Article: Cost of Hastings container port put at $9.4bn

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From the Melbourne Age click here!

Cost of Hastings container port put at $9.4bn

Cost of Hastings container port put at $9.4bn
David Rood
February 28, 2011

TURNING Hastings into a container port would cost $9.4 billion, according to internal government documents that threaten the Baillieu government's promise to develop the deep-water port within 10 years.

The expert costings put a price tag on the controversial port redevelopment for the first time, revealing it would cost $9.4 billion to transform Hastings within 10 years and $12.5 billion in 20 years.

The Coalition government has pledged to transform Hastings within eight to 10 years, recently saying the redevelopment was possible and necessary given the massive increases in Port of Melbourne container traffic.

With $5.5 billion of the 10-year Hastings option to be spent on road and rail alone, the June 2010 costings by the Transport Department and Major Projects Victoria reveal the difficulty the government has in finding funding to help pay for the development.

The government is under increasing financial pressure from the cost of the state flood recovery, reduced federal funding for Victorian infrastructure projects to help pay for the national flood response, and last week's redistribution of GST revenue that Premier Ted Baillieu said would cost the state budget $2.5 billion over the next four years.

The Hastings costings were prepared for Labor former ports minister Tim Pallas, with a second document, by consultants Deloitte Touche Tohmatsu, vouching for the departmental work.

The Port of Melbourne is Australia's biggest container port, handling more than a third of the nation's trade. Container traffic is expected to quadruple by 2035.

Responding to the January release of a national ports strategy, new Ports Minister Denis Napthine said transforming Hastings to a container port within 10 years was not only possible "but necessary''.

"There is room for significant growth in containers through Melbourne; that level of growth is very difficult to manage without gridlocking Melbourne," he said.

Mr Napthine stressed that opening Hastings would not mean the closure of the Port of Melbourne, and said the road and rail development would need Canberra's funding help.

Mr Pallas, now shadow ports minister, said the government's 10-year Hastings plan would leave a black hole in the state's finances, and called on the Coalition to say how it would fund the port pledge.

"It is almost certain that the development would not be completed in the time frame of eight to 10 years promised by the minister,'' Mr Pallas said.

But Mr Napthine said he did not accept that the costings represent the Coalition's plans, saying they were based on the assumptions for road and rail of the previous Labor government.

''If the government didn't develop Hastings, Victoria would still be up for a massive infrastructure spend to development the Port of Melbourne,'' he said.

Mr Napthine said the current ports situation was due to failure by the previous Labor government to plan for the state's infrastructure needs.

The Victorian Employers Chamber of Commerce and Industry said it was not surprised by the $9.4 billion cost, saying it underlined the stark choice business and government face.

The chamber's public affairs manager, Chris James, said there must be a transparent and public process that considered all options, including further investment in Swanson Dock or the development of Webb Dock, Geelong or Hastings.

It should also take into account massive private and public sector investments made at the Port of Melbourne, including channel deepening, he said.