Country Report Australia October 1996 Main report

Economic policy: Cross-ownership airport restrictions reinstated--

During early August the federal government bowed to pressure from both the opposition and the states, and reinstated cross-ownership restrictions on Australia's airports. This means that the firm or group which has a controlling interest in Sydney airport or the proposed Sydney West airport after their privatisation will be limited to a 15% stake in the Melbourne, Brisbane and Perth airports. The cross-ownership restrictions may dilute bidding interest in the first tranche of airports offered for sale (Brisbane, Melbourne and Perth), by limiting ownership options for Australia's busiest gateway, Sydney airport.

The government's policy reversal was prompted by Labor's threats to join the Democrats and Greens in voting down the legislation in the Senate if the cross-ownership rules originally proposed by Labor were not reinstated. The Victorian, Queensland and Western Australian governments also lobbied the federal government to prevent their major airports from being absorbed into a network with Sydney and Sydney West airport.

--and a number of airport bidders have emerged--

Expressions of interest have been sought for Brisbane, Perth and Melbourne airports. The leasing of Adelaide airport, which was to be included in the first tranche, has been deferred until the completion of a feasibility study into the proposed integration of the domestic and international terminals. The list of bidders for the first trance of airports includes the Australian Airports Ltd group (backed by broking house J B Were & Son and the National Australia Bank), Amsterdam Airport Schipol (backed by the Commonwealth Bank and Macquarie Bank) and the Australian Pacific Airports Corporation (comprised of BBA, State Super Corp and the AMP Society). There are also several unaligned bidders, including the Hudson Conway group (which operates the Melbourne Casino), Westfield (a property developer and shopping centre owner), the City of Melbourne and National Mutual. Estimates of the bids for all three airports are in the range of A$1.6bn- 2.2bn.

The bidding structure will be by tender. Syndicates will lodge preliminary bids, which will then be used to draw up a shortlist of potential buyers for each airport. The list will be finalised in mid-October, with bidders not on the shortlist being knocked out of contention. A preferred bidder will be selected for each airport in March.

--with qualifying foreign bidders being given local status

The federal government is allowing foreign-held institutions to stand in the bidding as local investors, provided that at least 60% of the funds they manage are drawn from Australian investors. The same guideline was adopted for the CSL and Qantas floats and is expected to clear the way for the involvement of institutions such as National Mutual, Bankers Trust and County NatWest.

© 1996 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information