Ports: largest overall

SUBMISSION BY THE SA LOCALGOVERNMENT RESEARCH CENTRE TO THE TRANSPORT PORTFOLIO COMMITTEE ON THE NATIONAL PORTS AUTHORITY BILL

Introduction

The central thrust of this submission is that the National Ports Authority Bill treats South African ports as if they were somehow divorced from the broader urban and regional contexts within which they operate. There is little recognition in either the Bill or the White Paper which preceded it that ports are an integral and often major component of urban economies and have a direct impact on cities’ transportation systems and infrastructure. Increasingly, too, they are playing a major role in local tourism strategies.

We thus endorse the sentiment of the portfolio committee that a ports strategy cannot be isolated from a broader transport and industrial economic strategy.

The White Paper sets out by acknowledging this when it says –

"…there are indeed aspects in the administration of commercial ports that impact on both the provincial and local government spheres, and it is obviously in the public interest and in accordance with both the letter and spirit of co-operative government, that these aspects e meaningfully addressed. The Constitution stipulates that all spheres and all organs of Government must co-operate with one another in mutual trust and good faith by fostering friendly relations, assisting and supporting one another, informing one another of, and consulting one another on, matters of common interest."

Likewise, the White Paper lists as one of the objectives of the National Commercial Ports Policy "to ensure that strategic port planning is closely aligned with the integrated development planning process of the associated city".

But these acknowledgements are not carried forward into the body of the White Paper and do not find expression in the National Commercial Ports Bill.

International Practice

The following table demonstrates a dominant international trend by which major world ports are governed not by highly centralised national authority, but by the cities and regions in which they are located.

