Port cap is real, Minister declares

CAPPED: The Port of Newcastle would have to pay compensation if it breached a container cap imposed by the Baird government. PICTURE:
CAPPED: The Port of Newcastle would have to pay compensation if it breached a container cap imposed by the Baird government. PICTURE:

THE Baird government has admitted the Port of Newcastle would have to pay compensation if it breached a cap on containers, saying Newcastle lacks the infrastructure “for handling large volumes of cargo containers” and arguing that most of the demand for containers comes from Sydney.

The government’s leader of the Upper House Duncan Gay made the admission in parliament on Wednesday, detailing how a threshold of 30,000 containers each year, plus an extra 6 per cent growth in volume each year, was negotiated during the $5 billion sale of Port Botany in 2013.

The “cross-payment threshold” would require the owner of the Port of Newcastle to pay compensation to the government, and in effect the lessee of the Port of Botany, if it established a dedicated container terminal.

Details of the cross payment - currently $100 per container or $1 million for a typical container ship of 5000 capacity – were first revealed by the Newcastle Herald last month, but until now the government has never specifically acknowledged its existence.

Canberra analyst Greg Cameron said the “cross payment” meant it costs a container ship double to visit the Port of Newcastle what it costs to visit Port Botany.

“The government’s charge makes it unprofitable to develop a container terminal at the Port of Newcastle,” he said.

Mr Gay said the cap did not impact Newcastle materially because it would require a 238 per cent increase in local activity to reach the cap, and about 85 per cent of containers landing at Botany are distributed to within 40 to 50 kilometres anyway.

“The Port of Newcastle will continue to be NSW’s primary coal export facility,” he said.

However Newcastle MP Tim Crakanthorp said the government had admitted to overseeing an “anti-competitive cross payment regime” that would have a “devastating impact” on the Hunter “for the next 96 years”. He said that if the terminal existed, the Hunter would be able to attract industry from Sydney.

“We do not have a purpose-built container terminal and we have a million dollar levy, and whilst this is the situation we will continue to have a very low container throughput,” he said.

“If we had a container terminal we would have a port that would support a thriving business and industry sector in Newcastle – if we have the terminal, we can attract the economic growth and trade that our region needs.”