Infrastructure, Transport and Regional Development minister Catherine King was briefed on the project last week.

Her office told the Newcastle Herald that the previous government, despite making detailed preparations for a funding announcement during the election campaign, did not allocate specific funds for the project in its last budget.

The government, which is identifying millions in savings from the Coalition's budget that it describes as 'waste and rorts', has not indicated if it will commit funds to the container terminal in its October budget.

As the Herald previously revealed, the Morrison government intended to fund the project from the $7.1 billion Energy Security and Regional Development Plan announced in the March budget.

Internal Morrison government documents show the container terminal listed among $787 million worth of projects that were slated for the Hunter as part of the $4 billion region's package.

All of the other Hunter projects, including Newcastle Airport terminal upgrade, the New England Highway bypass to Muswellbrook, and the Newcastle Super Hydrogen Hub, were announced during the election campaign.

The government was preparing to announce $250 million in funding to help establish the container terminal on May 6.

But it was scrapped less than 24 hours beforehand in response to internal concerns about the perception of growing Chinese influence at the port, the impact of a container terminal on the coal industry's access and the state government's opposition to the project.

The container terminal, which has the potential to attract $1.8 billion of private investment and generate more than 19,000 direct and indirect jobs in the Hunter and contribute $2.5 billion to the national economy, is unanimously supported by Hunter state and federal MPs and local governments.

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Former deputy prime minister Barnaby Joyce who negotiated the Energy Security and Regional Development Plan in return for the Nationals supporting Australia's pledge to reach net zero 2050, told the Herald there was no question that the container terminal was funded in the Coalition's final budget.

"When we negotiated the 2050 deal Newcastle was one of the key precincts. The deal insisted those appropriations were in the budget," he said.

"From Road 358 from Merriwa to Willow Tree and the Hunter's second range crossing to the Port of Newcastle, it was a package that reflected the wealth that the Hunter gave to our nation."

"Please Hunter, stop being taken for granted or nothing is all you will ever get."

NSW Nationals senator Ross Cadell, who was previously employed at the port to lobby for the container terminal, said he was determined to ensure Labor honoured the Coalition's commitment to the project.

"We are seeing with Labor that words are cheap," he said.

"It's no coincidence that the $787million allocated for Hunter projects, including the port, hasn't been spent.

"This is the first step from Labor taking things off the Hunter that it deserves. If our children are searching for jobs in seven years time it will come back to Labor's decision not to honour this."

A Port of Newcastle spokeswoman said the port had been in regular contact with the Morrison Government about the container terminal.

In particular, multiple emails had been exchanged with the former deputy prime minister's office regarding the announcement of $250 million funding allocated under the 2022 budgeted Energy Security and Regional Development Plan.

In addition, a media release prepared for the project's announcement states that the project was funded in the Coalition's budget.

It also stated the container terminal was critical infrastructure that was needed to expand Australia's export capacity for both traditional and new industries.

The port spokeswoman said the container terminal represented a key component of the region's economic diversification.

'The Newcastle Deepwater Container Terminal project would contribute $2.5 billion in economic activity across Australia, generate over 19,000 direct and indirect jobs and inject $1.3billion into the Lower Hunter alone," she said.

"We are confident Labor will do the right thing and honour the commitment."

But Ms King's office and Newcastle MP Sharon Claydon argued briefings from the department showed there were no specific funds allocated for the project.

"The fact this alleged commitment didn't make it into the budget, highlights the complete incompetency of the previous government," Ms Claydon said.

"It is a cruel hoax to suggest this money was in the budget when it's clearly not."

Despite that, Ms Claydon said she would continue to advocate for a Newcastle deepwater container terminal, which she said was critically important to the Hunter Region's economic development.

"I remain a strong advocate, but it's no secret that the NSW Liberal government must fix the mess it created when it 'sold' the Port of Newcastle for this project to be fully realised," she said.

"With BHP announcing its plan to close the Mt Arthur coal mine by 2030, there is no time to waste.

"A resolution to the NSW Government's dodgy arrangements that prevent the Port of Newcastle from competing in the growing container trade on a level playing field must be resolved as a matter of urgency."

Ms King's spokesman also cited the constraints placed on the diversification of the Port of Newcastle by the state government.

Fifty-year government lease agreements, known as port commitment deeds, were entered into as part of the privatisation of Port Botany and Port Kembla by the NSW government in May 2013.

The deeds, revealed by the Herald in 2016, oblige the government to compensate the lessee, the NSW Ports consortium, if container traffic at the Port of Newcastle exceeds an indexed cap, which began at 30,000 containers annually.

The cap presently sits at an estimated 57,000 containers.

The compensation would effectively double the cost of moving a container at Newcastle, giving NSW Ports a statewide monopoly.

The Federal Court last year dismissed an Australian Competition and Consumer Commission action over the legality of the deeds.

The court dismissed the ACCC's argument that the port commitment deeds, were "brazenly anti-competitive and illegal".

As part of its ongoing appeal the ACCC has argued that the court erred in endorsing secretive provisions contained in the long-term port lease agreements for Botany, Kembla and Newcastle.

A NSW Treasury Spokesperson recently said the government stood by its ports agreements.

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