Opinion by WA Treasurer Mike Nahan MLA
FARMERS have enough on their plates without having to worry about how the lease of Fremantle Port might impact their business.
The truth is, the lease of Fremantle Port will have very little, if any, impact on WA farmers apart from potential improvements in their supply chain to global markets.
The lease of Fremantle Port will be a good deal for all Western Australians - especially farmers.
That's not just my view, but one also shared by senior representatives, livestock and farming organisations.
A privately-managed port will facilitate investment resulting in enhanced productivity and efficiency relative to public ownership.
The private sector will seek to optimise the existing port through infrastructure investment and upgrades which the government would be unlikely to have the capacity to fund.
This investment will, in the medium to long-term, extend to the development of the outer harbour.
Leasing the port will fast track initiatives which will allow for larger vessels as well as the shift of live export trade from the inner to the outer harbour.
The State Government will use some of the proceeds from the lease to fund the development of a new berth at Kwinana to allow the movement of livestock facilities from the inner to the outer harbour.
These have been acknowledged as major pluses by livestock and farming organisations and I believe will be welcomed by the wider farming community as vital for the future of WA's agricultural sector, particularly in ensuring the longevity of the live export industry.
Critical to any future lease agreement will be a suite of safeguards to protect port users on the key issues of access and pricing.
There will be no vertical integration (between ownership and port operations) and the two stevedores will be maintained to ensure the current level of competition remains at the port.
This is aimed at mitigating the risk of unfair or anti-competitive outcomes.
Competition between service providers and stevedores will ensure prices are kept low.
The port lessee will be required to have an access policy - with an obligation not to unfairly discriminate against any user or potential user or to hinder access.
The entire operation will be overseen by the State's Economic Regulation Authority (ERA), which will be tasked with implementing a price monitoring regime based on transparent pricing principles.
Under the proposed regulatory system, prices will be monitored against existing port prices and relevant indices, with the port operator expected to justify and show cause for any price increases above this reference point.
Let me also put the current pricing in context.
Take grain as an example where fees charged by the Fremantle Port Authority (FPA) make up approximately one per cent of the total post farm gate costs for a tonne of wheat, which is equivalent to approximately 63 cents of the $59 total post farmgate costs per tonne, assuming current tonnages through the grain facility at the port.
Price fairness and transparency will be key.
A look at port privatisations across Australia also provides a telling insight into what the reality has been when it comes to pricing.
Leasing ports to the private sector has not sparked an abuse of market power.
The leasing of the Brisbane, Flinders and Botany ports has resulted in price increases which have broadly been in line with inflation, and all are subject to price monitoring.
This should give WA farmers great comfort.
The State Government is not going to hand over the keys of the port to the new lessee and give them absolute free rein.
There will be robust regulatory supervision in addition to price regulation.
The State will retain the Harbour Master function, allowing effective oversight over marine safety and access for users to the waterways.
The State will also be responsible for approving the port lessee's master plan for development and will have an ongoing oversight responsibility for future development plans.
Agriculture is critically important to both the State and national economies and we are seeking to reach a lease agreement that allows this sector to grow through increased investment to improve the efficiency of the paddock to plate supply chain.
It's no secret that I'm a supporter of the free market, and I believe the role of government is to regulate, not operate.
The lease of Fremantle Port will unlock value for all Western Australians.
The State's farming community will benefit through improved efficiency and productivity, driven by investment from the private sector.
For everyone else, the lease of the port will help to reduce State debt; maintain the State's international competitiveness; and help government invest in the schools and hospitals of the future.
Farmers have enough stress dealing with a whole range of issues from rainfall to harvest.
The lease of Fremantle Port is one issue they just don't need to worry about.