Country	Port	Governance
Singapore		The Maritime and Port Authority of Singapore (MPA) is a statutory board which was formed by the MPA Act of 1996. The MPA comes under the purview of the Ministry of Transport (MOT).
Netherlands	Rotterdam	Rotterdam Municipal Port Management (RMPM) was created in 1932 and manages the 10 500 ha. port and industrial complex on behalf of the municipality of Rotterdam. The Rotterdam Port Authority [RPA] is a division of the RMPM and is responsible for managing shipping traffic throughout the Rotterdam-Rijnmond area. The RPA is also responsible for traffic control and management, port operations control, and noxious and dangerous goods. In 1998, the port earned the municipality R92 million guilders.
USA	South Louisiana	South Louisiana is the largest tonnage port in the United States and the third largest in the world. The 7-member Board of Commissioners is appointed by the state’s Governor and each represents one of the local government parishes. The Port serves primarily as landlord to eight facilities leased to operating companies such as Peavey, Occidental, Archer Daniels Midland and Cargill. The exception is the Globalplex Intermodal Terminal, which the port purchased in 1992 and is currently redeveloping into a world class complex to accommodate a variety of dry bulk and break-bulk cargo.
China	Hong Kong	The Port of Hong Kong is unusual in that it does not have a port authority to provide and control all the port infrastructure. Most of the port facilities are privately owned and operated, with minimal interference from government. The Marine Department of the Government of the Hong Kong Special Administrative Region is responsible for the day-to-day administration of the port.
USA	Houston	The Port of Houston Authority is an autonomous governmental entity authorized by a 1927 Act of the Texas Legislature. The seven-member Port of Houston Commission is the governing body for the Port of Houston Authority. The City of Houston and the Harris County Commissioners Court each appoint two commissioners. These two governmental entities jointly appoint the chairman of the Port Commission. The Harris County Mayors & Councils Association and the City of Pasadena each appoint one commissioner.
Japan	Nagoya	The Nagoya Port Authority is a special local government body that was jointly established by Aichi Prefecture and Nagoya City in 1951. It is a port administration body regulated by the Port and Harbor Law. The authority is responsible for the preparation of harbour plans and for construction and works for the improvement of port facilities, and administers and manages the port area. Intra-harbor traffic, preservation of the water surface, stevedoring works, etc. are handled by private enterprises 15 assemblymen from Aichi Prefecture and 15 Nagoya City assemblymen constitute the 30-person Port Assembly. The current president of the Assembly is the mayor of Nagoya City
USA	New York/New Jersey	The Port Authority of New York and New Jersey is a financially self-supporting public agency that receives no tax revenues from any state or local jurisdiction and has no power to tax. It relies almost entirely on revenues generated by facilities users’ tariffs, fees, and rents. The Governor of each state appoints six members to the Board of Commissioners, subject to state senate approval. Board Members serve as public officials without pay for overlapping six-year terms. The Governors retain the right to veto the actions of Commissioners from his or her own state. The Board of Commissioners appoints an Executive Director to carry out the agency's policies and manage the day-to-day operations.
Belgium	Antwerp	The port is administered by an autonomous municipal body with a separate corporate identity, called the Antwerp Port Authority (APA). The APA owns the docks and the sites used by port operators and industries and also some of the port’s equipment. The Antwerp Port Authority has a workforce of 1,800. It owns and manages docks, berths, locks and bridges. It is responsible for planning, modernising and maintaining the infrastructure of the port, and for operating its own equipment, including floating cranes, shore cranes, tugs and dredgers. The Antwerp Port Authority leases sites and land, and distributes electricity in the port.
Canada	Vancouver	The Vancouver Port Authority (VPA) was established in 1998 in terms of the Canada Marine Act, which is "an Act for making the system of Canadian ports competitive, efficient and commercially oriented". Among other things, the Act establishes the governance model for the Board of Directors, setting criteria for the qualifications, terms of appointment, eligibility, and other matters related to the Board of Directors. The relative autonomy of the VPA Board allows it to make most key business decisions in the region instead of seeking approvals from Ottawa. Board members are selected by both industry and government. Business plans and capital budgets are approved by the VPA Board, and do not have to go to Ottawa. The Board is able to approve borrowing up to $225 million for port improvements without having to seek central agency approval from the Treasury Board/Federal Minister of Finance.
Australia	Melbourne	The Port of Melbourne is Australia's largest and busiest container port, handling 37 per cent of Australia's container trade. It is also the largest automotive port in Australia. Melbourne Port Corporation (MPC) is a corporatised port authority, established in 1996 with objectives and functions as defined in the State of Victoria’s Port Services Act of 1995. The MPC owns and manages the 493 hectares of land within the Port of Melbourne. Portfolio responsibility rests with the Minister for Ports.
Australia	Sydney	The Sydney Ports Corporation was established in 1995 after a series of reforms to the former Maritime Services Board aimed at bringing greater commercial focus, inter-port competition and customer responsiveness to the management of international shipping.
United Kingdom	Bristol	In 1991 First Corporate Shipping Limited, a private company owned by Terence Mordaunt and David Ord, purchased a 150 year lease of the Avonmouth and Royal Portbury Dock Estate from Bristol City Council.
United Kingdom	London	The Port of London Authority is a public trust established in 1908 to ‘administer, preserve and improve the Port of London’. Currently it is constituted under the Port of London Act of 1968. It has no equity capital and all its operations are financed from revenue with no outside support. Finance for capital works comes from internally generated funds, supplemented by commercial loans and leasing.
USA	Long Beach	The Port of Long Beach is governed by the City of Long Beach through the Long Beach Board of Harbor Commissioners. The five members of the Harbor Commission are appointed by the mayor and confirmed by the City Council. Commissioners appoint the executive director to head the Harbor Department, a 300-person department of the City of Long Beach that carries out port policies and manages port development. The Port of Long Beach operates as a landlord. The Board of Harbor Commissioners leases port shipping terminals and other facilities to private firms. Port revenues are reinvested in new facilities and improvements. California laws require ports to earn and spend their revenues only on activities related to commerce, navigation, marine recreation and fisheries. The port receives no funding from the city General Fund. The City Charter created the Long Beach Harbor Department to promote and develop the port. Under the Charter, the five-member Board of Harbor Commissioners is responsible for setting policy for the port and the management and control of the Harbor Department.
USA	Los Angeles	The Port of Los Angeles is a department of the City of Los Angeles and is often referred to as the Los Angeles Harbor Department. The Port is operated and managed under a State Tidelands Trust that grants local municipalities jurisdiction over ports and stipulates that activities must be related to commerce, navigation and fisheries. A five-member Board of Harbor Commissioners are appointed by the Mayor and confirmed by the Los Angeles City Council to provide direction and create policy for the Port. As a proprietary and self-supporting department, the Port is not supported by taxes. Instead, revenue is derived from fees for shipping services such as dockage, wharfage, pilotage, storage, property rentals, royalties and other Port services. Considered a landlord port, the Port of Los Angeles leases it property to tenants who then, in turn, operate their own facilities

As is clear from the above, it is overwhelmingly the global trend for city authorities to be directly involved in the administration of ports within their areas of jurisdiction. These arrangements are dictated by the very obvious interdependence that exists between ports and their hinterland city and regional areas. A review of international practice indicates that such municipal involvement in port management usually takes the form of an independent local port authority in which the host city is one of a number of core stakeholders.

In contrast to the majority of these major port cities, South African maritime local authorities have virtually no say in the development, operation or regulation of the ports which form not only the raison d’etre of their original establishment, but the very backbone of their strategic and economic focus. Historically, Portnet has undertaken both the landowner and regulatory functions of national ports and provided marine services, and the National Ports Authority Bill perpetuates this highly centralised and exclusionary pattern of control.

Key Issues

The following key issues arise out of our consideration of the National Ports Authority Bill.

The Bill fails to afford proper acknowledgement to the constitutional principle of cooperative government, which requires the cooperation of not just the three spheres of government, but also stakeholders from outside government in processes that impact on their interests and activities. In this context it is imperative that any approach to restructuring the administration, management and asset holdings of a structure such as Portnet should be subject to input from local authorities and other stakeholders in the regions where such entities are based.

There is thus no explicit recognition of the regulatory powers and functions of municipalities in such areas as land use management, transport services, environmental health, sustainable environmental conservation and the provision of essential utility services.

Cities have established capacity with respect to these administrative and regulatory functions. It makes sense that there should be a very clear alignment between these functions within the hinterland city and related functions at present undertaken within South Africa’s ports. These include safety, health and environment regulatory functions but also extend into a number of regulatory and administrative arenas.

The Bill fails to recognise that host municipalities are responsible for much of the transportation and other bulk infrastructure investment which is required to connect the port and its hinterland and to ensure a coordinated multi-modal, seamless transportation system. Failure to be adequately involved in the preparation of port development policies and plans jeopardises efficient transportation systems, undermines economic efficiency and impacts negatively on the city’s development frameworks.

Ports cannot operate in isolation from the municipal authority and vice versa. Port efficiency is determined by any number of local issues such as the availability and efficiency of hinterland connections, the availability of land adjacent to the port, the proper integration of appropriate freight stations and distribution centres offering optimum economies of scale and an efficient logistics network in general.

The Bill fails to recognise the role of ports in local economic development (LED).

"As a development approach, LED is based on the central idea that local mobilisation of actors and resources, building a convergence of interest around the competitive advantages of localities and building the capacity for economic actors to take up economic opportunities may arrest the damaging effects, and enable exploitation of the opportunities, created by new market conditions. The idea coincides with a global trend towards decentralisation of powers from national to local government. It is also associated with the shift from interventionist to enabling forms of governance to promote development partnerships between local economic actors." (Hindson, Hologram, February 2003)

Research into the most successful ports around the world has highlighted the importance of back-of-port activities in enhancing the competitiveness of ports. Many of these back-of-port assets/facilities/services are at the city-port interface and fall under the control of the host local authority. This requires in many instances joint initiatives and close working to realise the potential of such opportunities. From a city perspective, in an increasingly globalising world, ports offer the potential to confer a significant measure of comparative advantage to a region which can improve the location’s competitiveness and therefore offer more to the country as an attractive environment for investors. Finding an institutional arrangement which allows for direct and engaged partnerships is therefore essential.

Neither the National Ports Forum, which is mentioned in the White Paper but not provided for in the Bill, nor The Port Consultative Committees which are provided for in section 63 of the Bill are satisfactory vehicles for such partnerships. They are purely advisory in nature, incorporate too disparate a number of stakeholders, have too limited a mandate, and are dependent on too wide a ministerial discretion in setting their agendas.

In respect of the regional competitive advantage which is promoted by competition within and between the various ports in South Africa , it is noted that the numerous

submissions to the portfolio committee have stated that the White Paper fails to explicitly recognize these types of competition, and is inadequate to that extent.

