Colin Barnett will sell WA’s biggest container port, Fremantle, to raise funds for rail projects through difficult financial conditions.
The premier dropped the bombshell news during Thursday’s state Budget, saying that in the face of ballooning net debt, a collection of state-owned assets would be privatised.
Fremantle, which handles 700,000 TEUs* each year, is the top asset on the list.
“The decision to pursue a sensible program of further asset sales will enable the Government to build new infrastructure to support future growth without putting further pressure on the State’s finances,” Barnett explained.
State treasurer Mike Nahan forecast a net operating balance deficit of $2.7 billion for 2015/16, leaving the state with a net debt of $31 billion by the end of June next year.
As well as Fremantle, Nahan confirmed WA would sell the state-owned TAB, the Forest Products Commission and other assets.
The treasurer said the Government was responding to the “perfect storm” of economic conditions which has led to a $3.9 billion revenue fall in 2015/16 (down 13%), and a forecast $10.21 billion decline between 2014/15 and 2017/18.
“Commodity prices have plummeted, our share of GST revenue has been driven to record lows and softening economic conditions have directly reduced all other major sources of State tax revenue,” Nahan reasoned.
The Federal Government recently announced a $499 million packet would be delivered to relieve the state, but that funding was directly assigned by the Commonwealth to a selection of road projects around WA.
At least some of the funding from asset sales, however, would be directed to rail projects and new rolling stock, Nahan said.
“This is a good outcome for Western Australia,” the treasurer insisted.
“We will build the Forrestfield line, we will get the rolling stock and we will reduce debt.”
Currently, just 14% of Fremantle’s containers are handled by rail.
But the port corporation has a long term goal to lift that to 30%, with rail considered more economically and socially sensible.
And if history is any indication, the privatisation of a commercial port like Fremantle should accelerate commercial improvements like that one.
Fremantle could be sold in a package deal with the nearby Kwinana Bulk Terminal, which currently is listed under the same port authority.
Kwinana was put up for sale in 2014, along with the Utah Point bulk terminal at Port Hedland in the Pilbara region.
The Utah Point sale is reportedly off the cards, however, due to the struggles of primary customer Atlas Iron, and the dip in the price of iron ore.
*TEU refers to a twenty-foot equivalent unit, a classification used to give a single measurement for a number of shipping containers, which are commonly either forty, or twenty feet in length.