Renegade NSW Liberal MP Matthew Mason-Cox says his government's secret port privatisation deals were orchestrated by merchant bankers who had "done over" former premier Mike Baird to block competition.
Mr Mason-Cox told Parliament a container penalty included in long-term lease agreements for the Botany, Kembla and Newcastle ports in 2013 and 2014 "holds back the Hunter" and should be "unpicked".
"I was there when the deal was done in relation to the Port of Newcastle," the upper house MP said on Wednesday while backing a call by One Nation's Mark Latham to allow construction of a proposed $1.8 billion container terminal in Newcastle.
"I was unaware, as members in this place were all unaware, of what one might call the merchant banking sting in the tail.
"I cannot help but think that our merchant-banking premier at the time was done over by his ilk.
"In that regard, we have put together a deal which reduces competition amongst the ports in NSW."
Mr Mason-Cox did not name Mr Baird, but the former Liberal treasurer and premier is an investment banker and was the architect of the port privatisations.
Mr Mason-Cox's comments come as the NSW government is embroiled in a Federal Court action brought by the Australian Competition and Consumer Commission against NSW Ports, the consortium that paid the government $5.07 billion for 99-year leases at Botany and Kembla in 2013.
NSW Ports' shareholders are global fund manager IFM Investors, AustralianSuper, Abu Dhabi Investment Authority subsidiary Tawreed Investments and industry super funds Cbus (construction), HESTA (health and community services) and Hostplus (hospitality and tourism).
The ACCC, which cannot sue the government due to the technicalities of competition law, argues the privatisation deals are "illegal and anti-competitive" as they force Port of Newcastle to compensate NSW Ports if it develops a rival freight terminal.
The container cap beefed up the Port Botany lease price by giving the winning bidder a monopoly over freight movements in NSW.
The penalty payment was kept secret from Parliament and the public until it was revealed by the Newcastle Herald in 2016.
Port of Newcastle, owned by China Merchants and Australian infrastructure investment fund TIF, paid $1.75 billion for the Newcastle port lease in 2014.
The Federal Court case, in which the government has been named as a respondent, is due to start hearings on October 12.
"I very much look forward to that deal being unpicked, because I believe it really holds back the Hunter area in relation to not only the development of the port but also the movement of freight through that whole region," Mr Mason-Cox told Parliament.
"It also holds back the opportunity of bringing larger ships into the Port of Newcastle and creating a real hub there, which would drive economic activity in that area and provide a much-needed diversification of the economic base of the wider Hunter."
The Nationals, the Liberals' increasingly recalcitrant Coalition partner, have publicly backed a Newcastle container terminal as it would reduce rail freight costs for northern NSW farmers.
The Liberals' parliamentary secretary for the Hunter, Catherine Cusack, has been briefed by Port of Newcastle executives on the container cap and their plans for a terminal.
She said on Thursday that she could not comment because the matter was before the court but the issues involved were "terribly important to Newcastle".
The upper house Public Works Committee recommended last year that the government review the container cap after the Federal Court proceedings.
Mr Latham, whose party is a potential political threat to the Nationals in rural NSW, announced last week that he was moving to Newcastle.
The former federal Labor leader raised the Newcastle terminal in Parliament when he added an amendment to a motion from Greens MP Abigail Boyd which called on the government to halt the Great Western Highway duplication until it had investigated in detail improved rail connections between the state's west and the coast.
Mr Latham took aim at the container cap while adding an amendment to support rail freight capacity in the Hunter "to allow the construction of the Port of Newcastle container terminal".
"It ... effectively means we cannot build the Port of Newcastle because of the arrangements put in place by the Baird government and involving also Minister Constance and then Minister Berejiklian," he said.
"It is a shameful arrangement that now holds back the NSW economy when it can least afford it. We need the 15,000 jobs and the capacity to export out of the Port of Newcastle from the northern parts of the state."
Ms Boyd's motion and the amendment were approved with Labor support.
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