When will the Port of Melbourne be sold?
To say the port will be sold is only right in a colloquial sense. Technically it is being leased for 50 years. Up until about 2066, a “buyer” will control the asset, collecting various port charges and rents. The charging regime will be subject to monitoring from the Essential Services Commission. The owner will also have to comply with existing environmental and safety laws. The timing of the sale isn’t yet locked in, but the transaction is most likely to happen later this year, or possibly in early 2017. What will it sell for?
Although it was never explicit, the former Napthine government factored about $5.3 billion into the bottom line from the sale. Despite this, Labor hopes to get at least $6 billion. In May last year, Treasurer Tim Pallas said he expected the sale price to be “appreciably larger” than the Coalition’s original estimate, with “very substantial” private sector interest.
The state government will use money from the port sale to remove 50 level crossings. Photo: Paul JeffersWhat is the money to be used for?
Before the 2014 election Labor trumped the Coalition, announcing it would be selling the port and ploughing the cash into its $4.5 billion program to remove 50 level crossing over two terms. Labor also hopes to access the Commonwealth’s asset recycling program. Under that policy, states who sell assets and reinvest the cash in productive infrastructure get bonus payments equivalent to 15 per cent of the sale price. That means Victoria could get as much as $1 billion extra out of the sale. Who wants to buy it?
We don’t yet know. As Australia’s largest container port, there is likely to be considerable interest, even with several other ports, including the Port of Fremantle, on the market. The privatisation is also likely to face a tough national security hurdle, with the federal government recently flagging new powers potentially allowing it to bar foreign governments from buying it. That follows alarm about the century-long lease of the strategically significant Port of Darwin to a Chinese company. What does it mean for congestion?
On the upside, cash from the sale will be used to remove 50 level crossings. That will have a dramatic impact on congestion, removing delays caused by boom gate closures and allowing more trains to run on the network. On the downside, the deal could extend the operation of the Port of Melbourne for years, or even decades, with the new owner likely to expand its capacity to extract the maximum value. Under the deal, a viable rail shuttle is still about eight years away. That means – in the short to medium term at least – more trucks moving containers to and from the city. What will it mean for the price of imported consumer goods?
Probably not much at all. Don’t worry, the price of a flat-screen TV made in China almost certainly won’t change as a result of this deal. For most of us, the Port of Melbourne privatisation won’t have an impact.
This story Administrator ready to work first appeared on Nanjing Night Net.