NOT SOUND FINANCIAL PROPOSITION

Bay of Plenty Beacon, Volume 16, Issue 34, 18 December 1950, Page 5

NOT SOUND FINANCIAL PROPOSITION

REASONS FOR VIEWS OF PORT COMMITTEE (Special to The Beacon) Wellington, Dec. 15. The belief of the Port Inquiry Committee that the Whakatane proposal is unsound is based on the following conclusions: — A breakwater harbour at Whakatane to provide a depth of 30 feet (M.L.W.) at the entrance and 35 feet alongside the wharves is practicable and presents no serious constructional difficulties. The necessary investigations and the preparation of final plans for the proposed harbour would take a considerable time —possibly up to two years—and the construction of the harbour up to five years thereafter. The harbour would be unable to handle shipping until substantially completed. A reliable estimate of the cost of construction cannot be made until a thorough investigation aided by model tests has enabled a final design to be prepared. ' Upon the evidence before us the cost of the proposed harbour, to provide for two wharves each 800 feet by 80 feet (3200 feet of berthage) and for the necessary reclamation, a storage shed 1,000 feet by 120 feet, and all incidental facilities, and for the diversion of the river, would be not less than £2,180,000 "together with an additional cost 0f£220,000 to the Railway Department for the provision of rail connection and siding access, and including the purchase of the Whakatane Board Mills’ line. Having regard to the many uncertain factors the cost might well exceed the total sum of £2,400,000 above provided for. On this capital expenditure the annual administration, maintenance and capital charges, based upon an 'interest rate of 3i per centum, and •a loan term of 30 years,,are unlikely, in our opinion, to be less than £182,000. The proposal to provide 3,200 feet of berthage was based upon an estimated annual trade of 350,000 tons which figure was itself based upon the N.Z. Forest Service’s estimate of the maximum production of the Murupara project. We have already indicated our grave doubts as to whether and when this production Will be attained. Assuming, however, that 350,000 tons of trade were available a revenue of 10/5 per ton would be required to meet annual charges of £182,000. We do not consider that this amount of revenue could be secured save by recourse to rating or with assistance ■ from the State. There is nothing before us to suggest that the Whakatane Harbour Board’s area would willingly undertake further rating obligations, or that the State would undertake financial responsibility for its harbour proposals. We are accordingly of the opinion that the scheme is not economically sound.