COMMENT: The lease will help make a good port, a great port, and its proceeds will fund the removal of our 50 worst railway crossings, Victorian treasurer Tim Pallas writes.
Removing level crossings will create thousands of construction jobs and get Victorians home safer and sooner. It’s a boost for jobs, industry and our transport system.
The lease will make our port even better, increasing efficiencies and competitiveness, and maintaining Victoria’s position as the freight and logistics capital of Australia – good news for producers and manufacturers who export all over the world, and consumers who want affordable products.
A 50-year lease is proposed allowing the leaseholder to plan for capacity-expanding investment and providing future port land development flexibility.
The Essential Services Commission’s existing regulatory arrangements will be strengthened with the leaseholder to set prices in line with transparent principles.
Annual increases will be capped at CPI for at least 15 years to protect Victorian producers, manufacturers, other exporters and importers, and consumers.
To keep our supply chain costs competitive, capacity at the port of Melbourne needs to be optimised before a second port is built.
Industry has been calling for investment certainty, and we want to provide it.
The coalition’s KPMG report advises that developing the port of Hastings now would be “materially negative on a net present value basis over the life of the asset” and difficult to justify on a whole-of-state basis.
Victoria University puts the cost of developing the port of Hastings in excess of $12bn, casting doubt on it as a viable option.
Yet the opposition keeps prosecuting the case for Hastings even though their own ‘how to lease a port’ bible says it will lose money and warns of the costs and risks of the premature development of a second port.
Their report also puts the landside costs of the port of Hastings at more than double those of the port of Melbourne – a looming disaster for our exporters and hiking up costs for all Victorians.
The KPMG report calls for a lease of between 40 to 50 years. In line with this, Labor proposes a 50-year lease, allowing the leaseholder to plan for capacity-expanding investment and providing flexibility about future port development.
The lease arrangements clearly stipulate a 50-year lease and anyone who says otherwise is simply wrong.
There is no obligation on the government to extend the lease beyond 50 years. Any extension would need to be agreed between the government of the day and the leaseholder.
The opposition’s claims that blasting at the heads will be required are false. This is scaremongering – plain and simple; blasting at the heads hasn’t occurred for over 80 years.
Any future dredging of the shipping channels in Port Phillip Bay will continue to require the relevant environmental conditions and approvals.
The bill recently introduced into parliament, foreshadows a contractual regime should a second competing container port be required, to be negotiated with the preferred bidder – motivating the leaseholder to maximise the port’s capacity and minimise the need for a second, competing, container port.
This is a complex transaction. It isn’t easy, but it is right.
It’s a great example of asset recycling –unlocking billions of dollars from the port lease to plan and build vital transport infrastructure and making us eligible for significant funds through the Commonwealth’s asset recycling initiative.
Leasing the port of Melbourne to create jobs, fund the removal of Victoria’s 50 worst level crossings and make our port even better was an election promise – now the Andrews government is getting on with it.
This op-ed originally appeared in Rail Express sister publication, Lloyd’s List Australia.
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