The impact of privatisation on the financial and environmental performance of the Port of Brisbane Proprietary Limited (PBPL): a case study

The impact of privatisation on the financial and environmental performance of the Port of Brisbane Proprietary Limited (PBPL): a case study

The purpose of this study was to investigate whether there was a potential impact from privatisation on the financial and environmental performance of Port of Brisbane Proprietary Limited (PBPL). There are two motivating factors. First, available literature has provided contradictions between the predictions from the theory of the firm and stakeholder theory when comparing the financial and environmental performance of a firm being operated by a government-owned organisation compared to a private enterprise. Second, there is a need to investigate the inconsistencies of findings and arguments when comparing public versus private ownership of an Australian port due to the paucity of such studies in Australia.

There is also, limited literature which has evaluated the financial and environmental performance of privatised ports in Australia. A null hypothesis, therefore, was developed to evaluate the impact of ownership types on financial and environmental performance to address the inconsistencies of findings and arguments comparing public versus private ownership of an Australian port.

The theoretical framework used was based on the theory of the firm and stakeholder theory. Primary and secondary data for the Port of Brisbane’s financial and environmental performance operations was gathered across the pre-and post-privatisation ownership conditions (between 2005 and 2017). Six-year pre- and six-year post-privatisation periods were selected due to size and complexity. Each 6-year period was divided into two equal periods to account for the public ownership operations and the transitional period from public ownership as well as the transitional period into privatisation and the private ownership operations.

Step 1 involved a one-way Multivariate Analysis of Variance (MANOVA) for twelve (12) performance variables ratios across the four periods to test the null hypothesis. The MANOVA and ANOVA post-hoc tests significant results were used as an investigative analysis tool to frame the open-ended questions to gather reasons for such differences from interviewees in Step 2. The findings collected by interviews is used to triangulate the results of Step 1.

The financial and environmental performances of PBPL were found to improve during private ownership (between 2012 and 2017) compared to state ownership (between 2005 and 2010). Further, interviews revealed that the operational effectiveness and efficiency had increased statistically during private ownership as they had heavily invested in new technology during 2014 and 2017. Also, the total energy consumption ratio and the total Emission of CO2 values of PBPL reduced significantly after privatisation. A reason supplied was that the private management was strongly influenced by the terms and conditions of the PBPL privatisation agreement, corporate governance, accountability, competition created by the vicinity ports, the advantages of the geographical location of PBPL, and organisational mechanisms.

Consequently, PBPL conducted its business affairs and operational activities to meet its financial, operational and environmental strategic goals with the objective of achieving long term sustainability, while also creating increased shareholder value through correct market anticipations. This was achieved while also practising significant environmental protection, conservation policies and procedures in their daily operations.

This study provides a model for evaluating the impact of privatisation based on stakeholder theory. Further research could be conducted to determine the real purpose motivating the drive towards privatisation and establish if that motivation is driven by the desire for profit maximisation or to improve stakeholder satisfaction. Additionally, future research could perform a multi-port performance evaluation approach, which would enhance the appropriateness and significance of the research.