Nelson tug refusal defended by Mr Allen

Press, 19 July 1983, Page 17

Nelson tug refusal defended by Mr Allen

Nelson reporter

The Government could not be drawn into a situation whereby it “traded off’ one industry and its employees, against another, the Associate Minister of Trade and Industry, Mr Keith Allen, has told “The Press.” This was one of the answers given by Mr Allen to a list of questions submitted to him regarding the refusal of the Trade and Industry Department to allow the Nelson Harbour Board to import a $2.5 million second-hand tug to handle large ships at Port Nelson. The board made a formal application for a licence to import a 30-tonne bollard pull tug, in September, 1982. The application was declined on March 4 this year, on the grounds that the vessel could be built within New Zealand. The board countered this assertion by advising that although the tug could be built in New Zealand, it could not be available for about two years, that it would cost between $5 million and $6 million and that in the meantime, without a tug, the board would have to turn away large ships calling for wood chips — an export worth $8 million a year. Already one giant chip ship has been turned away because the board does not have a tug large enough to help berth her. The background to the application is the ever-ex-panding forestry industry in the Nelson region. Industry sources said yesterday that in the 1982-83 year forest products in the region earned $37 million. Of this, $17.5 million passed over Port Nelson wharves for export ($8.3 million in logs; $6.7 million in chips and $2.4 million in sawn timber). The industry said that the policy today was for ship owners to employ larger and more economical vessels on the New Zealand run for all forest products. Forward projections were

that by 1995 the region would be producing some $l5O to $250 million of forest products annually with overseas markets in mind. One submission put up by the board was that the forest industry in the region employed a lot of people and their jobs and the industry should be weighed against the ship-building industry. Forest sources in Nelson said yesterday that 939 persons were directly employed in forestry in the region. This figure did not include related employment (mechanics, drivers, managers, supervisors and the like). The questions put to Mr Allen, and his replies, were:— Are there not precedents to allow the purchase of second-hand vessels, for example, large fishing vessels (specifically the Arrow, recently commissioned by Mr Duncan Maclntyre in Nelson)?

“There are no precedents for the importation of second-hand tugs. Large fishing vessels, such as the Arrow, which are outside the range of local manufacture, enter the country under the duty-free fishing vessel importation scheme. This schemee was introduced in the 1976 Budget to encourage the development of New Zealand’s deep water resources. “The Government’s commitment to protect the local shipbuilding industry, and hence also the jobs of those employed in that industry, by prohibiting the entry of cheap second-hand vessels, is in accordance with the spirit and recommendations of the Development Commission, in its commercial shipbuilding and repair industry development plan released by the Government in 1981, which recommended the continuation of the scheme in a revised form. The I.D.C. also recommended the reduction in tariffs in respect of commercial vessels (including

tugs) and the exemption of new commercial vessels from import licensing. Government incentives also exist to encourage the local manufacture of commercial vessels, including a grant of 15 per cent of the cost of construction, paid to the vessel’s owner-purchaser. The Nelson Habour Board will be eligible for this grant if it places an order with an established New Zealand shipbuilding firm." It has been reported that one giant chip ship has been turned away. How many more are going to be turned away because Port Nelson is not permitted to have the required facilities? The harbour board says it cannot wait two years for a New Zealand tug. Comment? “I understand that the Port of Nelson is currently unable to handle vessels over 185 metres, and that vessels above this length

are scheduled to call at the port during this year. I accept therefore that there is a need for a tug to service these larger vessels. I do not accept, however, that this tug should be imported second hand. The Nelson Harbour Board was informed by the Trade and Industry Department as early as August 1982, that the importation of a secondhand tug would not be possible in terms of Government policy, unless the local ship-building industry could not supply to specification within a reasonable lead time.

“The New Zealand Ports’ Authority is fully aware of this policy, and has refrained from endorsing the board’s proposal until the import licensing decision is known. Further, the board has only recently approached the industry with a request for a written quotation and it appears

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that the differential between the cost of an imported second-hand vessel and a locally constructed utility tug is only $329,000. This includes the cost of the bare boat charter of a tug during construction time. Had the board ordered a tug from a New Zealand shipbuilder in August 1982, the vessel would have been well on its way to completion by now. The . industry advises me that the lead times involved are considerably less than the two years you have quoted (between 12 and 18 months). “I would also point out that the option remains open for the board to import a new (as opposed to second-hand) vessel, which, in accordance with the I.D.C.’s recommendation, is not subject to import licence but to a duty rate of 20 per cent. I understand that the board had received a quotation for the purchase

of a new tug in Japan, which is only marginally cheaper than the cost of a new construction in New Zealand.” How does the Minister and his department reconcile its attitude with the reported statement of the Prime Minister, Mr Muldoon, that the Government was “determined to preserve the profitability of exporting . . .” and that the “costs of following policies which result in New Zealand being shot out of exporting were just too great”? An $8 million industry is said to be jeopardised by the refusal of permission for this tug. Does the department and Minister acknowledge this? “The Government and the Trade and Industry Department are certainly determined to preserve the profitability of exporting, and this had never been in contention. The Nelson Har-

bour Board claims that it is not able to afford the cost of a locally constructed tug, and it is this, and not an import licensing decision, which may affect the forestry industry in the Nelson region. One of my concerns is that, if this licence is granted, a number of other harbour boards which are currently considering the replacement of tugs, would also have to be allowed access to second-hand imports. In the long term, this would seriously undermine the viability of the New Zealand shipbuilding industry.”

Does the department and Minister believe that the policy of protecting the jobs of shipbuilding employees outweighs the probable loss of the competitive edge in wood chip sales? Are not the jobs of those involved in the forestry industry in Nelson also to be weighed against such a policy?

“The Government cannot be drawn into a situation whereby it ‘trades off one industry and its employees, against another. I have carefully considered all aspects of this case and I consider that there are alternatives for the Nelson Harbour Board and that its problem in servicing larger vessels can be overcome within the framework of existing Government policy. I have consented to meet once more with the officers of the Nelson Harbour Board to further discuss this matter and ways in which the current problems might be overcome.” Mr Allen’s letter was referred to the board’s general manager, Mr Frank Baldwin, yesterday. He preferred not to comment, saying that his chairman, Mr Ron Fletcher, and he would meet Sir Wallace Rowling in Wellington tomorrow, to see Mr Allen.