Beyond The Sea
New Zealand’s Ports At Risk?
- by Victor Billot
Victor Billot is Communications Officer of the Maritime Union of NZ and Editor of the union’s magazine, The Maritimes. This article was written in his personal capacity, not on behalf of the union. Ed.
“Somewhere beyond the sea
(Bobby Darin, Beyond The Sea)
Out Of Sight, Out Of Mind
The control and ownership of the transport sector is a key theme in New Zealand's economic history. The maritime sector of ports and shipping are central to our economy, but they operate largely out of the public eye. A hundred or even 30 years ago there were much larger numbers of maritime workers than today. There was a large and thriving coastal shipping industry that employed New Zealanders. Today ports and ships are bigger than ever. But due to technology, political and economic factors, the numbers working in the industry are much smaller. The waterfront is a high technology environment with a shrinking number of workers. New Zealand shipping has been devastated due to the "open coast" policy.
So the contact of the public with the maritime industry is less. Up until the 1960s, immigrants arrived by ship. People fished off wharves at our main ports. Today in the post 9/11 world, ports are secure environments, with neat stacks of containers sealed off behind gates and high fences. People fly, with the exception of the cruise liners, floating resorts that wander around the Pacific. But New Zealand's trade has always been based on sea trade. Virtually all of our imports and exports arrive and depart on ships owned by global transnationals.
The size of these ships is growing but crews are a fraction of the size they once were, and sourced from the developing world. The maritime industry today is a complex beast. It covers fields that are diverse: global shipping lines, ports, the fishing industry, New Zealand coastal and interisland shipping, flags of convenience, yellow (scab) unions, casualisation, massive technological change, ongoing militant unionism. The maritime industry is an international industry and the global trends that are first encountered in the maritime industry soon spread onshore. New Zealand's ports are a regular feature in the business pages, but are largely out of the public consciousness. Their future is hard to predict but it is likely to be a rocky one as converging pressures come to bear in an unstable industry. The processes of privatisation are a global phenomenon, so it's worth looking at the international context before examining the case of New Zealand.
Ports Of Convenience, Toolkits And Hit Men: The Mechanics Of Privatisation
The consolidation of power of global terminal operators, as the transnational port companies are known in the industry, goes hand in hand with port privatisation. There are plenty of people ready to help get a port off your hands. The World Bank, for example, has a whole procedure on how to privatise your port which anyone can download from their Website (see references for the Web address). It is part of their helpful series on how to privatise and deregulate just about anything that moves.
As a major part of national infrastructure, and more importantly part of the global transport and logistics chain, ports are in the sights of that mysterious entity known as the "free market" – in reality, a shrinking collection of predatory corporations working hand in glove with their allies in Rightwing governments and neoliberal-dominated bureaucracies. The goal is to get control and profits out of the hands of democratic decision making and into the realm of profitable, globalised and privately held capital. Do a Google search on "port privatisation” and page after page of results scroll past, from Chile to Mauritania to Malaysia to little old New Zealand. On the global scale, port privatisation is resisted by port unions in general. The International Transport Workers' Federation (ITF) is the global federation of 751 transport unions including maritime unions, representing over 4.6 million workers in 154 countries. The ITF has an entire campaign dedicated to fighting for secure jobs in ports entitled the "Ports of Convenience" campaign, which seeks to resist the erosion of workers’ rights by global terminal operators through privatisation, casualisation and direct attacks on workers’ rights.
According to the ITF, the "Ports of Convenience" campaign name "deliberately links to the ITF’s long standing fight against flags of convenience, which have long been associated with a general lowering of standards for commercial gain. The aim of the campaign is to ensure that acceptable standards apply in ports and terminals around the world. The terms 'port of convenience' and 'terminal of convenience' refer respectively to ports or terminals that fail to meet these standards". The Ports of Convenience campaign and port privatisation are explicitly linked by the ITF. "The global network terminals are major promoters of privatisation, as it offers them new markets. In certain regions, the privatisation process is seen as a means of facilitating the elimination of trade unions. Company-based unions and those that only organise specific types of dockworkers rather than all the workers in the port are particularly at risk. In some countries the company union will cease to exist by law if the original company has disappeared" ( http://www.itfglobal.org/transport-international/ti25-ports.cfm). The ITF identifies three main problems with port privatisation:
1) Port restructuring and its impact on labour, particularly with regard to retrenchment, consequences for wages and working conditions;
2) Use of non-unionised labour, competing with unionised ports; and
3) The elimination or weakening of unions.
