Port payout decision puts state's financial hurdles in play

Treasurer Daniel Mookhey will have a very difficult task embracing the NSW independent pricing tribunal (IPART) decision that opens the way for the PoN to make a one-off $13million payment to expunge the penalty to start a container terminal at the Mayfield Wharf in direct competition with Botany and Kembla.

In Parliament recently, Premier Chris Minns was very vocal about the PoN having to pay somewhere between $600 million and $4.3 billion (Deloitte-based calculations).

Port Botany and Port Kembla were clearly expecting large payments to fend off the competition from the PoN.

Mr Mookhey's hurdle now is how he will make substantial payments to Botany and Kembla when he has only $13million in the kitty.

The PoN since 2014 has failed to operate container handling in accordance with the cap's allowable threshold, proving very costly to Hunter businesses and northern Inland farmers.

Port trade statistics in August 2022 show only one container was handled. These container importers and exporters have had to pay much higher freight costs to use the ports of Brisbane, Sydney, and Melbourne. This cost has been taken from the businesses and farmers, thus depriving the Treasurer of critical state revenue.

Calculations made by Correct Planning and Consultation for Mayfield (CPCFM) show lost trade of 493,264 containers since 2014. At $25 per TEU (20 foot equivalent unit) this equates to $12,331,600. There is no provision for compensation for lost trade. The PoN too, has lost a sizeable amount of revenue that could have funded staff to boost the container trade. And, of course, Mr Mookhey lost revenue.

With the "cap" expunged, the Port of Newcastle may now be prevented from handling any containers at all until the legislative issue with Port Kembla, as the state's second container terminal, is resolved.

The PoN has some level of approval for a very small container terminal of 350,000 TEU, however, a startup triggers considerable capital works to deliver and receive containers to and from the port. While some of this responsibility will be a cost to the port, responsibility for a major slab of the funding will be fall to Treasurer Mookhey's budget.

A stage I terminal development of say a 250,000 TEU facility must be underway relatively quickly as importers and exporters should no longer have to bear the cost of dealing with other more distant ports. Newcastle can easily handle 50 small container vessels a year now. With 2000 TEU each inbound and outbound - plus empties, this would equate to about 225,000 TEU; or an extra half a million trucks on Industrial Drive.

By the end of 2025, the approved full capacity should be feasible provided the off-site capital works are in place and the off-site support works are also operational. Mr Mookhey will need to allocate funding in the upcoming state budget and the federal government will need to also pencil in some serious funding this year.

The port has always claimed that containers will replace coal. However, coal would not seem to be on the decline due to the approval of modifications and expansion activities and with many of the new mines west of the Great Dividing Range coming online.

No doubt the PoN will be looking to build its two million TEU terminal in five to seven years. CPCFM says that, before four million truck movements a year are launched into our community loaded with TEUs and FEUs (40 foot equivalent unit), a rigorous and thorough planning process with adequate consultation will need to be undertaken.

The community can then thank the Port of Newcastle for bringing a state-of-the-art container terminal to the table and for being persistent in achieving its goal.

Let's hope we all do not, unlike our past member for Newcastle, Jodi McKay, get caught up in a "trains not truck" campaign.