Waiting for the Government to Fall on its Sword

By Greg Cameron*

For eight years, the NSW government’s terms for developing a container terminal at the Port of Newcastle have been crystal clear: there will not be one.

Proposed container terminal at Mayfield in the Port of Newcastle, NSW.

A decision was announced on July 27 2012 that a container terminal will not be developed at the Port of Newcastle before Port Botany and Port Kembla both reach capacity. Treasurer, Dominic Perrottet, confirmed this position on April 23 2020.

Without telling the public, the government reversed its decision when it leased Port Botany and Port Kembla to NSW Ports Pty Ltd on May 31 2013. It committed to pay NSW Ports for container traffic above a minimal specific cap if a container terminal was developed at the Port of Newcastle.

Under the secret deal, NSW Ports would be paid the same amount as shipping the excess containers through Port Botany would earn. This cost would be “passed-through” to a private company, “Mayfield Development Corporation Pty Ltd” (MDC).

MDC, not the government, would pay NSW Ports. It would be uneconomical for MDC to develop a container terminal, which was the government’s plan.

Leasing Port Botany and Port Kembla to the private sector was authorised by the “Ports Assets (Authorised Transactions) Act 2012” (2012 Act). Passed on November 22 2012, the 2012 Act did not authorise the government to make any payment to the lessee in respect of the Port of Newcastle.

The decision to pay NSW Ports using MDC’s money, was also hidden from the ACCC. The ACCC said on June 7 2013 that the government’s decision not to develop a container terminal at the Port of Newcastle made the government exempt from the “Competition and Consumer Act 2010” (CCA).

But the ACCC did not know that the government had reversed its decision not to develop a container terminal at the Port of Newcastle.

The ACCC even examined the government’s decision not to develop a container terminal before the agreements were signed with NSW Ports. If the ACCC knew about the deal, it would have advised the government to amend the 2012 Act.

Under the CCA, an action by a government that is likely to be illegal under the CCA can be made legal if legislation is passed approving that particular action. But the government did no such thing.

Leasing the Port of Newcastle to the private sector was authorised by the “Ports Assets (Authorised Transactions) Amendment Act 2013” (2013 Act). Passed on June 23 2013, the 2013 Act did not authorise the government to make it uneconomical to develop a container terminal by “passing-through” the cost of paying NSW Ports to the lessee.

The 2013 Act could not authorise the government to “pass-through” the cost of paying NSW Ports because the 2012 Act did not authorise the government’s contractual commitment in the first place.

The government terminated its negotiation with MDC in November 2013, leaving it without a source of funds to pay NSW Ports.

An announcement was made on October 28 2013 that no decision had been made to lease the Port of Newcastle. Making a decision to lease the port made the government exempt from the CCA. A decision to lease the port was announced on November 5 2013.

“Port of Newcastle Investments Pty Ltd” (PoN) leased the port from the government on May 30 2014. PoN agreed that the government would “pass-through” the cost of paying NSW Ports.

PoN accepted that the government’s terms made it uneconomical to develop a container terminal.

The ACCC alleged in the Federal court on December 10 2018 that NSW Ports acted illegally under the CCA because “passing-through” the cost of paying NSW Ports makes it uneconomical for PoN to develop a container terminal at the Port of Newcastle.

The ACCC is not currently alleging that the government acted illegally under the CCA. The ACCC has not challenged the government’s assertion that its 2012 decision is unchanged. 

But the ACCC’s current position is that the government was acting outside the operation of the CCA from at least July 27 2012.

The ACCC is not currently alleging that the government’s terms for developing a container terminal at the Port of Newcastle as at May 31 2013 reversed the decision not to develop a container terminal.

It is impossible for the ACCC case against NSW Ports to commence on October 22 2020 for a 29-day Federal Court trial, if the government decided not to develop a container terminal at the Port of Newcastle in May 2013.

As soon as the government admits that its decision not to develop a container terminal was reversed in May 2013, to allow conditions to be imposed that made it uneconomical to develop a container terminal, the ACCC can take court action against the government as well.

The ACCC is waiting for the government to fall on its sword.


*Greg Cameron is a transport consultant.

Further reading on this subject can be found at his website.