The Victorian Labor government's decision to privatise Melbourne Port, the last significant public asset in the state, through a 50-year lease has drawn little public opposition.
One reason is that the port is out of sight to most people in Victoria. Another is that the government has tried to soften opposition by offering to remove between 50 and 100 level crossings through the proceeds of the sale.
The government proposes to put the estimated $5 billion yield from the sale into an infrastructure fund, together with income from the sale of public lands freed through grade separation and the asset recycling grant from the federal government.
The federal government's Asset Recycling Fund is little more than a publicly-funded bribe to encourage state governments to sell public assets to finance “productive infrastructure”. Whatever amount the Andrews government receives for the port, the federal government will top it up with a 15% grant through the fund. The ACT government received $60 million in February after selling public lands and buildings in Canberra.
The deputy chairman of the Victorian Channels Authority Michael Dowling said: "The proposal to lease out the current Port of Melbourne for 50 years to fund rail and road infrastructure in the east and south-east of Melbourne is the greatest fraud ever conducted on the people of the west of Melbourne. It locks the west of Melbourne into guaranteed congestion and pollution for half a century."
While there is the obvious sweetener of speeding up car traffic and improving train frequencies, the people of Victoria are being swindled by this sale. It makes little economic sense to sell a profitable public asset to finance car-oriented transport measures. Given its AAA credit rating the state government could easily raise funds at low interest rates which could be offset through improved efficiencies.
Between 2007 and 2009 the Victorian government spent $350 million to remove a level crossing on Footscray Road. It was justified as part of a plan to build a direct freight rail link from Swanston Dock to three proposed inland container ports at Somerton, Altona and Lyndhurst.
The upgrade of the Swanston Dock rail terminal is estimated to cost $58 million, but has not been undertaken because of the privatisation plan. If built, the rail link will remove an estimated 3500 trucks from the road every day. Instead the government is spending $ 1.6 billion on upgrading Webb Dock which does not have train access because an earlier government sold the rail access to the dock as a part of “development' of Fishermen Bend.
Melbourne port is the base for more than 30% of Australia's shipping, the sole port for ships going to Tasmania and accounts indirectly for nearly 8% of the state's gross income. The privatisation is a recipe for growing conflict. Even with the expansion of Webb Dock, the port is expected to reach capacity 10 to 15 years and inner city residents and commuters will face increased truck traffic and the associated problems of noise, congestion, pollution and road deterioration.
The government has plans to develop another port at Bay West near Geelong after Melbourne port reaches capacity. But the plan is uncertain because the bay could be too shallow for big ships and the government is unlikely to develop another port to compete with the near monopoly of Melbourne Port once it is privatised.
Socialist Alliance's Moreland councillor Sue Bolton observed that environmental regulation would inevitably be weakened after privatisation and state governments could be under increased corporate pressure on issues such as dredging.
Geelong trades hall secretary Tim Gooden also raised the issue of regional business being more affected by rising costs after privatisation. Gooden pointed out that no private corporation would buy the port unless it was profitable. But if it were kept in public hands the profits from the port could be used to fund infrastructure development.
Gooden's argument is supported by government reports that reveal the port made a profit of $72.8 million in 2014. Once the mandated 15-year period of CPI-linked price increases expires, the port owners can raise prices at will and use their monopoly over a strategic asset to squeeze profits.
That this is not an idle threat is borne out by past experience with privatised ports in Australia. The Newcastle Port, which was privatised under a 98-year lease, increased prices by an average of 40% last January.
A Maritime Union of Australia submission to the Legislative Council Port of Melbourne Select Committee Inquiry into the Proposed Lease of the Port of Melbourne shows that ports in South Australia leased to Flinders Ports for 99 years for a price of $ 186 million, yielded an after-costs profit of $22 million. While the Port of Brisbane leased for 99 years at $2.1 billion yielded a net profit of $25.2 million.
Governments are handing over vital public assets to corporations who recover their investment in five to 10 years but gain income from them for 90 years or more. Income that could be spent on improving public services, expanding public transport and fighting climate change, instead lines the pockets of corporate interests for merely squatting on a piece of vital infrastructure.
Kenneth Davidson, writing in the Age said: "Victoria is facing an infrastructure fiasco rivalling the desalination plant and the East West Link."
The Daniel Andrews government has managed to escape public opposition to its proposed lease of Melbourne Port by offering the bribe of easing traffic congestion in exchange for the sale. But what Andrews is doing is essentially asking people to sell their home to upgrade their car. One might end up with a swanky car, but then there is the question of paying the rent.