Whether all these projects will be viable in the longer term (BrisCon has a 45-year lease) is highly moot. For one, the model was designed when oil prices were $US25 a barrel and every operator steadfastly refuses to disclose the oil price assumptions in its modelling. As do the Queensland, NSW and Victorian governments.
Surely Andrew McNamara, Queensland’s Minister for Sustainability, Climate Change and Innovation, and his Oil Vulnerability Taskforce will be wanting to know what his counterparts in government – particularly Deputy Premier and Infrastructure Minister Paul Lucas and Transport Minister John Mickel – have signed off on here. Not to mention Brisbane Lord Mayor Campbell Newman, who is a key proponent.
Given, today was just one day in the listed life of this trust and the likes of Macquarie Airports also had a rough beginning with many a sceptic lambasting the group for shelling out too much money to buy Sydney Airport. The sheer overhang though in BrisCon bodes poorly for the stock in this environment of distaste for complexity, leverage, high oil prices and bear-market sentiment.
There is potential for renewable energy to fuel cars and keep toll-roads ticking over but evidence has recently emerged that the cost of petrol is not “inelastic”, as they say, to demand for motoring. The traffic numbers for MIG’s assets such as the French APPR and Toronto’s 407 have been flat, even in some cases declining.
Until now, Queensland had a superior track record in PPPs to the southern states but now it is catching up, or is that down? The government has declined to reveal its Public Sector Comparator – a study which looks at various options to fund infrastructure – if indeed it bothered to do one at all.
Meanwhile, the other toll-road in Brisbane, RiverCity Motorway, is travelling at 30 cents, down 70% on its $1 issue price, albeit before investors have taken their distributions from capital along the way.
This week’s revelations that the NSW Government had been given strong advice that its proposed metro rail line out to the north of Sydney would be a dud demonstrate further that, when it comes to splashing around the ideas and the taxpayer money, appropriate disclosure and transparency is in order.
For a start, governments should bring back the PSC test. It should be made public so the public can debate the merits of different financing options in a defined consultation period rather than doing clandestine deals with big corporates and claiming spuriously that the deals and the modelling are ‘commercial in confidence’.
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.