In short, port privatisation fits in neatly with the union busting agenda. Port privatisation may seem boring stuff to many, but the forces pushing privatisation will go as far as they can to achieve their goals. Unions often get in the way of this process. For example, the ITF ran a major campaign after the murder of an anti-privatisation dockers’ leader in Guatemala in 2007. Pedro Zamora, General Secretary of the Guatemalan STEPQ dockers’ union, was shot 20 times by multiple assailants who ambushed him as he collected his sons from a hospital appointment on 15 January 2007. The ITF reported: "After firing 100 shots, one walked up to the wounded Zamora and shot him at point blank range in the face – in front of his children, one of whom, three year old Angel, was wounded in the attack. Zamora’s last act had been to push the children to the floor to try and protect them". The murderers were never brought to justice for this political assassination of a workers leader fighting to protect the rights of workers during a port privatisation ( http://www.itfglobal.org/campaigns/zamora.cfm).
Rationalisation, Privatisation Or Integration
There have been increasingly strident demands for "rationalisation" of New Zealand ports. The recurrent themes are that New Zealand has too many ports; its ports are inefficient and held back by public ownership; and there is no direction or plan as to how New Zealand's ports operate as part of the transport and logistics chain. As so often, there is a kernel of truth in many of the conventional capitalist criticisms of the failures of New Zealand ports. The problem is teasing out the real issues, and separating these from the usual self-interested solutions of people who see an opportunity to make a quick buck. What confuses matters are the hostile factions of the maritime industry whose antagonisms and tribal identity colour the debate. There is no sense of a consensus view, just a whirling melee of competing interests. There appear to be three broad groups advocating their own strand of thought about how to "sort the ports". These I have roughly divided into the "finance people", the "industry people" and the "concerned citizens."
The "finance people" are the pro-privatisation lobby, representing ideological business, the finance sector and their political allies. Numerous reports and think pieces have appeared from this group, who sense an opportunity for getting their hands on a juicy chunk of infrastructure, but who realise the potential of blowback from public resentment, and the instability of the industry. Secondly, there are the "industry people", who have a more pragmatic approach, including port company executives, many of the businesses who directly use ports, local shipping companies, and local government shareholders. They all have a stake in the current setup, so they are far less gung ho about a major shake up. They do not have a problem with subsidies or public investment as long as it benefits their own interests. An ongoing irritation for them is how the maritime sector has been left to fend for itself while Government pours cash into other transport modes.
Finally, the "concerned citizens". This is the public who seek to maintain public ownership and control of the ports, and indeed all our infrastructure. Many local ratepayers have an instinctive feel for keeping control of such important assets. The political Left in New Zealand is in weakened and reactive mode, but has found this issue is one that resonates with the popular mood. The pickup of the Keep Our Port Public ( http://www.keepourportpublic.org/) campaign in 2006, instigated by CAFCA, was surprisingly strong. The unions have far less sway than they once did, but still have more influence in this industry than most others.
Obviously things are not always quite as clear cut as this. Local government owners are all over the place, with some leaning towards public ownership and others keen on privatisation in some form. There are shifting and uneasy alliances. On the sidelines of the debate is the Government, which remains at arms length, perhaps hoping that it will all resolve itself, and distancing itself from any industry fiasco. Circling slowly in the deep waters are the shipping corporates and global terminal operators. The failed Hutchison deal at Port of Lyttelton in 2006 was a dress rehearsal and the interest is still there.
Captain Wei Jiafu, Chief Executive Officer of Chinese shipping line and ports company COSCO, visited New Zealand in October 2008, expressing interest in port investment opportunities. Captain Jiafu is well connected: reportedly a former President of the China Ship Owners' Association, and now the Deputy Chairman of the China Merchants' Bank, which "is connected to the top echelon of the Chinese government" ("Cosco boss eyes NZ", Evening Standard, 16/10/08). "If we were looking to expand our port network we would want a port in Australia or New Zealand," he said, mentioning the NZ/China free trade deal as a driver behind such a decision.
