To improve supply chain efficiency and economic growth in Australia, the government should seriously consider privatizing or long term leasing of public utilities such as electricity, water or port assets and invest proceeds in logistics infrastructure in the country, a senior executive of the Australian Logistics Council (ALC) said.
Speaking at a recent conference on "Infrastructure Investment & Asset Recycling", ALC managing director, Michael Kilgariff, stated that investing more in logistics infrastructure through
asset recycling was critical to improving supply chain efficiency and economic advancement.
Fund raising projects
“Properly done, the privatization or long term lease of electricity, water and port assets could realize desperately needed funds for new infrastructure projects,” Kilgariff stated.
“With the budgets of most Australian governments likely to be in deficit for the foreseeable future, it is essential that all possible mechanisms to fund critical logistics infrastructure, including asset recycling, are continued to be pursued by governments. With a recent ALC report showing that a 1% improvement in supply chain efficiency would boost GDP by A$2 billion, it is incumbent on governments to work with the community to demonstrate the potential economic and social benefits of appropriate asset disposal,” he stated.
Transparency is key
Further Mr Kilgariff said that there must be full and complete transparency with the electorate to demonstrate the recycling of assets is in the community’s long term economic interests. “Governments proposing some form of lease or sale of an asset must explain, firstly, the financial reason for the asset disposal and then clearly identify the public benefits that will accrue as a result of the disposal,” he added.
The manager noted that while the logistics industry was a strong supporter or asset recycling, a number of preconditions should be met before a proposed recycling or sale of an asset proceeds. “Any proposal to sell, or offer a long-term lease for any piece of infrastructure must possess a net positive benefit,” he said, adding that any asset that is sold must represent value for money, and be sold for the right price and not at any price.
“Finally, ALC believes the sale or long-term lease of an asset should not be pursued to the detriment of competition and freight efficiency,” he concluded.
Asset recycling will be a hot topic of discussion at the ALC Forum 2015, 10-12 March 2015, at the Melbourne Cricket Ground.
Nol van Fenema