Port of Newcastle management have played down the concerns, with project director Ross Cadell describing the attack on the port as "a crude attempt to hoodwink parliament by hiding a commercial dispute as a security issue", referring to what he said was a long-running pricing dispute with Swiss-based coal exporter Glencore.

Either way, the escalation of the argument - and its association with the port's 50 per cent Chinese ownership - means Newcastle joins the Port of Darwin and the federal government's repudiation of Victoria's "Belt and Road" agreement as touch points on the Australian side of deteriorating relations with our biggest trading partner.

Concerns over the port's Chinese ownership have been a rucurrent background noise ever since its 2014 privatisation, but the port said last August it did not expect to be caught by tightened foreign ownership laws.

In a statement yesterday, Senator Abetz said he and 14 other parliamentarians had written to Mr Morrison and Treasurer Josh Frydenberg "requesting action on the monopolised Port of Newcastle, which is 50 per cent owned by Belt and Road Initiative actor China Merchants Port Holdings".

The signatories include Barnaby Joyce, who yesterday regained leadership of the National Party and returned to his previous role as Deputy Prime Minister.

Senator Abetz said the group was "highly concerned" about a lack of pricing oversight and regulation over the port, especially given the Chinese ownership.

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"The Port of Newcastle is an important strategic national economic asset as coal exports that go through it represent around 40 per cent of Australia's national coal export volumes and the port has used its monopoly position in relation to Hunter coal exporters, creating uncertainty that threatens jobs and the global competitiveness of coal exports through the port," Senator Abetz said.

"In 2020, China imposed steep restrictions on Australian coal imports and ongoing price increases at the Port of Newcastle will impact the global competitiveness of Australian coal exports and Australia's capacity to export coal to other countries."

In this light, the port ownership needed the same sort of "urgent assessment that is being undertaken with the Port of Darwin".

Senator Abetz said the budget appeared to "retrospectively eliminate previous arbitration determinations relating to the port".

"In addition, the Australian Competition and Consumer Commission has no oversight on the port and its monopoly status," Senator Abetz said.

" ACCC Chair Rod Sims has described the Port of Newcastle as "a monopolist without constraint."

The port was privatised for $1.75 billion by the NSW government in 2014 to a 50/50 consortium of Australian investment funds and a China Merchant Port Holdings subsidiary, with the lease to run for 98 years. China Merchants is listed on the Hong Kong stock exchange, but research shows the major shareholders are Chinese state-owned corporations.

In their letter to Mr Morrison and Mr Frydenberg, the 15 MPs cite concerns raised recently by security expert Peter Jennings and the Australian Strategic Policy Institute, which they say "has warned that this situation means that the Communist Party of China can, at its discretion, impose punitive costs to hurt Australian coal exporters through the ownership structure at the Port of Newcastle".

"It seems incredulous that a half Chinese-owned company that controls a monopoly bottleneck in the coal export chain can increase charges at their discretion, forcing up prices for Australian coal overseas making our second largest export commodity less competitive," the letter continues.

It goes on to say that changes to competition policy in the form of the National Access Regime - announced as a measure to "improve timeliness" in last month's federal budget - would "exacerbate the situation".

Responding to the claims, Mr Cadell, a former NSW National Party director, said the budget changes were designed to counteract what he described as "unintended consequences" of a 2015 review of competition policy, known as the Harper review.

Mr Cadell said Glencore had been involved in some 60 court cases and arbitrations over port charges and the budget changes had "given certainty" to the situation.

He said the port was "14 months into 10-year pricing deeds with vessel operators", which were at "a substantial discount to our standard charges".

He said the port had released a two-page fact sheet that countered in detail the various points made by the port's critics.

More importantly, the pricing questions and the ownership dispute were two different issues.

"This is a crude attempt to hoodwink parliament by hiding a commercial dispute as a security issue," Mr Cadell said.

Glencore declined to comment yesterday but the Minerals Council of NSW said the port was "wrong to claim this is just a dispute with a single coal producer".