Inside New Zealand, the “finance people” who dominate New Zealand’s economic decision making, are also frustrated by what they see as the inertia of the industry. The New Zealand Port Sector Report 2008 by Rockpoint Finance is an excellent example, with a mass of well-researched data aimed at the potential investors in privatised ports (a copy is available online for free, see references below). The authors are well aware that "commercial consolidation" may be frustrated by the misguided attitudes of the population. "Clearly there remains public and political interest and concern regarding ownership of strategic assets, as has been demonstrated by an untimely political roadblock preventing a benign foreign bidder, the Canadian Pension Plan, acquiring a strategic but minority stake in Auckland International Airport. The debate on ownership of strategic or infrastructural assets is too ideological and increasingly political. We have observed that the economic benefits provided by infrastructure (and its economic utility) are largely independent of ownership" (6.3, NZ Port Sector Report, 2008).
There is a certain lack of self-awareness in such statements. The idea that economic benefits are "largely independent of ownership" leaves one wondering what motive there would be for private investors to want to buy the ports. But this a common theme in the push for privatisation in ports as well as other sectors. Opponents of privatisation/corporate globalisation are described as blinded by ideology and narrow political obsessions, while the advocates of selling off everything to global corporations are simply approaching things from a rational and logical perspective. The fact the cheerleaders for privatisation will be the prime benefactors is not seen as influencing their objectivity.
New Zealand Ports: To Whom Do They Belong?
There have been ongoing calls for the “rationalisation” of New Zealand ports, an ill-defined term that tends to shift meaning depending on whom is using it. Rationalisation will probably involve mergers, some ports growing at others’ expense, possibly changes in ownership or attempts at privatisation, perhaps even the failure of some ports to survive in anything resembling their current form. There are many criticisms – some valid, some self-serving – about the port sector. These include the number of ports ( New Zealand has a large number of ports for its size), the lack of coordination, the ownership model and lack of "efficiency".
Most ports in New Zealand today remain under full or partial ownership by local government, a combination of Regional, City and District Councils, with a limited level of private shareholders and in some cases listing on NZX. Ports previously under the control of local Harbour Boards, many in existence since the 19th Century, fell victim to the "Port Reform" process under the 1984-90 Fourth Labour Government. The 1988 Port Companies Act created corporatised ports with a legal obligation to operate as profit-making businesses, with ownership by local government. This was a blueprint for privatisation, but the plan went awry. "While the original intention of the Port Companies Act (1988) was to facilitate private ownership, every New Zealand port remains majority owned by a council. Of the 15 ports presented in the following figure, seven are wholly owned by a single council, and a further three are wholly-owned by two councils. Ports themselves have also acquired stakes in other ports . . . " (4.3, Rockpoint Coastal Shipping and Modal Freight Choice Report).
New Zealand's main ports today are Whangarei/Marsden Point (Northport), Ports of Auckland (Onehunga), Tauranga/Mount Maunganui, Gisborne, Napier, New Plymouth, Wellington, Lyttelton, Nelson, Port Chalmers (Port Otago) and Bluff. There are also several small specialist ports including Westport. The following is a breakdown of port ownership from north to south, with details drawn from port company Websites and annual reports, and Rockpoint's NZ Port Sector Report 2008 and Coastal Shipping Report (see references).
Northland Port Corporation (NPC) http://www.northport.co.nz/
Whangarei Northport Ltd is the port operating company for the port of Marsden Point, jointly owned by Northland Port Corporation and Port of Tauranga on a 50/50 basis. Northland Port Corporation is majority owned by the Northland Regional Council (53.614%) with a substantial minority shareholding by Ports of Auckland (19.9%) and numerous smaller shareholders (Northport Annual Report 2009).
Ports Of Auckland (AKL) http://www.poal.co.nz/
AKL is New Zealand's busiest container port. It is 100% owned by Auckland Regional Holdings, on behalf of Auckland Regional Council, after returning to full public ownership in 2005. AKL has a small secondary port at Onehunga used for some specialist domestic shipping. AKL is highly unionised and has seen ongoing industrial action. Because of its position and value, it is a highly politicised port in terms of the debate that surrounds its future, which we look at in more depth later in this article.
Port Of Tauranga (POT) http://www.port-tauranga.co.nz/
POT is New Zealand's largest port by international trade volumes. Historically log exports were the major focus but this is changing with rapidly growing container volumes. POT has an "inland port", Metroport, situated in the greater Auckland area (inland ports are basically container processing depots that are connected to old fashioned seaside ports with rail and truck transport). POT is listed on NZX but its major shareholder is the Bay of Plenty Regional Council. It is in a competitor position with Ports of Auckland.
Port Taranaki (TAR) http://www.porttaranaki.co.nz
Trading as Westgate, TAR is New Zealand's only deepwater west coast port. Its key strength is oil and gas exports from the offshore industry, together with Fonterra's dairy exports. TAR is 100% owned by the Taranaki Regional Council.
Port Of Napier (NAP) http://www.portofnapier.co.nz/
NAP is primarily an export port for commodities including logs, agriculture and horticultural exports. In December 2009 it was announced that Hawke’s Bay Regional Council now owns 100% of the port’s shares, having bought the 8% previously held by the strangely named horizons.mw (formerly Manawatu Wanganui Regional Council). NAP was the scene of major industrial action by the Maritime Union in 2007.
Port Of Gisborne (GIS) http://www.eastland.co.nz/Port/
A smaller regional port, GIS is one of a number of businesses owned by the Eastland Community Trust. The main exports are logs and horticultural produce. The Gisborne District Council is the main beneficiary of the Trust.
Port Of Wellington (WGN) http://www.centreport.co.nz/
Trading as Centreport, WGN has struggled in recent years with the decline of manufacturing but has been helped by interisland shipping and its central city properties. Ownership is with the Wellington Regional Council.
Port Nelson (NLS) http://www.portnelson.co.nz/
NLS is mainly based around forestry exports. Ownership by Nelson City Council and Tasman District Council.
Port Of Lyttelton (LYT) http://www.lpc.co.nz
Port of Lyttelton will be familiar to Watchdog readers as the subject of an attempted privatisation that resulted in the Keep Our Port Public campaign (see Watchdog 115, August 2007, “Pigheaded Christchurch Council Unrepentant On Thwarted Lyttelton Port Sale”, by Murray Horton, http://www.converge.org.nz/watchdog/15/03.htm. Ed.) .The current ownership status of the port is a majority holding by Christchurch City Holdings, with a minority share held by Port of Otago, and some smaller shareholders. Lyttelton remains the South Island's largest port by container volume although Port of Otago is catching up. Lyttelton is also the export point for West Coast coal and has benefited from Fonterra's recent moves to long distance rail their products rather than using Port Timaru.
Port Of Timaru (TMU) http://www.port-timaru.co.nz/
Trading as PrimePort, Timaru has certainly been a prime example of how regional ports (and the regional economy that depends on them) can be mugged by shipping companies and market dominating companies. Over the last couple of years, changing shipping schedules of major shippers like Maersk and Hamburg Sud have hit Timaru, followed by the decision in 2009 by Fonterra to shift the bulk of its dairy products on long distance rail out of the South Canterbury region and through to Lyttelton. The port has already seen major redundancies and casualisation and its future as a regional container port is under some question. Ownership is with local authorities (the main one being the Timaru District Council) as well as some private shareholders.
Port Otago (OTG) http://www.portotago.co.nz/
After hard times in the 1990s, Port Otago has been on the up, benefiting from the growth in dairy exports plus its substantial property investments. It is the second biggest port in the South Island and also has an advantage due to its "end of the line" position for container transshipment, acting as a kind of depot for empty containers heading out of the country. The port is 100% owned by the Otago Regional Council. In 2006 OTG made a blocking move by buying just enough shares in the Lyttelton Port Company which quashed the privatisation agenda there, and since that time there have been protracted negotiations about how the ports may operate together in the future.
Bluff (SPN) http://www.southport.co.nz/
Trading as SouthPort, Bluff services the Southland district. Driving into Bluff past the derelict freezing works, you certainly get a feel for how times have changed for this once thriving port. Bluff is now a much smaller operation, but still has good facilities on its harbour island. It has several things going for it. The dedicated wharf for the Tiwai Point smelter, another longstanding CAFCA favourite, provides the backbone for the port. Bluff has recently gained a container ship service after a number of years of not having one. Oil exploration in the Great Southern Basin is also a potential earner for Bluff, although Port Chalmers may muscle in on this as well. There are also Council-owned port facilities in Marlborough (Picton/Shakespeare Bay), Greymouth and Westport.
