Tuesday, June 30, 2015
A Victoria University infrastructure specialist is warning political posturing could see importers and exporters pay higher prices to use port facilities around Australia and could leave taxpayers to foot the bill for potential compensation payments.

Maritime logistics expert Peter van Duyn from VU's Institute for Supply Chain and Logistics says recent plans to privatise many Australian ports have become very messy.

"In Victoria, despite previous bipartisan support for privatising the Port of Melbourne Corporation (PoMC), the opposition is now blocking the current form of legislation to authorise a 50-year lease," Mr van Duyn said.

"That could potentially leave a multi-billion dollar hole in the state budget."

Mr van Duyn explains that in a bid to raise the sale price, PoMC served a rent review notice on one major lease holder in the port, container stevedore DP World, allegedly asking for a rise in excess of 700%.

"That's caused a howl of protests from other lease holders and numerous importers and exporters," he said.

The Tasmanian government relies heavily on the PoMC and has struck a deal with Victoria to protect Tasmanian port users from fee rises, complaining a price hike would undermine its competitiveness. In New South Wales, the Port of Newcastle pushed access prices up an average of 40% after its recent privatisation.

The Northern Territory Government recently released the sale/long term lease documents to the market for the Darwin Port Corporation. In an apparent move to raise its sale price, the corporation announced that as a result of a government 'review,' very significant increases in port fees were introduced, which include a new fee of $2,000 per ship call, an increase of 15% to daily berth rates, and a 30% increase in wharfage rates.

Mr van Duyn said the Western Australia government has announced the port of Fremantle has "put out the 'For Sale' sign, too".

"No word yet on potential price increases, but watch this space," he said.

Mr van Duyn acknowledges that new ports are necessary to cope with increased freight flows, but says they would compete directly with existing ports.

"That will make it extra hard for the sellers and bidders to determine a fair price for these attractive infrastructure assets, under what conditions a competing port may be established, and whether potential compensation should be paid to the incumbents.

"Overall, this is a messy picture," he said.
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