Institutions and port performance: A case study of the Port of Tauranga,New Zealand

Opportunity, 1945–1964

In the early 1950s the Labour government engaged in a public–private partnership with a company called Tasman Pulp and Paper (formed in 1952) to construct and operate a large newsprint, pulp and timber mill. The proposed mill was in an isolated location and so the government began exploring options for rail, road, housing, power and most importantly, for Tauranga to be used as an export port. ¹⁴ The pulp and paper mill began operation late in 1955, creating additional trade for the port. A report by an engineer hired to investigate Tauranga Harbour as a potential export port, concluded that ‘[t]he acute shortage of ground readily available for development as an industrial area is very evident in Tauranga’. ¹⁵ However, the Mount Maunganui site, which was within the Tauranga Harbour Board’s territory, had ample land available for development (see Figure 3). Yet one year later when the Tauranga Harbour Board requested a transfer of 99 acres of crown land (Public Works Department) at Mount Maunganui, the resident engineer at Tauranga advised against it as the ‘question can only be resolved when the [government’s] policy with regard to a deep water port is known’. ¹⁶ In addition, Cabinet documents reveal that the government was hesitant to grant the board any authority to purchase lands for purposes other than ‘what is necessary for harbour management’, as the ‘precedent thus created could be an undesirable one from the Government point of view when dealing with possible similar applications from other Boards’. ¹⁷

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Figure 3.

Port of Tauranga, December 2013.

Rotorua, the region from which most of the port of Tauranga’s users came, was not content with the decision. As Mr J. D. Alach, the Tauranga Harbour Board’s Chairman noted:

There is no doubt that Rotorua and Tauranga have a community of interests and the establishment of a deep sea port will strengthen the ties of not only these districts, but of other districts in the Bay of Plenty. ¹⁸

According to government reports prior to suggesting Mount Maunganui as the location for the port for the Bay of Plenty, no port could be developed more cheaply than Tauranga. ¹⁹

Despite the advantage of being a low-cost port relative to its peers, the Tauranga Harbour Board was also very aware that given the financial constraints constitutionally imposed on it, it could not expand unless contractual guarantees were provided by private companies. The board stated in 1946 that it sought to ‘provide port facilities at Tauranga … [to] relieve congestion at the port of Auckland … providing the guarantees of trade sought from private interests and the State are fulfilled’. ²⁰ The board repeatedly asked the government whether or not it was considering its port for the export of timber from state forests or was planning to rail it directly to Auckland, but were left in the dark as to the government’s intentions.

A year later the Chairman pleaded to the Minister of State Forests to make available ‘the Government’s decision in this matter’, so that ‘the Board can take the necessary steps to prepare plans for any developments that may arise out of the opening up of the Timber Trade’. ²¹ By 1948 the media was increasingly commenting on the possibility of a deep-water harbour at Tauranga, but the board was steadfast, exclaiming that ‘until the report of the experts [from the Works Department] is available it is impossible for the board to make any decision in the question [of port facilities]’. ²² Mr Alach complained that the Auckland Harbour Board had made inquiries ‘as to the suitability of the Auckland port for the export of timber … It appeared as if the Auckland port was out to grab everything possible’, he remarked, noting ‘that there was one thing in the Tauranga board’s favour, and that was the congestion at the Auckland port … [and] the fact that the department must consider all possible export ports’. ²³ There was certainly demand for Tauranga as a timber port. ‘You [Tauranga] have proved that you can handle the timber’, said Mr V. C. Florey, Rotorua County Council Chairman, ‘and we have the timber for you to handle’. The biggest obstacle was that the ‘roads existing and proposed between Tauranga and the inland areas were not sufficient’. ²⁴ This was partly because the Railways Department had previously bought a private road transport operator which had serviced the Rotorua–Tauranga route on behalf of the Northern Steamship Company, but in a classic example of anti-competitive behaviour had immediately discontinued the service. ²⁵

A committee was appointed by the government to decide between Tauranga and Whakatane for the proposed deep-sea ‘Bay of Plenty port’. The proposal at Whakatane never had the support of the Bay of Plenty local authorities. ²⁶ It would have seen the creation of an artificial harbour just 60 miles from Tauranga requiring a ‘very large sum of public money’. ²⁷ This was confirmed by the engineer’s report, which estimated that Whakatane would cost £4–£5 million to develop while Tauranga could be converted into a deep-water harbour for £200,000–£950,000, with no rates required from local bodies. ²⁸ Annual charges at Tauranga would be £37,600 initially before rising to £128,000, while Whakatane would require £219,000 before rising to £336,000. ²⁹ But a decision continued to be delayed. In 1953 Mr Alach was still unable to make ‘any promises of early activity’. ³⁰

The government’s indecision over the establishment of pulp mills in the region and the urgent need for capacity led to plans being put in place to extend the Tauranga Railway Wharf by 150 feet in 1951. The Harbour Board drafted the plans and sought urgent approval by the Marine Department’s engineer on 12 April 1951. It was considered ‘extremely difficult to handle the trade now offering at the existing wharf’, ³¹ and the Harbour Board needed its plans to be approved before it could borrow £26,000 and commence the extension. ³² This time the plans were approved promptly on 22 June 1951. However, the extension of the wharf did not go as planned. In 1952 the Harbour Board revised its loan application to £12,000 and changed the proposal from the 150-foot concrete extension to the south to a 105-foot timber extension to the north. This last minute change was brought about by a visit from the Transport Minister on 18 June 1951, in which ‘the opinion was expressed that in view of Port Development at Mt Maunganui, heavy expenditure in increasing the capacity of the Tauranga wharf to cope with timber trade was not justified’. ³³ The Murupara scheme was going ahead and so the deep-sea port at Mount Maunganui was deemed necessary to have such a facility to accommodate the ‘most spectacular instance of State intervention in the first two post-war decades’. ³⁴

An investigation by the Department of Works recommended that Mount Maunganui should be the preferred site, as development would be £100,000 cheaper; annual costs £3,000 less; it would have better facilities for expansion both on the water side and the land side; and it would be easier and cheaper to develop for vessels of greater draft in the future. ³⁵ However, by 1950 it seemed the government had decided that the Murupara project would no longer involve the state to the point previously thought. As a confidential report by the Commissioner of Works in 1950 noted,

One of the principal reasons for this arrangement [state constructing Tauranga then handing it over to the Port Authority] was the fact that the products from the State development at Murupara were expected to account for the greater part of the trade of the port for many years.

