Contained, restrained: no clarity on Newcastle fee

Ports policy in NSW relies on the state government being exempt from the Commonwealth Competition and Consumer Act 2010 (CCA).

Australia’s competition law protects consumers against anti-competitive market behaviour. But the NSW government is claiming exemption from the competition law in respect of charging a fee for container movements at the Port of Newcastle in 2013. Were the government not to claim this exemption, the ACCC would be obliged to ask a court to determine whether the fee breached the CCA. 

There are direct implications for the NSW Freight and Ports Strategy, November 2013. A container terminal has not been built at Newcastle because the fee adds $1 million to the cost of a visit by a typical container ship compared with Port Botany. The government does not charge a fee at Port Botany. Under the strategy, Port Botany’s status is maintained as the only container terminal port in NSW. Should Port Botany reach capacity, a terminal at Port Kembla is next in line. Both ports were leased to the same company, NSW Ports, in April 2013. The fee applies until 2064.

The government also pays compensation to NSW Ports, for losing container shipping business to the Port of Newcastle. Recovering this payment is by charging the Newcastle fee. The government says these arrangements are part of the strategy. But in the two years it took to produce the strategy, the government concealed the fee, the compensation payment and the competition law exemption. Consequently, I believe the strategy is illegitimate.

The fee and compensation were only revealed when the Newcastle Herald published a leaked document on July 28, 2016. Days later ACCC chairman Rod Sims revealed the exemption claim in an Australian Financial Review article. The government claimed competition law exemption because it was charging a fee for containers at Newcastle and paying this to NSW Ports. But when the government charged the fee in 2013, it was negotiating with a private company for developing a terminal with minimum capacity of one million TEU containers a year.

Negotiations with Newcastle Stevedores Consortium were taking place pursuant to a government tender held in 2010 under strict guidelines for public private partnerships. In 2010, the government gave no indication of being exempt from the competition law in respect of the container terminal tender.

Because of non-disclosure, the government would be in breach of the NSW Public Private Partnerships Guidelines were it to claim exemption from the competition law in 2013 in respect of its 2010 tender. Despite many questions lodged in State Parliament, the government refuses to give the date it claims it was exempt from the competition law in respect of the Port of Newcastle. 

Government policy in 2010 was that a container terminal at Newcastle would service northern NSW. But Premier Mike Baird said in Newcastle on September 27, 2016, that “massive expenditure” was needed for additional road and rail infrastructure to support a container terminal at Newcastle. This extra infrastructure is required only for competing in the Sydney market. It’s not needed for competing in the northern NSW market. The government terminated negotiations with Newcastle Stevedores Consortium in November 2013 without the consortium withdrawing its proposal. 

The government still refuses to give reasons for charging a fee for containers at the Port of Newcastle and for paying this money to NSW Ports as compensation.

LEFT FLOATING: The government refuses to give the date it claims it was exempt from the competition law in respect of the Port of Newcastle.

LEFT FLOATING: The government refuses to give the date it claims it was exempt from the competition law in respect of the Port of Newcastle.

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