ALC and ACCC prosecute conditional case for asset recycling

Kilgariff calls for transparency as Sims warns of competition risks

ALC and ACCC prosecute conditional case for asset recycling
Rod Sims warns states against temptation.


With recent state election results raising questions on state government handling of infrastructure ownership, Australian Logistics Council managing director Michael Kilgariff has taken up the cudgels again in support of asset recycling.

In a speech to a Sydney conference on the issue, Kilgariff says the option is critical to assisting governments invest in productivity enhancing infrastructure.

"Properly done, the privatisation or long term lease of electricity, water and port assets could realise desperately needed funds for new infrastructure projects," he tells delegates.

"With the budgets of most Australian governments likely to be in deficit for the foreseeable future, it essential that all possible mechanisms to fund critical logistics infrastructure, including asset recycling, are continued to be pursued by governments."

The process rather than the sales and leases themselves was seen as the nub of the issue.

Kilgariff says it was clear from the results of the recent Queensland and Victorian elections that there must be full and complete transparency with the electorate to demonstrate the recycling of assets is in the community’s long term economic interests.

"Governments proposing some form of lease or sale of an asset must explain, firstly, the financial reason for the asset disposal and then clearly identify the public benefits that will accrue as a result the disposal," he adds.

While the logistics industry was a strong supporter or asset recycling, a number of preconditions should be met before a proposed recycling or sale of an asset proceeds.

"Any proposal to sell, or offer a long-term lease for any piece of infrastructure must possess a net positive benefit," Kilgariff says.

"It is also important that funds raised as a result of the lease or sale of infrastructure is in turn invested in productivity enhancing infrastructure.

"ALC also believes that any asset that is sold must represent value for money, and be sold for the right price and not at any price.

"Finally, ALC believes the sale or long-term lease of an asset should not be pursued to the detriment of competition and freight efficiency."

His intervention preceded one from the Australian Competition and Consumer Commission (ACCC), which questioned the possible state of competitive outcomes from incentive payments aimed at speeding the process up.

ACCC chairman Rod Sims warns in the Australian Financial Review against state governments being tempted to make as much cash as possible and instituting anti-competitive frameworks or inadequate regulation.

Asset recycling will be discussed at the ALC Forum 2015 on March 10-12 at the Melbourne Cricket Ground.  More information or to register can be found here.

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