The Port of Melbourne.
The Victorian Government has successfully leased the Port of Melbourne for more than $9.7 billion.
The Lonsdale Consortium, comprising of the Future Fund, QIC, GIP and OMERS signed a lease of the port’s commercial operations for a term of 50 years. The lease, worth more than $9.7 billion, reflects strong bidder interest and the port’s value, as the biggest container and cargo port in the country.
Ten per cent of lease proceeds will be invested in regional and rural infrastructure projects, totalling more than $970 million.
A new $200 million Agriculture Infrastructure and Jobs Fund has also been established to drive economic growth in our regions, boost exports and support Victorian farmers from paddock to port.
The government will work with the Commonwealth over the coming months to finalise the additional 15 per cent that Victoria is entitled to under the Commonwealth’s asset recycling initiative.
The state will retain responsibility for the Harbour Master, Station Pier, relevant safety and environmental regulation, waterside emergency management and marine pollution response.
During the lease term, Lonsdale will maintain access to public walkways and bike paths for community use.
Commercial and recreational vessels’ access will not be affected by the lease, with the port being returned to public hands at the end of the lease.
Infrastructure investment critical
The long-term lease of the Port of Melbourne for $9.7 billion must be accompanied by significant investment in road and rail infrastructure linking the port to the wider transport network to maximise its economic contribution to Victoria and the nation.
“Now that an agreement has been reached on the long term lease of the Port, ALC encourages the State and Commonwealth Governments to prioritise infrastructure investment to the port to ensure it can meet its economic potential,” said ALC managing director Michael Kilgariff.
“This includes an appropriate investment of the $58 million set aside for the port rail shuttle, which has been on hold while the Port lease transaction was being finalised.
“An appropriately regulated port, supported by efficient road and rail links, is vital to sustaining the Victorian economy and driving productivity improvements across the supply chain.
“Today’s confirmation that the Port has been leased for 50 years to a consortium comprising of the Future Fund, QIC, GIP and OMERS provides certainty to the logistics industry and unlocks significant funds for reinvestment.
“ALC looks forward to the Government prioritising logistics infrastructure investment from the proceeds of the sale, and from the 15% dividend to be provided to the state under the Federal Government’s Asset Recycling Scheme.
“Infrastructure Australia has predicted the volume of containerised trade going through our ports and airports will increase by 165% from 2011 to 2031.
“This significant growth underscores the need for all governments, including Victoria, to invest in appropriate national infrastructure to ensure our landside infrastructure can keep pace with waterside growth.
“This investment must incorporate all modes of transport, including short haul rail, which needs to play a greater role into the future as our ports continue to move greater number of containers each year.
“With the Victorian Government securing a record $9.7 billion windfall from the Port of Melbourne lease, now is the time to get Victoria’s supply chains right by investing in the state’s logistics infrastructure to maximise the port’s future potential,” he concluded.
Industry cautiously positive
The Container Trade Alliance (CTAA) has congratulated the winning consortium led by QIC, and looks forward to working with the new Port Management team to realise landside productivity improvements for containerised trade through the Port of Melbourne.
“CTAA will be working with our Alliance companies and their regional export customers to ensure that the funds allocated for regional & rural agricultural infrastructure and job creation truly assists exporters to be more productive and competitive in accessing the Port of Melbourne. This should include much needed road infrastructure investment to remove the impediments to Higher Productivity Freight Vehicles (HPFVs) delivering regional exports to the Port at higher mass,” CTAA director Neil Chambers said.
… and negative
Meanwhile, ANL managing director John Lines wrote in an online opinion piece:
“It is good that the Port of Melbourne lease process has been decided but we have grave concerns over the price paid and the impact of future price rises on not only direct users of the port but the broader Victorian community.
“Port and other State asset privatisations are a tax by stealth which will be paid over decades to come. If we look at the numbers for Melbourne and do some very simple calculations, the port made EBIT in 2014/15 of A$121 million which at the sale price of A$9.7 billion for a 50-year lease, is A$194m per year just to get their money back let alone make a good investment return.
“So the only way is up for prices.”
