Thursday, 28 July 2016

Another blow for Australian Infrastructure Developments: ACCC Chair reveals port privatisations not in the nation's best interests

Australian Infrastructure Developments Pty Ltd and its shadowy backers face more than a Lower Clarence community determined to fight its scheme to industrialise Port of Yamba situated in the high environmental value Clarence River estuary.

Now it has been revealed that its desire to extensively expand and privatise this small domestic port will in all likelihood increase freight costs for the Murray-Darling Basin farmers, graziers, agri-businesses and mining corporations that are supposed to be its future customers.

Financial Review, 26 July 2016:
The head of the competition regulator has called out governments for blatantly structuring asset sales to maximise profits at the expense of consumers and businesses.
Australian Competition and Consumer Commission chairman Rod Sims said he had been a strong advocate of privatisation for 30 years because he believed it enhanced economic efficiency but he now believed "people in the street" who oppose privatisation because it raises prices had it right based on recent port sales in NSW. 
He said he was now "almost at the point of opposing privatisation" because state and federal governments were becoming increasingly blatant about structuring sales to maximise proceeds at the expense of competition.
"I am getting more exasperated. I just think governments are more explicitly now privatising to maximise the proceeds - including the Commonwealth," he said. 
"They are explicitly saying the reason they don't want to do this or this is that it'll damage the proceeds they are getting. They're not even playing the rhetorical game anymore. 
"I see it getting worse. I think a sharp upper cut is needed in this area. That's why I am saying, 'let's just stop the privatisations'. It is increasing prices - let's just call it out." …..
Mr Sims said ports privatisation was the best example of the approach that had turned him off privatisation as a policy. 
The ports of Botany and Kembla had been privatised together to limit competition, a big debate was under way in Victoria about making sure the Port of Hastings would be a competitor to a privatised Port of Melbourne in future, and "the same battle" was being waged over the Port of Fremantle, where  the WA government wants to give the buyer a right of first refusal over a future outer harbour port. 
The ACCC chairman last month criticised the way Port Botany was privatised, saying price monitoring of unregulated monopolies was ineffective. But this is the first time he has gone so far as the call a halt to sales of public assets. 
Mr Sims said he was less concerned about the NSW government's power poles and wires privatisations because the state has an independent pricing regulator. The NSW government has applied to the Australian Energy Markets Commission to draw out until 2024 an annual price hike of up to $520 per household that was scheduled take effect from July 2017 to avoid a "price shock" for consumers. 
Mr Sims said he was also concerned that monopoly ports were being privatised without any pricing regulation, leading to "lovely headlines in the Financial Review saying 'gosh what successful sales, look at the multiples they achieved'."
"Of course they bloody well did. The owners have factored in very large price rises because there's no regulation of how they set the prices of a monopoly. How dopey is that?" he said.  
'It's damaging our cost structure'
"I think it's a serious issue facing Australia. I think it's damaging our cost structure considerably. 
"And when you meet people in the street and they say, 'I don't like privatisation because it boosts the prices', and you dismiss them, no no, they're right. Recent examples suggest they're right." 

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