Tenth Anniversary Conference

Port Reform in New Zealand, One Port's Perspective

Doug H F Green

Thank you for giving me the opportunity to speak to you this afternoon.

The reason for Port Reform was given concisely in a speech by a New Zealand Labour Minister of Transport, the Hon. Bill Jeffries, when he said, "in simple terms the port industry is too expensive and the country does not get the value it should from the enormous capital and labour costs that the port sector generates".

The New Zealand waterfront, as far as employment was concerned, was governed by the Waterfront Industry Commission Act which enshrined in legislation the three monopolies which were the basis of two of the three cost centres involved in the movement of cargo at New Zealand ports. In simple terms, this Act gave Harbour Boards the sole right to supply the plant for the moving of cargo, Harbour Workers the sole right to drive that plant on the wharves and Waterside Workers the sole right to work on ships. The Harbour Board costs were reflected in its charges in respect of the various services and facilities it supplied, such as pilotage, tugs, berthage, wharfage, storage etc. The second cost centre was the Waterfront Industry Commission or WIC as it was known, which administered the employment of Waterside Workers. In New Zealand the WIC did not actually employ the Waterside Workers but hired them to the stevedoring companies, the third cost centre, when they required labour for their business of loading and unloading ships. The stevedoring companies were the only element of competition which existed as far as the cost of moving cargo in New Zealand ports was concerned. It was indeed a relatively small element of competition, no more than 10 or 15% of the total cost of loading a ship and the degree of competition was, to put it mildly, limited, given that individual stevedoring companies all had to draw their labour from the same pool provided by the Waterfront Industry Commission. The effect of course was that the watersider did not identify with stevedores as his employer and therefore the source of his income and employment conditions, but rather solely with the union. A similar situation prevailed with the bulk of Harbour Board employees in that the large majority of them also identified more strongly with the union than with their Harbour Board employer. The situation was further exacerbated in that in the negotiations of awards the question of ability to pay was not an issue, it was "pay or else". In simple terms, there was no competition. Both groups of employees were guaranteed the work regardless of how well they performed.

In the year to 30 September 1986 the total cost of the WIC and the Nelson Harbour Board for the operation of the port was $12.83 million. The Harbour Board costs amounted to $6.65 million and this covered the employment of 99 staff, providing two tugs, a dredge, pilot launch, heavy plant, workshops, wharf sheds, wharves, in fact the total infrastructure of a Port. The Waterfront Industry Commission costs for the same period in Nelson were $5.75 million and this cost covered the employment of about 120 Waterside Workers, the attendant WIC staff, their offices and watersiders amenities. In addition, a further $430,000 in 1986 was paid by the New Zealand Apple and Pear Marketing Board, the shipper of fruit through the Port.

Waterside Workers conditions of employment were negotiated nationally. They actually received quite a low hourly rate, from memory it was about $5.78 an hour, but every cargo they worked attracted an additional bonus. The bonus varied according to the cargo and on top of that they got additional rates depending on the condition of the ship, cargo etc. The $430,000 I have referred to didn't fall into any of these categories. This was a payment whereby they got an extra bonus paid directly to a Waterside Workers locally owned Company. Effectively they received two bonuses, one was called an incentive bonus, and the other a productivity bonus and I confess I have long given up trying to understand what the distinction was between the two.

The union was not above exploiting the vulnerability of the fruit cargo to achieve other objectives. I recall on one occasion the Port had refused to allow a store to be built in an area which would have given the Waterside Workers coverage over the work in that building. The matter was left until the start of the fruit season when the unfortunate Apple and Pear Marketing Board was told that the watersiders would be working to rule until the Harbour Board changed its mind! During the fruit season, which in Nelson covers about four and a half months, the supply of local Waterside Workers was inadequate. It was a common sight at that time to see the fruit vessels at anchor in Tasman Bay waiting to be loaded. Only Waterside Workers could work on vessels so it was necessary to transport them in from other New Zealand ports if they were available. The Nelson shipper of course had to bear the cost. In the last year before port reform, this amounted to $678,000 and I stress, this was the cost purely of getting the labour to the wharf, not the cost of paying them to actually work. In the same year the undercover bonus paid by the New Zealand Apple and Pear Marketing Board, totalled $530,000 so that the legislation was causing an additional cost to that cargo alone of $1.2 million in one year.

