Newcastle Container Terminal Kicked Down the Road

A NSW upper house enquiry into how Port of Newcastle’s sale affects NSW public works spending ended in anticlimax.

But it further lifted the lid on secretive dealings by the state government that, to enable the sale of ports Botany and Kembla, raised their value by stymieing the future growth of Newcastle’s port.

Though it found both public and parliament were not told of this deal – in which Port of Newcastle pay NSW Ports consortium for container traffic – it deferred investigating this to a “future inquiry.”

Pictured – Freighter passes Nobbys Head, Newcastle. Image credit Port of Newcastle

Shortly after the committee began, the Australian Competition and Consumer Commission (ACCC) launched a Federal Court case against NSW Ports – operators of Port Botany and Port Kembla – for making agreements with the state that the ACCC alleges had an anti-competitive purpose and effect.

The second enquiry won’t be until after the ACCC’s Federal Court proceedings “have concluded, or at such time as the House determines.”

Committee chair, Robert Brown MLC, said while Newcastle container limitations had not significantly affected public expenditure on Sydney’s transport infrastructure projects, NSW Government should review the state’s ports policy, including the potential for a container terminal at the Port of Newcastle.

The committee recommended that the Legislative Council (NSW upper house) inquire into the ports transactions – specifically container limitations and associated financial obligations contained within the Port Commitment Deeds (PCDs) – and that the NSW Government conduct a detailed investigation of freight rail options between Ports Botany, Newcastle, and Kembla.

Expressing apparent frustration, a Port of Newcastle spokesman told the Newcastle Herald that the company was “nonplussed by the inquiry’s outcome” calling it a missed opportunity, and that regional NSW “shouldn’t have to wait for lengthy court processes to tell everyone what we already know."

State Member for Newcastle, Tim Crakanthorp, vowed to continue pressuring the government until “the port of Newcastle reach[es] its full potential. Welcoming the ACCC decision on 29 January, he said “the Government finally admitted last year that there was a massive anti-competitive clause in the Port of Newcastle contract, after years of secrecy and cover ups.”

Analyst Greg Cameron questioned not only why the NSW government concealed the conditions of sale and the levy but, particularly, when they were disclosed to the ACCC.

Why is this date confidential?

Did the ACCC learn about them before or after Port Botany and Port Kembla were leased to NSW Ports on May 30 2013?

The date is critical because the ACCC claims that the government stopped carrying on a business for the purposes of the “Commonwealth Competition and Consumer Act 2010” (Competition Act) from at least July 27 2012, when it announced that the state’s next container terminal would be developed at Port Kembla, after Port Botany reached capacity.

Mr Cameron said the ACCC claims that the Competition Act stopped applying to the government in respect of a Newcastle container terminal because the government had decided, from at least July 27 2012, not to develop a Newcastle container terminal.

The ACCC claim, obviously, is wrong.

What the government had actually decided was to develop a Newcastle container terminal on condition that the developer reimbursed the government for any payment the government made to the lessee of Port Botany/Port Kembla. That is why the government concealed the “conditions of sale and the levy” from the public and the Parliament.

But did the government provide the ACCC with this information while concealing it from the public and the Parliament?

Had the public and the Parliament been informed about the government’s intentions, before Botany and Kembla were leased, the ACCC had an obligation to inform the public and the Parliament that the government’s actions were likely to be illegal under the Competition Act.

Mr Cameron said the ACCC also was obliged to inform the bidders for the Botany and Kembla leases that entering into the Port Commitment Deeds with the government was likely to be illegal under the Competition Act. The ACCC has not disclosed the date it was informed about the “conditions of sale and the levy.”

To questions on the sitting day, 31 January, Port of Newcastle CEO, Craig Carmody, acknowledged that the lessees of the Port of Newcastle had agreed to the PCD at the time of the transaction, and that investors understood that they had purchased a coal terminal port:

What I would say, looking at it, first of all they did not really have a choice; people were desperate to buy a port; it was a condition of the sale that you had to agree to the deed, so that was what you had to agree to even be able to play the game.

I would say that at the time they bought it coal was rampant, coal was an amazing future. They did buy a coal terminal port, there was no denying that is what they paid for.

Mr Carmody also told the committee that the PCD had affected a decision by port and supply chain operator DP World to ‘walk away’ from a memorandum of understanding to develop a container terminal in Newcastle:

DP World walked away. They had a memorandum of understanding [MOU] with us to develop a container terminal if it was possible. DP World walked away because the port commitment deed [PCD] made it economically unviable. Obviously that is fine; that is exactly what we are being told by the new investors.

Mr Carmody said he would demonstrate to the public that the removal of the PCD in order to enable the development of a Newcastle container terminal would benefit the state:

… my view is I am trying to prosecute this case as far as I can get to show people that the removal of the port commitment deed is actually in the benefit of New South Wales, particularly northern New South Wales.

The NSW Legislative Council Public Works standing committee was established on 15 March 2018 to inquire into and report on public works. It’s three current enquiries are:

  • Scrutiny of public works in New South Wales
  • Sydney stadiums strategy
  • Impact of Port of Newcastle sale arrangements on public works expenditure in New South Wales. The report, released on 25 February 2019, can be downloaded from this page.

The Newcastle Port hearing took 22 submissions, including from NSW Ports, Port of Newcastle, NSW Government, ACCC, Lock the Gate Alliance, Moree Plains Shir Council, and, amongst many more, Newcastle and Sydney Business Chambers.

Pictured ~ Artist’s impression of Port of Newcastle container terminal in the Mayfield precinct. Image supplied by Port of Newcastle.