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Joe is a fresh face in the industry, having joined CM six months ago. Although he writes on all subjects, he has a particular interest in environmental regulation of shipping and in the growing African container terminal market.

Is the privatisation of the Port of Melbourne really a done deal?

Is the privatisation of the Port of Melbourne really a done deal?
The Port of Melbourne is being fought over in the State parliament Credit: David Wallace

In the container industry and in Australian politics, it seems to be accepted that the Port of Melbourne will be privatised by the State of Victoria.

This view has been reinforced by comments such as those by Australia’s deputy Prime Minister Warren Truss, who told the International Transport Forum yesterday that “the Port of Melbourne is about to be sold to the private sector”, adding controversially that he expects a “really big price”. Incidentally, this comment may anger terminal operator DP World who would be forgiven for thinking that the big price is coming at their expense.

Anyway, the confidence over privatisation seems to sit uneasily with a quick look at the make-up of the Victorian parliament and the Twitter feeds of Australian politicans.

While the centre-left Labor Party controls the lower house, the upper house (the legislative council) is split very evenly. Labor has 14 seats, as do the main opposition, the centre-right Liberal Party. On top of this, the Green Party have five, the Liberals’ right-wing allies the National Party (whose federal leader is the aforementioned Warren Truss) have two, the shooters and fishers party (only in Australia!) have two, the sex party (we’ll brush over that one) has one, as do the Democratic Labor Party and the Local Jobs party.

So Labor needs the support of either the Liberals or the Greens. The Green Party oppose private monopolies on principle and its leader Greg Barber said: “This is probably our last piece of really critical economic and transport infrastructure and I can’t believe we’d be putting it in some private company’s hands.”

The Liberals have issued similarly strong anti-Labor statements on the issue. The State’s Liberal treasurer, Michael O’Brien, tweeted a photograph of the board game Monopoly with the caption: “I know that Labor socialists love monopolies. Doesn’t mean the public does.” He added: “This is really about Labour potentially sacrificing the interests of Victorians for the next fifty years in order to make a quick buck.”

Hence if the Greens and Liberals are opposed, the plan has no chance, why is everyone acting like it’s going to happen? Perhaps the Liberals’ opposition is not as strong as it seems. The Greens’ Greg Barber tells me that, despite O’Brien’s strong words, the Liberals are “on the fence” on the issue.

The playground insults and board-game jibes may be making a fairly minor difference of opinion look like much larger one. In practice, the differences between the two main parties seem to come down to two things. Labor wants a 50-year lease, the Liberals want a 30-40 year lease. Labor wants a stipulation in the lease which would guarantee compensation for the operator if a second container terminal in the area was built before the Port of Melbourne reaches capacity. The Liberals oppose this, saying it would effectively “kill off” hopes for a second container terminal in the next half-century.

These differences of opinion are not insurmountable so I suspect the conventional wisdom is right after all. Labor and the Liberals will huff and puff and barter and compromise and the privatisation will go ahead, with a lease of somewhere between 40 and 50 years.

At Container Management, we’ll be keeping a close eye on the story so subscribe to our newsletter and follow us and me on Twitter.

About Joe Lo

Joe is a fresh face in the industry, having joined CM in July 2014. Although he writes on all subjects, he has a particular interest in environmental regulation of shipping and in the growing African container terminal market.