Outside the fruit season there was an over supply of Waterside Workers in Nelson and as a result watersiders were paid for being idle for 44.5% of the total time they were actually paid for outside the fruit season. To give a national perspective of idle time, the cost in the 1988 year was in excess of $13 million.

In Nelson the position was even worse. We no longer enjoyed even the minor element of competition between stevedoring companies. Originally there had been two and sometimes three independent stevedoring companies resident in the Port, but in 1986 the Nelson stevedoring company owned by the Union Group, formed an alliance with the local branch of the Waterside Workers Union on a 50/50 basis and between them set up a company called, I always thought rather appropriately, Union Stevedoring Services Ltd.

Within a relatively short period of time there existed only one stevedoring company in the Port of Nelson and that stevedoring company was the one 50% owned by the local branch of the Waterside Workers Union who, as I have said, also supplied all the labour to the bureau for the loading of ships in Nelson.

It is probably worth recording that the local branch of the Waterside Workers Union had shown no small enterprise in other commercial activities, not surprising when you think of the influx of funds they were receiving annually by way of the extra bonus. They were part owners of a shopping mall in Nelson, they held the local franchise for an international ball bearing manufacturer, and they had their own provedoring company. They were also property owners at the Port. These businesses at the Port seemed to very quickly get a substantial share of the market. I recall on one occasion, for example, being advised by our Wharfinger that the Waterside Workers had stopped work on a particular vessel. because they had observed a stranger onboard the vessel. They had established that he was the representative of a national provedoring firm who was touting for business. They took umbrage at this intrusion and hence had stopped work to demonstrate their displeasure. It goes without saying of course that they were the current provedores for that ship.

It would be quite unfair to give you the impression that the sole source of excessive cost on the New Zealand waterfront was the Waterside Workers. The largest union on the New Zealand waterfront, after the Waterside Workers, was the Harbour Workers Union which provided the cargo service workers who drove Harbour Board plant carrying cargo across the wharves. These employees were required only to drive the mechanical plant, do some plant maintenance and clean the wharves. When there was no cargo work available, and this happened quite often, these employees went home on full pay, which for all of the Harbour Workers in those days was a 9 hour day paid for at 10 hours plus a meal money. The average income of the cargo service worker in the year to 31 March 1988 was $40,000 per annum, plus an average non taxable allowance of $1,622, and for this they worked on average for 26 hours a week.

The other unions representing employees of Harbour Boards were the Merchant Service Guild, who represented both the pilot staff and also the tugmasters. The Institute of Marine Engineers provided the engineers for the vessels.

Nor were the Harbour Board's excessive costs limited solely to the cargo service workers. For example, an employee doing ships lines at weekends or at night for one call would get 4 hours at double time. The average duration of a call was about one hour. It was not uncommon for a Harbour Worker to do, say, four ship calls over the weekend and pick up the equivalent of 32 hours pay plus travel money.

You will appreciate that in those days each union in New Zealand enjoyed exclusive coverage over its area of work, so there was no question of bringing somebody else in to do ships lines at a lower rate of pay.

If a pilot came in for as little as an hour to do a relief job because of a rush of shipping on his day off, a full 24 hour period would be added to his leave entitlement. Tug and pilot launch crews in a tidal port such as Nelson, still adhered to the normal working day from 7 in the morning till 5 at night but of course did a considerable amount of their work outside normal working hours and enjoyed as a result very substantial penal rates.

