From The Australian, more trouble for WA as iron ore port privatisation collapses:
It is understood big investors are reluctant to bid for Utah Point — which is used by struggling miners including Atlas Iron — given its exposure to iron ore…Kwinana’s main use is iron ore miner Consolidated Minerals.
“There are some complications there about value,” Dr Nahan said of the two port assets.
…He also cast doubt on Premier Colin Barnett’s claim last year that asset sales would raise $2bn a year until the 2017 election, totalling $6bn.
That is, they’re worthless as both firms are the dirt delivering dead. And to complicate things further, sensible alternative sales are rejected:
Despite being natural monopolies, the evidence from other states suggests that well-regulated private distribution networks are in the public interest. From the Garnaut Review:
For state owned network service providers, there is an unfortunate confluence of incentives that may be leading to significant over investment and gold plating of network infrastructure. As discussed earlier, state government owners may have an incentive to over invest because of the low cost of borrowing and tax allowance arrangements. In addition, political concerns about reliability of the network, about the ramifications of any failures, may further reinforce these incentives.
The existing financial incentives for state owned network providers to over invest coupled with the political cost of any failure in the network managed by a state owned company, have the potential to overwhelm any countervailing incentives to minimise operational costs.
The comparison of costs between Victoria, where the network providers are in private hands, and New South Wales and Queensland, where the network providers are in state hands, is at the very least a compelling piece of evidence to support this contention. While there are likely to be genuine differences between the states that explain some of these divergences, it is unlikely that these differences explain the majority of these divergences.
A budget dying the death of ludicrous assumptions, that can’t sell what it wants, won’t sell what it should, has already lost the AAA rating and the bust has barely begun.
Yet Tony Abbott is on the blower to Victoria instead:
Victorian Premier Daniel Andrews has lifted the lid on the growing antagonism between him and Prime Minister Tony Abbott revealing a silence so long during a recent phone conversation that he thought Mr Abbott had rung off.
Mr Andrews said the phone call was derailed, and ended abruptly, when he suggested a meeting to discuss the dumped road project.
“At the end of the phone was silence. I thought he’d actually hung up at one point. But it was absolute silence,” he said today.
The East-West link debacle was the result of the Liberal state government pushing through the project overly swiftly and without appropriate cost/benefit analysis, with help from a barely scrutinised Federal bribe of $1 billion, to ensure the polity was backed into a corner for the election, which has rather backfired.
Why is Tony Abbott not finding a constructive solution for Labor-run Victoria while giving Liberal-run WA a free pass for ridiculous mismanagement?
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
