Despite some concerns, industry overall has welcomed the leasing of NSW ports Botany and Kembla to the NSW Ports Consortium
By Anna Game-Lopata | April 16, 2013
Industry overall has responded positively to the successful leasing of NSW ports Botany and Kembla to the private NSW Ports Consortium.
The NSW government last week announced the successful award of the 99-year lease for $5.07 billion.
The government says the net proceeds of the transactions will be channeled into the state’s infrastructure projects including West Connex, and the Pacific and Princess Highways.
But the Freight &Trade Alliance (FTA), a body advocating for Australian importers and exporters says the deal could result in increased rates
for incumbent tenants at bulk liquid berths and container terminals.
“As per the experience at other ports subject to privatisation, the potential exists for the consortium to increase its prices,” says FTA Director Paul Zalai.
“Industry and public concerns about privatisation centre on the downstream implications
of increased petrol prices and fees associated with international trade through the ports.”
Zalai also calls for a commitment from the new port operators to follow through on
the Port Botany Landside Improvement Strategy (PBLIS).
“PBLIS has significantly reduced truck queues, delays to deliveries and waiting time detention fees,” Zalai says.
“We need to know how this important reform initiative will be managed under the new port arrangements to ensure that we build on the results achieved to date.”
On the pricing issue, Zalai concedes assurances have been received by the NSW Treasurer Mike Baird that safeguards are in place.
He says the consortium, comprising
Industry Funds Management, Australian Super, QSuper and Tawreed Investments, will have to notify the government of any charge increase.
“This aims to allow the minister to seek further detail and/or refer the matter for consideration by the Independent Pricing and Regulatory Tribunal,”
Zalai says.
“In the event of a pricing dispute, avenues also exist to address it through the National Competition Council under Commonwealth legislation.”
Despite his concerns Zalai
says the FTA acknowledges the rationale behind privatising Port Botany and Port Kembla.
“Privatisation will allow the NSW government to gain much needed revenue for infrastructure and also provides potential benefits for commerce,” he says.
“It is envisaged that the new port operators will focus on efficiency gains through better use of existing assets and co-ordination of resources.”
Meanwhile peak bodies the Australian Logistics Council (ALC) and Infrastructure Partnerships Australia (IPA) have strongly welcomed the news.
“We are particularly encouraged by the involvement of Australian industry super funds,” says ALC Managing Director Michael Kilgariff,.
“The involvement of Australian super funds demonstrates the industry’s willingness to invest in productive infrastructure assets which have stable, long-term returns.
“It also sends a message to governments they should continue focusing on the identification of infrastructure assets that are appropriate to be transferred to the private sector as a means of raising much needed funds to boost national freight efficiency.”
Kilgariff says it is clear there is strong market interest in investing in assets.
“I encourage other governments to consider which of their assets could be sold or leased in a similar manner to improve national productivity,” he says.
He says the ports transaction also highlights the important work the Infrastructure Finance Working Group is undertaking to develop strategies to further encourage private investment in nationally significant infrastructure.
“ALC encourages both sides of politics to support the ongoing work of the Infrastructure Finance Working Group, particularly its efforts to encourage the $1.4 trillion super industry to invest in local infrastructure projects,” he says.
Kilgariff
also calls on the NSW Government to maximise the amount it invests in critical freight logistics projects.
“Using the funds from the lease of these two ports for freight logistics projects, which have passed rigorous cost benefit analysis, will help drive further efficiencies along the supply chain and reduce business costs which can be passed on through to consumers,” he says.
Infrastructure Partnerships Australia
adds the “excellent sale price” for the two ports will allow the state to make meaningful inroads into tackling its substantial infrastructure backlog.
“This sale will prove a win for taxpayers, commuters and the state’s freight sector” says IPA Chief Executive Officer, Brendan Lyon.
Lyon says commercially mature, high quality assets like Port Botany are better suited to private sector ownership.
“The recent negative credit outlook from rating agencies reinforces the need to sell assets and reign in spending,” Lyon says.
“Governments cannot just print money to fund new projects, like households and businesses they have to live within their means; and if we want more infrastructure, we have to find ways to fund it.
“Recycling mature assets to invest in new infrastructure is a sensible approach that will pay dividends for NSW.”
“Industry congratulates the NSW government on this excellent outcome which will give the public confidence, should the government decide to privatise its circa $35 billion transmission
and distribution assets.”