THE PRESS SATURDAY, DECEMBER 20, 1986. Seeing red in the port

Press, 20 December 1986, Page 20

THE PRESS SATURDAY, DECEMBER 20, 1986. Seeing red in the port

The Lyttelton Harbour Board, from the state of its annual accounts, has given an unintended thrust to the Government s argument that the country’s ports should be run by companies. The Minister of Transport, Mr Prebble, urges a more commercial approach to the running of ports and, after viewing Lyttelton’s provisional accounts, most people would unhesitatingly agree with him. Mr Prebble’s solution might be extreme, even erroneous. There is nothing to guarantee that appointed directors will handle matters more satisfactorily, or profitably, then elected local bodies and their appointed advisers; but many people in Christchurch and Canterbury must wonder if some such shake-up is not needed. The company approach may in fact ensure the making of profits in the short run, but at the expense of service to users of the port in the long run. The board’s financial year ended on September 30. The net result of the year’s activities was a loss of $2.7 million. Income from the operation of the port increased by almost 9 per cent during the year to a little more than $29 million, but expenses increased by almost 17 per cent to nearly $33 million. The loss on running the port was reduced to the net figure by various financial transactions, such as interest on investments. Had it not been for this other income, the deficit would have been about $3.5 million. There will be less of this other income next

year, because the board has had to reduce its working capital and investments during the year by $5.2 million. This depletion of reserves has left the board with no cushion and very little to play with should trade fail to improve greatly in the coming 12 months. Such an increase does not seem likely. Much of the blame for the year’s loss — a turnaround of $5.8 million on the previous year’s activities — has been laid upon the container crane accident in February, 1985. The crane was out of use for a year, but the board’s loss-of-revenue insurance covered only six months.

The state of the books, however it may be explained, impinges upon another matter — the board’s proposed reclamations. The plans have been vetoed by the Ports Authority, but not relinquished by the board, which intends to appeal the Ports Authority decision. The rest of the community must wonder at the board’s apparent disregard for financial reality.

Far from accepting the need to cut its coat according to its cloth, the board contemplates projects, the first step of which will cost — on the board’s own, probably conservative, estimate — some $lO million while it is losing $ll for every $lO it earns. Be it the result of boldness or wrongheadedness, the situation is extraordinary and the board obviously must make a rigorous review of its plans.