Minister must act on controversial Melbourne port fees

There are avenues to raise concerns of Tasmanian exporters, writes John Livermore

ANDREW Wilkie’s request to Tony Abbott to force the Victorian Government to remove its port-user licence fees and proposed rent hike raises constitutional questions.

It also raises questions over the powers of the Australian Competition and Consumer Commission and the Essential Services Commission of Victoria.

The port licence fee applied from July, 2012, and was estimated to cost Tasmanian shippers and businesses $13 million a year. There are also constitutional issues surrounding the charge.

In the case of Hughes and Vale v NSW, the High Court struck down the Queensland State Transport Facilities Act requiring interstate road traffic to pay more than a reasonable sum for the use of its roads as breaching s92 of the Constitution requiring freedom of interstate trade.

The Victorian Government recently introduced the Delivering Victorian Infrastructure (Port of Melbourne Lease Transaction) Bill 2015. This privatises the Port of Melbourne on a 50year lease, estimated by Victorian Treasurer Tim Pallas to reap $6 billion to fund transport projects.

Tasmanian Logistics Committee chairman Steve Henty welcomed the provision to cap the increase in annual tariffs together with the pricing oversight provided in the Bill of the Victorian Essential Services Commission.

However, container, automotive and bulk terminal or stevedoring operations are excluded. This, it is claimed, would leave Tasmanian domestic shipping operators exposed to excessive port rent increases and all Tasmanian exporters disadvantaged by potentially uncontrolled increasing transport costs. As the Port of Melbourne is the primary freight gateway to Australia and the rest of the world for the majority of Tasmanian container and trailer freight (27 per cent), the new Victorian Bill requires amendment to restrain unreasonable increases in accessing the port.

By contrast, Victorian Transport Association chief executive Peter Anderson welcomed the Bill “as so much of infrastructure spending in Victoria is tied to the port sale” and the Government’s decision to cap rate rises on prescribed port costs to the CPI. This was good news for freight operators as it means port investment certainty.

The Australian Logistics Council has welcomed the news Port of Melbourne fees would remain at 2015 levels plus CPI increase.

However, council managing director Michael Kilgarriff claimed the big issue was the proposed rental increase would impact on the future competitiveness of the Port of Melbourne: “The excessive rents proposed remains an ongoing issue and if not resolved sensibly will have a detrimental effect across the supply chain.”

Tim Piper, of the Australian Industry Group, stated that “the business community

needs to feel that certain additional costs and exposure to increases are not unduly levied on stevedores, port users, the broader business community and ultimately Victorian consumers.”

The Victorian Farmers Federation estimated new rent charges could add $80 to the cost of a container moved through the port. With the claim rents on containers go from $16 per square metre to $120, it says stevedores will have little choice but to pass costs to road and rail operators that move containers from port to warehousing and distribution facilities.

The advice I have received from the ACCC is that it only monitors the prices, costs and profits relating to supply of services by a container terminal operator at the ports of Adelaide, Brisbane, Burnie, Fremantle, Melbourne and Sydney under direction for the Federal Treasurer under part VIIA of the Competition and Consumer Act 2012. In 20132014 its monitoring of the property costs of container stevedores showed that these were 9.8 per cent of the stevedores’ total costs.

The ACCC does not currently have an access or pricing role over the Port of Melbourne Corporation. It is now seeking that power.

Part IIIA does provide for interested parties to have the Port of Melbourne declared. This would require the relevant Minister to apply to the National Competition Council to have the services provided by the Port of Melbourne regulated.

The NCC would make a recommendation on whether the criteria for applying access regulation is met so that service is declared. If it is declared, then the second stage requires the Port of Melbourne and interested parties to negotiate terms and conditions of access to the declared services. If a negotiated agreement cannot be reached, then the ACCC can be called to arbitrate and make an access determination.

This advice has been given to Minister Rene Hiddings’ advisers. There seems a strong case to act on it.