Infrastructure

Just another port study

A new study on the Port throws up a different result to the last one, Dileepa Fonseka explains why

Auckland 'move the port' studies have averaged out to at least two per year over the last decade with almost every one of them throwing out a different option or result. 

There is a $5b difference in estimated costs and $2b in benefits between this latest report by Sapere and the last one by the Upper North Island Supply Chain Study (UNISCS) - despite both reports being run less than a year apart.

The studies diverge in key areas. In Sapere's analysis, Manukau Harbour is the preferred option to a Northport move, but in the UNISCS study, that option was dismissed right from the start. 

The divergence shouldn't surprise. At least 20 studies have been conducted over the last 10 years into moving the port or reshaping the North Island's supply chains through different port strategies.

Infometrics economist Brad Olsen said the country seemed to get a different answer every time it asked the same question.

"The thing that gets me is it looks like every report we do we get a different outcome."

60-year timeframe

The differences between the current studies going head-to-head came down to road, rail, land value, and the timescale over which benefits and costs were examined.

Sapere's report was conducted with a 60-year timespan in mind while the UNISCS only looked at the next 30 years. 

The Sapere report found that Northport's berth capacity would only last till 2060.

"Marine and coastal engineers conclude that Northport would need a 2km long quay, involving dredging and reclamation that expands beyond identified constraints to the west (residents, wetlands) and to the east (into Refining NZ’s liquids berths and well beyond) with significant impacts on coastal processes affecting the nearby coastline and channel."

The 60-year timeframe also changed things markedly when it came to the way roading infrastructure costs were allocated in the two studies.

Sapere said UNISCS' preferred option of Northport delayed the need for $1.4b in roading infrastructure rather than removed the need for it entirely. 

So while those upgrades weren't needed in year 30, they might be needed by year 60.

"It is not that the projects would not be needed at all as a result of the relocation, but that they would not be needed until later in time, resulting in cost savings," they said.

"The time period used for the working group analysis effectively meant that the entire costs of some roading investments was avoided (as the ‘re-entry’ of costs subsequently fell outside the study period).

"In our view, the best characterisation is of delayed costs rather than avoided costs."

From $1.2b benefit to $2b cost

The Sapere report also had a different take on the average truck trip distance which nullified $1.2b in benefits the UNISCS had found would accompany a Northport move.

One key driver within that was a major difference in the estimate of how far trucks would travel from Ports of Auckland in the central city or Northport.

A truck that serviced Ports of Auckland in the central city would travel 81km on average, according to numbers used by UNISCS.

However, when Sapere looked at the journeys that led to the creation of this 81km figure, it found 9 percent of all road trips that contributed to this average distance were ones that ended up in Wellington. 

There was no clear reason for these Wellington trips. So Sapere stripped them from its modelling of both the Northport and current port location option.

That reduced the average trip distance for a truck that serviced POA to 21 kilometres.

That, and differences in how much freight would shift from road to rail turned $1.2b in benefits into an additional $2b cost in the calculations.

Property uplift

The UNISCS report placed a great deal of emphasis on the windfall Auckland Council would get in terms of rates and leases once they were taken up by a higher-value occupier.

That was supposed to be the key 'carrot' that would persuade Auckland Council to give up its port asset.

However, the Sapere report discounted a lot of these gains. For starters it said Auckland Council wouldn't reap most of the $5-6b land value gain because developers who developed the land would. 

It also dismissed the rates take as irrelevant to a cost-benefit analysis because technically it wouldn't create extra economic resources. 

"The payment of rates and income received from leases are cash transfers between parties and do not result in creation or destruction of resources, per se.

"Therefore, they should not be included in an economic CBA [Cost-Benefit Analysis]."

Not the end

Then again, the current report is unlikely to be the final word on the matter. For starters, one key factor often examined in port analyses has been missed: urban development around the new port locations.

Urban geographer Ben Ross said this had factored into other port moves overseas.

"When you're moving a port. You're not just building a port, you're also setting up a new satellite as well.

"Both reports didn't do the cost-benefit of the satellite. Which would change it."

The development of Manukau Harbour didn't require industrial complexes to move. That was part of the reason it was a preferred option, but also meant it would generate fewer benefits from new urban development.

Unresolved too were issues around the amount of land still available at Manukau Harbour - with much of it having already been taken up - and the impassability of the sand bar itself, which has created some notoriously treacherous conditions.

While the Sapere report found the poor conditions were not as uninsurable as UNISCS contended they were - and that other issues regarding the movement of sand could be overcome with dredging - their observations were subject to a geotechnical and engineering analysis. 

Perhaps that's why Mayor Phil Goff called for another study less than an hour after the latest port report was officially released.

“It is my firm expectation that, following the election, the new Government will immediately start work on a facts-based options analysis of the Manukau or the Firth of Thames." 

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