Too many ports in a storm provides a comprehensive overview of the perverse incentives and weaknesses in Queensland’s current approach to port development.
As the mining investment boom turns to bust, Queensland’s port capacity has already shifted from a shortfall to a surplus. Coal ports are operating at 65 per cent capacity, well below the industry average of 85 per cent. Duplication of liquefied natural gas (LNG) ports on Curtis Island are dragging down industry competitiveness before the first exports flow. This puts Queensland at a competitive disadvantage in the short-term, and at risk of stranded assets in the long-term.
With investment banks now forecasting slow global thermal coal demand, Queensland has enough current and committed port capacity until at least 2017. Even with more optimistic projections for export growth, Queensland has enough approved port capacity until at least 2025. This means no further port approvals need to be decided before 2020.
This report finds surplus port capacity is a problem for the Queensland Government, not just the private sector. With industry under financial pressure, employment and environmental standards may slip. Stranded assets would put jobs and government revenue at risk. Dredging for port capacity that may not be needed has significant environmental costs.
The underlying problem is that Queensland’s boom-time policy settings and government attitudes have served to amplify rather than check the irrational exuberance of private investors. Too many ports in a storm provides a checklist of 5 practical steps Queensland’s government can take to address the perverse incentives, inadequate information and confused governance that led to current surplus port capacity.