Increasingly, there is a constructive and mutually beneficial synergy between commercial ports and tourism. Virtually every major maritime municipality in South Africa has under contemplation strategies to utilise at least portions of their ports for tourism purposes and it is thus essential that this sector should be allocated a place on any advisory or consultative bodies established by the Bill.

Given the role played by fixed investment in creating economic growth and the multiplier effect of this type of investment in port cities, it makes little sense to exclude local authorities from some form of involvement in the overall port planning and regulatory process. This is especially so in Durban and Cape Town who have, or desire to have, large waterfront tourist activities located side by side with the working terminals in the harbour periphery. However in SA the regulation, management and planning of ports has hitherto been the prerogative of the national government which owns and administers all port land and consequently receives 100% of the income accruing therefrom in the form of taxes, rentals or direct operating profit. This contrasts markedly with the position of most of the world’s leading landlord ports, examples being the Port of Rotterdam which In 1998 earned the municipality R92 million guilders.

The Bill gives no attention to the adequate treatment of environmental impacts. In terms of costs and benefits, it is not clear whether the benefits acquired from the port activities would outweigh the costs incurred by the municipality as host, such as on providing supporting infrastructure, dealing with the consequences of port-generated pollution and responding to contamination of recreational beaches and estuaries.

In the field of urban transport planning, the White Paper stipulated that in the context of integrating land transport planning processes, the National Land Transport Transition Act and the Municipal Structures Act will remain the key documents informing a holistic approach to transport planning and will enable coordination between national, provincial and local governments and the National Ports Authority. In furtherance of this objective, it was envisaged that municipalities’ Integrated Development Plans (IDPs) would be integrated with a National Port Development Framework Plan. However, this intention is not explicitly carried into the Bill, and in the absence of adequate institutional arrangements to develop such a framework it is unclear how the integration will take place, especially in relation to cost apportionment.

The impacts of port activities on the surrounding areas and the region, such as congestion and capacity problems on regional links and the role of rail and road infrastructure in movement of cargo to and from the hinterland, have not been adequately examined in the White Paper and are thus not catered for in the Bill. The effects of the port are felt beyond the port itself since they are an integral part of the road and rail system, as they are of stormwater, sewage, electricity and disposable waste systems. The nature and the responsibilities for these impacts have not been fully explored.

Urban Planning Issues

The understanding of the concept of planning in South Africa has been profoundly redefined in recent years. This has entailed a shift away from the purely spatial

dimension of planning and towards an understanding that developmental spatial planning decisions can not be made without reference to the full range of social, cultural, economic, political, environmental and technological issues which impact upon, and which are affected by, those decisions. The move to a principle-led, normative approach to planning introduced by the Development Facilitation Act (DFA) of 1995 heralded in a paradigm shift in planning in South Africa. The so-called DFA Chapter 1 principles apply to all land development and spatial planning in the Republic, emphasising the importance of environmental sustainability, the use of land development to promote human development, the maximum use of public participation and conflict resolution.

The principles apply to all forms of planning which affect land development, including spatial planning and policy formulation, the decisions of all public authorities affecting land development under any law, and all legislation, including all land control systems and instruments affecting the development of land.

The principles are also binding on all future actions of legislatures at national, provincial and local government levels. This means all laws, regulations and by-laws which are passed or changed must conform to the principles.

It is the emphasis on integrated planning and development which is largely ignored in the Bill through its failure to view port planning and management in its broader urban context.

The White Paper acknowledges that the future competitiveness of the port system and infrastructure will be influenced among other issues by land use in and around the ports and by demand and constraints of intermodal connections. These issues are at the centre of any municipality’s core business. For the National Ports Authority to expand and develop the ports, any such proposals are subject by law to the relevant local government development approval processes.

For this and other reasons, it is imperative that local authorities are actively involved in the planning process around port development. As expressed above, both the White Paper and the Bill have been drafted in isolation from this necessity. As an example of how easily local authorities can be excluded from such involvement – despite provisions for a consultative or advisory process - the City of Cape Town has expressed its dissatisfaction about the manner in which the NPA has approved the Development Framework for the Port of Cape Town without adequate participation by the City.

