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Melbourne 'lucky' over $9.7b port sale

AAP logoAAP 19/09/2016

Some "lucky" timing has handed Victoria a windfall $9.7 billion for the Melbourne port lease and ensured money can be poured into more infrastructure projects.

The 50-year lease price was significantly higher than the government's $7 billion estimate, and Treasurer Tim Pallas put it down to a lack of other good options in equity markets.

"I think we've been very lucky in terms of timing, let me be frank. Couldn't have picked a better time to go to the market," Mr Pallas told reporters on Monday.

"To be honest, we had a lower number ourselves in terms of what we expected.

"To say that this is a good day and this was a pleasant surprise I think would be a mild understatement."

The Lonsdale consortium bid, which includes the Future Fund, QIC and international investors, has passed competition and foreign investment checks.

"This is a massive vote of confidence ... every Victorian should take great pride in the price that has been paid for this asset," Premier Daniel Andrews told reporters.

More than $970 million of the purchase price will be spent on regional and rural infrastructure projects.

Victoria will also push to get the bonus 15 per cent of the sale price it is due under the federal government's asset recycling scheme.

Mr Andrews said next year's budget would reveal how the money would be spent, but building infrastructure was the key to creating jobs and pushing momentum in the economy.

The previous government had booked about $5 billion for the sale of the port lease, but estimates of the final price had ranged as high as $7 billion before Monday's announcement.

Opposition Leader Matthew Guy said his hard-fought negotiations over the port lease legislation had done nothing to drive the price down, and said the cash should improve the government's current projects.

"There's no excuse to do things on the cheap any more," Mr Guy said.

The legislation includes a 15-year compensation period if a competing government-funded port is built - the government originally wanted a 50-year compensation period.

Greens leader Greg Barber said the sale would hurt Victorian businesses.

"These new owners will want a return on investment and that will come from squeezing Victorian exporters," he said.

Mr Pallas signed the contracts on Monday morning, with commercial close expected on October 31.

Victoria is highly unlikely get the 15 per cent of the sale price it is was hoping for under the federal government's asset recycling scheme.

A spokesman for Treasurer Scott Morrison says the scheme closed to new deals on June 30 and uncommitted funds were returned to the budget.

"An agreement was not finalised with Victoria, despite them having the time to do so," the spokesman said in a statement.

He says the federal government will still work with Victoria to determine how $877.5 million of ARI funds that were set aside for Victoria could be allocated.

Victorian Treasurer Tim Pallas said the prime minister was breaking his commitments and "shortchanging Victoria".

"This money is owed to Victorian taxpayers and must go to Victorian projects," Mr Pallas told AAP in a statement.

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