Funds from privatising Victoria’s rural finance lender and the Port of Melbourne will be spent on infrastructure, the state government says on the eve of its budget.
The government is selling its agribusiness lender Rural Finance Corporation (RFC) to Bendigo and Adelaide Bank for $1.78 billion.
It will also push ahead with a 40-year lease of the Port of Melbourne.
The privatisations will feature in Tuesday’s 2014/15 budget, which is expected to show Victoria will remain in the black and a focus on major infrastructure projects six months out from the state election.
The proceeds of the two asset sales will be spent on infrastructure, including extending the rail line from Mildura to Geelong.
The government also expects to reap a further 15 per cent from each sale under the federal asset recycling program, an incentive for states that sell assets to fund infrastructure.
Money from the RFC sale, which is expected to deliver the state net proceeds of about $400 million, will go towards building infrastructure in country Victoria.
“This is going to be a very good outcome for the people of rural and regional Victoria,” Treasurer Michael O’Brien said on Monday.
The 40-year port lease will also go to the market early next year but the government will not reveal how much it expects to receive.
Mr O’Brien said the government had accepted advice that a 99-year port lease was a bad idea.
Ports Minister David Hodgett said funds raised would go towards the $110 million development of a container port at Hastings on the Mornington peninsula.
Tuesday’s budget is also expected to feature more funds for Melbourne’s East West Link tunnel and to shed light on plans for an airport rail link.
Mr O’Brien said Victoria was the only state with a surplus and all budget announcements would be fully funded.
Opposition Leader Daniel Andrews bagged the asset sales, saying the RFC should have gone to tender.
“Who sells a $400 million asset without even going to tender?” he asked.
“We have very significant concerns about the Rural Finance Corporation deal.”
Mr Andrews would not be drawn on whether Labor would support a 40-year Port of Melbourne lease, after originally calling for a long-term contract.
“We have always said what guides us fundamentally is the best value for Victorian taxpayers,” he said.