Of course it has to be recognised that all of these conditions were enshrined in the award and had all been agreed to by the employer. Clearly then the employer was suffering from a lack of intestinal fortitude in being a party to such agreements. In reality of course the Port employer seldom had any room in which to move. As one who served as an employers' national negotiator on a number of waterfront union awards, I can assure you we were essentially in a situation of fighting a rear guard action. Let us say, that an employer has refused to meet some claim put to him by the local union executive. Very shortly that employer would have received a call from the national union representative. If the employer did not then toe the line he would be advised that further failure to comply would necessitate some "massage" and work would stop. Now at this stage, both the owner of the cargo and the shipping company would become very anxious. The shipper wants to get his cargo to the market or his cashflow is going to be affected, so are his customer relations, and the shipping Company have their vessel tied up at a wharf and it is not earning them any money. But let us say that they decide this is something worth hanging in there for, and this was very much the exception rather than the rule in my experience, and understandably so given the fact that you very seldom won anyway, well the next thing is they close your port. Now this concerns everybody else who wants to get their cargo away so the pressure grows and if that doesn't work then the next thing you are faced with is a national stoppage. And at the end of it they know they are going to get the work because no one else is allowed to do it and they probably won't agree coming back to work until they get paid for the time they had been on strike. Of course all stevedore employers and Harbour Board employers had gone through this exercise sufficient times to recognise the futility of taking your port or your ship into such a situation, excepting in the direst of circumstances.

To put it more bluntly than the Minister of Transport did, the waterfront unions had control of New Zealand ports and were exercising a tariff on the cargo which was out of all proportion to the services their members were providing.

So what could we do about it.

In November 1984 everybody connected with the ports industry was summoned to a meeting at the Beehive, we were told by the Honourable Mr Prebble, then Minister of Transport for the Labour government, that he had recently learned that the NZ Shipping Company whose enterprise had been bedevilled by strikes in Australian Ports, had discovered that the Australian ports at that time, strikes and all, were still cheaper than the New Zealand ports. He went on to say that a saving of 50 cents on the cost of a tonne of cargo through the Port would make a major contribution towards improving New Zealand's ability to compete in the world markets. He also told us New Zealand was too young a country to have sacred cows and that as far as he was concerned, sacred cows should be treated the same way as any other cows which were no longer economic. He did concede that when you shot a sacred cow it made rather more noise but he assured us that it died just the same.

The Port Reform process in New Zealand has been enabled essentially by three pieces of legislation:-

The Waterfront Industry Commission Amendment Act,

The Port Companies Act, and

The Employment Contracts Act.

Nothing could be done until the monopolies enshrined in legislation had been removed. The Nelson Harbour Board threw itself wholeheartedly into the process of lobbying for reform of the New Zealand waterfront. At the same time at local level the Board was conscious of the growing clamour of complaint from the port users about the cost of stevedoring at the Port, as well as the attitude of the Port's sole stevedore which was, in my view, dominated by the Waterside Workers Union. The point was increasingly made that there existed no competition at Port Nelson.

The Harbour Board was of course well aware that it was highly unlikely that anyone else would set up a stevedoring company to provide that competition, when it had to draw its watersider work force from the pool of labour which owned 50% of the Company it was going to have to compete with.

The Board therefore decided to set up an alternative stevedoring company and this despite the fact that under the prevailing legislation governing Harbour Boards it was unlawful for us to hold shares in a Company. Under a cloak of secrecy, to avoid compromising the position of any of the people approached with the waterfront unions, the Board invited a number of major port users to join it in setting up an alternative stevedoring company to provide some competition in the Port. The Board eventually held 20% of the shares in that company and four other major port users also took 20% each.

By this time we were now engaged on a number of fronts. Firstly, we were engaged nationally, as I have already told you, in trying to progress Port Reform. Secondly, we were trying to placate the port users by the development of an alternative stevedoring company and thirdly, we were endeavouring to make progress with our own employees, particularly the Harbour Workers Union, to alleviate costs in that area. I will, for the moment, stay with the stevedoring company and outline to you the major points that occurred in the development of that Company.

