Radical changes proposed for N.Z. ports

Press, 14 March 1987, Page 1

Radical changes proposed for N.Z. ports

By

PAT TAYLOR

in Greymouth

Each big harbour board in New Zealand will be required by the Government to form a port company or companies to run its commercial facilities, the Minister of Transport, Mr Prebble, told the annual meeting of the Harbours Association in Greymouth yesterday.

In what he said was “the longest speech I have made as a Minister” — it ran to 20 foolscap pages

— Mr Prebble said it contained the most radical changes in the history of New Zealand ports. Each port company would work under the

constraints of the Companies Act and Commerce Act, have its own board of directors, and articles and memorandum of association, and be given the principal aim of functioning as a successful business.

“This should desirably include providing a dividend to shareholders and seeking a return on the considerable equity the community has in our ports,” said Mr Prebble.

“The Government recognises, however, that it may not be appropriate for this policy to apply to those harbour boards that have limited trades and functions or that rely on

rating revenue to support the board’s operations. "Accordingly the Government believes that Gisborne, Wanganui, and Greymouth boards should be able to decide for themselves whether to form a company or have their functions and assets transferred to an alternative local authority or authorities,” said Mr Prebble.

The plan was not to turn elected harbour boards into companies; they would be two separate and distinct entities.

The port companies would perform the boards’ commercial port functions and the elected

board? would,' retain responsibility , for non-trad-ing and local authority functions such as meeting community and recreational responsibilities and taking the wider coastal development, safety, and planning role. “In addition they would have the critical role, as joint shareholders in port companies, for monitoring the performance of the companies and helping to determine such matters as the scope of company activities and performance targets.

“In future the electors will be able to see very clearly whether a board is performing adequately by

asking how its port company is doing and whether the board has met its community responsibilities,” he said. The Government had decided also that the shares in any port company would initially remain in public ownership.

Harbour boards would own 50 per cent of their companies with the remaining 50 per cent to be distributed among its constituent local authorities.

“That said, the Government has recognised that it would be inappropriate to force any harbour board or local authority to retain those shares if they thought that this capital

might be put to a better use elsewhere,” said Mr Prebble. Provision would therefore be made for the sale of shares at the discretion of the shareholder. With investment decisions being taken in a commercial manner like those in the private sector, the disciplines and penalties of the market place should apply.

“Taken together, the greater degree of interport competition and price pressure from users that exists today and the protection afforded by the Commerce Act will serve as deterrents to those who might exploit their position.

“Accordingly, the New Zealand Ports Authority Act which has failed to prevent gross over-capi-talisation at our ports or achieve its planning ob-

jectjyes will be repealed,” said Mr Prebble. He said that the introduction of this new policy would require a complex legislative and commercial package. “Within the Government’s broad policy framework there are, however, still some issues that require resolution. The Government had directed officials to continue to research and finalise the issues involved in establishing port companies. This would involve seeking the assistance of harbour boards on these details. An issue to be resolved was the formula for membership of the board of directors of the port companies. Harbour board and local authority members should not simply be able to “swap hats” to become the company

directors. “Like the Government’s State-owned enterprises, it is essential that the port companies. .. ...are .’.r.not fettered unjustifiably. by the parochial dictates of politicians. “The directors should clearly be people of a high commercial and business calibre, and comparable to those In simi-lar-sized companies,” said Mr Prebble.

Mr Prebble listed several other items which he said required “fleshing out” but said the harbour boards had asked for greater autonomy to pursue commercial goals. “The Government is going to provide that autonomy, together with the responsibility for performance that must go with it.”

Other reports, page 2