Now that the exploitation of the forest is likely to be on a different basis, the State’s immediate interest in a port at Tauranga is considerably less, and it is probably better under these circumstances for the Tauranga Harbour Board itself to undertake the port works.

There is no other site in the Bay of Plenty where a harbour could be constructed or maintained at lesser cost than at Mt. Maunganui. ³⁶

Mr F. D. Donovan, a member of the Tauranga Harbour Board, suggested that ‘eventually [after construction] the Mount wharf would be the responsibility of ratepayers … In the meantime the Government was carrying on and would hand over to the Tauranga Harbour Board on terms that had been negotiated’. ³⁷

Despite such concerns, the end result was the passing of the 4 November 1953 Deed of Agreement with the Crown to finance the development of a 1400-foot concrete wharf at Mount Maunganui, but with the Tauranga Harbour Board to ‘eventually repay every penny’. ³⁸ The wharf was completed on 1 July 1958 with a depth of 31 feet at low tide. It was officially gazetted as ‘The Mount Maunganui Wharf’. ³⁹ The board’s Chairman, Mr Alach, had long been a believer in the idea that a port had to finance itself from shipping revenue. As a critic of this policy remarked,

The policy of the [Tauranga] Harbour Board, as expounded by its chairman, Mr J. D. Alach, has been that the port must live on its shipping revenue, and the board has claimed as a great virtue the abolition years ago of ‘the harbour rate,’ while the development of port facilities has been almost negligible in comparison with what has been done elsewhere. ⁴⁰

One of the reasons for this cultural development at the port was that the region of Rotorua, the port’s largest user, was in the Tauranga port district but did not pay rates to finance it. ⁴¹ This was not seen as an issue by the Harbour Board because ‘wharfage receipts [are] ample to meet all maintenance and administrative charges’. ⁴² The board maintained a strong opposition to rating the land within the port’s district, as it believed that ‘the port is mainly servicing newsprint, pulp, sawn timber and logs’, almost none of which came from within the port’s rating zone. ⁴³

However, this soon became a problem because, legally, for every pound of capital expenditure the board was only able to raise one penny from each of Tauranga Borough and Tauranga County, as well as three farthings from Matata Riding of Whakatane County, for a total of 2¾ d or 2.75% of all capital expenditure. ⁴⁴ For loans, the Harbour Board was constrained by the Harbours Act 1908, Harbours Amendment Act 1910, the Local Bodies Loans Act 1913 and the Tauranga Harbour Board Empowering Act 1919, which required the board to obtain ‘consent of the ratepayers of the Harbour District’, prior to being approved for a loan. ⁴⁵ This placed the board in a tough situation. Trade through Tauranga was growing at a rapid pace, with the Treasury expecting the tonnage to double during the five years to 1964. However, the board was legislatively restricted from raising capital itself. The 1953 Loan Agreement with the government as part of the Mount Maunganui project prohibited the board from taking on any more debt until the outstanding balance of £1.4 million was repaid, even if it had revenue surpluses sufficient to cover interest and sinking costs of any new construction. ⁴⁶

Treasury and the Tauranga Harbour Board both agreed that 1200 feet of additional berthage would be required at Mount Maunganui. Cabinet decided that the best way forward was to relax the legislative constraints on the board, partially releasing them from the 1953 constraints and forming a Heads of Agreement ‘as a basis for co-operation between the Government, Tasman Pulp and Paper Ltd. and the Tauranga Harbour Board’. Tasman Pulp and Paper Ltd. would provide a loan of £500,000 subject to Tasman exports having priority at the port, with the board raising the remaining £500,000 through the issue of public debentures. ⁴⁷ The Heads of Agreement and alterations to the 1953 Agreement were approved by Cabinet on 2 February 1959. ⁴⁸

At the same time there was significant Japanese interest in the use of Tauranga to export logs to Japan. Treasury reports note that the Tauranga Harbour Board came to an agreement with the Japanese interests that if they could find the capital to finance a new wooden wharf then the board would give them sole right of use for loading logs for up to ten years with nominal wharfage charges. ⁴⁹ This was because the Japanese company, Tokyo Menka Kaisha, which had agreed to lend the board £100,000 for the construction of the wharf, was frustrated by the government’s restrictions on local authorities seeking external investment funds. ⁵⁰ However, if the Japanese were going to construct the wharf themselves then they required certainty in the form of a long-term contract and guarantees from the New Zealand government to increase the number of import licenses so that Japanese ships, which had been arriving almost empty, would be able to secure more balanced loadings. The government declined the offer and the ‘whole proposal [was] dropped’. ⁵¹ In New Zealand at that time there was a general antagonism towards foreign investment. ⁵² A. D. McIntosh, the Secretary of External Affairs, noted that the incident raised the ‘general question of Japanese investment in New Zealand’, and that ‘the suggestion that gift finance might have been made available by Japan is even more delicate’. ⁵³

Tasman Pulp and Paper Ltd., as part of its agreement to finance half of the cost of the wharf, had its privileges contractually secured in an agreement with the Crown and Tauranga Harbour Board that granted them a 20-year priority of 600 feet of berthage along with storage space. This priority would be upgraded to 1000 feet of berthage, if required by the company, upon completion of the 1200-foot wharf upgrade. ⁵⁴ However, this agreement was not allowed under the Harbours Act 1950, under which a board could not grant such a long priority without first going to the public with a tender for lease. Even then, certain cargoes and vessels could not be prioritised. The ‘accepted principle of Harbour Boards’, at the time in New Zealand, and also in Australia, was that ‘the first ship to arrive gets the first berthage available’. The stakes involved at Tauranga – the government considered the port’s upgrade as a matter of important ‘national development’ – were so high that for the first time these provisions were changed. ⁵⁵ But to do so, the Harbour Board had to seek parliamentary approval. This was achieved with the Tauranga Harbour Board Loan and Empowering Act 1959 which overruled the Harbours Act 1950 and allowed the contract to become reality.

At the time, a tanker occupying a berth for less than 24 hours would bring the board £2,000 in revenue, but a log ship that sat in a berth for 24 days only paid half that. This was because the berthage ‘rent’ was fixed at 1 d per ton per working day. Under the ‘first come, first served’ mandate in the Harbours Act 1950, if all three berths at Tauranga were occupied by log ships it would ‘completely disrupt all other trade of the port’, resulting ‘in a disastrous fall in port revenue, leaving the board two alternatives – either strike a harbour rate to make up any deficiency existing after the “establishment period” or to increase the wharfage charges on logs to an extent which could only have the effect of killing a trade which is of great national importance’. ⁵⁶

As Figure 4 shows, by this stage the growth at Tauranga had been impressive, increasing from a throughput of 0.02 million tonnes per annum in 1946 to 3.3 million in 1973.

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Figure 4.

Tauranga’s rapid growth, 1946–1973.

However, Tauranga’s port and land access facilities were struggling to keep up. For Tauranga to expand – that is, to borrow – it had to have an Act of Parliament passed (a Loan and Empowering Bill). In just eight years between 1954 and 1962, Tauranga had to do this four times. ‘Meanwhile, it was not unusual to see four or five ships anchored in the roadstead awaiting a berth’. ⁵⁷ The seven berths at Tauranga were occupied for, on average, 30 days in a 31-day month, an occupancy rate of nearly 97% which was the highest in New Zealand. ⁵⁸ This growth led to the appointment of a Commission of Inquiry on 23 August 1962 into Tauranga’s land access, which had not kept up with the expansion of the port. The commission recommended that £3 million be spent to 1970 by the Ministry of Works on upgrading the road facilities to the Port of Tauranga, with a further £2.36 million required in the next decade. It also advised the Railway Department to complete the Kaimai Deviation which would shorten the distances to Tauranga considerably. ⁵⁹ While the deviation would cost £5 million, the commission regarded the savings in internal transport costs to be, from the ‘broader national viewpoint’, worthwhile. It also noted that an ‘important consideration’ was the immediate savings of £1.841 million which would be achieved on the existing line by having the deviation in place. ⁶⁰

Finally, the commission strongly advised that regulation 29 (2) of the Transport Licensing Regulations 1960 not apply to any railways servicing the Bay of Plenty. Regulation 29 (2) protected the railways from road competition. While the commission advised that this regulation should be abolished for all transport operators, it only recommended that it be omitted for new transport development. The ‘road transport operators working in the Bay of Plenty are giving efficient service at reasonable costs and with full regard to their customers’ interests’, and they did not want to see that competition eroded. ⁶¹ The Kaimai Deviation tunnel would ultimately be completed in 1976 at a total cost of NZ$26 million, massively reducing inland transportation costs to Tauranga relative to Auckland. ⁶² It is clear, however, that institutional constraints still hampered Tauranga’s attempts to respond to opportunity.

Amalgamation, 1965–1974

In the 1950s and 1960s the national government tried to centralise a number of services previously run by local governments to avoid ‘wasteful duplication’ of infrastructure and services. ⁶³ One such attempt was the Local Government Commission, a body initially established in 1946, designed to review the ongoing functions of the numerous local government authorities. However, this first attempt proved to be a complete failure; the commission set to work ‘with the gusto of a cartographer mapping hitherto unexplored territory’, but in attempting to reorganise local government in Christchurch and Auckland it crossed a political line and was abolished in 1951. ⁶⁴ A second attempt was made with the Local Government Commission Act 1953, but this body achieved very little, given that it had far fewer powers than the 1946 version. It was reconstituted in 1961 following a 1960 parliamentary Select Committee with the Local Government Commission Act 1961, which reinstated the powers the original body possessed as well as granting additional ones. The justification was that between 1946 and 1960, leading up to the reconstitution, the number of local bodies in New Zealand had increased by 300, demonstrating the inadequacy of the previous commission at achieving its goals. ⁶⁵

In 1965 the Local Government Commission investigated the Bay of Plenty region and recommended that the Whakatane Harbour Board and the Ohiwa Harbour Board be abolished, and their functions be transferred to the Tauranga Harbour Board. The Tauranga Harbour Board would then be reconstituted as the Bay of Plenty Harbours Board, consisting of 16 members representing local government in the region. ⁶⁶ This proposed change would have increased the representation of the port’s users on the board. While the commission’s advice was not acted on immediately, eventually a slightly modified version was enacted, culminating in August in the Bay of Plenty Harbour Board Act 1970. The duties and authority of the board were not much changed from when it was the Tauranga Harbour Board, but the number of representatives on the board was reduced to 13. ⁶⁷ Rotorua, along with the other major regions that exported from Tauranga, finally had a sound administrative structure for their port.

Containerisation and the New Zealand Ports Authority, 1975–1977

By the mid-1970s containerisation was well on the way to revolutionising the global shipping industry. ⁶⁸ The Port of Tauranga, now under the control of the Bay of Plenty Harbour Board, was keen to expand into this growing industry. As Gordon Jackson put it, ‘every port authority wishing to remain in business in a serious way began equipping container berths’. ⁶⁹

However, while the port of Auckland had $20 million of container investment approved by the government, Tauranga’s applications to expand into containers – beginning in 1968 – were repeatedly refused. ⁷⁰ As the Bay of Plenty Harbour Board put it:

There are several investment decisions by major Port of Tauranga users such as the Dairy Industry, Forest Industry etc., pending at this time. Many of the investment decisions are directly related to the decision as to whether Tauranga will become a container port … The uncertainty as to the future of Tauranga as a container port has also produced uncertainties in terms of pending future multi-million dollar regional stock/storage investments. ⁷¹

Other than the costs imposed on port users by the uncertainty created around Tauranga’s future, the biggest argument in favour of Tauranga as an export port was the congestion at Auckland that had been ongoing since the 1950s. The port of Auckland already had two container terminals and was proposing to build a third at a cost that greatly exceeded Tauranga’s proposal. However, Tauranga had ample space to cope with additional throughput, and urgently needed the trade as log exports, which had previously been a staple at the port, had declined and were expected to recover to only about a quarter of the previous highs. ⁷² Tauranga had 44 acres of space immediately available for a container terminal (30 acres available as part of Phase 2), with a 1000-foot quay suitable for container operations also available. ⁷³

The Bay of Plenty Harbour Board argued that only through ‘a healthy competition between ports, especially where inland transport economics are favourable’, could you ‘ensure that port labour costs are maintained at the lowest possible levels compatible with efficiency and a fair deal to watersider labour’. ⁷⁴ At the time, waterside unions were attempting to extend higher watersider pay rates to inland container terminals and enforce a union monopoly of labour supply, resulting in ‘bitter industrial disputes and in some cases national port strikes … lasting months’. ⁷⁵ Tauranga had no such constraints; indeed, the 54 acres of available consolidated backup area meant that no inland container depots would be required.