Given the nervousness of our shippers about the reaction of the watersiders union to our new stevedoring company, the other contributors to the Company had all made it a condition of their involvement that they did not have to guarantee giving the new stevedoring company any work. In fact the only work we could get was the loading of chip ships which involved very few watersiders and foremen/stevedores who were provided by the Foremen/Stevedores Union. The Harbour Board did not have sufficient foremen/stevedores in its employ and the sole resident stevedoring company in the Port refused to make their employees available to us. This meant that we had to import foremen/stevedores from other stevedoring companies outside of Nelson.

We were satisfied that we had employees of our own who were capable of doing the work and after some negotiation we reached agreement with the National Union of Foremen/Stevedores, which was quite a small union, that they would accept some of our salaried staff as members on a part-time basis. However, the first time we attempted to use our own staff as foremen/stevedores the local Waterside Workers Union refused to supply labour on the grounds that they were being required to work with non union labour.

We pointed out that our staff were now members on a part-time basis of the foremen/stevedores union but alas in the meantime that union had been "spoken to" by the watersiders union and they had cancelled our membership.

Our next step was to take the Foremen/Stevedores Union to court because the prevailing legislation provided that where a person was in a position to do the work over which the union had coverage, that union had to accept that person as a member. In the event the judge ruled that the foremen/stevedores union did not have to accept our employees as part-time members, on the grounds that the rules of that union did not provide for part-time members. However, he added a rider to this decision to the effect that because there was no union available for part-time foremen/stevedores, there was nothing to prevent our people working on that basis. We were of course delighted. We had in fact done better than we ever could have hoped for, we were now able to employ our own staff, under our own conditions, as foremen/stevedores for our own stevedoring company. It was a major breakthrough.

We were however less fortunate in the Labour Court with the Harbour Workers Union.

At national negotiations in 1987 I had advised the Harbour Workers Union that the Nelson Harbour Board, and I suspected other Harbour Boards, could not sustain the 9 hour day and its attendant 10 hours pay and a meal money, and I advised further that if they did not agree to an 8 hour day it was inevitable that redundancies would result. The Harbour Workers Union national negotiator and his team took a short recess, came back and told me we could have an 8 hour day but it would cost 10 hours pay and a meal money! Quite clearly then we were going to get no co-operation in reducing cost from the union.

It was our belief that the award in existence provided for negotiations to take place to arrive at a redundancy agreement without any stoppage. The national Union of Harbour Workers took an opposing view and this was upheld by the Labour Court. The Harbour Workers national union offered a voluntary redundancy agreement on the same basis as had already occurred in one major port in New Zealand. We at Nelson believed that a voluntary agreement would not enable us to achieve the reduction in work force that we required and that we had to have a compulsory redundancy agreement. In view of our failure to agree with the union, Port Nelson then suffered the longest industrial stoppage in a New Zealand port since the 1951 strike and the port remained closed for 22 days.

We had of course some experience of port stoppages, and were aware of the type of pressure that we could expect, not only from the unions but also from other parties who were affected by the strike. We were determined not to concede this matter and as soon as we received the strike notice we called a meeting of all of the port users, told them what the position was and why we were seeking the compulsory redundancy agreement. From then on, throughout the duration of the strike, we held regular meetings with the port users. It is a credit to those port users, many of whose businesses were seriously disrupted, that almost without exception they were totally supportive. We also took a half page advert in the local paper to ensure that the public got the facts. At the end of the strike there was forged a national compulsory redundancy agreement for all Harbour Workers in New Zealand with the exception of those employed by the one Port who had already entered into a voluntary agreement.

On this occasion we made 13 staff redundant. The majority, if not all, were volunteers. Further redundancies occurred later and today we have a total permanent staff of 48.

In September 1987 the Harbour Board set up the Establishment Unit which was to progress the development of the Port Company. Two pieces of legislation were to become effective from 1 October 1988, the Port Companies Act, and an amendment to the Waterfront Industry Commission Act, which provided for the abolition of the Waterfront Industry Commission thus making it necessary for Waterside Workers to be hired directly by stevedoring companies. This same legislation removed the monopolies previously enjoyed by Harbour Boards in respect of provision of plant, the monopoly enjoyed by Harbour Workers over cargo work on the wharves, and lastly, the monopoly enjoyed by Waterside Workers in the loading and unloading of ships.

