Time to list the Ports of Auckland?

The Herald reports:

A new report has highlighted that it might be time to rethink the ownership model for the Ports of Auckland.

Speaking to the Herald’s Stock Takes podcast, TBD Advisory director Phil Barry says a new report from his organisation shows full government ownership of major infrastructure rarely drives the best results.

This is not surprising. The electricity generator companies are providing greater dividends to the Government with 49% ownership than they did with 100% ownership, and power prices had lower increases after partial privatisation than before.

Ports of Auckland’s return on assets improved from 10.1 per cent to 12 per cent between 2015 and 2016 (for years ending June 30), and return on equity went from 12.5 per cent to 14.4 per cent – but then deteriorated.

By 2017 the return on assets was 7.9 per cent and return on equity 9.1 per cent, only to see an improvement in 2018 with 8.3 per cent and 10.7 per cent respectively before the ratios came crashing down.

The return on assets fell from 5.9 per cent in 2019 to a negative 0.1 per cent in 2022 and the return on equity went from 6.9 per cent to -1 per cent in the same period.

Terrible returns.

Looking at 11 ports across the country, research from TDB Advisory found the four with some degree of private ownership consistently performed better over the past eight years.

Port of Tauranga, South Port and Napier Port all have shares listed on the share market, allowing for some degree of private ownership.

“The average return on assets for the 100 per cent-owned local government ports was around 6 per cent, while mixed-ownership ports achieved about a 50 per cent better return, or around 10 per cent on average.”

Seems a no-brainer to me.

You can listen to a podcast discussing this in more length here.