The proposed governance model selected by the Harbour Board differed from that of other New Zealand ports in that it was deliberately designed to avoid conflict. The initial proposal was for the container terminal to be owned by a consortium made up of the Harbour Board, the stevedoring companies, user shipping lines, and, remarkably, the Watersiders Union, ‘if possible’. ⁷⁶ The union was, not surprisingly, a strong supporter of this plan, acknowledging that due to the seasonal nature of Tauranga’s trade the condition that casual employment would be the primary employment structure was acceptable, with union participation aiming to ‘minimise the normal industrial problems of the introduction of a Container Terminal and produce a better degree of co-operation and understanding between management and labour’. ⁷⁷ Remarkably, one shipping company in a letter to the Minister of Transport Sir Basil Arthur noted that they found the

Watersiders Union most co-operative, and within their own authority they would certainly do all they can to allow us to work two shifts, but whether Government Legislation at that time would allow this or not is a matter of speculation. ⁷⁸

The idea of waterfront joint ventures including trade unions is in contrast with the usual view of the wharves as arenas for class conflict. James Reveley has shown how a small New Zealand company survived until the late 1980s by creating bonding social capital through a joint venture, which included the waterfront union. ⁷⁹

At the time, investment decisions had to be approved by the New Zealand Ports Authority (NZPA), an entity established with the New Zealand Ports Authority Act 1968 with the idea that it would regulate capital spending (sec. 13) to prevent spending that was outside the ‘national ports plan’. The authority was established with the best of intentions as an attempt to stem the apparent duplication of infrastructure that individual ports, acting in their own interests, were undertaking. ⁸⁰ However, in reality the authority was quickly captured by interests in Auckland and Wellington. One of the biggest problems was that the NZPA never developed a ‘national ports plan’ and so, as noted by King, ‘it is hard to see on what grounds the Authority can judge proposals … except on an ad hoc basis with reference to only the viability of the specific project concerned’. ⁸¹ There were no explicit economic or political criteria from which to judge applications from individual ports. In the first four years of the authority’s existence, 56.3% of capital expenditure approved was for Auckland and Wellington (Section 13 (1) of the Act required the authority’s permission for any capital expenditure over $150,000; $250,000 for Auckland and Wellington). ⁸² Admittedly they were the two largest ports at the time; however, together they only handled about 39.5% of the total tonnage in New Zealand and future expansion was limited by their geography. ⁸³ More economical, lower-cost alternatives to pouring more capital into Auckland and Wellington were available, such as the Tauranga proposal.

Despite these advantages, the Authority refused to approve Tauranga’s application. In a letter addressed to Sir Basil Arthur, Minister of Transport, F. W. James of the Steel and Tube Company of New Zealand Ltd., expressed his displeasure in no uncertain terms:

We have found through bitter and expensive experience that the Port of Auckland has not been a successful port for the discharge of cargo destined for the Bay of Plenty and Waikato … We feel that the extension of the Auckland Harbour Board’s container terminal will not ease the situation but in our view the present unsatisfactory position would be worsened by the extra cargoes such extensions would generate.

The Bay of Plenty Harbour Board has ample land available for the successful operation of a container berth and we were most disappointed to learn of the Port Authority’s decision … Because of the land already available for storage and handling of containers at Mount Maunganui such congestion would not occur at this port. In addition, the Kaimai tunnel, when completed will provide a fast, economical inward and outward route for the Waikato and South Auckland areas. ⁸⁴

Similar letters were received from other firms and exporters, declaring that the decision ‘will have the inhibiting effect and inevitable result of a stealthy ring-bark’ (Figure 5 shows the local media’s reaction). ⁸⁵

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Figure 5.

1975 Newspaper comic critical of the Auckland Harbour Board’s influence.

Meanwhile, Auckland was struggling to cope with its current trade volume, with the average delay at the Auckland container terminal from August–December 1974 being in excess of 24 days per container. The minimum delay from the time of off-loading from the vessel to the completion of devanning of the contents was 13 days, with a maximum delay of 48 days. ⁸⁶ Even when the well-documented congestion at the port eased, the delays persisted as the number of containers devanned (unloaded) per calendar day fell progressively with congestion levels. ‘It seems apparent therefore’, notes a 1975 study on Auckland’s container devanning, ‘that the reduction in congestion has not produced the devanning performance efficiencies at the container terminal which might have been expected following the reduction in congestion and the availability of additional shed space … If such a course is persisted with [additional handling through inland expansion at Auckland] it can in itself finally negate the whole benefit to the nation of the adoption of containerisation as a complete transport system’. ⁸⁷ The situation at Auckland, and in New Zealand in general, was not aided by the actions of waterfront labour. According to the Waterfront Industry Commission’s annual report, in 1972–1973, the average turnaround of container ships was 5.31 days; by 1973–1974, it had risen to 7.55 days. This was caused primarily by a ‘reluctance of watersiders to work a three-day shift, the lack of container handling equipment and the industrial climate on the water front’. ⁸⁸

Tauranga’s Mayor, Mr R. A. Owens, described the situation as one where ‘Auckland is endeavouring to build an empire which, just as surely as that of the Romans, will fall – it will kill itself with its own weight’. He pleaded with the government, ‘in the national interest … [to] weigh it up, over and above the power of the Auckland members of Parliament’. ⁸⁹ Unfortunately for Mr Owens and Tauranga, the Transport Minister, as the appeal authority, upheld the decision of the NZPA on 24 March 1976. ⁹⁰ This decision was made on the back of a socio-economic study carried out by the Ministry of Transport with assurances from the Auckland Harbour Board that ‘they expect no insurmountable problems in this area [congestion], and I have no reason to doubt that assurance’. ⁹¹ Judge K. G. Arthur, the former chairman of the NZPA and chairman of the commission set up to evaluate Tauranga’s first major deep-water expansion in 1950, commented on the decision by remarking that Auckland did not have the space for its container berth ‘but will never change and admit it’. As chairman of the 1950 inquiry he was assured by the Auckland Harbour Board that ‘its upper harbour development would be finished in a few years and it would take all the trade Tauranga could handle’. ⁹² Yet by 1976 that development had yet to begin and Tauranga was by then New Zealand’s leading export port.