The legislation however contained a nasty shock for Harbour Boards and the Harbour Workers Union, for whilst these two groups were to lose their monopolies effective from 1 October 1988, the Waterside Workers Union would retain its monopoly until 1 October 1989.

It is difficult to decide whether this distinction was drawn to appease the Watersiders or whether it was a piece of Machiavellian genius on the part of the Minister of Transport. Certainly at the time I made strenuous representations to the Minister and other members of Parliament to have the watersiders lose their monopoly at the same time as Harbour Workers and Harbour Board did. In the event however the perceived advantage given to the watersiders remained and it was to play a significant part in the progress of Port Reform at Port Nelson.

The Port Companies Act had charged the Establishment Units with presenting to the Minister a Port Plan which would show how the commercial assets of the Harbour Board would be taken over by the new port company and at what value. The plan had to show how staff matters would be handled and so on. The Port Companies Act stated the principal objective of a Port Company would be to operate as a successful business and required that Directors should be appointed who would best enable the Port Company to achieve its objective. Perhaps with that in mind the Port Companies Act required that not more than two Directors could be members of the Harbour Board or any other local authority. The Port Plan had to be submitted to the Minister of Transport together with the appropriate cashflow statements, which would in turn establish the value at which the assets should be taken over. It will give you some indication of the over-capitalisation that had occurred in New Zealand ports, when I tell you that the value of the commercial assets held by the Harbour Board was $63.2 million fixed by professional valuers. The value, thrown up by the discounted cashflow statement exercise, which of course reflected our likely revenue for the future, put the asset value at $32.4 million.

Negotiations were progressed with the national Waterside Workers Union, to provide for the transition of Waterside Workers from their administration by the Waterfront Industry Commission to direct employment by stevedoring companies on 1 October 1989.

Ten negotiators were appointed from the Ports Industry employers for the first time including two representatives from the non container ports of New Zealand. I was one of those representatives.

I am not going to inflict on you a blow-by-blow account of the national negotiations with the Waterside Workers Union. Suffice to say the negotiations were at times difficult and protracted. They eventually culminated in an agreement and subsequently the number of Waterside Workers nationally reduced by about 50% as individual stevedoring companies started to employ directly. The agreement reached also provided individual employers with the ability to hire casual labour totalling up to 25% of the permanent work force of each employer. Manning levels of work gangs were in future to be at the discretion of the employer, methods of operation would similarly be the sole discretion of employers and the Waterside Workers Union would no longer be involved in the selection of staff.

In respect of the loading of fruit ships, unlimited casual workers could now be employed and of course this was of particular benefit to Nelson. From Port Nelson's point of view this national agreement achieved two of our objectives. Firstly, the union no longer had the ability to demand the sort of payment that I have referred to earlier, and secondly instead of having to import Waterside Workers from all over New Zealand during the fruit season, we could supplement the permanent work force with casual workers. This represented a saving, based on the previous year's costs, of $1.2 million. I remember thinking at the time that we were already out in front of Mr Prebble's 50 cents a tonne saving.

The national agreement provided for local agreements to be reached at each Port and this process followed.

The employment of watersiders directly by companies involved in the loading of ships was now underway. At Nelson our Harbour Workers had now seen the reality of the situation and had accepted an 8 hour working day. In addition Port Nelson Ltd had employed nine Waterside Workers directly.. Of course nine waterside workers could only service a limited number of cargoes, almost exclusively in our case they were chip ships and for the rest of the time, while the Labour Relations Act remained in force, we were unable to employ these people on other work though they had agreed to do it.

Port Nelson had made no secret of the fact that it believed the local watersider involved stevedoring company would on 1 October 1988 endeavour to take over the work of the Harbour Workers Union members on our wharves.

