“It is common knowledge that the Port of Melbourne Corporation (PoMC) is proposing an annually indexed container levy to pay for channel deepening anyway if the project proceeds!”
“If Shipping Australia and VECCI had bothered to attend more of the Channel Deepening Inquiry, rather than just their own presentation, they would be better informed, and would have heard evidence that the PoMC’s economic case is seriously flawed. Expert Witness Francis Grey and his colleagues from Economists@Large undertook a rigorous re-work of the project Cost Benefit analysis using an appropriate discount rate and demonstrated the project was underwater with a negative C/B outcome of some -$500 million. In essence, PoMC would get a taxpayer funded free ride if a 6% discount rate is used.” says Ms. Warfe. Economists@Large say that a 6% discount rate is unrealistic for projects like channel deepening which claim significant economic benefits and commercial status. They note that most investment banks use at least 12% discount rate when assessing major projects.
Independent policy consultant and former Treasury economist Richard McEncroe also demonstrated that the PriceWaterhouse Coopers economic analysis of the Port of Melbourne was limited in its scope given the importance of the Bay to Victoria’s community and wider economy. Mr. McEncroe also advised the Inquiry that although the PoMC claim there is a net economic benefit for Victoria from the project this is highly contestable given nobody still knows how much the project is really going to cost and that there is no discernable strategy for financing the project.
“And on top of all that, they would also have heard the PoMC’s own Economic expert witness, Mr. Steve Meyrick confirm that trade volumes through Melbourne will be unaffected whether or not the project proceeds, and that the recent Department of Treasury and Finance commissioned PwC economic analysis confirms this view. Once all the financial data is laid out you have to wonder what the business sector’s point is” says Ms. Warfe.
“It is also common knowledge that the business sector is not happy about the PoMC’s proposed levy to pay for channel deepening and is putting pressure on government (taxpayers) to fund the project. It is interesting to note that the CEO of the Victorian Employers' Chamber of Commerce and Industry, Neil Coulson, said yesterday (24th July) that a levy on containers would be disastrous for the state economy. Mr. Coulson is either agreeing that channel deepening is a disaster or telling government that in spite of demanding that the project proceed, the business sector refuses to pay for channel deepening and expects government will fund it on their behalf” says Ms. Warfe.