The Bay of Plenty Harbour Board was understandably upset. It was quick to point out errors totalling over $3 million in the Ministry of Transport’s socio-economic analysis, sums which had proven to be a decisive factor in the appeal’s failure. Businesses were also quick to criticise the decision, with the Federated Farmers of New Zealand adding that even with the error, it ‘will cost a great deal more than $3 million to get our produce up to Auckland’, and that there is a ‘deplorable situation [in] which [there] exists a $2 million crane in Wellington has been sitting idle for 2 years, because of an argument as to who should work it. What good is a major port to anybody when this state of affairs can render it useless?’ ⁹³

These complaints continued to flow and in 1977 the New Zealand Co-op Dairy Company, New Zealand’s largest dairy company, also challenged the decision against the Bay of Plenty Harbour Board. It estimated that it was losing $1 million annually by having to ship through Auckland instead of Mount Maunganui, adding that only ‘the joint follies of the Ports Authority and the Auckland Harbour Board’, could ignore the issues involved in moving freight through ‘some of the most congested arteries in N.Z.’. ⁹⁴ An internal Ministry of Transport memo dated 14 September 1977 noted that the only body in New Zealand that supported the Ports Authority decision was the Auckland Harbour Board. ⁹⁵ The main argument put forward by Auckland in its submission was the self-serving argument that 85% of its (Auckland’s) costs are fixed and so must be recovered from users. It feared that competition from the more efficient and flexible Tauranga would decimate its financial position somewhere in the region of $1.4–$3.5 million per annum. ⁹⁶ Finally, on 7 December 1977, in what was described in an internal memo as a ‘controversial decision’, the Minister of Transport for the first time overruled a NZPA decision. The Secretary for Transport advised the minister that it would be ‘unwise and unnecessary for you to state that you found the new evidence presented as persuasive because although it is likely to be found more palatable by the Ports Authority it may not be so acceptable to the Auckland Harbour Board who did not see this new evidence or comment on it’. ⁹⁷ The new evidence the secretary was speaking of was a revised financial analysis which eliminated the $3 million cost error from the previous study. ⁹⁸

In all, the NZPA had ‘failed dismally at central planning of port development’. ⁹⁹ It was captured by Auckland and Wellington interests even when the market was crying out for and willing to pay for new facilities elsewhere. It had misunderstood how competition worked and in an attempt to increase efficiencies by centralising the industry, actually worked to reduce it by stifling the competitive process.

Decentralisation and waterfront reform, 1978–1989

While the future of Tauranga was ensured by the 1977 decision to grant it container port status, at least two institutional challenges remained: waterfront labour and the centralisation of New Zealand’s ports that had occurred under the reign of the NZPA.

On 1 October 1975, New Zealand introduced a ‘Port Service Charge’, a fee to be charged to port users determined by the average of all New Zealand port handling costs. While this initially eased the problems facing the larger ports such as Auckland and Wellington who were able to over-man and underutilise facilities as a result of prior labour agreements, it placed an increasing burden on the more efficient secondary ports. These secondary ports were no longer able to compete on price through lower handling costs. With costs centralised, competition was fought on turn-around instead of price and the larger ports were able, through their influence with the NZPA, to invest in ‘vast amounts of capital on wool store facilities, cranes, land reclamations for container parks and a variety of peripheral necessities. The more invested, the more unlikely that secondary ports will come into their own again and the more certain that the huge, unnecessary internal freight bill will grow’. ¹⁰⁰

New Zealand had also centralised its waterfront labour force with the Waterfront Industry Commission (WIC), an entity established during the Second World War. ¹⁰¹ The WIC pooled all waterside workers together effectively cross-subsidising labour costs between different ports. ¹⁰² Workers were allocated to individual ports by the WIC for up to five months with guaranteed payments to any underutilised workers made out of the National Administration Fund, a fund financed by a levy on the national port wage bill and a charge on container traffic. ¹⁰³ Reveley has argued that this system reached a breaking point with the advent of containerisation which reduced the labour-intensiveness of waterfront work. ¹⁰⁴ It only continued for as long as it did because of path-dependent institutional ‘lock-in’. ¹⁰⁵

Under containerisation, labour needed to be directly and continuously employed but this was not possible under the container terminals agreement between the WIC and the unions. Perversely, as with capital expenditure where the only competition that could take place was through over-investing, the only competition that could take place on the labour front was through ‘special agreements’ outside the WIC between individual shippers and labour unions. ¹⁰⁶ In New Zealand, both of these incentives – the pooling of capital and labour costs – worked to centralise key costs faced by ports in New Zealand to the point where they were unable to compete on these fronts by reducing costs and improving efficiencies. Inefficient ports were not revealed as they were automatically cross-subsidised by more efficient ports (or at least, inefficiencies would grow and persist for a long time before being discovered). By the mid-1980s, waterfront wages averaged around $950 for a 28-hour week with no overtime, two-thirds higher than the national average of $575 for a 40-hour week inclusive of overtime. ¹⁰⁷

As Douglass North has suggested, because ‘various kinds of markets (political as well as economic) have different margins at which competition can be played out, the consequence of the structure we impose will be to determine whether the competitive structure induces increasing economic efficiency or stagnation’. ¹⁰⁸ Institutions help determine where competition occurs and whether that competition is unproductive (rent-seeking) or productive (welfare-improving). In the case of New Zealand’s ports, arguably a significant amount of competition was of the welfare-reducing variety where port authorities, shipping companies and stevedores had to compete not in lower prices or improved efficiencies but through over-investment and costly payments to labour.

A turning point occurred in 1984 following the election of David Lange’s Labour government and, importantly, the promotion of pro-reformist Roger Douglas to the position of Finance Minister. Increasing disquiet over the contribution of New Zealand’s ports to the wellbeing of the nation saw that industry, amongst others, directly earmarked for reform. A letter to the Minister of Labour from the New Zealand Stevedoring Employers’ Association Inc., described the situation on the waterfront as ‘a mess’, where ‘special agreements proliferate, special cargo rates are often astronomical, and the bonus system is a machine that devours money faster than it can be generated, all without much visible benefit to the industry. Watersiders … are interested only in how much can be milked from the industry’. ¹⁰⁹ The association thought that piecemeal attempts at altering the existing arrangements, as had taken place since 1950, would not work. What was needed was a ‘radical approach’ to reform ‘a system which thrives on overmanning at all levels, which holds the employer to ransom daily … and which required an expensive and bureaucratic Waterfront Industry Commission to administer it’. ¹¹⁰

The first sign that the government was willing to change the institutional environment of the New Zealand port industry was an initial review in 1984 involving the Transport Advisory Council, Exports and Shipping Council, Harbours Association, as well as the Waterfront and related industry groups. Shortly thereafter the government commissioned the ‘On Shore Costs Study’, a work which identified operating inefficiencies and poor work practices in New Zealand’s ports. ¹¹¹ While the ‘On Shore Costs Study’ itself was light on recommendations, the government used it to justify reform in the shape of the commercialisation of ports through the passing of the Ports Companies Act 1988. As part of the reform process, which is summarised in Tables 1 and 2, the now obsolete and ineffectual NZPA was abolished (sec. 41), with the new port companies taking full ownership of their respective ports.

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Table 1.

Timeline of port reform, 1984–1989.

1984
February	Initial review due to increasing disquiet about New Zealand’s ports.
November	On Shore Costs Discussion Document: The transport, handling and related costs of goods by sea.
December	The Minister of Transport along with 140 industry representatives expressed their views on the ‘On Shore Costs Study’.
1985
July	On Shore Costs Study Summary and Analysis of Submissions by the government.
September	Ports Industry Workshop held with 46 industry representatives, agreeing that: ‘The New Zealand ports industry should actively promote New Zealand’s trade objectives in the national interest by providing within an integrated transport network a ports system which ensures an efficient and cost-effective transfer of cargoes between land and sea’.
1986
May	Ports Industry Review Committee containing industry representatives tasked to report back with recommended reform proposals.
1987
March	Announcement of Ports Policy with three primary objectives: • The separation of the harbour boards’ commercial function from their non-trading roles; • The freedom from antiquated legislative controls over commercial activities; and • The need for standards of accountability similar to those applying to businesses in the private sector.
1988
May	Port Companies Act and related legislation enacted by parliament (29 April).
June	Government Initiates review of the WIC.
October	Establishment of Port Companies.
December	Government announces the WIC prevented any accountability that would result from a direct employer–employee relationship; it created rigidities which prevents ports from adapting to changing circumstances; waterfront labour was no different to the rest of the economy and should be treated as such; and that therefore it would be abolished.
1989
March	Waterfront Industry Reform Act approved by parliament.
September	Waterfront Industry Restructuring Act approved by parliament.

Source: B. A. Martin, Port Reform Publicity (Ministry of Transport, April 2, 1990), R17340931, Archives New Zealand, Wellington.

Note: WIC = Waterfront Industry Commission.

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Table 2.

Key institutional changes, 1988–1989.

Pre-1989	Post-1989
Ports owned by the New Zealand Government.	Ports owned by Port Companies, with 51% held by local authorities.
Investment decisions made by the New Zealand Ports Authority and Transport Minister.	Investment decisions made by individual port companies.
All labour pooled by with costs for unused labour distributed evenly across the industry.	Ports negotiate for their own labour force. Employment declined 37% in one year.
Forty-hour work weeks guaranteed with tight restrictions on shift arrangements.	Ports free to innovate on labour scheduling.
Stevedores prohibited from owning or leasing mobile equipment.	Stevedores allowed to purchase or hire mobile equipment from whomever they please.

To soften the blow to ports that were suddenly faced with enormous redundancy payouts the government passed the Waterfront Industry Restructuring Act 1989. This Act temporarily established the Waterfront Industry Restructuring Authority (sec. 4) with the power to compensate employers for these obligations. ¹¹² This was a necessary step to help break the path-dependent ‘transitional gains trap’ that New Zealand’s port industry had found itself in. ¹¹³ Finally, amendments were made to the Local Government Act 1974, the most important feature of which, from the point of view of Tauranga, was to transfer a large portion of the power previously bestowed to the Auckland Harbour Board to the Auckland Regional Council and the Waikato Regional Council.

All of these reforms allowed Tauranga to flourish. Unlike Auckland, Tauranga had ample low-cost backup land; was close to major domestic markets; had cool-store capacity and off-wharf permanent stores for major shippers; and had a far more competitive, long-established cargo-marshalling service. According to a Ports of Auckland Limited (PAL) study, ‘Tauranga has the potential to compete for nearly all of Auckland’s conventionally handled general cargo overseas trade, and some container trade (e.g. the Japan trade)’. ¹¹⁴ The marshalling efficiency at Tauranga came about because ‘while stevedoring companies were powerless to influence the loading practices of the watersiders, it was possible to innovate in the marshalling area’. ¹¹⁵ Independent contractors were hired along with the Drivers’ Union to transport cargo to ship-side.

Les Dickson, a first-year employee at Tauranga, saw an opportunity to use an existing ‘Wagner’ – a log-moving machine that was not being utilised – to cart logs 24 hours a day to the dock. This improved efficiency dramatically, effectively saving the employment of three trucks and trailers, three truck drivers, three cranes, six crane drivers, along with the operating costs of running all that machinery. It was the first time 24-hour-a-day operations had been introduced at a New Zealand port, a ‘ground-breaking’ achievement ‘in an industry where union control meant that normal operating hours were strictly limited to daylight, with weekend work coming under special arrangements’. ¹¹⁶ The success of that effort saw Dickson form his own company at Tauranga, Associated Stevedores, and after navigating ‘the unique bureaucracy of the waterfront’, managed to negotiate with the Waterside Workers’ Union for shift work that would enable work to continue 24 hours a day until cargo was fully loaded. This was a landmark achievement in the late 1970s in an industry where ‘hours and conditions of work were strictly controlled’. They were met with continuous pressure from established vested interests such as the Port Employers Association ¹¹⁷ and the Auckland unions, the latter of which ‘imposed itself on Tauranga, preventing the adoption of systems that might be less labour intensive’. ¹¹⁸

The change in attitude in New Zealand was exemplified by a speech given by economist Ronald R. Allan of McGregor & Company. He noted that the concerns that had led to the creation of the NZPA and similar anti-duplication regulations were unfounded. Fluctuations in the shipping industry should not be ‘interpreted as a sign of a cut-throat and unstable market’, for these ‘instabilities are a reflection of a healthy, entrepreneurial and highly competitive market’. ¹¹⁹

Privatisation and the modern port, 1990–2012

Following the success of the 1987–1989 reforms of the New Zealand port industry, the government sought almost immediately to ‘liberalise the ownership regime of the newly formed port companies’, once it was ‘satisfied that port users will not be disadvantaged and that economic efficiency will be promoted’. ¹²⁰ The current ownership structure prevented private ownership of a port beyond 49%, which it believed blocked ‘the natural development of an ownership market for port companies’ (Figure 6 shows the geographical location of New Zealand’s Port Companies at the time). This is in line with the theory of market contestability, where what matters for efficiency is not actual competition prevalent in a given industry at a particular point in time but the threat of potential competition at any time. ¹²¹

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Figure 6.

New Zealand’s ports in November 1989.

Port companies, shippers and shipping companies believed that a serious flaw of the corporatisation model adopted in 1988 was the transfer of ownership from harbour boards to local authorities. This was because the temptation for the local authorities to cross-subsidise other community concerns created a conflict of interest, whereas the harbour boards ‘had at least been for the port alone’. ¹²² The stakeholders almost unanimously agreed that the 51% compulsory local authority ownership should be abolished and that this would solve the issues they faced. The government agreed and on 20 March 1990, the Minister of Transport announced that the government planned to introduce legislation to allow 100% industry ownership of port companies. ¹²³ While all of this was going on, Tauranga had already begun innovating and expanding. The removal of the NZPA saw Tauranga immediately start work on two new berths at Sulphur Point to cater for the pressure its clients were putting on it to increase capacity, as by this stage the port was quite congested. It was not alone either; by 1990, Napier, Timaru, Tauranga and even Auckland had begun expanding to the sum of $90 million in port facilities. ¹²⁴

Port users and the board at Tauranga quickly established the Port of Tauranga Industrial Council, ¹²⁵ with the sole goal of negotiating with the unions for an individual award at the port. If a national agreement was signed first, precedent would be set and Tauranga would have to follow it. So the council sent Mr Allan Jones to Wellington to negotiate on behalf of the port, with the sole job to say ‘no’ to any deal. ‘By never agreeing to anything, they could never do a deal’, Jones recalled. ¹²⁶ Other ports made concessions to the union to have work continue but Tauranga would not back down on the requirement of 24-hour-a-day, seven-day-a-week shift work and that strategy eventually worked, with an agreement being reached on 11 December 1989. It also set the precedent for casual labour, appealing the initial 10% cap on casuals to the Labour Court and ultimately winning approval to hire whomever it wanted, whenever they were needed. ¹²⁷ Thus job control on the waterfront finally passed from unions to employers.

Table 3 shows that these innovations had an enormous effect on port productivity. In New Zealand as a whole, post-reform labour declined from 3156 to 1774 within a year, or about 44%. At Tauranga, the labour force declined from 441 to 202, or 54%, while gang sizes fell from 10.5 to six. Productivity at Tauranga increased from 1550 tonnes of cargo per ship in 1989 to 2500 tonnes per ship in 1990 – an increase of over 60% – with a lot of the benefits passed on to shippers in the form of an immediate 26% price decline. ¹²⁸ It was claimed that compared to Australia, New Zealand had a 30% cost advantage pre-reform but a 60% advantage post-reform. ¹²⁹ The New Zealand Dairy Board, one of the largest port users in New Zealand, estimated that in the eight months following the reforms it had saved $5 million. ¹³⁰

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Table 3.

Key post-reform statistics at Tauranga.

Item	1989	1991	1993
Throughput (‘000 tonnes)	4078	6114	6880
Average days in port	5.5	2.4	1.8
Operating cost per tonne (index)	100	57	55
Average tonnes per employee	25,487	44,627	52,124
Average berth occupancy	70%	39%	32%
Tonnes per gross gang hour	71.9	–	115.1

Source: Archives New Zealand, R16684786, Grant Macvey to Ministry of Commerce, ‘Statistics Port “Port Reform”’, 30 May 1994.

The question then becomes, if such huge savings were available why was reform not undertaken earlier? The answer lies in New Zealand’s institutions. Today’s inefficiencies can be tomorrow’s profit opportunities provided the institutional environment is one that allows those opportunities to be taken. In the case of New Zealand, the inefficiencies were institutional in that they were the result of a long period of poor interventions in the industry. The New Zealand Dairy Board, along with New Zealand’s ports, stevedoring companies, and shipping lines, were prevented from capturing these potential efficiency gains due to an institutional structure that impeded change. It took a change in political leadership for institutional change to begin and for those potential gains to first be discovered, and then realised. ¹³¹ The rapid move from one of the most regulated economies in the Western world to one of the most liberal in the 1980s, dubbed ‘Rogernomics’ after the Minister of Finance Roger Douglas, was the result of a ‘dominance of policy formation by a small number of people’. ¹³² As Roger Douglas said:

Do not try and advance a step at a time. Define your objectives clearly and move towards them in quantum leaps. Otherwise the interest groups will have time to mobilise and drag you down. ¹³³

Without this catalytic change in the institutional environment, any attempts at port reform would likely have been doomed.

Meanwhile, the post-reform environment at Tauranga was energetic. Tauranga had never become involved in stevedoring and generally kept its operations to the port business only, unlike other ports around New Zealand. ¹³⁴ It had also maintained the early philosophy instilled by former chairmen such as J. D. Alach that the port should not cross-subsidise; it should consult with port users; and that it should operate on a user-pays basis rather than levy rates on its constituents, most of whom do not use the port. The same could not be said for other ports. Stevedoring was one item where each individual port could make its own decision. Every other port in New Zealand had some kind of stake in stevedoring, whether it was a shareholding or outright ownership. Tauranga was the only port with no investment by the port in stevedoring, or receiving and delivery. While stevedores said they were happy to compete with the ports in stevedoring, none of them actually believed they would face true competition. ¹³⁵ Tauranga, having always had effective stevedoring competition, had three stevedore companies working the port at the time of the reforms: the Associated Stevedores, NZ Marshalling, and NZ Stevedores. There was even union competition, with the Watersiders Union, Northern Drivers Union and Harbour Workers Union all having a presence at the port. It also had no labour force of its own, unlike other port companies which had hired their own labour forces with the abolition of the WIC. ¹³⁶

Thus the governance structure at Tauranga, a modified legacy of the past, was quite conducive to efficiency and it has for a long time been the most efficient port in New Zealand, even with the institutional difficulties it and all ports in New Zealand faced. So when those institutional barriers were lifted by the reforms in the 1980s, business as usual rather than a massive overhaul of the port’s governance was what was required.