Lyttelton And Otago: Keep Your Friends Close And Your Enemies Even Closer
The case of port privatisation that Watchdog readers are most likely to be familiar with is the attempted privatisation of the Port of Lyttelton in 2006. I won't give a full history of this as it has been covered extensively in previous editions of Watchdog. References to several specific articles, available online, are listed below. The Keep Our Port Public campaign wasn't a new thing, incidentally. Trawling back through some of the back issues of Foreign Control Watchdog (now accessible online at http://historicalwatchdog.blogspot.com thanks to the monumental efforts of Lynda Boyd) I read on page 32 of Watchdog 75 (April 1994, http://historicalwatchdog.blogspot.com/2009/12/foreign-control-watchdog-april-1994.html) about the former Campaign for People's Sovereignty and its investigations into plans to privatise Port of Lyttelton. The author is unnamed, but I assume its Murray Horton, whose brisk prose style is recognisable even after the passage of time (Victor’s guess is correct. Ed.).
In the 2006 privatisation bid, the Christchurch City Council through its business arm Christchurch City Holdings Limited (CCHL) attempted to buy up minority shareholdings in the Port of Lyttelton (listed on NZX) in order to sell off half of the port to global terminal operator Hutchison. The joint venture would have seen CCHL retaining control of the land and infrastructure, with Hutchison having a controlling interest in the port operating company. The deal foundered when Port of Otago launched a surprise raid and bought a blocking share in Port of Lyttelton, preventing the proposed takeover going ahead. Port Otago wasn't interested in seeing a global operator plant themselves further up the coast to use their market dominance to hoover up any available shipping.
There was much wailing and gnashing of teeth, along with substantial embarrassment for the Christchurch City Council and the privatisation lobby, following this debacle. Once the dust settled, a drawn out mating dance began as the two ports tried to figure out how things would work in the future. We've heard about flags of convenience and ports of convenience – this is more of a marriage of convenience. A memorandum of understanding was signed in October 2008 to "explore a merger of their respective port operations" and in February 2010 the two ports announced they were continuing to work towards a "potential operational merger" ("Merger Decision Closer”, New Zealand Shipping Gazette, 27/2/10). After the 2006 Lyttelton deal fell sideways, Hutchison vanished in a puff of green smoke, but not before following up a few more leads and seeing whether perhaps they could pick up another port ( Auckland) on its way out of the country.
A Tale Of Two Ports: Party Central In The Super City ( Auckland)
Fierce competition between Ports of Auckland and its rival Port of Tauranga has built over the last decade, with both positioning themselves as the big New Zealand “hub” port. Since the failure of privatisation in the 1990s, the Ports of Auckland has swung back into full public ownership, albeit through the corporatised model of ownership. The Port operates as a standalone business, as management conflicts with the unionised workforce attest. The Ports of Auckland is very much an import port, servicing New Zealand's largest city.
Auckland has been a battleground for years between privatisers (or perhaps we should call them privateers) and those who want to keep the ports in local hands. The 1990s saw off the privatisation threat and in the last few years the pendulum swung the other way, with the Ports becoming very much a desirable asset for its owners, the Auckland Regional Council. That's not to say there hasn't been a privatisation campaign slowly bubbling away in the background, mixed up with the battles with Tauranga, industrial strife between management and the large and militant Auckland branch of the Maritime Union, the new "Super City" plan from Rodney Hide, and of course our Prime Minister's contribution to the future of ports, the "party central" plan to develop Queens Wharf for the 2011 Rugby World Cup.
The wider issue behind this last issue, and beyond the vacuity of John Key, is actually a big one for central city ports both in New Zealand and around the world. Often their prime position means "waterfront development" is all about real estate potential, as opposed to working ports. The issue has been a big one in Sydney. The privatisers claim that Ports of Auckland is mismanaged, underperforming and somehow making the people of Auckland worse off. Yet a short examination of the 2008 Annual Report of Auckland Regional Holdings (ARH) shows clearly how much benefit this asset brings to Aucklanders. The ARH is required by law to own and manage its assets in the long-term interests of the Auckland region, providing funds to the Auckland Regional Council (ARC).
It is no coincidence that the howls about “underperforming dinosaurs” have arisen at a time of global economic crisis. Why we should be so surprised at reduced profit levels in the worst global recession since the 1930s? What worse time could there be to promote a fire sale of New Zealand assets in a bargain basement style auction? Deja vu may occur to those who recall the saga of the New Zealand rail system. Sold for a song to asset stripping vultures in the 1990s by the most unpopular Government of the postwar period, the rail system was passed around and run into the ground, before the inevitable realisation that it had to be placed back in national ownership.
