Undisclosed fee holding back Newcastle – Newcastle Herald

A container terminal could boost our port, writes Greg Cameron.

A SECRET fee was imposed on future container movements at the Port of Newcastle in 2012. Premier Mike Baird steadfastly declines to disclose it. To do so would invite examination of whether the fee violates Australian competition law.

The fee was imposed to boost the sale price of the Port Botany lease. This lease was worth more by retaining Port Botany’s status as the only container port in NSW.

The fee is the primary impediment to building a container terminal in Newcastle. Remove it and the land that is suitable for a container terminal will rise in value. A container terminal will not be supported by Newcastle City Council without dedicated rail freight access. A rail line would need to be built along the banks of the Hunter River to join the main rail line on Newcastle’s northern outskirts.

This in turn would justify building a rail freight bypass of Newcastle – between Hexham and Fassifern – to remove freight from the Newcastle rail line. The rail freight bypass would open up the northern Sydney container market.

This is the competition that the government most fears. It is then possible to build a rail freight bypass of Sydney, between Fassifern and Glenfield in southwest Sydney, and pay for it by railing containers. This would enable freight to be removed from Sydney’s rail network. The added capacity would boost passenger services, which is a more valuable use of Sydney’s rail capacity than freight.

The state government estimates that 6.9 million containers (teu) will be trucked between Port Botany and western Sydney by 2046, compared with 1.9 million teu in 2013. Removing the rail freight service to Port Botany will have little effect on container trucking.

These are compelling reasons to examine the state government’s imposition of a secret fee on container movements at the Port of Newcastle. Although the government has never confirmed the existence of the fee, it has confirmed that compensation is payable to the Port Botany operator if container movements at Newcastle exceed a threshold number. This number is believed to be 15,000 teu a year – the current number of container movements.

It is assumed that the fee on container movements provides the funds to pay compensation to the Port Botany operator. Otherwise, the government would need to fund the compensation from consolidated revenue.

A big question is what legal obligation does the state government have to compensate the Port Botany operator?

The state government is quick to point out that the Port of Newcastle lease does not prevent a container terminal. This implies that there is no impediment to developing a container terminal. But the fee and compensation payment are nothing but impediments. Drop them and see how fast investors will move to build a container terminal on the available land.

Mr Duncan Gay, Minister for Roads and Freight, said he told the Newcastle ‘‘local community’’ about the government’s actions. What did Mr Gay say, whom did he tell and, when did he tell them?

In 2008, the government consolidated ownership of 470 hectares of Newcastle port lands with the Newcastle Port Corporation, including the container terminal site. The objective was to enable proponents of investment to deal with a single entity that was able to assist with land and waterside requirements. ‘‘Cutting red tape’’ was the intended means for ’’greater efficiency and reduced costs’’.

In 2010, Newcastle Port Corporation was negotiating with a selected tenderer to develop a container terminal. But negotiations were terminated by the government in 2012.

This was after the cap, fee and compensation payment were imposed. Labor seems in support of these actions, without really acknowledging them.

Is this what the community can expect from government and opposition when the state’s electricity poles and wires are sold?

Greg Cameron is a policy analyst based in Canberra.