Secret Ports Privatisation Fee

Greg Cameron – 23 March 2015

Greg Cameron

Greg Cameron

A fee charged by the NSW government for container movements at the Port of Newcastle above a ”cap” remains a secret.

The fee and cap were revealed to parliament on 17 October 2013 by The Hon. Duncan Gay MLC, as Minister for Roads and Ports. Mr Gay said that he had informed the local Newcastle community, which plainly means that the Minister does not object to the details being made available to the community.

The government’s fee and cap are anti-competitive because they make a container terminal at Newcastle port an uneconomic enterprise. The government imposed the fee and cap in April 2013 for the Port Botany lease agreement. NSW Ports, the Port Botany lessee, will be paid the fee for every container movement at Newcastle port in excess of the cap. The fee and cap are included in the leasing arrangements for the Port of Newcastle. Port of Newcastle Investments, the port lessee, will pay the NSW government the fee for every container moved through the port in excess of the cap.

In March 2012, the government issued planning conditions of consent for developing a 1 million teu capacity container terminal on the site of the former Newcastle steelworks at Newcastle Port.

In June 2012, the government indicated that it considered Port Kembla to be the ”logical” location for major new container facilities when Port Botany reached capacity, due to its proximity to transport links, including intermodal facilities planned for south-western Sydney.

On 1 July 2014, the government advised that arrangements for the Newcastle port lease do not prohibit development of a container terminal on the former steelworks site.

On 22 August 2014, NSW Treasury said that a container terminal at Newcastle port would be an uneconomic enterprise (see statement by Anglo Ports). However, Treasury failed to acknowledge the existence of the fee and cap and how their removal would make a container terminal an economic enterprise.
The government’s claim that there is no market demand for a container terminal at Newcastle is based on the manifestly false assumption that there is no market demand in northern NSW for the services that a container terminal provides. Were the fee and cap to be removed, this would render a container terminal at Newcastle port an economic enterprise, as demonstrated by the willingness of the private sector to develop a container terminal.

In November 2013, the government terminated negotiations with Anglo Ports to develop a container terminal at Newcastle port. In a statement dated 10 February 2015, Anglo Ports said that it did not withdraw from the negotiation.

The negotiation was terminated by the government to allow the government to include the fee and cap in the lease arrangements for Newcastle port.

There is no fee or cap on container movements at either Port Botany or Port Kembla.

With 1450 metres of quay line, a container terminal at Newcastle port would have capacity for 3 million teu per year. This capacity could be doubled should the adjoining site, which is privately-owned, become available for a container terminal.

The government is yet to advise whether the fee and cap apply to privately-owned land at Newcastle port. Even more capacity would be possible should one or more of the port’s coal loaders see better opportunities in handling containers than coal.

The government estimates that container movements through Port Botany will increase to 10.9 million teu by 2046, up from 2.1 million teu in 2013 (BTS, 2014). In 2046, 6.9 million teu will be moved by truck due to insufficient rail capacity at Port Botany, compared with 1.9 million teu moved by truck in 2013.

In addition, the government is unable to demonstrate how rail capacity serving Port Botany will be increased to carry 4 million teu per year.

Neither is the government able to demonstrate the source of funds to complete stages 2 and 3 of the Northern Sydney Freight Corridor or the Western Sydney Freight Line.

Logically, removing the fee and cap because they are anti-competitive would see a container terminal at Newcastle port precede a container terminal at Port Kembla, while delaying the time that Port Botany reached capacity, which, if the BTS estimate is to be believed, will not have occurred by 2046, when 10.9 million teu are moved.

Newcastle port would serve the Sydney market by the railing of containers to a new intermodal terminal at either Eastern Creek, or Badgery’s Creek. The rail freight line would join the main northern line at Hexham, 15 km west of Newcastle, and from there extend south to Fassifern, Eastern Creek, Badgery’s Creek and Glenfield, where it joins the main southern line. The rail freight bypass line was NSW government policy but no longer appears in planning documents.

The rail freight bypass would enable road freight currently entering Sydney to use rail. It would be privately funded. The bypass line is not required if a container terminal at Newcastle port served only northern NSW.

A potential $80-$100 per teu price hike at the Port of Melbourne would benefit Newcastle port. A Newcastle container terminal would service Victoria by railing containers to Eastern Creek and Parkes, and then using the Inland Rail Line.

Mr Robert Coode, Executive President of the Australian Peak Shippers Association, has said that an $80-$100 per teu increase in container shipping costs at the Port of Melbourne will severely handicap most shippers and make them uncompetitive in the market place. According to Mr Coode, many shippers have already started to look at using alternate ports such as Sydney and Adelaide to move all, or at least a ”goodly part”, of their goods to customers.

If the NSW government is imposing a $100 fee per teu on container movements at Newcastle port, Mr Coode’s statement is further proof that the fee makes a container terminal an uneconomic enterprise.

APSA is the designated peak shipper body granted status by the Federal Minister for Transport and Infrastructure under the ”Competition and Consumer Act 2010” to represent the interests of Australian exporters.

The government refuses to release details of the fee and cap because they are anti-competitive.

Greg Cameron

29 Eddy Crescent

Florey ACT 2615

02 62598145

NSW Hansard

17 October 2013

The Hon. ADAM SEARLE: My question is directed to the Minister for Roads and Ports. How much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port?

The Hon. DUNCAN GAY: The rules in the organisation that did the scoping study for Port Botany and Port Kembla and introduced guidelines there indicate that while general cargo is allowed there will not be an extension under the rules for the lease of Newcastle Port. So the short answer to the question is that we do not envisage that any compensation will need to be put in place. The Government has been clear on this all the way through the process, even before it indicated it would lease the port at the stage when Newcastle Port Corporation was in place. I have indicated in the House, as I have in Newcastle—indeed, I made a special visit to Newcastle to talk to the board, the chief executive officer and the local community—that part of the lease and the rationalisation was a cap on numbers there. I am not saying that there will be no containers into Newcastle. Certainly, a number of containers will come in under general cargo, but there will not be an extension. The only time an extension is allowed is when a specific number is reached and is tripped in Port Botany and Port Kembla.