Asciano deal triggers privatisation talks

Quoted in the AFR on Tuesday, Port of Melbourne chairman Mark Birrell and NSW Ports chairman Paul McClintock agreed the Asciano deal showed major international investors are increasingly interested in reliable, long-term assets.

Australian state and federal governments could take advantage of this trend by selling off more government assets, the chairmen suggested.

“I’m very pleased there is heightened investment interest in the nation’s infrastructure assets because we need extra funds attracted to it to help fund new projects,” Birrell was quoted as saying.

“Australia can’t simply rely on increased public funds,” he continued. “It has to attract new sources of capital – and overseas funds are increasingly going to drive this interest. They like the long-term returns.”

Birrell, who is also the chairman of Infrastructure Australia, chairs the Port of Melbourne Corporation – the government body in charge of the port. The state government plans to sell the port, with legislation – in the form of the Delivering Victorian Infrastructure (Port of Melbourne Lease Transaction) – currently before Victorian Parliament.

The decision to sell Melbourne has no doubt been influenced by the privatisation of Port Botany, and the nearby Port Kembla, in mid-2013.

Paul McClintock is head of NSW Ports, the company which now operates Botany and Kembla on behalf of the private investors. And he agrees with Birrell, telling the AFR the Brookfield bid for Asciano showed long-lived assets were increasingly attractive to investors.

“In a lower interest rate world, there will increasingly be more and more investors looking at long-duration assets,” McClintock was quoted as saying.

“It’s an international space so you will see lots of foreign interest coming through as assets around the country are put up for sale.”

The NSW Government recently put much of the state’s electricity infrastructure up for grabs in an effort to raise $20bn in long-term infrastructure funding. Privatisation was also on the cards prior to the most recent elections in Victoria and Queensland, to mixed reviews from voters.

Electricity infrastructure is a common area for privatisation, but government-owned ports, rail and other infrastructure assets have also been on the cards. The Federal Government is looking into the potential sale of the Australian Rail Track Corporation, which owns much freight and passenger rail infrastructure along the east and south coasts.