A REPORT commissioned by the Maritime Union of New Zealand highlights some pitfalls that may befall a privatisation deal at the Ports of Auckland.

The 27-page report said privatisation would lead to higher costs because a private operator would require a higher rate of return from their investment than the Auckland Council – which presently operates the port – does now.

The report argues that these returns could not be gained by bringing costs down but from increases in charges.

Maritime Union of New Zealand National Secretary Craig Harrison said a key concern coming out of the report is the potential for price hikes hitting port users – then being passed on to local industry and consumers.

Mr Harrison said privatisation of operations at Ports of Auckland is estimated to hit local port users with NZ$70 million in extra costs annually.

“Any private operator in Auckland would be in a monopoly position and would seek returns on its investment, on top of the lease cost – the profit has to come from somewhere.”

The report said an international container terminal operator reportedly offered NZ$1 billion for an initial payment for the POAL operating lease.

The report’s authors used that figure as a starting point to extrapolate the increase in costs to port users – NZ$70 million per year.

Mr Harrison said the primary value of the Ports of Auckland is how it facilitates trade.

He said there is growing concern there is no clear strategy for the ports and decision-making is being driven on a short term, ad hoc basis.

“The Ports of Auckland is going through a period of growth and stability under new leadership with improving returns and should be left to get on with the job and not meddled with.”