“We are alleging that making these agreements containing provisions which would effectively compensate Port Kembla and Port Botany if the Port of Newcastle developed a container terminal, is anti-competitive and illegal,” said ACCC Chair Rod Sims.
The following day, 11 December 2018, the Port of Newcastle released a commissioned report on the economic impact of a container terminal at the Port of Newcastle. This suggested (among other things) that a modern container terminal would cut land transport costs for northern NSW businesses by $2.8 billion by 2050. This would, according to Port of Newcastle CEO Craig Carmody, increase exports from Northern NSW including the Hunter by $1 billion by 2050
"Businesses in Newcastle, Singleton, Tamworth, Gunnedah, Port Macquarie, Kempsey, Liverpool Plains and Narrabri can look forward to savings of more than $500 per standard container, if they shipped their goods through Newcastle rather than Port Botany or Port of Brisbane," Mr Carmody said.
NSW Public Works Inquiry
(b) The nature and status of the port commitment deeds, the extent to which they contain limitations on container port movements, and the terms and binding nature of any such commitments.
(c) The extent to which container port limitations contribute to additional costs for NSW industries who are importing or exporting from New South Wales, especially in the Port of Newcastle catchment.
(d) Any other related matters.
2. That the committee report by 28 February 2019".
- The Hon Robert Brown MLC Shooters, Fishers and Farmers Chair
- The Hon Taylor Martin MLC Liberal Party Deputy Chair*
- Ms Cate Faehrmann MLC The Greens
- The Hon John Graham MLC Australian Labor Party
- The Hon Trevor Khan MLC The Nationals
- The Hon Scot MacDonald MLC Liberal Party
- The Hon Lynda Voltz MLC Australian Labor Party
- Finding 1: The Port Commitment Deeds including the conditions of sale and the levy were not disclosed to the public or the Parliament:
- Finding 2 26 That the limitations on Newcastle container port operations following the ports transactions have not significantly impacted expenditure required on transport infrastructure projects in Sydney.
- Recommendation 1: That the Legislative Council consider establishing an inquiry into the ports transactions, and specifically container limitations and associated financial obligations contained within the Port Commitment Deeds, at the conclusion of the Federal Court proceedings involving the Australian Competition and Consumer Commission and NSW Ports or at such time as the House determines.
- Recommendation 2: That the NSW Government conduct a detailed investigation of freight rail options between Ports Botany, Newcastle and Kembla, including options for line duplication and dedicated freight-line construction, to ensure strategic future corridors are preserved, to optimise rail modal share of freight transport, to better align capacity to meet future demand and to improve the rail service reliability.
- Recommendation 3 35 That the NSW Government conduct a review of the state's ports policy, including the potential for a container terminal at the Port of Newcastle, at the conclusion of the Federal Court proceedings involving NSW Ports, or at such time as the House determines.
The analysis is very Sydney centric. I have seen this type of analysis before dating right back to the Cohen Commission inquiry into a proposed Northern state. There the analysis focused on railways, the apparent economies associated with the Sydney port rail network and the additional costs associated with developing an alternative system. Leaving aside costing and pricing issues, the way that then NSW rail freights were set provided an artificial surplus to the Sydney railway network carrying Northern good that then became a cost, the analysis was based on what was not what might be.
I thought that was the case here too. It is heavily set within existing plans, existing structures. The Port of Newcastle is seen as an extension of the Sydney network and analysed in that context. In a way, the approach adopted by the Port of Newcastle in emphasising certain savings that would accrue to Sydney through (for example) reduced infrastructure spend encouraged that approach. Disprove those, or at least cast doubt on them, and the case starts to fall to ground.
Assuming that I understand the arguments correctly, the evidence ran that the majority of container traffic was Sydney bound and that, further, the economic locus was shifting to the south and south west, effectively isolating Newcastle, The argument here seems to have been two fold. That expenditure and planning should be focused on the existing infrastructure and that these trends made it unlikely that a container port at Newcastle could be viable.
I have commented before about the way in which present development dynamics are progressively disadvantaging and indeed fragmenting the North The evidence presented to the committee seems to support that view. However, the whole analysis misses certain key points.
The anti-competitive clause itself should never have been there in the first place. It artificially increased the price that was paid for the long term lease at the cost of the Port of Newcastle, Newcastle and indeed importers and exporters across Northern NSW who might have benefited from alternative shipping options. It also artificially increased traffic through the Botany Bay and Port Kembla, creating an economic incentive for further investment to manage the increased traffic.
One can argue about the quantum, one can argue about the extent to which container traffic at Newcastle would be viable, but it remains an economic distortion introduced by the Sydney Government whose costs are born by those in the North.
In this context, and this in part reflects the way the committee's terms of reference were written., there is actually no recognition in any of this of the North as an economic and geographic entity with its own interests. How might we use a container terminal at Newcastle? How might we combine it with other infrastructure to encourage Northern development.? I think that these questions are worth asking.