An article in the New Zealand Herald (7/4/09) by the then President of the Maritime Union's Auckland Waterfront Branch, Denis Carlisle, stated "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". The Union noted that 99% of our imports and exports as a maritime trading nation move by sea but New Zealand had 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".
A Tale Of Two Ports: Yellow Unions And Suitcase Stevedores In Tauranga
The Port of Tauranga has been the seeding ground for a new breed of aggressive, anti-union stevedores. The union situation is not obviously directly related to privatisation on the surface. But experience overseas, as noted previously in this article, has shown privatisation and anti-worker, union-busting activities are part of the same package deal. Tauranga has been the source of numerous problems for unions as its rapid expansion and anti-union stevedores have led to deunionisation and "yellow associations" (company unions). It has a fragmented labour force that is highly casualised and as a result the port is portrayed as innovative and forward thinking by the business sector. Talking to some of the casual workers there some years ago, their stories of living on the end of a mobile phone waiting for work from one of several employers, provides a different picture. It's a 21st Century version of the evils of the old "bull" system, where wharfies used to be picked up for a days work by labour-selecting foremen at the wharf gates.
In comparison, the Ports of Auckland has strong union membership through the Maritime Union of New Zealand. The history of the port was that the former Harbour Workers Union joined up with the Waterfront Workers Union in Auckland in 1990 (and in turn the WWU amalgamated with the Seafarers Union into the Maritime Union in 2002.) Apart from Auckland, the old Harbour Workers Union merged into the Rail and Maritime Transport Union (RMTU). In the Port of Tauranga, as in most ports, both MUNZ and RMTU represent workers, and the relationship has been historically bumpy.
But Tauranga has a greater threat which both unions are well aware of. There are several privately owned stevedores which operate in-house unions. One stevedore, ISO, also operates throughout New Zealand as a "suitcase stevedore" and were at the centre of major industrial conflicts with MUNZ (prior to 2002 the WWU) throughout the 1990s up until the present day. These have included Tauranga, Auckland, Gisborne, Nelson, Timaru, Bluff, and Port Chalmers, and more recently Napier. These in-house unions are officially registered and a condition of such registration is that they operate at “arms length” from the employer. How this independence is monitored is one of life's great mysteries.
In any case, these unions are referred to by the genuine worker-controlled unions by a variety of names including “yellow associations” to reflect their real nature. They have no relationship with any other bona fide union or union body such as the Council of Trade Unions. Such stevedores operate with a core workforce supplemented by casual workers. The casualisation is the key as any casual who decided to join a genuine union, as opposed to the company union, would have dim prospects for their future career. Despite these outward differences between Auckland and Tauranga ports, and fierce competition, there have been attempts at some kind of merger from both sides. The most recent in late 2008 saw Ports of Auckland make an approach to Tauranga to buy its container business, an offer that went nowhere ("Auckland-Tauranga Port merger founders", NZ Herald, 26/2/09).
Double Or Nothing: Duplication Of infrastructure
The result of many ports operating without central direction or strategy has created an environment of parochial competition. Ports compete to see who can capture the big trade of the shipping companies. There are winners and losers, and often this year’s winner is next year’s loser. Ports sink large amounts of money into creating infrastructure to attract trade away from their competitors. An elegant case was the "$20 million hole" at New Plymouth, where the Port of Taranaki carried out a channel deepening to facilitate a deal that would have seen Pike River coal barged from Westport and exported from Port of Taranaki.
“The trouble was that at the time the Port of Taranaki made the investment decision, it and its partners did not have a contract signed with Pike River. Subsequently, Pike River elected to ship its coal through Lyttelton, leaving the Port of Taranaki with a deeper channel that it didn't need" (Dominion Post, 25/6/08). Pike River Coal, a 2007 Roger Award finalist, also left the Port of Greymouth high and dry with their wheeling and dealing. "A multi million dollar revamp of Greymouth's port has been scuttled after a decision was made to send millions of dollars of coal to Lyttelton instead. After two years of planning, Pike River Coal has abandoned its plans to revamp the Port of Greymouth, instead opting for Solid Energy's proposal to send more coal by rail to Lyttelton. Pike River was going to start exporting the coal via Greymouth next year but now the deal is off after the company got a better deal." (TVNZ News, 28/11/07).