"Since April last year nine Hunter coal producers have collectively sought a commercial agreement with the port on future pricing and access settings under a collective bargaining authorisation," minerals council chief executive Steve Galilee said.

"The port has used its monopoly power to simply refuse to engage in this process. As a result, the NSW Minerals Council has sought policy changes to secure an arbitration process for resolving such disputes, potentially through the Australian Competition and Consumer Commission."

On radio 2GB, the Prime Minister said the Home Affairs Minister could "give directions to the port" if there was "evidence to support" it.

"We are extremely concerned about proposed regulatory changes to the National Access Regime foreshadowed in the 2021-22 Federal Budget. Specifically, we are concerned that these changes will give the Communist Party of China a strategic geopolitical advantage over the export of Australian coal.

"As you are aware, the Port of Newcastle is a major strategic asset for Australia. It accounts for around 40% of Australia's coal exports, and is the largest coal export port in the world.

"The Port also operates as a monopoly, making it incredibly vulnerable to foreign interference. Most coal producers in New South Wales have no alternative but to use the Port of Newcastle.

"It is also half-owned by China Merchants Port Holdings, which is a state-owned corporation under the direction of the Communist Party of China.

"The Australian Strategic Policy Institute has warned that this situation means that the Communist Party of China can, at its discretion, impose punitive costs to hurt Australian coal exporters through the ownership structure of the Port of Newcastle. This comes on top of China's recent ban on Australian coal, as one of the many punitive measures imposed on Australian export commodities.

"It seems incredulous that a half Chinese-owned company that controls a monopoly bottleneck in the coal export chain can increase charges at their discretion, forcing up prices for Australian coal overseas and making our second-largest export commodity less competitive.

"Despite this, the ACCC has no oversight role in relation to the Port of Newcastle and its monopoly position. ACCC Chair Rod Sims has described the Port of Newcastle as "a monopolist without constraint."

"To make matters worse, the 2021-22 Federal Budget item 'Improving Timeliness - National Access Regime' appears to exacerbate the situation, by retrospectively eliminating previous arbitration determinations relating to the Port of Newcastle. We note that the Department of Prime Minister and Cabinet's Office of Best Practice Regulation describes this proposal as "not consistent with good practice."

"We also draw your attention to the fact that China Merchants Port Holdings openly states that its ambition is to implement a "Port-Park-City" development model at the Port of Newcastle, under the Communist Party's "Belt and Road" Initiative.

"The company's parent, China Merchants, also boasts that it is guided by 'Xi Jinping thought on Socialism with Chinese Characteristics for a New Era'.

"In light of these concerns, we ask that you:

- declare the Port of Newcastle a monopoly under the National Access Regime;

- establish a mechanism for arbitration between the Port of Newcastle and NSW coal producers, similar to the ACCC's arbitration mechanism for other monopoly assets;

-and provide assurance that any regulatory changes in relation to arbitration determinations will not be retrospective.

Yours sincerely

Senator the Hon Eric Abetz Liberal Senator for Tasmania

Senator the Hon Matt Canavan Nationals Senator for Queensland

Senator the Hon Concetta Fierravanti-Wells Liberal Senator for New South Wales

The Hon Barnaby Joyce MP Nationals Member for New England

Senator the Hon Eric Abetz Liberal Senator for Tasmania

Mr Llew O'Brien MP LNP Member for Wide Bay

The Hon Kevin Andrews MP Liberal Member for Menzies

Senator the Hon James McGrath Liberal Senator for Queensland

Senator Alex Antic Liberal Senator for South Australia

Senator Paul Scarr Liberal Senator for Queensland

Senator the Hon Bridget McKenzie Nationals Senator for Victoria

My George Christensen MP INP Member for Dawson

Senator the Hon Sarah Henderson Liberal Senator for Victoria

Senator Susan McDonald Nationals Senator for Queensland

Mr Phillip Thompson OAM, MP LNP Member for Herbert

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