WHEN there was a crisis in ports in Queensland and NSW the result was obvious to all, according to Transport Minister Troy Buswell.
Queues of empty ships lying offshore were a high-profile reminder that the sector’s management was lacking. It’s a situation Mr Buswell says is unlikely to be encountered in Western Australia.
That is not because our ports are managed better, the minister believes. Instead, due to the nature of WA’s industry development and its domination by iron ore, the problem is much less obvious because it has been inverted.
Instead of ships stuck at anchor, Mr Buswell claims the risk to the state is that resources assets are stranded where they lie, deep within our rugged ranges, because ports and their governance structures denied their development.
“There is increasing pressure on ports that was not there four or five years ago,” Mr Buswell said.
“The visible representation of stress in our ports will not be queues of ships like we saw in Queensland; it will be in under-realised resources in the ground.”
This is the potential problem that Mr Buswell sees in allowing WA’s ports to continue as they are, operating as isolated units and often competing with each other without regard to a broader strategy governed by the needs of state development.
It is this view that is shaping his response to two key reviews handed to him recently – a report into Port Hedland Port Authority operations by PwC and a broader Ports Review conducted by a ministerially appointed steering committee.
Mr Buswell said WA’s ports had been under immense pressure as they sought to meet the export demands of industry, not just in total scale but also the many issues relating to commercial rivalries between miners (many of which are major companies with far more resources than the port operators they are dealing with).
In this view he echoes the thoughts of many people who are close to the state’s ports, either involved in operations or as customers.
“Ten to 15 years ago, generally, ports were dealing with local importers and exporters and didn’t have the enormous issues of trade and dealing with large companies,” said one player in the ports sector.
“Regional ports stepped up to the big league and there is something of a mismatch.
“The pressure on government-owned ports has been immense.”
While Mr Buswell summarises the issues as being rising demand, increasingly complex operating environments and unwieldy, debt-heavy financial structures, it is clear that the frequently changing nature of ports’ objectives create conflict because they are required to make a profit and provide a community service.
He is also concerned that the result of this may be that the state is losing out not just in the timely development of its minerals assets, but also in gaining a fair return from its assets due to a lack of broader strategic thinking in deals struck between ports and mining companies.
This has played out in recent times with changes of key personnel in two key export ports.
Last month, Esperance chief executive Michael Frydrych departed suddenly after little more than a year in the job, on the back of industry concern over expansion allocations. Last week, long-term Port Hedland chairman Ian Williams retired after it was understood he had unsuccessfully sought an extension to his term.
Port Hedland was criticised for its poor profitability last financial year but it has also rapidly evolved into a multi-user port and undergone a trebling of output in under a decade as well as dealing with proposals to more than double capacity again.
“Traditionally, strategic planning has been done by individual ports,” Mr Buswell said.
“(I want) to make sure broadly those individual plans align with the strategic state plan.”
In turn, he wants to see that aligned with a state freight strategy.
However, he did not see the changes as sweeping or dramatic.
“It is more evolutionary than revolutionary,” he said.