Partly float air and sea ports, says commission

Councils should consider partly privatising their port and airport assets, while ports rendered less efficient by their labour practices would benefit from more competition, says an important new report.

The Productivity Commission's draft report on international freight transport, published yesterday, found air freight costs for New Zealand traders were 15 per cent higher than those in Australia and sea freight costs 20 per cent higher.

Among the factors affecting costs, port productivity compares favourably with overseas, but some ports are better than others, with Tauranga the best.

Wellington's Centreport ranked ahead of Port of Napier but behind Auckland, Lyttelton and Otago.

Wellington City Council, which owns the city's port, said it needed to consider the report before reacting to it.

"But obviously we are interested in anything that has an economic impact on the city and the region," a spokesman said.

Auckland mayor Len Brown ruled out any privatisation of Ports of Auckland.

"Aucklanders have made their views clear. They wanted the council to retain ownership of their strategic public assets and I will honour that commitment," Brown said.

Productivity Commission chairman Murray Sherwin said Tauranga's use of competing stevedoring contractors was part of the reason for its higher productivity.

"It's a pretty well-run company by all accounts – and it shows across many of those productivity and performance indicators – and I think its counterparts would acknowledge that's the one they look to for performance benchmarking," he said.

The report has been published as a dispute over attempts by Ports of Auckland to change work practices comes to a head.

Ports of Auckland chief executive Tony Gibson said his port was well-placed to compete with the best in the region, "but we need fundamental changes to current labour practices to achieve that".

The report said it was time to axe international shipping lines' exemption from competition law.

The exemption allows shipping lines to co-operate in ways that could be illegal in other industries, and the report said there was no longer any need for it.

Sherwin said it did not appear to be a big factor in freight costs now, but that removing the exemption could be beneficial in the future.

Submissions on the draft report can be made until February 27.

The final report is due to be presented by April 1.

- © Fairfax NZ News