Botany privatisation to bankroll key road projects

NSW will privatise Port Botany and use the proceeds to bankroll upgrades to the Pacific and Princes highways

By Brad Gardner | September 7, 2011

Port Botany will be privatised under a 99-year lease to bankroll upgrades on key freight routes, the Pacific and Princes highways.

NSW Treasurer Michael Baird, who handed down his first budget yesterday, is planning on handing over Botany’s assets to private hands by mid-2013 to scrape together the cash to meet a federal commitment on the Pacific Highway. The Port of Newcastle and Port Kembla will not be part of the deal.

Canberra has promised an extra $750 million to 2014-15 to continue upgrades as long as NSW matched it dollar for dollar. Baird says the government is determined to reach the figure.

He refers to the Port of Brisbane privatisation that netted $2.1 billion for taxpayers, saying it proves the benefits that can be realised. Botany’s assets include three container terminals with six container berths, which will rise to 11 when upgrades are completed next year.

"The introduction of a private operator at Port Botany will increase contestability and help drive further efficiency on the waterfront, which will in turn help to further develop the NSW economy," he says.

Roads Minister Duncan Gay says NSW will match funding up to $468 million to 2013-14, which is when the Federal Government’s road expenditure scheme, the Nation Building Program, expires.

The Budget outlines a $6.3 billion investment in transport in 2011-12, with almost $3.2 billion allocated to roads. Key projects to receive funding include the Pacific Highway, the Hunter Expressway and the Hume, Greater Western and Princes highways.

Another $200 million will be spent over four years on a road safety and congestion package, with $41 million allocated in 2011-12.

Budget papers say the $250 million slated for the Hume Highway will go toward bypasses at Holbrook, Tarcutta and Woomargama to prevent the need for trucks and motorists to travel down local streets. Ongoing work on the Pacific is expected to cut travel times while lifting road safety and freight efficiency.

The Maritime Union of Australia (MUA) has criticised the privatisation plan for Port Botany.

National Secretary Paddy Crumlin accused NSW Premier Barry O’Farrell of flogging off public assets for short-term political gain instead of developing long-term plans to increase productivity and services.

"Furthermore, Mr O’Farrell is selling public assets into a capital market which is currently experiencing severe decline. Amid the current global uncertainty, it’s doubtful there are sufficient funds for sustainable private sector investment in infrastructure," Crumlin says.

"Privatisation of essential infrastructure such as ports has been dismissed worldwide. The O’Farrell government has gone to the policy lifeboats in the first six months of its term."

But Infrastructure Partnership Australia has backed the government’s decision to divest itself of Port Botany. IPA CEO Brendan Lyon expects privatisation to return around $2 billion to taxpayers, which can then be used to invest in major infrastructure projects.

"The budget also points to a very compelling case for the privatisation of the state’s electricity business," he says.

"The sale of electricity transmission, distribution and generation assets would strengthen the budget by more than $50 billion and would be a game changer in terms of infrastructure investment."

The budget establishes advisory body Infrastructure NSW, which the government claims will improve the way infrastructure is assessed and delivered.

The group will be responsible for developing strategies and plans, reviews and evaluations, overseeing and monitoring key projects and coordinating funding submissions to the Federal Government.

The budget also sets up the Restart NSW Fund, which will be responsible for financing infrastructure projects, including roads. The Government will set aside 30 percent of funding for non-metropolitan regions. Infrastructure NSW will be responsible for recommending projects.

In delivering the budget yesterday, Baird announced a modest $718 million deficit for this financial year, before returning to surplus next year.

Treasury has revised down its gross state product forecast in 2011-12 from 3.5 percent to 2.5 percent, while GST revenue is tipped to be $395 million less than what was predicted in the mid-year review.

"The state’s output is expected to recover from a period of below trend growth in 2011-12 to above trend growth in 2012-13 based on the strengthening of private sector spending," Baird says.

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