New Zealand 's New “Hub” Port: Brisbane
A report entitled “Long term optimisation of the Port Sector” was released in October 2009 by Auckland Regional Holdings, the business arm of the Auckland Regional Council. It described developments in an “intensely competitive industry dominated by a few large international players". The report suggested that the port rationalisation process could result with a centralised "hub" port for New Zealand on the other side of the Tasman. The idea is not as strange as it first sounds. After all, the distance between many New Zealand ports is fairly big anyway, and the vast size new generation container vessels now coming online require equally massive port infrastructure.
The retiring CEO of Pacifica Shipping (one of New Zealand's last coastal shipping companies), Rod Grout, gave the issue a blast on his way out earlier this year. In an NZPA interview he lambasted the Government's "apathy towards domestic shipping" and raised the issue of an Australian hub as a potential outcome. The large international shipping lines could say "we're now hubbing in Sydney, please make sure you arrange to get your cargo to that port", he said. "When you allow international shipping lines to take their share of domestic cargo they'll pick the eyes out of it". The debate about whether Tauranga, Auckland, Lyttelton or Dunedin could become hub ports was "small fry" compared to the bigger picture. "People tend to take a hands off approach and let the market dictate. The market could easily dictate Sydney or Melbourne" ("Aust. ports could become hubs for NZ: industry leader", Otago Daily Times online, 22/1/10).
Downstream from this comes the crunch. The power of the shipping companies will become greater, and their ability to put the screws on New Zealand ports will be increased even more. With no collective bargaining power or national plan, individual ports will continue to savage each other. Such a situation should make concerning reading for the Minister of Transport, Steven Joyce. The fact that he has amiably declined to get involved in the minor matter of the future of New Zealand's ports has now got to the point where even the traditionally crusty and conservative maritime industry bosses are scratching their heads.
Crisis? What Crisis?
Going back a few years, there were high hopes the Clark Labour Government would deliver for the maritime sector. Yet Labour did not deliver on cabotage or even some kind of regulation for New Zealand shipping (cabotage is the policy of reserving coastal shipping for domestic ships and crews, practiced in many countries including the USA. In this context it refers to Government policy, since the early 1990s, to allow foreign crewed ships to operate in NZ domestic shipping Ed.) . Towards the end of their term, some minor concessions were offered. In their last term of Government, the much vaunted “Sea Change” strategy was rolled out which proposed an integrated transport system and offered $36 million of funding for developing coastal shipping over four years.
But it appeared there was some confusion about what it was all for in practical terms. There was little uptake and shortly after the election of National in 2008, the Sea Change strategy sank without a trace. After sniffing the wind on the Lyttelton deal in 2006, some local Labour MPs lined up to sign a statement calling for the port to remain in public hands. Typically, the Labour government itself was mute. The Sea Change strategy put some seeding money towards coastal shipping and there was talk of integrated transport systems. Casualisation of the maritime workforce was going to be looked into by Ruth Dyson and Peter Brown, the New Zealand First MP with a maritime background. But they must have known that these initiatives were doomed before they even began, as they were finally rolled out in the last days of the 1999-2008 Fifth Labour Government. A cynic might wonder if they were intended as a political sop to jolly along some of the long suffering maritime unionists.
The approach of the current National Government has been to dump even these limited initiatives, pump cash into roading, and to keep a safe distance from the port sector. The Port Strategy Website reported on 22 January 2010 that "New Zealand’s future port scene will be shaped by natural market forces and not influenced by direct Government intervention….Resisting calls from some within the sector to 'encourage' the predominant council shareholders to view assets commercially, Transport Minister Steve Joyce says shippers and the next generation of vessel callers will already provide sufficient 'drivers'". Joyce told media he was taking a "watching brief" (whatever that means) and wanted to "encourage those who are shipping the goods and the logistics companies and port companies to work together" (in other words, do nothing). Our favourite dairy giant even came in for a scratch behind the ears. “I don’t believe there is anything stopping them from doing that and we are seeing developments in that area with some of the decisions that Fonterra has taken this year and I think we’ll see further developments”.
Running Against The Tide: Resisting The Privatisation Agenda
The big problem with the current debate is how the agenda is set by default. The same failed mantra of privatisation and deregulation doesn't sound very convincing, but has every chance of going over the line in the absence of a clear alternative. In that sense, the crisis in New Zealand ports is a reflection of our society as a whole. The current direction will lead to disaster but the loudest and most confident voices are those representing the aggressive finance sector, pro-privatisation, anti-union, scornful of democratic institutions and the public interest.