Tauranga was also a leader in cost reducing innovation. The port pioneered what became known as the ‘five in seven rule’, where stevedores could adjust working arrangements so that their employees could be paid on a five-day-a-week basis, with the actual hours worked varying in line with vessel availability. This was enshrined in its local award contracts after negotiations with the unions (which resulted in some short-term industrial action before being accepted), stevedores and shipping companies. ¹³⁷ This contract meant that labour costs were the same for the port for all shifts from Monday to Sunday and where there was a shortage of permanent labour, the port was free to hire casual employees. ¹³⁸ So when the time came to sell the 51% local government stake in New Zealand’s ports, the Bay of Plenty Regional Council refused to sell. While other local authorities could not wait to offload their ports – ratepayers were often saddled with expensive port levies – the port of Tauranga had never levied a rate and was profitable in its own right. For example, the $25 million expansion at Sulphur Point, announced as soon as the NZPA was dissolved, was financed entirely from port revenue. ¹³⁹

After devolution, some local councils, such as in Auckland, eventually bought back all the remaining shares, thereby retaining full control over the port. There have been suggestions that this could lead to some ports ‘being used as ready sources of public revenue … with profits being earmarked to fund city infrastructure without the politically unpalatable need to increase property taxes’. ¹⁴⁰ While possible, there is little evidence that that this takes place at Tauranga despite mixed ownership. The long tradition of user-pays and self-sufficiency were maintained, with the Bay of Plenty Regional Council preferring to treat the port as ‘a financial asset, rather than an entity to control … [with] a substantial proportion of private shares and contestability between the port’s service providers’. ¹⁴¹

As Figure 7 shows, since the reforms in 1989, Tauranga’s cargo throughput has increased at about five per cent per annum. As a result, by 2013 the port handled 373% more tonnage than it did when the reforms took place 23 years previously.

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Figure 7.

Tauranga’s growth, 1989–2012.

The port has the largest private ownership of any of New Zealand’s commercial ports, with 45.02% being owned by the private sector and 54.98% held by the Bay of Plenty Regional Council. Its financial performance is unmatched in New Zealand; in the past 15 years it has been the best performing stock of any industry on the New Zealand Stock Exchange. ¹⁴²

As we have seen, Tauranga is also the only port in New Zealand where stevedores compete with each other in the provision of container handling services. This unique feature is one of the key reasons for Tauranga’s relative efficiency; it has been able to use markets to provide services where others have relied on hierarchy, thus enjoying the production and governance cost advantages markets provide. ¹⁴³ The institutional reforms that took place in New Zealand did not deal with the details of the organisations (ports) themselves, but instead opened them to competitive forces. The government successfully lowered transaction costs across the entire industry: in Oliver Williamson’s words, it reduced ‘frictions’ in the system that were producing ‘needless slippage or other loss of energy’. ¹⁴⁴

Tauranga was fortunate in that its basic organisational model, thanks to events in the past, was already one of the most flexible in New Zealand. Institutional reform simply allowed efficiency to flourish on a larger scale through competition with less-efficient ports whose position had been protected by high transaction costs and institutional ‘lock-in’. ¹⁴⁵ There was a triple layered path-dependent lock-in in the New Zealand port industry, where several inefficiencies were present: the selection of Auckland and Wellington as the North Island’s two major ports; the poorly implemented centralisation and cross-subsidisation of the industry; and the influence waterfront labour exerted over every port in New Zealand. It took major institutional reforms – arguably only possible when the potential profits were large enough for entrenched interest groups to be overcome – that enabled Tauranga and other New Zealand ports to realise major efficiency gains. ¹⁴⁶

However, it is also important to note that the institutional reforms were not costless. It was a costly process, both ex ante in overcoming interest groups such as the port of Auckland as well as ex post as thousands of waterfront workers were put out of work and ports had to adapt to a new, more competitive, environment. Importantly, institutional reform did not fix all of the problems at New Zealand’s ports. Some regional councils still use their ports to cross-subsidise city infrastructure. ¹⁴⁷ The institutional reform in New Zealand allowed ports that were willing and with good governance structures in place, such as Tauranga, to thrive, but it did not go so far as to allow less efficient ports to fail. ¹⁴⁸ Furthermore, the light-handed regulation of New Zealand’s ports has led to concerns that the efficiency dividends were reaped more by shareholders than port users. ¹⁴⁹ Ports enjoy a degree of natural monopoly power and effective regulation is required to ensure that at least some of the efficiency gains flow to consumers of port services.

Conclusion

As an export-dependent nation, New Zealand requires efficient port gateways, but this case study of Tauranga from 1945 to 2012 has demonstrated that inefficient institutions and path dependency reduced port performance. Figure 2 summarises our conclusions on the pattern of path dependency at Tauranga.

Tauranga’s institutional frailties became visible when transaction costs rose to a point where the port could not function and trade was being stifled, making institutional change more profitable than the alternatives. The lack of demand, development and government attention at Tauranga prior to the Second World War allowed the Harbour Board to resolve a number of conflicts and gradually establish a culture (informal institutions) that would enable the port to thrive. This culture, including an insistence on a user-pays system, and the development of conflict-minimising governance structure, enabled Tauranga to successfully navigate a number of challenges in the 1950s as the Japanese log trade boomed. However, as Auckland struggled with congestion and the advent of containerisation, public pressure caused the government in 1968 to centralise control of its port industry with the creation of the NZPA. The body, however, led to rent-seeking and regulatory capture by the largest, most established players, especially Auckland. Furthermore, under centralised control the ports demonstrated an inability to adapt to changing circumstances, both to cater to new demand (Japan), but also to new technology (containerisation). The experience was similar to that of the United Kingdom, where centralised control also failed to help the ports successfully adapt to changing circumstances. ¹⁵⁰

Additionally, the problems at Tauranga were worsened by a powerful union that, despite some initial promise of cooperation, primarily aimed to protect the employment opportunities of members and resisted the introduction of container handling. Furthermore, labour costs had been centralised through the Waterfront Industry Commission and port charges centralised through the NZPA’s Port Service Charge. These rigidities allowed inefficient ports to improve their bottom line at the expense of the more efficient, such as Tauranga, especially if they had sufficient influence over the NZPA to continuously increase capacity through over-investment.

Eventually, pressure from Tauranga (and more importantly, a significant number of New Zealand’s largest exporters) led the government to overrule an NZPA decision for the first time in 1977, sparking the beginning of waterfront reform. The NZPA was abolished in 1988, and by 1989 the institutional matrix constricting New Zealand’s ports had been dramatically relaxed, reducing transaction costs across the industry and allowing Tauranga finally to achieve its potential.