VICTORIA’S Essential Services Commission has begun the first formal review of land rents in the privatised Port of Melbourne, with a particular focus on possible abuse of market power.

The Commission is fulfilling its role under section 53 the Port Management Act 1995 (Appendix A) which requires the ESC to consider whether the Port of Melbourne has:

  • market power in relation to the process for setting and reviewing land rents
  • exercised market power in a way that causes material detriment to Victorian consumers (a misuse of market power).

“If we find there has been a misuse of market power, we are to make recommendations on possible economic regulation to the Assistant Treasurer,” the ESC said.

The review, which covers the period from November 1, 2016 to October 30, 2019, will consider the processes used to set and review land rents; Port of Melbourne’s compliance with any of these processes; and the extent to which the land rents paid are ultimately passed through to Victorian consumers.

The Commission has issued a Scope and Process Paper with feedback sought by October 25, 2019 via https://engage.vic.gov.au

A draft report is due in January 2020 and a final report the following month.

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The ESC’s work will be closely watched by the port and transport industry, given widely-aired complaints by stevedores of unprecedented rent increases of up to 700% that, in part, have been used as justification for substantial increased in contentious terminal access/infrastructure fees.

The Port of Melbourne says its regulatory team has already held several meetings with the ESC about the review.

“The ESC’s market rent review inquiry is written into the Port of Melbourne’s Port Management Act, and we are fully cooperating with the ESC in relation to our obligations,” a spokesman said.

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