Institutional Framework Issues

Port operations are not a municipality’s core business and expertise, and it is not therefore being suggested that local government should seek any institutional dispensation whereby it would be directly responsible for shipping and cargo management. Ports are however the physical and functional epicentres of their metropolitan regions and therefore there is a strong case for the planning and development of the ports to be closely linked to the planning and development of the surrounding cities, provided that this is not at the expense of national economic growth and development.

The provisions in the Bill regarding the formation of Consultative Committees is insufficient to ensure effective consultation and cooperation between the NPA and the provincial and local spheres of government. It is not sufficient for these sub-national governments to be simply included with all other users of ports, as intergovernmental negotiations and cooperation cannot always occur effectively in a public forum representative of a plethora of diverse public and private interests.

In this connection, section 50 of the Bill, which governs the closure of ports is completely hostile to municipal interests. While it is accepted that the closure of any of South Africa’s commercial ports is an unlikely prospect, it is not sufficient that the NPA should be primarily responsible for such an undertaking after approval from the Cabinet. The closure of any commercial port would have far-reaching negative consequences for any maritime municipality, akin to those experienced by certain towns after the closure of mining operations. Neither the White Paper nor the Bill provides for public-private partnerships with the host city and other spheres of government in such infrastructure and investment programmes.

The very complex issues of environmental management and the impact of port development on the ecosystems of coastal cities will not be adequately addressed in the absence of a meaningful role for local government in port planning. As the CSIR has already pointed out to the portfolio committee, the major component of port planning is land use and land availability. Inevitably, this implies the expansion of port activities into the marine environment, where the costs of such expansion on water quality are substantial compared to the cost of landward expansion. Hence, Cape Town has experienced beach erosion on the northern shores of Table Bay as a result of dredging sand other construction activities in the Port of Cape Town, while in Saldanha Bay port expansion into the water body has been linked to a change in circulation patterns within the bay, which affects the natural fluctuations of nutrients within the system.
Neither the White Paper nor the Bill deals adequately with financial and fiscal matters. The municipality as host city carries costs for providing infrastructure and services, which have major implications on the efficiency and the performance of the port.

Constitutional Issues

Schedule 4B of the Constitution includes harbours as a matter over which local government has executive authority and the right to administer, in terms of section 156(1). As there is no obvious etymological or legal difference between "port" and "harbour", it is arguable that South Africa’s major commercial ports fall within the purview of Schedule 4B. If this argument is sustainable, commercial ports are not an exclusive competence of national government as stated in the White Paper.

According to section 151(4) national government may not compromise or impede a municipality’s ability or right to exercise its powers or perform its functions.

It is therefore important to acknowledge the role of the municipal authority in this regard and to ensure that national port policy does not encroach on the autonomy and integrity of maritime municipalities. A distinction needs to be made in the policy between the roles and functions of local authorities within their "harbours" function and the role of national government within the "regulation of national and international shipping" function. There is no evidence of the interrelation of these roles in the White Paper or the Bill.

While it is acknowledged that the National Ports Authority Bill was preceded by both a Draft White Paper and a White Paper, it is regrettable that the consultation and public participation processes have not been subjected to greater debate. It is particularly regrettable that consideration of the Republic’s commercial ports policy was not extended to a broader discussion about the relationship between commercial ports and their host municipalities, the role of commercial ports in local economic development, and the principle of subsidiarity in the governance of South Africa’s commercial ports.

In this respect, we concur with the view of Dr Gustav de Monie, which was placed before the portfolio committee when it was conducting public hearings on the White Paper -

"What is, however, lacking in the present draft policy document and will prove to be critical to ensure the port operational efficiency that the government is aiming for, is the requirement for the National Ports Authority to apply the principle of "subsidiarity" and thus to delegate maximum possible power for planning, management and operations to the individual port branches. The relationships between the centre and the individual ports should either form a substantial section of the new port policy document or should be an essential part of the ‘Ports Act.’"

Conclusion

It must be accepted that Government’s policy in respect of South Africa’s commercial ports rests on the basic principle articulated in the White Paper that "port system development, management and enhancement will primarily remain a national function".

However, it remains a major concern that insufficient importance has been attached to the role of local authorities in the exercise of this function. They are consequently left with little more than a tenuous advisory role which fails to recognise the considerable importance of commercial ports to the economic, financial, social and environmental well-being of South Africa’s maritime municipalities.