It required no great genius to arrive at this conclusion, both groups of workers were grossly over-staffed, and obviously the more work the watersiders got, the less redundancies they were likely to suffer. The way the new legislation was framed gave the watersiders a real advantage. We had long advised our Harbour Worker employees that we believed this would happen, however the majority of them clung to the belief that one union would not cross another's picket line and there the matter rested, until shortly after 1 October, when the Union Stevedoring Company advised that they would be working the next ship entirely with their own employees, including carrying their cargo across the wharves, using their own plant.

In the event we reached an agreement with the stevedoring company that the vessel would work as it had in the past and that any industrial dispute would be avoided. The vessel came in, it was a roll-on roll-off vessel, the ramp went down, and out of the hold trundled the first forklift carrying the cargo as was agreed, to the end of the ramp. However it did not deposit its cargo at the end of the ramp but started to proceed across the wharf only to find its way blocked by an equally large forklift belonging to the Port Company. It would be unkind of me to say that I hadn't felt entirely secure in relying on the agreement, suffice it to say that a contingency plan had been put in place. We ended up with a sort of Mexican Stand-off where forklifts faced each other blocking passage.

I won't bore you with the details with what transpired between the two companies, much of which anyway is quite unrepeatable. This was in fact an unpleasant situation but from it sprang the realisation on the part of our Harbour Worker employees that the local watersiders really would try and take their jobs. Their union failed to protect them. At last some of them started to see the Port Company in a different light. Until October 1989 our employees were left to watch the Waterside Workers doing their work.

We had to find a way of providing work opportunity for our work force and replacing the business we had lost. We therefore negotiated with our Harbour Worker employees for 15 of them to resign from the Harbour Workers Union and to join the Waterside Workers Union, thus giving us a Waterside Worker strength of 24 employees. Not surprisingly, the local branch of the Waterside Workers Union refused to accept them. We had prevailed upon a major shipper to allow us to stevedore their vessel. We anticipated opposition and we were not wrong. On the morning our 24 watersider workers went to go onboard the ship, they were met by a picket of Waterside Workers from the other Company. We were prepared for this and quickly sought an injunction removing them, this was duly granted that afternoon, and the following day, when they went to go onboard the ship, they were met by another picket, this time on the grounds of safety. The General Manager of the Port Company enquired of the union president, leading the picket, who was also a director of the other stevedoring company, what were his concerns about safety and he would only reply that we were not acting in accordance with the Safety Manual. The Port Company General Manager asked for a copy of the Safety Manual only to be told that the watersiders union couldn't find it, and indeed we never did get a copy of that Safety Manual. Back to court we went again, and this time the judge demonstrated his displeasure by giving a further injunction and $2000 in costs against the union.

Our objective was to achieve a multi-skilled work force that could work cargo vessels when required and otherwise go back to their trades and carry out maintenance and so on. To do this, we reached an agreement with our employees whereby by April 1991 nearly all of our employees agreed to provide a pool of labour from which employees would be drawn for whatever tasks they were able to perform. By May 1991 came the Employment Contracts Act, whereby compulsory unionism and exclusive union coverage was abolished and along with it went the national award system. In future there would be enterprise or individual bargaining. We offered individual contracts to our employees. Not surprisingly this also resulted in considerable opposition from particularly the NZ Harbour Workers Union and quite an unpleasant situation prevailed for some time.

The objective of the Company was to achieve a direct relationship with its employees, not as was alleged, a union bashing exercise, and we wanted our relationship with our employees to be mutually beneficial.

It is also worth recording to you that the major part of the Port Reform process had taken place before the Employment Contracts Act came into being. Well, now turn to the results of the exercise we carried out. Today at Nelson we have 48 permanent employees. Our old rivals, no longer part-owned by the Union Company, have about 35 permanent employees. In addition at Port Nelson we employ 150 to 200 casual employees, who not only replace the pre 1988 Waterside Workers on fruit ships, but also as a result of the training courses we now run each year, assist on all other types of work in the port.

