A DECISION by the NSW government to withdraw its container fee at the Port of Newcastle would remove the last remaining impediment to investing in a container terminal. For a typical container ship, the fee adds $1 million to the cost of visiting the port and makes a container terminal commercially unviable compared with Port Botany.
A container terminal would stimulate investment in manufacturing for export throughout northern NSW by providing efficient transport access to world markets.
The possibility of the government dropping its fee was raised in Parliament last week when Roads, Maritime and Freight Minister Duncan Gay said: “As the government has consistently said, the leasing terms of ports Botany and Kembla do not prohibit the development of a container terminal at the Port of Newcastle.”
Although the fee was charged in 2013, it was kept secret until July 28, 2016, when confidential details were published by the Newcastle Herald. Mr Gay later confirmed these details in Parliament on August 10.
But the fee may yet prove to be unlawful.
In 2013, the government required the “Newcastle Stevedores Consortium” (NSC) to pay the fee. NSC comprised Grup TCB (a Spanish firm), Newcastle Stevedores Pty Ltd and Anglo Ports Pty Ltd.
In 2010, NSC had been selected by Newcastle Port Corporation as its “preferred proponent” for building a multi-purpose terminal, including a container terminal with minimum capacity of one million per year, at the Port of Newcastle.
At that time, the government had no intention of charging a $1 million fee. The government was subject to the Commonwealth Competition and Consumer Act 2010. Charging a fee for container ships could have potentially breached the Act, but only a court can determine a breach.
Negotiations with NSC were conducted in 2010 under strict government guidelines for “privately funded development”. By December, these negotiations required cabinet approval to proceed to a contract. This approval was not given before the March 2011 general election, which Labor lost. The new Coalition government revised the state’s ports policy and on two occasions – August 2012 and July 2013 – secretly instructing NSC it did not want a container terminal.
However, in 2013, Cabinet approved contract negotiations with NSC. These negotiations included the government’s requirement for NSC to pay the fee.
The government’s legal position was described by ACCC Chairman, Mr Rod Sims, to the Australian Financial Review on August 1: “The law at the moment only deals with governments when they are making decisions carrying on businesses, which is generally deemed to be when they are operating businesses as distinct from making a government decision,’’ he said. ‘‘So our judgment is that at this stage there is no more we can do on the matter.’’
But the government’s negotiations with NSC in 2013 had been conducted according to the 2010 agreement, when the government was subject to the Act, and wanted a one-million per year container terminal. The government was unable to claim retrospective exemption from the Act. When the government terminated the negotiations in November 2013, it privatised the port with an exemption from the Act in respect of charging the fee. Developing a container terminal still requires the government to pay NSW Ports compensation. If charging a fee for containers at the Port of Newcastle is not the government’s source of funds, what is? A new tax?