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Thursday, 14 May 2015

Where's the Strategy on Freight and Port Sale?

https://au.news.yahoo.com/thewest/business/a/27918528/budget-delivers-record-deficit
The sale or long-term lease of Fremantle Port, announced in today's WA State Budget, casts a disturbing new light on what was already unseemly haste to get the Perth Freight Link underway. 

It was reported in February that detailed planning for much of the project, including the most difficult section from Stock Road to Fremantle Port, had not yet been done. Yet the Government is already calling for tenders on what, in the absence of such planning, must be a high-risk project for tenderers.

Now we can see why there is such haste - in addition, of course, to the Government's wanting to preclude the possibility of a new incoming government in March 2017 being able to cancel contracts as the Victorian Labor Government did for the East-West Link in Melbourne. The East-West Link was also a major road project with dubious justification and contracts entered into hastily just before an election.

If the Port is to be sold or leased, Perth Freight Link is effectively either an attempt to boost the price or a direct subsidy to the new port owners. 

In the absence of a business case for the Perth Freight Link, we don’t know for sure that boosting the price will cost more than it achieves – an indirect subsidy to the new owners – but it is highly likely. Tenderers for the Perth Freight Link project will, in any case, add a premium for the high risk of the project.

Similarly, tenderers for the Port will discount the price they are willing to pay for the risks associated with the Perth Freight Link - and it is entirely possible that a potential purchaser might prefer to place more emphasis on rail transport of containers from the Port, effectively diluting any value the Perth Freight Link would have.

Whatever the merits of selling or leasing the Port of Fremantle, the conjunction with the haste to get the Perth Freight Link project underway strongly suggests a lack of coherent strategy for freight not only at the Port but more generally. The continual delays in releasing the 'Moving Freight' strategy appear to be a result of the Government's lack of consistency and the resulting 'need' to avoid the embarrassment of a plan that its own actions undermine - as happened with the Public Transport Plan and Government's subsequent abandonment of MAX light rail (Stage 1 priority in the plan) in favour of an Airport rail link (stage 2 priority).

Written and Posted by Ian Ker, Convenor, STCWA

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