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PoMC is relying on our irreplaceable, scarce and jointly owned resources to gamble on a future which most rational people can see is not going to pan out the way the PoMC is hoping. Aside from running out of resources to keep manufacturing all the stuff to put into the containers to get shipped all around the world; what ship operator is going to want to sail from Asia (our biggest trading partner) all the way to the Melbourne (almost twice as far as ports such as Brisbane or Darwin) when oil keeps going up and up in price (and gets more and more scarce)?

For the PoMC’s plans to work out their way, we would need unlimited availability of everything from steel and wood, to grain, to oil - and all at rock bottom prices – something we are not likely to ever see again! And we would need shippers to lock themselves in to always doing business with the PoMC at the rates PoMC hopes will happen. The shipping industry has a long history of doing exactly what suits IT best - not the nations or the ports they choose to visit. 

Have a look at this really great Youtube on STUFF – Where it comes from, why we buy it, and where it ends up (link below).

The story of STUFF: http://www.storyofstuff.org/

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And: Here's what hundreds of our supporters said in a joint submission to the Parliamentary committee. (Submissions closed on 28th April).

Standing Committee on Finance and Public Administration

Legislative Council

Parliament of Victoria

Re: Port Phillip Bay Channel Deepening

As shareholders of the Port of Melbourne Corporation (PoMC), taxpayers are entitled to a more rigorous analysis of the case for channel deepening (CDP) than provided by PoMC. The business case should include a realistic examination of the costs/benefits for all taxpayers but PoMC’s business case relies on an outmoded economic framework which is no longer applicable in the 21^st Century.

The costs of losing or damaging the range of services presently provided by the Bay for free have been excluded from the economic modelling and decision making. PoMC has relied on a ‘business as usual’ mindset, projecting steady growth into the future. There is no lack of learned opinion that we can no longer subscribe to the business as usual mindset.

Estimating ‘net present value’ (NPV) in 2007, PoMC used a cost figure of $590m. Costs are now almost $1 billion so the claimed benefits have diminished substantially. PoMC is advocating benefits based on cost reductions flowing to end users, whilst also introducing a container levy. End users will not benefit as importers and exporters costs have already increased via the levy, leaving no savings to pass on.

To achieve its benefit/cost ratio of 3.3, PoMC used the gross benefit figure of $1.936 billion not the net benefit, and divided it by the total cost estimate less the ‘sunk’ costs already spent. PoMC also fails to point out that only one third of the economic benefit flows to Victorian interests.

Using the more conservative and realistic assumptions below, the NPV is reduced to minus $540 million:

·          Cost of around $1 billion,

·          Project valuation over 10 years with a terminal value

·          12% discount rate not the 6% used by PoMC

·          Conservative estimate of future shipping fleet composition

On these conservative figures, this is a dis-benefit to Victorians. Clearly the project is already unjustifiable, even before any more costs blow-outs occur. 

I also have grave concerns about the Alliance between PoMC and Boskalis. During the SEES Inquiry Boskalis executives said they are now very aware of their responsibilities and had never breached any standards, claiming “zero incidents with environmental impact”. Boskalis failed to mention incidents where standards MUST have been breached, such as the sinking of a Boskalis dredge in Ponte Noir, Republic of Congo in 2006, where 3 people lost their lives, and the collision of Boskalis dredge Fairway in the port of Tianjin China in March 2007, resulting in the dredge being written off. Boskalis is also a joint venture partner in the controversial Jurong Islands project where sand has been illegally taken from Indonesia for land reclamation projects in Singapore.

The secrecy surrounding the Alliance between Boskalis and PoMC must be investigated, otherwise Victorian taxpayers may be exposed to unlimited loss and our priceless Bay may be damaged irretrievably. It is noteworthy that both Boskalis and James Hardie Industries have their headquarters in The Netherlands, so in the event of any compensation claims against Boskalis, like the asbestos victims, many Victorians may face insurmountable difficulties in obtaining justice.   

Yours sincerely,

Name:

Address:

Date: