In brief: In its 2015 Budget, handed down yesterday, the WA Government confirmed the expansion of its asset sales program to manage the state's debt. In response to the first forecast budget deficit in WA in 15 years, a significant new second tranche of assets has been added to the sales program. Partners Andrew Pascoe (view CV) and Ben Farnsworth (view CV)report.
WHICH ASSETS HAVE BEEN ADDED?
The following assets have been identified for sale in the second tranche of WA's asset sales program:
- Fremantle Port Authority. The government will pursue the disposal, through a long-term lease, of the assets and operations of the Fremantle Port Authority. This disposal will subsume the process for the sale of the Kwinana Bulk Terminal. Fremantle Inner Harbour handles almost all the container trade for Western Australia, as well as livestock, motor vehicles and general cargo. Importantly, the expansion of the sale to include the other Fremantle Port berths decreases the direct exposure to the resources sector relative to other WA ports assets. The Treasurer indicated that the restructuring of the Fremantle ports disposal is expected to significantly broaden the size and appeal of the transaction to international investors and trade buyers, as well as the expected return to the State.
- WA TAB. The state-owned betting agency TAB remains the only government-owned TAB in Australia and has been valued at up to $1 billion. The Treasurer indicated that this disposal would be carried out following further consultation with the WA racing industry.
- The Forest Products Commission.
- A portfolio of Government Regional Officers' Housing stock.
- Securitisation of part of Keystart's loan book.
- The state's vehicle fleet, via a sale and leaseback arrangement.
- Various government-owned office buildings, via a sale and leaseback arrangement.
- Individual generation assets of Synergy and Horizon Power, and Western Power's non-core assets. This is consistent with the WA Government's response to the first phase of its Electricity Market Review in which it foreshadowed that it would pursue discrete asset sales of generation capacity, but no full- or large-scale privatisation in the electricity sector (see our Focus: WA Electricity Market Review for more details).
Proceeds of sales will be invested into already-committed infrastructure projects, including the Forrestfield Airport Link, as well as used to pay down state debt.
These assets join the first tranche of assets identified for sale, comprising Utah Point Bulk Export Facility and the Kwinana Bulk Terminal and the Perth Market Authority in Canning, which were the subject of previous WA government announcements on asset sales. Sales of the first tranche continue to be progressed by the State.
In addition, the government will also expand its land sales program by a further $68 million, having now identified potential land sales valued by the State at a total of $268 million. The government expects that further sites will be added to the sales pipeline and included in the 2016-17 Budget process.