Today there is no designated employment. You are referred to as a Port Services Worker. The work force is truly multi-skilled. One employee who started with us as a carpenter is now employed as a forklift driver, a shipwright, pilot launch master, tug master, security service man, and a Port Services Foreman. Today, at Nelson, there are no fixed shifts. Our employees work any 40 hours over 5 days, so if your ship comes in at midnight and you want to work her, that's when we start working. The only time there is a penal rate at Port Nelson is if an employee has to work more than 12 hours on the trot, and I hasten to add this is a situation which we do our very best to avoid. Today you will see our female office staff on ships lines gangs, tug crews, tally clerks on cargo work and even humping apples in the hold. The training we provide for our casual workers does not differentiate between the sexes and indeed Nelson was the first Port in New Zealand to employ females on the loading and unloading of ships. Today a log vessel, which used to take on average seven days to load, will load in 3 days.

But what, you may ask, of our unfortunate employees who have been ground down by the Port Reform process and the impositions of the Employment Contracts Act. Well, they certainly work a lot harder. Today 75% of our permanent staff are on individual contracts, the balance, about 12 employees, are on a collective contract. The average income of a port services worker is in the region of $44,000, the top employee earns in excess of $56,000 per annum. That same employee in the 1988 tax year earned just under $32,000. Today all of our employees and their partners are in a medical health scheme paid for by the Company and in addition while the first two days of any sickness which is not a work-related accident, is not paid for, after the first two days an employee can be off sick, on pay, for any period of six months in a 12 month period. Today 49% of the shares in our stevedoring company are held by a Trust. Our employees were invited to buy the shares at 20% below market price and 99% of our employees have taken up these shares. Shares were initially sold at $2.80 a piece, and the dividends in the last two years have been 75 cents and $1.03 per share. All of these benefits for our employees have been introduced as part of Nelson's Port Reform process. Sadly, but perhaps not surprisingly, the only recognition this has had from the trade union movement, was when Ken Douglas, President of the New Zealand Combined Trade Unions, visited me about 18 months ago and advised that Port Nelson had been cited in a report on the Employment Contracts Act to the International Labour Organisation.

The benefits of Port Reform to the Port Company are impossible to quantify accurately. Port Nelson Ltd took over the Harbour Board charges which were effective in 1987. We reduced these charges by 19.3% in April 1991 and there has been no increase since then. I prepared a paper which draws a comparison with our final pre-port reform results, compared with the position in 1995.


PORT NELSON LIMITED
1988 1995
Cargo Throughput Tonnes 1048000 1813000
Average cost per Tonne 6.84 5.86
Pre Tax Profit 702000 4000000
Extra Ordinary Items 2000000
Reverse Charges Reduction 2400000
Inflation 1988-1995 2600000 11000000
Deduct Increase in Cargo 5000000
Comparison 702000 6000000

In addition the savings from not paying under-cover bonuses and having to transport Waterside Workers into the Port would today be in the region of a further $1.7 million. Stevedoring costs have dropped substantially. The information is commercially sensitive and therefore difficult to obtain. I can give you one example. The cost of stevedoring a particular cargo at Port Nelson has dropped by 75%, the cost saving on this cargo equates to more than $1.65 million per annum. That cargo represents less than 20% of our total cargo throughput for the year.

The cost of putting that same cargo through other ports in New Zealand would be 60% greater than the cost of putting it through Nelson.

One of the shippers of a certain cargo through Nelson told me recently that since Port Reform his Company was saving five days in port per ship visit as a result of the quicker turnaround of ships. He told me the average value of the saving was $US8,000 per day in ship hire. To give you both a local and a national perspective, this year 37 such cargo vessels came to Port Nelson and over 200 came to New Zealand.

The Company went through considerable pain, stress and cost in getting to this position, but from the point of view of the Port Company, our shippers and our staff, I believe it was well worth it, recognising of course that not everybody would agree with me.

Finally I believe that in one aspect at least Australia has a head start on New Zealand. While some of our port companies have sold shares to private enterprise, the majority of the Port Companies remain in the hands of the local authorities and in turn provide them with a steady source of cash. I share Mr Prebble's view that the control of port companies should not rest in the hands of local authorities, for I fear that the benefits which have been achieved may be eroded over time.

Why HR Nicholls?

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