NSW Ports has dismissed the push for a Newcastle container terminal as an “infrastructure white elephant” in its submission to a NSW upper house inquiry.
The private consortium, which is fighting legal and political battles to maintain an agreement which would penalise Newcastle for developing a rival freight terminal, says Newcastle is the “wrong place” to expand the state’s container capacity.
The company paid the state government $5.1 billion in 2013 for 99-year leases over Port Botany and Port Kembla.
A 2014 deal for the sale of Newcastle port required the new operator, Port of Newcastle, to compensate NSW Ports if it developed a rival container terminal.
Read more: The ports dispute explained
NSW Ports is now fighting to protect its commercial interests after parliament set up an inquiry into the arrangement and competition watchdog the ACCC launched Federal Court action against the company over a deal it labelled “anti-competitive and illegal”.
The parliamentary inquiry, which is specifically into the impact of the Newcastle port sale on public works expenditure in NSW, will hold a hearing on January 31.
In its submission, lodged on Monday, NSW Ports says prioritising container movements at Port Botany and Port Kembla reflects population and economic growth trends to the west and south-west of Sydney.
“The simple facts are that there is no demand for a new terminal at present and, if there were, Newcastle is the wrong place to build it as it is too far away from the container destinations,” NSW Ports chief executive officer Marika Calfas said on Tuesday.
NSW Ports says 80 per cent of containers imported through Port Botany are unloaded within 40km of the port and less than two per cent of the containers are destined for the Hunter and Central Coast.
A report prepared last year for Port of Newcastle by Deloitte Access Economics said 87 per cent of imported containers were moved initially within the greater Sydney area, but 27 per cent ended up eventually in the Hunter or Central Coast.
A separate report prepared for the port by consultants AlphaBeta forecast that a modern container terminal in Newcastle would cut land transport costs for northern NSW businesses by $2.8 billion by 2050.
A Port of Newcastle spokesman said on Tuesday that the company was “happy to discuss the facts”.
“We’ve been very open about the weight of economic analysis that supports the need for Newcastle’s terminal development and look forward to hearing all the relevant evidence and data at the inquiry,” he said.
Read more: ACCC finds NSW ports deal 'anti-competitive'
“We’re targeting the newer, more efficient and greener ships that are being built in large numbers overseas. These ships won’t be able to be accommodated at other ports on the east coast.
“Newcastle already has the channel depth and mature rail and road connections needed for a fully automated container terminal.”
The NSW government, which is planning to connect Port Botany with western Sydney via the Sydney Gateway and WestConnex toll roads, says in its submission to the inquiry that the Newcastle port commitment deed (PCD) supported its strategy for lowering freight costs and truck movements.
“When Newcastle Port was leased in 2014, some of the State’s obligations to NSW Ports were contractually passed through to the Lessee of Newcastle Port,” the submission reads.
“This arrangement was known to bidders and the ACCC ahead of the transaction and is documented in the Port of Newcastle PCD.”
Newcastle handles about 10,000 containers a year, well short of the 30,000 threshold which would trigger penalty payments of about $100 per container, but Port of Newcastle argues the arrangement rules out future investment in a freight terminal.
Ms Calfas said Port of Newcastle’s estimates of freight capacity would create more than 2700 extra truck movements a day in the city, assuming half of the volume would be moved by rail.
She echoed the government’s justification for the compensation arrangement, arguing Newcastle was “attempting to have the conditions of the sale changed without compensating the NSW government”.
“It could be argued that the Port of Newcastle’s investors, China Merchants Port Holdings and The Infrastructure Fund, are seeking business value uplift at the expense of the NSW taxpayers,” she said.
The Port of Newcastle spokesman said it would not comment about the deed arrangements given the ACCC’s court action.