Len Buckeridge’s plans for a port at Kwinana are still top-of-mind for the building giant.
LEN Buckeridge knows he upsets people in power.
The building magnate realises that he doesn’t say the right things at the right time to keep people onside.
Then again, when it comes to a major development such as the James Point port proposed for Kwinana, there’s not much that needs to be said.
At a time when the state is constrained by funds and industry is desperate for export infrastructure, the fact that a private company like the Buckeridge-backed James Point Pty Ltd wants to spend $400 million of its own funds should be enough. Clearly money doesn’t talk loudly enough in Western Australia these days.
With Mr Buckeridge offering competition to Fremantle Ports for a range of users, there ought to be a chorus of exporters championing the James Point cause. Yet industry appears strangely silent.
And, given James Point won an international tender to gain its state government contract 11 years ago, those who complain about selling the farm should welcome the fact that a local company not only wants to do the job, but can do so competitively.
The lack of progress on this project, however, seems to indicate a lack of enthusiasm for the project within the ranks of Premier Colin Barnett’s conservative government.
On the surface it appears to have done as little to advance the cause of the port’s development as its Labor predecessor, which was openly antagonistic to Mr Buckeridge.
Those in WA at the time will recall Mr Buckeridge and former Labor transport minister Alannah MacTiernan bickered openly about the port.
But the issue is bigger than Labor and Ms MacTiernan.
Mr Buckeridge acknowledges that he has offended almost every key politician on both sides of government for the past 10 years. He almost delights in the fact that his intolerance makes him something of a pariah at the political level. He admits this annoys many of those who work within his massive private construction group BGC, Australia’s biggest home builder.
It is not just the politicians. The building magnate is clearly not enamoured with the state’s bureaucracy, including development agency LandCorp, which is closely linked to the port project as the holder of much of the land required for the port’s development.
“I am rude, I have always been rude,” Mr Buckeridge admits.
“I am my own worst enemy.”
Then again, being nice to people is not a prerequisite to success in business.
And what Mr Buckeridge offers the state does not require a diplomatic explanation. He has a contract with the state government to build a $400 million state-of-the-art port, which will provide competition that could lower the price of exporting commodities and importing bulk goods and, in the future, containers.
“It will cost them (the state) bugger all,” Mr Buckeridge said.
“At some future time they’ll have to build this.”
Speaking to WA Business News about the long-delayed project, Mr Buckeridge dismissed some of the objections that he claims are being raised about his private port proposal, including BGC’s ability to fund the project.
“We have zero debt,” he said.
“We have a couple of billion in assets and we turn over $3.2 billion per annum.”
Furthermore, Mr Buckeridge said the banks had provided him with more than $200 million in drawdown capacity and were actively courting him.
“[Westpac CEO] Gail Kelly just left one minute before you [arrived for the interview],” he said.
Longer term, there also appear to be arguments about James Point undercutting the existing Fremantle Port Authority operations and making them unviable. In effect, this is viewed as a threat to competition.
Yet, BGC’s history flies in the face of that objection.
Since Mr Buckeridge started constructing cheap flats in the 1960s, the residential builder and building supplies manufacturer has consistently pushed down prices in the market segments it has entered.
Even its recent move into the brick market via Brikmakers has pushed prices down significantly for what is a primary building material in WA.
In addition, the contract signed in 2000 by then WA transport minister Murray Criddle clearly states that the Transport Department has the right to instigate pricing arrangements if it isn’t satisfied that a competitive market exists. Furthermore, disputes over pricing would be settled by the Australian Competition and Consumer Commission.
The immediate cost to the state in terms of the value of land to be transferred appears to be the most significant hurdle for the first stage of the project, which received planning approval in 2004.
These days, government insiders suggest the lack of progress since the Liberals came to power in late 2008 has more to do with the price BGC was prepared to pay for the land; they claim Mr Buckeridge doesn’t want to pay a commercial price for the land.
Another senior bureaucrat says simply that some land will be found for the project.
Both these views suggest the state is seeking more from the port developer, possibly because the land involved has escalated in value in the 10 years since James Point won the tender to build the infrastructure.
Industrial land shortages have been a big issue in the past four years and it may not look politically astute to hand over prime real estate to the richest man outside of mining.
But again, Mr Buckeridge points out that he had a deal. He said LandCorp agreed in 2002 to sell him the key piece of shoreline on which the first part of the port was to be built, including a wharf that would be reclaimed from the sea. The price tag was to be $8 million.
He said the then Labor government refused to ratify the deal. That deadlock was due to political rivalry as Mr Buckeridge was, among other things, viewed as an enemy of the union movement.
Mr Buckeridge believes that Ms MacTiernan was opposed to the concept of a private port at Kwinana, which had arisen during the previous Liberal government under former premier Richard Court.
He also thinks the new conservative state government is paranoid about how much land he wants for the port and what he’ll do with it – including concern that the land could be subdivided for factories and other non-port development.
“What nonsense,” Mr Buckeridge said.
Instead he outlines in significant detail how the port development is to work.
His company, BGC, would put in a new road just below its existing industrial hub to connect the first stage of the port, which would initially bring in clinker for his cement manufacturing and provide the competition in grain handling infrastructure, which has not kept pace with the deregulation of that export market.
Mr Buckeridge claims the government is bound to build a new access road and rail loop at a future stage when commodities such as bauxite and iron ore would be exported from a rebuilt pier in the middle of the port.
Further development to the south of the port would allow the export of livestock and other commodities, including Collie coal, which Mr Buckeridge believes will be unwelcome at Bunbury.
A rail loop would provide access to several additional LandCorp blocks, Swan Cement’s existing facility and the site of Rio Tinto’s HiSMELT operation, which is being decommissioned.
The inclusion of container facilities was also envisaged as the port grew.
Although the state government would need to build the rail infrastructure, several blocks of LandCorp land would become significantly more valuable to industrial users as a result of their proximity to the private port development.
While the government might be concerned about the value of industrial land it would transfer, Mr Buckeridge does not want the state to think it will get off lightly if it reneges on the port development it contracted James Point to build, own and operate.
For instance, 1 million tonnes of clinker already comes in through the existing BGC wharf where he wants to build the port, supplying a significant amount of the state’s cement.
“I am tempted to say bugger you, I’ll bring in none (of the clinker), you’d bring the state to its knees; but I am greedy and the money (lost) would hurt,” Mr Buckeridge said.
His threats extend beyond the indirect economic pain he could cause by flexing the muscle of his home building empire.
Mr Buckeridge estimates the cost of delay to BGC is $14 million a year. Over a decade he reckons the government owes him $140 million, implying he could seek damages.
The James Point plan also conflicts with Fremantle Ports’ medium- to long-term vision to expand its outer harbour operations at Kwinana, as its inner harbour at the mouth of the Swan River reaches capacity before the end of the decade.
The big unknown is whether Mr Buckeridge’s rough and ready approach to business might find a more willing ear in new Transport Minister Troy Buswell, who advocated private-public partnerships for infrastructure when he was state treasurer.
While Mr Buswell could not be reached for comment on the James Point issue, his thick-skinned approach to government is seen by some as closer to Mr Buckeridge’s style than most in politics.
The question for the private port developer is whether Mr Buswell has the political will or capital to take on such a fight after recently returning to state cabinet.
