The Australian Competition and Consumer Commission’s decision to challenge allegedly “illegal and anti-competitive” arrangements used to “prevent or hinder” any Newcastle container terminal is the big break the project has been waiting for.
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The arrangements targeted by the ACCC were built into the privatisation of the state’s three main ports when Botany and Port Kembla were leased together for 99 years in 2013 to a consortium called NSW Ports, and when Newcastle was leased for 98 years in 2014 to a group known as Port of Newcastle.
The government repeatedly denied there were limits on Newcastle and it was not until the Newcastle Herald obtained paperwork in 2016 proving their existence that the government admitted they were real. Under these “port commitment deeds”, Newcastle must pay NSW Ports (via the government) a fee of at least $100 a container, a deal-breaking cost of between $35 million and $200 million a year on the size of operation being planned at the moment.
At the same time, the government argued that the restrictions didn’t matter because a Newcastle terminal was uneconomic on its own terms: it was too far from markets, ships would only stop at Botany, Newcastle should stick to coal, and so on. But supporters argued that if a Newcastle terminal was such a hopeless case, why would a pro-free-markets government contractually protect Botany from competition for the 50 years revealed this week by the ACCC?
It is clear that the ACCC has had concerns about the Newcastle handcuffs from the time they were applied, but it had argued in the past that it was unable to intervene because of technicalities in the federal competition laws.
This, it seems, is why the ACCC is only taking court action against NSW Ports, and not against the government, which was the party offering the protection, after all. The ACCC says the case could take two years to run, but it’s already proving a circuit-breaker, and may not need to be resolved in Newcastle’s favour to have a positive impact.
Port of Newcastle chief executive Craig Carmody has said the organisation is talking with the government and there are compelling commercial reasons why the dispute would best be settled by negotiation.
Four parties are involved: the ACCC, the government and the two port operators. NSW Ports is owned 80 per cent by Australian funds and 20 per cent by the Abu Dhabi government. Port of Newcastle is 50 per cent owned by Queensland-based The Infrastructure Fund (TIF) with the other 50 per cent held by one of the world’s largest stevedoring businesses, China Merchants Port Holdings.
Rather than lose its monopoly through a court decision, NSW Ports may find a negotiated settlement with the government and Port of Newcastle to be a better outcome.
Newcastle had been negotiating with another international stevedore, the Dubai-based DP World, about building its terminal, but these talks ended mid-year, and it is now looking at other options.
It is worth noting that the port’s latest economic analysis was launched this week at the Sydney headquarters of infrastructure giant Macquarie Bank. Macquarie is about to become asset manager for The Infrastructure Fund, and hosting the launch of the AlphaBeta report can be read as a sign that the highly influential Macquarie has confidence in the Newcastle plan.
Add the undoubted heft of China Merchants Ports – both financially and as one of the world’s largest port operators – and you have some heavy hitters behind a bold proposal to build a $1-billion-plus, state-of-the-art automated container terminal capable of handling bigger ships than Botany.
Despite this week’s undoubted progress, there is one major question at the Newcastle end of things that needs resolving.
In the original, BHP-era version of the project, containers were to move in and out of the port along a new rail line passing the BHP steel mills and the Steel River industrial park, joining the main tracks at Hexham. From there, southbound trains would take the long-promised Hexham-to-Fassifern rail link, bypassing suburban Newcastle.
In another example of poor planning, the easement was never reserved and the land in question is no longer owned by BHP, meaning it would have to be bought back. As for the Hexham-to-Fassifern rail link, it’s as far off in the future as it was 20 years ago.
Without such infrastructure, containers would have to go in and out of the port via the inner suburbs. The more that go by road, the greater the number of semi-trailers heading in and out of Industrial Drive. The more that go by rail (the preferred mode), the greater the delays for motorists at the Clyde Street, Islington, and Glebe Road, Adamstown, level crossings. An approved 2012 concept plan for the Mayfield site found the road and rail impacts were manageable, but there was resident opposition last time around, and there will be this time, too. Especially as Newcastle says the advice from international shippers and stevedores is to build as big as possible from the start.
The road-rail access issues need sorting out without delay, because no-one wants Botany’s road congestion replicated here. Done properly, the Newcastle terminal would be a truly significant economic driver for this region and beyond. The ACCC’s intervention means that BHP’s departing legacy is again firmly on the table.
Ian Kirkwood
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
