Call for Upper House Inquiry into Ports Legislation - and Transparent Tender Process

The case 'for' privatisation remains dubious, with calls for an Upper House Inquiry and transparency in the tender process. Dr Robert Carr writes.

At the Wollongong Town Hall forum two weeks ago (see short video here), the New South Wales Government had - and lost - an opportunity to sell the merits of its privatisation plans to the public. Many were stunned at how lack lustre the case for privatisation really is – no financial projections or feasibility studies had been prepared by the Government’s speakers, nor any clear view of its economic position to support the plan.

With 10,000 anti-privatisation petition signatures under its belt, today the Save Our Ports Coordinating Committee wrote to NSW parliamentarians, calling for Members to consider an Upper House Inquiry into the Ports Assets Bill before it passes into legislation.

The Committee also raised questions about the transparency of the Expressions of Interest (EOI) process for potential tenderers of the lease of Port Kembla. Concern about the tender process emerged after a member of the local community was refused a request to receive the EOI information ‘pack’.

The Treasurer Mike Baird's response, received 13^th November 2012, read more like an exhibit from the current ICAC ‘Rum Corps’ investigation than a credible and impartial process. Baird says:

"I understand that Morgan Stanley, Government's financial advisor to the transactions, has already advised [the inquirer] that the EOI is intended to be distributed only to those parties that are genuinely seeking to participate in the transaction process. This response still remains current and, on this basis, the document is not a public document."

Mr Baird's choice of phrase - "genuinely seeking" – ought to raise a few eyebrows; the Treasurer’s response suggests that the Government is culling applicants before they receive an application on the basis of who they are rather than the merits of what they submit.

Parliamentarians should not only reject the Ports Access Bill outright, they should seek an Amendment to the Bill that an Inquiry take place into the Bill’s legal, moral and economic implications.

Such echoes calls made previously by the local community and Wollongong City Council. At the Save Our Ports rally at Port Kembla Harbour in August 2012, around 400 residents passed nine resolutions. Resolution 9 was a call for a parliamentary inquiry “before any fixed decision is made”. Wollongong City Council has since passed a motion seeking a Parliamentary Committee before any fixed decision about the Ports is made. There has been no reply by the O’Farrell Government to either request.

So what do we know about the privatisation plans? One argument the Government has put forward is that the state budget is in deficit. The NSW Auditor since found that the O’Farrell government had misplaced $1 billion. The Government’s case that it needs to privatise state assets to put the budget back in the red is simply untrue.

We also know that privatisation will deprive the state of a revenue stream – for spending on public services, health, education and roads - for our long term future. By some estimates, the lease of Port Kembla is set to deprive the state of $50 million annually over the 99 period of the lease (this does not include growth in income due to extensions of the port and projected increases in trade). The Government’s proposed lease price of $500 million is evidently a dud deal, short changing estimated income returns to NSW by $4.5 billion.

Economist Graham Larcombe also made a strong case at the Town Hall forum to show that the NSW Government - which has stated privatisation will increase the efficiency of the ports - is actively perpetuating such a myth contrary to economic research.

Bizarrely, the Port Assets Bill will privatise the profits - but the taxpayers will retain the risks and pay for the costs and liabilities. The public will retain the risks of owning the asset (including environmental), while the leasee will coup only the profits. It makes no business sense to give away the profit-making part of an asset, but retain the risks of owning it.

The Government has proposed it would allow Port Kembla to be double-badged with Port Botany as well. If Port Botany and Port Kembla are leased together to the same (potentially multinational) company, such a move is anti-competitive and should be referred to the Australian Competition and Consumer Commission (ACCC) by the Upper House Inquiry.

Community opposition to the privatisation is widespread and growing. The feeling across our region is that these ports must remain in public hands. That members of the public are denied access to the EOI indicates that the NSW Government, through its agency, has at best fostered an opaque environment around this process, and at worst may have compromised the entire process through its actions.