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THE Border Mail has this week brought to light confidential negotiations between the Victorian government and the City of Wodonga about subsidising the creation of a rail terminal at the council’s Logic business park.
Having a new national freight operator come to Logic might seem the answer to the council’s prayers, given its foray into commercial property development has left ratepayers with a $32 million debt.
Yet, there has been no discussion of the business case for a terminal at Logic right now, whether the demand is there to make it viable or how it would commercially survive once subsidies cut out.
I know about the need to ask these hard-nosed commercial questions.
My family built the Ettamogah Rail Hub, 10 minutes up the highway, five years ago.
We did so in response to market demand because businesses lacked a freight-rail option. It’s a state-of-the-art efficient facility that offers competitive pricing without the need for government handouts and it has plenty of capacity.
The Border Mail reported that the council and state government subsidies on the negotiating table for Logic included cash, rate holidays and interest-free terms on the land.
From someone who has a long history of building rail terminals, if that’s what it takes just to get someone to consider an investment, it rings some loud warning bells about commercial viability.
The negotiations between Wodonga and the Victorian government were held behind closed doors until The Border Mail’s report.
Any publicly funded rail terminal at Logic (or, indeed, anywhere) must be based on a sustainable business case and has to be shown to be in the public interest through following the proper council and state government processes to ensure transparency and accountability to the public.
It must also meet the principle of competitive neutrality so that publicly subsidised services do not enjoy an unfair advantage over the rest of the market that compete on their merits.
Inefficient duplication does not lead to competitive outcomes.
This article first appeared on www.bordermail.com.au
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