Herald praises Brown

March 13th, 2012 at 1:00 pm by David Farrar

The NZ Herald editorial:

Courage in politics too often goes unnoticed, especially when it requires silence. Auckland’s mayor has shown remarkable courage over the past week, resisting pressure to call the Auckland Council’s port company to heel in the current dispute. Some of that pressure has been exerted in public, by commentators, union leaders and a protest march in sympathy with the sacked watersiders that the Labour Party’s leader saw fit to attend. But just as much pressure will have been coming on him in private, from Labour members of the Auckland Council and party activists who helped him get elected.

The latest challenge for the Mayor is one of the Labour Councillors, Richard Northey, has moved a motion to have a Council committee declare opposition to the Ports restructuring, which would humiliate  if it passes.

The contractual stevedoring arrangements the company wants to make would match those its nearest rival, the Port of Tauranga, has enjoyed for many years.

They were introduced at Tauranga without the strife that has disrupted the Auckland port for so long now, and members of the Maritime Union are still employed on Tauranga’s wharves.

The Port of Tauranga is only part-owned by its local authority. There can be little doubt partial privatisation makes a difference. Boards of directors can more easily resist political pressure when they owe a duty to private as well as public shareholders. More important perhaps, trade unions know this. They cannot as readily bring political pressure to bear in a dispute.

This is absolutely true. The union becomes far less reasonable, because it has lackeys on the local authority who will interfere on their behalf.

The other advantage of the PoT model is that it allows the employees to become share-holders, as 90% of stevedores at Tauranga are.

The best argument for a partial sale of Ltd would be intervention by the mayor and council in this dispute.

Mr Brown knows this very well. It is he, almost alone in public now, who is doing the most to show that assets in full public ownership need not be a pushover in labour bargaining. This is the first step, and probably a necessary one, on the path to proving that assets in public ownership can be competitive with private enterprise in every way.

If Northey wins the vote, it will be a classic case of politicians interfering to benefit their donors and supporters.

All of them are at least half-owned by local councils. Had they been fully privatised there is no doubt we would have seen mergers and rationalisation that would have produced better returns for private shareholders, more efficient transport networks for the whole country and more bargaining strength for the ports in negotiations with shipping companies.

If this sort of rationalisation is possible with ports in council ownership, the largest port will need to lead the way. If Ports of Auckland Ltd can get close to the rate of return the mayor has set, it will be in a more dominant position than it has ever been.

But that all depends now on Mr Brown’s courage. Can he see it through?

This is a huge test for Len. Can he defeat Northey?

On the issue of too many ports, that is a view shared by the PM:

A concession from the Prime Minister that the country may have too many ports.

The drawn out and often acrimonious Auckland port dispute has spawned calls for the number of ports to be culled.

John Key’s giving some thought to suggestions we’re overloaded in the unloading business, and he says the Productivity Commissioner is looking at the overall structure.

“In the end the truth of it is if we have too many ports then they won’t be financially viable and some will close,” he told Newstalk ZB’s Mike Hosking.

Mr Key says Ports of Auckland is losing business to Tauranga because Tauranga is more efficient.

And as the editorial notes, the ownership model stops there being a sensible rationalisation, where a 10% cut in transport costs would add $1.5b to the economy.

6 Responses to “Herald praises Brown”

  1. davidp (3,866 comments) says:

    >“In the end the truth of it is if we have too many ports then they won’t be financially viable and some will close,”

    Sydney’s port activity has pretty much moved to Wollongong, and London’s to Felixstowe. Both have been replaced by economic activity that is much higher value. Maybe Auckland should be one of the ports to close? Whangarei and Tauranga can take up the slack and the port land can be used for offices and apartments.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. wreck1080 (5,020 comments) says:

    Browns lefty heart is fighting with his righty brain.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. Richard29 (377 comments) says:

    Rationalisation makes sense.

    In terms of the dispute – I can see both sides.

    I think that the ports decision to pick a fight with their workers (this was initiated not by workers demanding raises but by management demanding a contract change for all permanent staff), refuse to change any of their bottom lines and then fire 100% of permanent staff half is extreme.

    I don’t completely blame the current port leadership for this – they are fairly recent appointments, they are just delivering what Auckland Council Investments have asked them to do. They can’t raise prices without losing business, their costs come out of three areas, labour, land and plant. The land cost is some of the most expensive in the country and I’m sure they can get a little bit more efficient in use of machinery capital etc if squeezed – but not by a lot. So the bulk of the savings would have to come from Labour – this is plainly obvious to everybody concerned that you are not going to achieve the 12% return without masive restructuring so for Len to maintain demands for the dividend and act surprised and say his hands are tied when the port cuts Labour costs is cynical in the extreme.

    The real question marks I have is the performance of the previous management. It’s not like the wharfies pay went from $40k to $90k in the last six months. There will have been year after year of pay negotiations where successive managers have rolled over and approved wages and conditions that they know full well are not sustainable or realistic just because they don’t have the guts to pick a fight with the union. The last 3 years of this was under a port 100% controlled by our right wing mayor and current head of the Act party – so I’m unconvinced of the ‘crony left wing mayor’ argument. It seems like Banksie sided with the status quo of union dominance and Len is implicitly backing port management.

    The other bit that worries me a bit is that the majority of the current Auckland Council Investments Limited (ACIL) board (who Len unconvincingly claims he is powerless to overrule) was appointed by Rodney Hide. For all the talk of privatisation being evil arguably the current structure is considerably less accountable than a public listing would be – at least opponents of the restructure would have the right to show up to a shareholders meeting and voice their opposition and vote no confidence in management. Instead the mayor Auckland elected claims that he is powerless to make any call over the asset Aucklanders are supposed to own – if he doesn’t have any power then who does exactly?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. trout (1,132 comments) says:

    Richard29@2.15 is incorrect. The collective agreement allowed the Port Company to hire contract workers (that the Union agreed to this is surprising but there it is). The first strike was called by the Union to force the Port Company to use Union members for particular jobs (the tween wharf shuttle was one). Perhaps the Union could see its power eroding and was reasserting itself.
    The Port has not been ‘100% controlled by our right wing mayor and leader of the Act party’ at any time. It was controlled by Infrastructure Auckland or the ARC led by Mike Lee. (who elected to buy out all the private shareholders, strip out cash, and lay down before the workers in pay negotiations)

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. Richard29 (377 comments) says:

    Thanks ‘trout’.

    I agree that it’s funny that the union agreed to that clause – although given their focus on job stability and regular hours and given the variable nature of the work volumes perhaps even the union could see the value in using contractors to manage peaks and troughs but changed heart when they saw the company using them more heavily in place of full timers.

    Ahah – so Mike Lee was ultimately the person who OK’d years of wage increases. Well that makes sense to me now – agree or disagree with him at least he’s been reasonably consistent from the outset.

    Interestingly despite the uproar on the left over the restructure and layoffs it seems Len may be playing a long game here. If the port does achieve a highly profitable return and increase in economic contribution to the region with an efficient labour model under 100% public ownership then it’d make it much harder for future right wing mayoralties to use efficiency as a pretext for privatisation. I wonder where the unions will stand on that – would the end justify the means?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. trout (1,132 comments) says:

    Mike lee has shown a degree of frustration at having the Port management removed from his sticky fingers. His latest solution is to have Exporters and importers subsidize the workers wages through cartel pricing.
    nIt should be remembered that the much admired Port of Tauranga includes Union members in its workforce.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote