Portland in South West Victoria is a beautiful city. It was first illegally settled by the Henty brothers in 1834. It became a home to whalers and sealers and the city boasts many fine stone buildings from that era.
After all the whales were killed, Portland went to sleep. The excellent harbor – the only deep water port between Adelaide and Melbourne – slumbered too, little used except for grain, wood-chip and live mutton exports and for the import of alumina and export of aluminium for the Alcoa smelter.
The Port of Portland was privatised by the Kennett government in 1996. In negotiations to sell to Infratil and Scott Corporation, the state government agreed to exempt the port from Land Tax. The government perhaps got a higher price by permanently lowering the port’s costs.
This was a damn fool thing to do. It has injured both government and buyers.
The government has lost the tax revenues, and a major inducement to invest in Portland’s future and its infrastructure. It has no skin in the game.
The port owners have much less incentive to realize the potential of this great natural asset. Without Land Tax to spur them forward, it matters little whether they get out of bed in the morning or not.
They can just go on loading commodities and clipping shipowner’s tickets.
Portland (pop. 10,000) remains seriously underdeveloped. While the rest of the state has grown by leaps and bounds, Portland sleeps. Its laggard status should be a matter of considerable concern to all Victorians.
Yesterday, the High Court of Australia rejected attempts by the government to free itself of the poor decision to exempt the port from Land Tax and obliged the state to refund with interest Land Tax charges imposed by the following Bracks government.
While the grounds for the judgement are sound – that governments must abide by the commitments of their predecessors – the unhappy lack of mutual commitment and dual benefit goes on. Portland loses.
UPDATE: For more on the legals behind the High Court judgement see this excellent post at Australia Policy Online.