According to Ports of Auckland chief executive Tony Gibson, wharfies work 26 hour weeks and he pays them $91,000 a year. Union president Garry Parsloe says it’s actually 40 hour weeks and $57,000 a year, or $27 an hour.

Labour says Auckland’s waterfront dispute is helping privatisation advocates and left wing commentator Chris Trotter says the reappearance of class conflict has the power to bring down popular, left-leaning mayor Len Brown in the next election and break the union movement to make way for privatisation and workplace ‘reforms’.

Christine Fletcher, Citizens and Ratepayers leader in the new Auckland Council comes up with the immediate solution of selling the port.

Mike Lee, long-time chairman of the former Auckland Regional Council, talks to Gulf News editor Liz Waters about the Ports of Auckland, its role in the New Zealand economy and factors behind the current stalemate.

Forget some of the headline stuff surrounding the port issue. Fonterra – which announced shifting its port business to Tauranga at the height of the high summer strike action by Auckland union workers – shifted its business to Auckland three years ago and has a policy of rotating around different ports. It was due to move again about now anyway, says Mike Lee.

Forget also productivity and profitability issues. While productivity is the major concern for the company it was only in September that Ports of Auckland chief executive Tony Gibson himself boasted the rate of cargo unloaded off ships was “the best ever recorded at the Ports of Auckland”. The union says Auckland’s port is the second most time-efficient in Australasia, second only to Tauranga.  

After six years of relative industrial peace under the ARC ownership Lee, the former chairman of the ARC, has been watching the dispute with mounting dismay. 

‘The first point that needs to be made is that the Port of Auckland is 100 percent owned by the people of Auckland and that both parties to the dispute need to keep this in mind.  The escalating rhetoric coming from both sides needs to be toned down and both parties, management and union, need to treat each other with respect, as human beings and sit down face to face and work through their differences.”

At the centre of the conflict is the breakdown of trust between union and management. The flash point for the union taking action was the loss of four jobs on the large conveyors called shuttles that transport the containers within the port.  

Mike Lee sees the dispute as avoidable and resolvable but is alarmed that the gap between respective positions of union and management seems to be widening – with the company escalating the dispute by threatening to break the union and taking steps to contract out the whole work force. Mike is critical of the lack of experience and apparent knee-jerk attitudes of the new directors.

“Directors that we (the Auckland Regional Council) put in place on the board, I believe, were very competent people. Unfortunately during the Government-controlled  transition to the new Auckand Council, all but two directors, people who had a lot of experience and a lot of integrity – and who were not interested in selling the port but wanted to work constructively with the union – were dumped,” says Lee.

The last to be removed was the highly experienced shipping company owner and businessman Peter Dunlop, a former ships captain with a “no bullshit” straightforwardness and a good working relationship with the union. Lee especially regrets his removal by the government appointed shareholder ACIL (Auckland Council Investment Ltd) only 14 months into his contract, admitting he sees it as ominous in the context of wider agendas.  It was Peter Dunlop who was largely responsible for getting the union to agree to the productivity gains the CEO was proudly announcing in September. “Now look what’s happened since his departure.

“Once he went, the union felt they had no one they could trust or talk to – I know they became quite alienated by Dunlop’s removal.”

Which isn’t to say he sees the port dispute as a one-sided situation. “My advice to the union was that going on strike for job security seemed to me counter-productive.  Unfortunately the strike action has played into the hands of the new hard-line people on the Board – who want to get rid of the union altogether.”

Lee, a former ships officer, has had a long association with the Port.  In 1992, early on in his political career and newly elected to the Auckland Regional Council, he was involved in the debate over the sale of the port.  The port sale idea had come from previous National Government and met with widespread opposition from the Auckland public. The ARC in a long and heated debate, finally resolved by a narrowest one-vote majority of regional councillors to overturn plans to sell Auckland’s 75 percent of the port. A 25 percent share of the port had been previously allotted to the Waikato Regional Council. Waikato subsequently sold its shares at which point the share price doubled overnight.

