Plans to privatise Australia’s Port of Fremantle have made a step forward after legislation enabling the sale of its long-term lease was introduced to Parliament last week.
The endeavour is not guaranteed to succeed, however, as Western Australia’s Liberal leadership needs support from opposition parties to pass the bill.
Specifically, the state’s government has to garner at least two votes from the Nationals, Greens, Labor or the Shooters & Fishers parties in addition to receiving backing from all Liberal Party members of the Legislative Council. The Nationals and Labor have already said they were against the port privatisation.
Despite so, the Nationals voted to allow the first reading stage to go ahead last week.
The government hopes to finalise the proposed leasing of the port in the second half of 2016, a policy it argues would help raise money to reduce debt and fund new infrastructure projects. It admits the timeframe is largely dependent on the passage of the legislation.
Should the privatisation fail, Treasurer Mike Nahan said the government will not be able to invest in infrastructure upgrades needed to allow for the move of livestock facilities from the Inner Harbour to the Outer Harbour.
“Analysis of capacity and trade growth has confirmed the Outer Harbour, which would be additional to the Inner Harbour operations, will not be required for at least 15 years and probably much longer,” Nahan noted in a statement.
Under the proposed legislation, the Economic Regulation Authority will have power over access to the port and its pricing regime, which includes “a number of protections designed to ensure continued fair access to relevant port facilities and services and to mitigate the risk of potential abuse of market power unfair pricing”, according to the statement.
The government will retain oversight of any new Port lessee through a restructured Fremantle Port Authority. It will be responsible for approving the chosen bidder’s master plan for developing the asset and have an ongoing supervisory role for any future development proposals.
The Australian Competition and Consumer Commission, the country’s competition watchdog, has expressed concerns that agriculture supply chains could be hurt if the government offers the port’s future owner the right to develop a new port to the south of the original facility.
Fremantle, which handles most of Western Australia’s livestock and grain exports, was responsible for $28 billion in trade last year. It is set to become the last government-operated container port in mainland Australia after the divestment of Port of Melbourne, which is currently in progress.
Australian firms IFM Investors, QIC and Hastings, as well as New York-based Global Infrastructure Partners, are believed to be considering taking part in the bidding process.