Port of Melbourne to be leased for 50 years

The Port of Melbourne will be privatised on a 50 year lease
in a move that will earn the Victorian Government $5b – $6b.

The ABC reports that the move could also make the Government
millions more through the Federal Government’s asset recycling scheme.

The Victorian Government would use the windfall to fund
other transport projects, such as the removal of level crossings on the state’s
rail network.

As the AFR reports, privatisation of the port would mean that
the buyer would be entitled to compensation if a future government wants to
build a second container terminal, a prospect that has been much discussed by
former governments.

Victorian Opposition spokesman Michael O’Brien criticised the
plan and claimed that it would kill the prospect of a second terminal in order
to make some fast money.

The Government requires the support of the Opposition to
pass the legislation in the Upper House. The Coalition wants a 30-40 year
lease, while the Greens have rejected the idea on the grounds that it would
create a monopoly and could lead to higher costs for exporters, such as local
manufacturers, using the port.

However, Palls said the Government would ensue that doesn’t
happen by capping annual tariff increases at CPI levels for at least 15 years.

The Australian Industry Group (AiGroup) cautiously welcomed the plan.

“It makes clear sense to have these assets managed by the
private sector and for the capital the state has tied up in these assets to be
released for other purposes,” Ai Group Victorian Director, Tim Piper, said
in a statement.

“Ai Group also welcomes the involvement of the
Victorian Essential Services Commission in the oversight of prices paid by port
users. This, together with the capping of price increases in line with the
Consumer Price Index, is a critical protection for the state’s businesses and
consumers.

“However, industry is cautious of suggestions that some
port prices will not be subject to a CPI cap; that long-term restrictions will
be placed on the emergence of potential competition from new ports; and that
some price caps will have a finite life.”

Image: Port of Melbourne