The Minister of Transport Steven Joyce is obviously hoping that "the market" will decide in order to get the Government off the hook, hoping to ride out the inevitable shakedown of the industry and avoid any collateral damage to his Government. These local concerns are no doubt watched by the global shippers, but New Zealand is probably just a minor nuisance to them. This is a mixed blessing. Our ports are small time to them, and there is a sense that the moves by Hutchison and the talk by COSCO are more about tidying things up than any great financial incentive.
Global shippers might be happy to forget all about New Zealand and just bundle our products in from a major Australian hub. Why worry about a small customer who can't get their act together? The alternative path, towards a planned and integrated transport system, would have to acknowledge that the transport chain for New Zealand is not just "another business" but the infrastructure on which our business depends. This means taking on the dominant finance sector attitude with its short-term outlook. It is entirely possible to have a profitable port wheeling and dealing in waterfront property, yet doing a third rate job in getting our products to the world.
Just as dangerous is the lack of appreciation of the role of ports. You can see this in how many people see ports as an ugly inconvenience to trendy urban lifestyles, sitting on valuable real estate. In Opposition the Labour Party has campaigned on an anti-privatisation platform with the Super City moves in Auckland, but the contradiction between Phil Goff's free trade cheerleading and Labour's new found zest for people power is obvious. The Greens and the Alliance have followed port and maritime issues from a Leftwing perspective, and NZ First had an interest in it. Yet two out of three of these parties are no longer in Parliament. The Greens are experiencing a transition period and their most effective advocate for industrial and maritime issues, Sue Bradford, has left Parliament. CAFCA has kept an eye on the issue and obviously appreciates the importance of this sector, with its ongoing support for public ownership of ports and the New Zealand shipping industry. But CAFCA has a broad agenda and one busy organiser. It can serve as an information clearing house, provide a national network of interested people and, as has been proved, can jump start an effective local campaign.
The once powerful maritime unions no longer have the ability to simply press the button and walk off the job in support of a political principle. Non-union and scab labour outfits are openly operating in key ports. The Maritime Union of New Zealand is a small union that enjoys a high profile and has actively advocated against port privatisation but is faced with attacks on several fronts. The uneasy relationship between MUNZ and the RMTU (and the fact there are two unions on the waterfront) is an ongoing saga that will have to be resolved before a consistent position can come out of the unions. The Maritime Union has proposed the concept of a “Kiwiport”, with a view that ports throughout New Zealand should come under a coordinating structure.
Despite the efforts of the current Government to lock New Zealand further into a fossil fuel dependent economy at a time of peak oil and climate crisis, coastal shipping offers a ready made solution. The regeneration of a regulated domestic shipping industry would lead to the stability of regional ports, providing an alternative to the large vessel syndrome promoted by global shipping operators whose arbitrary changes to calling schedules have ports on the hop. Ports could be put under local ownership and control, but rather than being left to parochial competition, they would have to operate in an integrated framework.
A national ports plan and Government shareholding could carry out port rationalisation based on the public interest. Ports would be operated on a basis of facilitating trade. The savings on wasteful competition would be enormous, and the transition to hub and feeder ports could be managed to ensure regional ports were not disadvantaged. The casualisation of the industry could be turned around, and secure jobs and a career path would make waterfront work a more attractive option for young people in an ageing industry. The New Zealand mindset is still dominated by the idea that farmers are the sole wealth creators on the basis that they grow and milk the cows. This is of course true, but a cow udder is only the first step in the complex trade and logistics process.
Ports and the maritime industry are seen as an afterthought or a problem, or possibly something that could be hocked off to make some short term cash. There are more exciting things to think about, like tourism. There is little appreciation that if we get our ports wrong, we will be in the unusual position of being a remote maritime trading nation that has lost control of its transport and logistics chain. New Zealand will become one step closer to becoming a paddock with a golf course attached to the side. There will be winners, but the people of New Zealand will not be amongst them.
References And Bibliography
"TI Briefing: The ports of convenience", Transport International Magazine, International Transport Workers Federation (Issue 25, October 2006) http://www.itfglobal.org/transport-international/ti25-ports.cfm
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