Manukau Harbour delivers best cost benefits for a new $4B Auckland port, study group says

Friday 1st July 2016

A cost benefit analysis shows Manukau Harbour would be the preferred replacement site for a new Auckland port despite shipping and business interests preferring one on the east coast.

The Port Future Study released today, two days after details were leaked to the media, concluded that expected freight growth at the existing Ports of Auckland site will be okay for a few decades but beyond that there will be a need to move, which is consistent with previous studies.

It recommends a more comprehensive investigation of two relocation options – the favoured Manukau Harbour and the Firth of Thames. Within that, three sites on the Manukau and two on the Firth of Thames have been short-listed.

Both Northport and Port of Tauranga were considered as alternatives but it was felt neither had sufficient capacity long-term to accommodate their own growth and cargo for Auckland. All the options have flaws and study group chair Rick Boven said the challenge was finding the best of a range of bad options.

While the Manukau was the preferred site, more detailed geotechnical analysis could rule it out which is why the Firth of Thames, which would have higher capital and operating costs, was also recommended for further investigation, he said.

The study group also recommends that if the port is moved, cruise ships which deliver around $500 million annually to the New Zealand economy should continue to be accommodated near the CBD.

The recommendations will go to the council’s Auckland development committee next week and if accepted, are then likely to be forwarded to the incoming council to deal with once the local government elections are over in October.

There’s a lot of uncertainty about when a shift will be needed. Even if the planning process were to begin today, it could take 15 years for consenting and construction, particularly given many of the short-listed sites are subject to Treaty of Waitangi settlement negotiations with iwi. The study group has recommended council assess regular triggers to consider the best timing.

The report says there are three options: waiting until port volumes, expected growth, and forecast capacity signalled the port should be relocated, doing it as soon as possible which would be during the 2030s, or seeking a ‘sweet spot’ that includes when the city wants to redevelop the existing port site for other uses, potentially in the 2040s.

But Boven said it was important to have an alternative location in place before then.

“Because if we need it at a future point and don’t have one, development that will take place in the meantime will make it difficult and very expensive to secure a port location down the track. It’s like reserving a road transport corridor or creating a paper road where you ensure you have the provision to deal with uncertainty in the future.”

In the interim, the group recommended allowing the council-owned Ports of Auckland to extend Bledisloe Wharf on the waterfront to provide more berth space for general cargo and cruise ships.

It was important to maintain the port company’s revenue because any new port would need scale to make it viable, Boven said. POAL said it was now starting the design process for a removable piled wharf structure at the northern end of the Bledisloe terminal that will not require reclamation. Public protests and court action last year stymied POAL’s reclamation plans.

But Boven said once that work was completed and an alternative location identified, the group recommended the port be constrained to its current footprint.

The EY consultants’ report to the Consensus Working Group provides detailed cost-benefit analysis of maintaining the port where it is, relocating some functions elsewhere, and preferred alternative options. Building a new port at Manukau had a higher cost-benefit analysis than retaining the port where it is but the economics rest on realising value from selling at least some of the existing port site which is likely to be worth more at a later stage.

A Manukau port has lower capital costs of around $4 billion compared to $5.5 billion for one at the Firth of Thames. The Puhunui site ranked highest when economic, cultural, environmental considerations were taken into account though it had the highest capital cost of the three on the Manukau. The consultants’ report said the variance between the range of options including doing the minimum on the current site, was between $2.6 billion to $150 million.

Preliminary estimates for acquiring land and seabed in the Manukau area were provisionally $310 million. That includes $50 million for the seabed and around $100 million for the estimated land area required for a new port of around 50 hectares. A further 40 to 50 hectares would be required for expanded infrastructure at a cost of around $160 million.

That compares with a total land acquisition cost of $80 million for the Firth of Thames which included estimates of $50 million to acquire seabed, around $15 million for 50 hectares of land for the port, and a similar amount for the additional land required.

It’s estimated the value of the 75 hectares the current port is sited on would be between $1 billion to $2 billion depending on when it is sold.

Shipping operators had said they favour a new port on the east coast where their current shipping routes around New Zealand are rather than the west where weather and swell conditions could potentially close a new port at times.

The Employers and Manufacturers Association also said, on balance, it favours a large-scale East Coast option as the most attractive to shipping companies and business.

General manager of advocacy Mark Champion said there was concern shipping companies might relocate business to alternative ports such as Tauranga if they didn’t want to use a west coast one and that it might make sense once Auckland and Tauranga’s existing ports hit capacity to consider one replacement superport in the Firth of Thames that could supply both regions.

Auckland Chamber of Commerce chair Michael Barnett said business accepts that Auckland’s commercial port may need to move long-term but not before a new site has been selected and consented. In the interim, the chamber wants the council to make early decisions on extending berthage and yard space to handle the growth of cruise and longer ships and to address road and rail access to resolve congestion in the Grafton Gully area.

BusinessDesk.co.nz

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