WHILE the privatisation of the Port of Newcastle returned a greater-than-expected $1.75 billion to state treasury coffers, it also put a financial cat among the pigeons when the new operator moved quickly to substantially lift access charges to shipping.
The timing was not good for the coal industry, with coal prices falling sharply. One of the Hunter’s biggest mining companies, Glencore, applied to the National Competition Council to have the Port of Newcastle “declared” as monopoly infrastructure under competition policy known as the National Access Regime.
This would result in the Australian Competition and Consumer Commission being involved in price-setting, as it is at other ports, including Port Botany, Brisbane and Melbourne. It had previously been involved in Newcastle, when demand for coal-loading facilities outstripped supply.
Glencore’s application was initially rejected by the competition council, which under competition law makes recommendations to the federal treasurer, who makes a final decision. In this case, it was Finance Minister Mathias Cormann, who, as acting treasurer at the time, decided to leave things as they were at Newcastle, meaning the company operating the port was free to set fees as it saw fit, using its commercial judgement as guidance.
Glencore took Mr Cormann’s decision to the Australian Competition Tribunal. On Tuesday, the tribunal announced it was setting Mr Cormann’s decision aside, and declaring the port to be a monopoly needing to be regulated.
The immediate consequences of this decision are uncertain. The port operator is considering an appeal. It argues that its initial price hike was necessitated by 20 years of under-pricing when the state government ran the port. It says its success depends on the successes of its customers, and that fees are comparable and competitive.
At first glance, Newcastle’s shipping channels do seem to be an obvious “natural monopoly”, making them eligible for regulation under competition policy. But if Mr Cormann and the competition council were able to find compelling reasons why these laws should not apply to Newcastle, then a higher appeals court may well disagree with the Australian Competition Tribunal.
The determination with which both sides have staked their positions in this dispute is a sign of how much is potentially at stake.