THE GREAT PRIVATISATION SWINDLE

Written on the 17 May 2010

THE GREAT PRIVATISATION SWINDLE

With bidding underway for the Port of Brisbane sale, the question now leads to how it will be managed? Customs logistics economist Martin Feil is against privatisation, but tells Brisbane Business News that if the Queensland Government is to sell, it needs to do so properly to establish the port as a national hub.

PRIVATISATION has been one of the great swindles of the last 50 years, as both federal and state governments have sold fundamental assets to overseas and local financiers at prices that disadvantaged Australians.

The most obvious flaw in the process has been the failure to transfer risk from the state to the commercial enterprise vehicle, and if the latter’s projections are wrong then it goes broke and risk reverts to the state. Recent examples include the Cross City Tunnel and the Sydney Airport rail link in New South Wales.

I have spent 40 years as a customs broker dealing with container carriers, operating customs bonds and I’ve seen my share of warehouses and empty container depots, working for large corporations involved with the import and export of merchandise goods.

Everyone down south knows that Queensland has a natural logistics advantage in imports and exports, that it is closer to the rest of the world. But it does not maximise its advantage and hasn’t been able to cement its position, often because ‘who you know’ type scenarios have led to contracts going to Sydney or Melbourne ports when they would have gone to Brisbane - if economic efficiency were the only factor.

Selling the Port of Brisbane potentially involves a lot more value for the people of Queensland than a $3.5 billion windfall gain in government revenue. The stevedores of Asciano and DP World have been excluded from the sale but it will be difficult to ensure that bidders close to them aren’t involved.

Shipping companies and port owners throughout Asia and Europe would be likely buyers and they are both historically and presently close allies of the stevedores and DP World in particular – the latter owns more than 50 ports around the world. Asciano has been struggling with a debt of $4.6 billion borrowed to buy Patrick’s stevedoring business from Toll but managed to raise $2 billion last year.

Queensland should be the point of entry and exit from the east coast of Australia, because the logistics industry is, in 2010, all about the duration of the supply chain. Extra days cost money and the major importers are heavily focused on cost savings in the supply chain. The politics, in Sydney particularly, are all about congestion in the face of inner city roads and housing, as well as a mirage of intermodal rail hubs that are at least 10 years away.

Shipping along the coast from Brisbane to Sydney takes two days, with a day at least in Botany Bay and another two further days to the Port of Melbourne, which can add five days to a voyage and another four to return to home port. There is no common sense in the pre-eminence of Melbourne as the largest container port in Australia The stevedores are more efficient there and the city has really managed to sell its port to exporters in contested regional areas.

Queensland needs to create a major intermodal east coast rail and a storage and repackaging facility close to the Port of Brisbane. There has to be an open access, shared services rail connection at the terminals which rails all containers straight out of the port and connects to rail services down the east coast. The intermodal terminal can’t be owned by the stevedores or a conglomerate of shipping companies.

The Federal Government’s Auslink policy has languished for the past eight years, with the central government argument that rail had to increase its land transport market share from 20 per cent to 40 per cent by 2020. Billions of dollars were spent improving the speed of the rail link from Brisbane to Sydney but did nothing about the other major problems moving containers from ship to land and from the port to the importers’ warehouses.

Is it too late for the Queensland Government to extend the terms of its tender? A continuous income stream and employment from a major national business function would probably be worth a lot more than $3.5 billion in the long term.

Don’t sell the farm Anna Bligh. Make sure that the Port of Brisbane becomes the heart of intermodal movements of containers in Australia. You have the natural advantage now, so all you need is the will to make it happen.


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