what the Council and its commercial subsidiary, Christchurch City Holdings Ltd (CCHL), are trying to do. CCHL’s recent advertisement in the Press (7 April, pA7) is presumably their best shot. Its case rests on four points.

1. New Zealand Has Too Many Ports For The Trade That’s Available

Perhaps. But every port will disagree that they are the one which should be tossed out to lighten the load. Doesn’t this cry out for national collaboration as the Christchurch MPs suggested, rather than every port for itself? See the section headed “ Christchurch’s Government MPs Slam Deal” in the cover story “Lyttelton Port Company Sale Dead In The Water”, for details of what those MPs said. Ed.

2. Overseas Shipping Lines Are Playing New Zealand’s Ports Off Against Each Other And Demanding Business On Their Terms

Quite. New Zealand should be telling the shipping companies what to do. What’s new? This has been going on for a century or more. But how can one port on its own, however strong, prevent that? This doesn’t just cry out – it screams for ports to work together in the national interest. Actually, it is not just a problem for the ports. Their coordination cannot be just the sum of parochial interests. We used to have something like this – a national Ports Authority.

Our whole land transport system, road and rail, needs to support the port system. So does coastal shipping. Having only one international port in the South Island would require enormous changes to these transport systems. They may not cope. How would giving operational control to the biggest port owner in the world, Hutchison Port Holdings (of Hong Kong), wrest control back from the shipping companies? I have yet to see a serious justification. I can see at least three reasons why it won’t solve the problem but make it even worse.

First, it is giving the fingers to other South Island ports, effectively telling them they will be made redundant. Just what did CCHL think those other ports would do? Sit there and congratulate Lyttelton for being so smart? Of course they were going to react. If this deal was strategic thinking on CCHL’s part, it forgot one of the most important rules: anticipate what your competitors will do. The only surprise at Port of Otago’s reaction in grabbing a share of LPC should have been its speed and method. It was never going to sit and watch its position be undermined. Neither would Timaru or Bluff or competing North Island ports.

Second, why should Hutchison be better at resisting the shipping companies than effective local port man agement? More likely it will do deals with the shipping companies that suit its own international interests. For example, is it good for our exports to Europe to be sent via the Panama Canal because Hutchison controls ports at both its ends, rather than via the Middle East?

And looking ahead, what makes anyone think that a company like Hutchison will be independent of the shipping companies? Already it has shares in China’s biggest container shipping company, China Ocean Shipping Company (COSCO), which calls regularly at New Zealand ports. The two companies also share ownership in port facilities in Kwai Chung, Hong Kong. It would pay Hutchison to expand its ties to shipping companies to assure it of port patron age. Rather than achieving independence from the shipping companies, we’re buying into another more entrenched form. Third, if Lyttelton did become the South Island’s only significant international port, why would we want this unregulated monopoly in the hands of Hutchison?

3. Ports Need To Spend Millions Upgrading Their Outdated Facilities And Overseas Lines Are Demanding The Same Expensive Facilities At Every Port

Again, coordination is needed to decide where to spend the millions. But the implication is that we need a white knight (Hutchison) loaded with money to provide the millions. Excuse me while I bang my head against a wall. Haven’t we learned anything from the privatisations of the 90s? Did privatising our rail system lead as promised to millions of dollars invested in upgrading our rail services? No – it led to millions being sucked out and we, the suckered taxpayer, being left to fix the mess. Did privatising our telecommunications system lead as promised to millions being spent on the latest facilities? No – it led to millions being sucked out, and world-trailing technology. White knights don’t exist in this hard commercial world. If they can make more money from running down the assets than building them up, that’s exactly what they will do. Perhaps CCC and CCHL should instead bite the bullet and use some of that ready flow of dividends from the port to do some of the upgrading.

4. Only A Port That’s Prepared To Make The Right Decisions And Has Strong Partnerships And International Linkages Will Survive

B ut these are wrong decisions. Former LPC Chairman, Brent Layton, has claimed that the real reason for the privatisation was “labour reform”. If he’s right, it’s pretty bankrupt policy making which lays the cost for the behaviour of shipping companies on port workers despite substantial productivity increases.

Internationally, privatisation of ports has been associated with large scale layoffs, the use of unskilled, non-union labour, and casualisation of jobs. When Hutchison’s two Panama Canal ports were privatised, 75% of the dockers lost their jobs. In privatised ports in Europe and Malaysia, low paid, low skilled labour has been brought in from other countries. Temporary international movement of workers is being discussed in the current World Trade Organisation negotiations and may well come up in the free trade negotiations with China.

With thinking like this, no wonder New Zealand w ages have fallen 30% behind Australia’s. None of this would be good for the town of Lyttelton. And the CCC, CCHL and LPC haven’t even had the decency to genuinely consult their owners, electors and guarantors: the citizens of Christchurch. Clumsy? Downright bad decision making.

The Press declined this article, on the grounds that the Lyttelton Port Company sale issue is “dead” and that the paper is “sick of it”. A slightly different version (aimed at a Dunedin readership) was published in the Otago Daily Times, 2/5/06. Ed.