Darwin port lease uncertainty has industry uneasy

By: Rob McKay

NTRTA sees the past shining an unkind light on privatisation while lawyers underline need for clarity on regulatory powers

Darwin port lease uncertainty has industry uneasy
The Port of Darwin.


While aware of the port lease heat generated in the south, the Northern Territory trucking industry views the Port of Darwin’s outlook with mounting concern.

As a public meeting looms on the NT Government’s plans, NT Road Transport Association (NTRTA) executive officer Louise Bilato indicates there is some trepidation over potential 99-year lease given past experience.

"We certainly don’t want any diminishing of the asset by a private operator," Bilato tells ATN.

"The Northern Territory Government have in the past not been good at selling off our assets in a way that actually benefits the community in the long run – and our rail is a good example of that."

Rate levels and competition concerns, particularly relating to the vulnerability of smaller transport operators, rate highly amongst concerns fed, not least, by a possible 767 per cent rent hike in the Port of Melbourne.

Smaller operators are a feature of the size of the NT market and tend to rely on several income streams, including port runs, to supplement incomes as seasons change.

Another uncertainty relates to livestock exports if a private operator decides to seek alternative uses.

"We do need it to be very carefully thought through because the Northern Territory doesn’t have that many ports," Bilato says.

She adds that, while not seeking to be a needless impediment to progress, the timing and the speed of the port move suggests to association members that, like the privatisation of the Territory Insurance Office, it could become a more expensive exercise than thought.

Meanwhile, legal experts at Corrs Chambers Westgarth have shone a light on the lack of clarity on what Darwin’s port situation might eventually be.

Their comments come five weeks after the Senate sought to examine how the Northern Territory Government was going about the process.

In analysis aimed at prospective bidders, lawyers Thomas Jones and Sarah Godden point out that the Territory’s Ports Management Bill 2014 vests "a significant amount of discretion" in Northern Territory Utilities Commission over regulations and, potentially, to set up front charges and terms and conditions.

The Commission can regulate: prices for goods and services; standards and conditions of service and supply; licensing; market conduct; and "other economic regulatory matters".

Depending on how the Commission approaches its role, this could be more intrusive than that relating to, for example, Port Botany, "although it is not clear from the draft Bill whether price regulation is intended to displace commercial agreements".

"If the Government elects to limit the categories of regulated services to those in, Victoria, the risk faced by the port operator will be significantly less than were it to regulate the entirety of services at the port," the lawyers say.

"As a result, a potential bidder would be well advised to obtain assurances regarding the proposed regulations."

The lawyers warn that review rights on Commission determinations are very limited and its investigative powers are broad, though "the mere existence of those powers does not necessarily mean that the Commission will routinely exercise them as a matter of practice".

They advise interested parties to consider lobbying for:

  • a provision to clarifying that price regulation imposed by the Utilities Commission does not displace a private agreement made between the port operator and an access seeker
  • an additional provision which reaffirms the Government’s preference for light handed regulation which appears to be intended
  • guidelines be issued in draft prior to the sale, to give potential investors more certainty.

In his second reading speech on the Bill, NT chief minister Adam Giles confirms a long-term lease is proposed.

"This will provide the private sector with secure tenure and confidence to invest in the ongoing development of the port to meet the growing freight demand across all sectors of the economy," Giles adds.

"The goal of this government is to make the Port of Darwin a cost effective alternate to southern ports which are becoming congested and have serious transport logistic issues.

"This is why we are also focusing on ensuring we have appropriate transport infrastructure to make the Port of Darwin a viable alternative for the ever increasing resource developments across Australia."

He goes on to state that the framework will "improve efficiency of port operations and, in turn, increase revenue generated from the port".

"Where there is evidence of inappropriate pricing behaviour, the government has the capacity to step in to regulate prices," Giles says.

"This approach is considered to deliver an appropriate balance between commercial certainty for an investor and a level of independent pricing, oversight and scrutiny."

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