Container Penalty Mocks Representative Democracy

Without informing the public or Parliament, Coalition government ministers decided in 2012 to penalise future governments if they changed the Coalition’s policy of not developing a container terminal at the Port of Newcastle.

The ministers’ decision makes a mockery of representational democracy.

Ministers decided that an offending future government would pay a penalty to a lessee of Port Botany and Port Kembla if that lessee lost container business to the Port of Newcastle.

For four years until 2016, ministers knowingly and deliberately concealed the penalty and denied that it existed. They were forced into an admission when the penalty was exposed in July 2016 by the Newcastle Herald.

Ministers actively prevented MPs from considering the penalty by concealing it and denying it.

When NSW Ports Pty Ltd leased Port Botany and Port Kembla from the government in May 2013, the government contractually committed to pay the penalty to NSW Ports, until 2063.

A trial was conducted in the Federal Court in October – December 2020 into the penalty’s legality under the Commonwealth’s “Competition and Consumer Act 2010” (CCA). It was impossible for the Federal Court to conduct this trial if the penalty was legislated. A legislated penalty would have complied with the CCA, by virtue of being legislated.

On March 18 2021, the Treasurer, the Hon Dominic Perrottet, advised Parliament that the penalty was authorised under section 6 of the “Ports Assets (Authorised Transactions) Act 2012” (PAAT). That advice cannot be correct because the trial could not have been conducted if the penalty was authorised by Parliament.

Passed by Parliament in November 2012, the PAAT authorised Port Botany and Port Kembla to be leased to the private sector. Section 6 authorised the Treasurer to “exercise all such functions as are necessary or convenient for the purposes of an authorised transaction”.

Section 6 did not expressly authorise, or expressly preclude the penalty. The penalty is unlawful because it was not considered by Parliament under any legislation.

Greg Cameron
Transport Analyst

Further comment

State Cabinet made a commercial decision in 2012 to penalise the state government, as well as future state governments, if a future lessee of Port Botany and Port Kembla was to lose container business to the Port of Newcastle.

Cabinet concealed its decision from Parliament when Parliament passed the “Ports Assets (Authorised Transactions) Act 2012” (PAAT) in November 2012, authorising Port Botany and Port Kembla to be leased to the private sector.

Section 6 of the PAAT authorised the Treasurer to “exercise all such functions as are necessary or convenient for the purposes of an authorised transaction”.

Section 6 did not expressly authorise current and future state government to be penalised. Neither did section 6 expressly preclude current and future state government from being penalised.

Section 6 made no reference to penalising current and future state governments because the penalty was deliberately concealed from Parliament.

Cabinet again deliberately concealed the penalty from Parliament when Parliament amended the PAAT in June 2013, authorising the Port of Newcastle to be leased to the private sector. By then, the penalty had been included in lease contracts with NSW Ports Pty Ltd for Port Botany and Port Kembla, dated May 2013.

Cabinet ministers denied that the penalty existed until it was exposed by the Newcastle Herald in July 2016.

A trial into the legality of the penalty under the “Competition and Consumer Act 2010” (CCA) was conducted by the Federal Court in October – December 2020. This trial could not have been conducted if the penalty was legislated under section 6 of the PAAT.

The trial proves that the penalty was not legislated under section 6 of the PAAT.

Do Members of Parliament consider that the penalty that Cabinet deliberately concealed from Parliament was legislated by Parliament?