Australian Politicians Squabble Over Port Melbourne Sale

Port of Melbourne

By Reuters 2016-02-23 12:35:30

Two years after it first flagged a sale, Australia's Victoria state on Monday threatened to bypass parliament to privatize the Port of Melbourne, the nation's biggest container port, if lawmakers could not agree to sale terms.

Victorian state Treasurer Tim Pallas said if the Labor government and Liberal opposition cannot agree to sale terms by Thursday he will use special government powers reserved for large state-owned infrastructure divestments to enable a deal.

"We've got a mandate, we're implementing it, make no mistake. Thursday is a rock hard deadline," Pallas told reporters.

The prospect of sidestepping parliament to push through a sale highlights the extent to which political headwinds have hampered a A$100 billion ($72 billion) plus program of public asset sales being used by Australian federal and state governments to cut debt and fund capital works.

The Port of Melbourne sale, which local media have said is expected to fetch A$6 billion, was first proposed in March 2014 by Victoria's then conservative Liberal government. Since then the state has had a change of government and a lengthy public inquiry into the divestment.

Pallas's Labor government does not have control of the state's upper house where opposition lawmakers disagree with Labor's sale terms. Labor wants to include compensation if another operator builds a rival port within 50 years. The opposition believes the compensation should cover just 15 years.

"What we can't do is go against the advice (that) you must have a compensation regime, you must guarantee the value of the asset you are selling, and you must make sure the private sector ... can have the certainty that they can invest over time," he said.

Investors from China to Qatar are flocking to Australian infrastructure because it is seen as well-regulated and predictable, a reprieve from volatility in commodity and equity markets. In November, New South Wales sold an electricity network to a global consortium for A$10.3 billion.

But local politics have presented obstacles.

In 2015, Queensland voted out its government after one term based on a policy of selling infrastructure.

The same year, Northern Territory created a political backlash by selling its Port of Darwin to interests linked to the Chinese military, setting off a national government review of the processes by which foreign asset purchases are approved.