A KEY industry group has called for state government intervention after the Essential Services Commission released its Market Rent Report claiming the Port of Melbourne’s exercise of power had “caused material detriment”.

The ESC report was prescribed as a pre-condition to the privatisation of the port in 2016.

According to the ESC, Port of Melbourne tenants were “incurring inefficient rental costs and higher transaction costs, evidenced by examples of deferred investment, and uncertainty impacting tenants ability to lock in new customer contracts”.

“These impacts have flowed through to consumers.”

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The ESC also called for remedial action by the state government.

Victorian Transport Association chief executive Peter Anderson said the report confirmed “what the VTA has been saying for years, particularly about the inevitability of cost increases for tenants in a monopolistic environment”.

“The Victorian Government must legislate for greater control and oversight over non-prescribed rate increases if tenants are to have any certainty over cost hikes, which inevitably get passed on to landside freight operators and consumers as higher prices,” Mr Anderson said.

VTA chief executive Peter Anderson. Credit: David Sexton

The Port of Melbourne, meanwhile, issued a statement disputing the ESC conclusions.

“We hold the firm view that our activities in leasing port land have been undertaken in accordance with usual market practice and consistent with our obligations,” a spokesperson said.

“We take our stewardship of the port very seriously and we have invested more than $280m over the past four years.

“Our ongoing investment program has focused on creating a more productive and efficient port for tenants, which ultimately delivers significant benefits to the Victorian community and the wider economy.”

Ports and freight minister Melissa Horne . Credit: David Sexton

The spokesperson said although there was “clear evidence” that the system of rent-setting at the port was working, Port of Melbourne would “consider additional ways to improve information and processes to assist in rent and lease negotiations”.

Got 50 minutes spare? Check out presentations to the ESC that contributed to the Market Rent Report. Credit: ESC and YouTube

In a statement, ports and freight minister Melissa Horne said the government would work with the port operator and tenants on their enhanced voluntary negotiation framework and monitor the effectiveness of that approach for the next 12 months.

The Department of Treasury and Finance is to lead the government’s response to the report.

The full Port of Melbourne Market Rent Report can be viewed here.

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