Later, and as chairman of the ARC it made sense, he says, to buy back that 25 percent shareholding through its shareholding subsidiary Auckland Regional Holdings. This enabled a much more simple governance model and allowed the transfer, ownership of the valuable 17 ha Wynyard Quarter (‘tank farm’) land out from the port. This in turn enabled a much more sensitive development with significantly more public open space than the commercially-driven port company had planned.  Transferring out the Wynyard Point land enabled the port company to refocus itself on the its core business of running the port instead of being distracted by real estate development, he says. 

ARC’s decision to take over 100 percent ownership was strongly supported by Aucklanders, including many of  the shareholders. Some critics opposed it for ideological reasons – and others because Ports of Auckland [POAL] shares were a very good investment (like all the other previously public entities like Telecom, power companies and airports).

The refocus had been largely successful.  In terms of profitability and return on capital the Productivity Commission reports that while the Port of Tauranga has a 6.3 percent return on capital, Ports of Auckland returns 6 percent. Tauranga’s 6.3 percent is marginally better but mainly because it has it has more lucrative regional timber and farm produce exports across its wharves but handles a lower percentage of containers than Auckland. Ironically Lee believes containers are part of the problem. 

Over time, with an ongoing rivalry and parochial bloody-mindedness between the two ports and the astute Danish shipping cartel Maersk playing one port off against the other, both Auckland and Tauranga have ended up with a rate for container processing that is far below that of other Pacific ports including Sydney and Melbourne.

Lee says the ongoing provincial rivalry makes little sense and is costing shareholders of both ports.

But POAL is not only a blue-chip commercial investment – it is also an enormously important part of the country’s economic infrastructure.

With Auckland handling 63 percent of the upper North Island’s container trade –Tauranga and all the other ports share the rest – it is responsible for processing $26.4 billion of New Zealand’s imports and exports which equates to 16 percent of New Zealand’s Gross Domestic Profit. In addition POAL supports 22 percent of the Auckland economy and sustains 187,000 jobs.

It is an economic powerhouse, says Lee, and would be economically significant for Auckland even if it did not make a profit at all.   However since 1992 when its privatisation was successfully opposed by thousands of Aucklanders, the ports company has returned about a billion dollars in profits and assets to the people of Auckland.  Profits which would have most likely largely gone overseas had it been privatised. 

“It is impossible to even contemplate the renaissance of public transport we have achieved and the major investments in trains, stations, ferry terminals, North Shore Busway stations etc over the last 10 years without the income from the Ports of Auckland,” he says.

While improved efficiencies from the work force will achieve better returns there are definite limits to just how much.  However the most fruitful avenue for gaining better returns come from the charges the Auckland port is able to achieve from the shipping companies for processing containers.

Given the enormous tonnages and numbers going through the port (nearly a million containers a year), even a $10 per container increase in the currently ridiculously low price would add $10 million to the bottom line, says Lee.

“The real money to be gained comes not from extracting it from the workforce but by getting the container price up, closer to the Sydney/Melbourne price. That’s potentially worth tens of millions annually.” 

 This will require taking on the shipping cartel – which will probably require a genuine joint-venture between the Auckland and Tauranga container terminals – and not the thinly disguised takeover bids various parties have contrived from time to time.  It’s time to end the ‘race for to the bottom’ and promote New Zealand public interests”, he says.

So even if wharfies did work 26 hours a week for $91,000 a year, as Ports of Auckland chief executive Tony Gibson says they do, it would hardly justify tying the port in knots and losing large chunks of trade to fight it out with a union which has already said it doesn’t want a pay rise.  And union president Garry Parsloe refutes both figures anyway. Overtime over the 40 hours takes it up to, at best, $71,000, he says.

“The bottom line”, Lee says, “is that the port belongs to the people of Auckland and is vital for New Zealand.  Improved efficiencies are essential both in operational practices and on pricing.  But there is little chance of getting improved productivity in a climate of bitterness and enmity.” •