Updated November 2 2020

5 million super fund members V NSW government

 

A company owned by five million Australians is alleging that the NSW government broke the law.

 

NSW Ports Pty Ltd is alleging in the Federal Court that the government acted illegally when it leased the Port of Newcastle to Port of Newcastle Investments Pty Ltd (PoN) in May 2014.

 

NSW Ports is 80 per cent-owned by industry super funds, led by IFM Investors.

 

Problem is, neither NSW Ports nor the government will disclose what law the government allegedly broke.

 

Why is an allegation on behalf of five million Australian taxpayers and super fund members, confidential?

 

NSW Ports’ legal action sets a worrying precedent for super fund investment in government-initiated projects.

 

It all began more than a decade ago, when the former Labor government called tenders for a container terminal at the Port of Newcastle.

 

The private sector was invited to develop a container terminal, at no cost or risk to the government.

 

Mayfield Development Corporation Pty Ltd (Mayfield) won the tender and started negotiating. Term Sheets were agreed by the end of 2010.

 

The government terminated the negotiation with Mayfield in November 2013.

 

Mayfield is now alleging in the Federal Court that NSW Ports acted illegally in May 2013, when Port Botany and Port Kembla were leased from the government.

 

NSW Ports secretly agreed to be paid financial support by the government, if a container terminal was developed at the Port of Newcastle.

 

NSW Ports and the government agreed that Mayfield would provide the funds to meet the government’s contractual commitment to pay NSW Ports for container traffic above a minimal specific cap at Newcastle.

 

Mayfield alleges that NSW Ports acted illegally under the “Competition and Consumer Act 2010” (CCA), which resulted in Mayfield being prevented from developing a container terminal.

 

The government terminated its negotiation with Mayfield after Mayfield said it considered the requirement to fund the government’s commitment to NSW Ports, to be illegal under the CCA.

 

The government was authorised to lease Port Botany and Port Kembla to the private sector by the “Ports Assets (Authorised Transactions) Act 2012” (PAA). However, the PAA did not authorise an unfunded contractual commitment to pay financial support to NSW Ports. Consequently, the ports leases are unlawful.

 

A decision was made to lease the Port of Newcastle to the private sector so that the lessee would provide the funds to pay NSW Ports. The “Ports Assets (Authorised Transactions) Amendment Act 2013” was passed in June 2013. However, the PAA, as amended, did not authorise the Newcastle port to be leased for the purpose of funding the contractual commitment to NSW Ports.

 

When PoN leased the port from the government, it agreed to fund the commitment to NSW Ports. Consequently, the lease is unlawful.

 

The ACCC alleges that NSW Ports acted illegally under the CCA, because the lease arrangements with PoN are an anti-competitive consequence of the lease arrangements with NSW Ports.

 

The ACCC alleges that PoN is unlikely to develop a container terminal, due to the requirement to fund the government’s commitment to NSW Ports.

 

The ACCC is seeking a court order restraining NSW Ports from claiming payment from the government, if NSW Ports acted illegally under the CCA.

 

PoN gave confidential testimony to the Federal Court last month. However, the ACCC has no case against NSW Ports, unless PoN testified as to being unlikely to develop a container terminal, due to having agreed to fund the government’s commitment to NSW Ports.

 

NSW Ports alleges that PoN acted illegally under the CCA, if PoN is unlikely to develop a container terminal.

 

NSW Ports is seeking a court order restraining PoN from paying the government, if PoN acted illegally.

 

The government has no authority under the PAA to pay NSW Ports using consolidated revenue.

 

All except the first three days of the trial, which was conducted from October 12 to 29, were in confidential session. The trial resumes on December 1.

 

A court date has not been set for Mayfield’s action against NSW Ports.

 

Mayfield’s action will establish whether the government was exempt from the CCA.

 

The ACCC considers the government was exempt from the CCA, because a decision was announced in July 2012 that a container terminal would not be developed at the Port of Newcastle before Port Botany reached capacity, followed by Port Kembla. However, the government replaced this decision by amending the Term Sheets with Mayfield to include developing a container terminal at the Port of Newcastle.

 

PoN may develop a container terminal on the same terms as applied to Mayfield.

 

The PAA, obviously, did not authorise the government to enter into lease agreements for Port Botany, Port Kembla and the Port of Newcastle that included an illegal condition.

 

If the Federal Court upholds Mayfield’s action against NSW Ports, it will mean that the lease agreements for all three ports are unlawful under the PAA, and illegal under the CCA.

 

Parliamentary convention is not to debate a case that is before a court.

 

But the convention does not prevent Parliament from knowing what a case is about.

 

Surely it is Parliament’s responsibility to find out?

 

The government claims that PoN is not prevented from developing a container terminal at the Port of Newcastle.

 

Premier, the Hon Gladys Berejiklian, described the payment PoN is contractually required to make as being a “penalty” and a “financial impediment” at a Budget Estimates hearing in September 2019.

 

The government concealed the “penalty” until it was exposed by “The Newcastle Herald” in July 2016.

 

In January 2015, the government said (QON 6677): “The government’s transaction team engaged extensively with the Australian Competition and Consumer Commission regarding the competition and regulatory framework, including the container arrangements.”

 

This claim is not corroborated by the ACCC.

The ACCC’s Federal Court action against NSW Ports was completely avoidable.

 

All that was required was for the NSW Parliament to pass a law allowing the government to financially support NSW Ports for losing business if a competing container terminal was developed at the Port of Newcastle.

 

But the government chose to conceal its decision from the public and Parliament.

 

Instead of seeking Parliament’s approval, the government announced a new policy on container facility development, on July 27 2012, which states:

 

“Once Port Botany reaches capacity, Port Kembla will be developed as the next long-term container facility. The development of a dedicated container terminal at the Port of Newcastle will be considered when both Ports Botany and Kembla become fully developed.”

 

NSW Ports was concerned about sovereign risk: government policy could change in the future and a competing container terminal could be developed at Newcastle.

 

To deal with sovereign risk, the government and NSW Ports agreed that the government would financially support NSW Ports if container traffic was above a minimal specific cap at the Port of Newcastle. They also agreed that financial support would not be payable should NSW Ports develop a container terminal at the Port of Newcastle, or lease the port from the government.

 

Updated July 2 2020

12 questions for the ACCC

 

In 2013, the Australian Competition and Consumer Commission (ACCC) examined the NSW government’s policy on container facility development announced on July 27 2012.

 

The examination was conducted between April 26 and June 7. The government leased Port Botany and Port Kembla to NSW Ports on May 31. The ACCC did not disclose that before the ports were leased, the government decided to require the developer of a container terminal at the Port of Newcastle to pay a penalty for container traffic above a minimal specific cap. The ACCC did not disclose that the lease arrangements with NSW Ports included a contractual commitment by the government to pay NSW Ports for container traffic above a minimal specific cap at the Port of Newcastle and that the source of funds was the developer of a container terminal at the Port of Newcastle. Government policy since at least May 31 2013 supports immediate development of a container terminal at the Port of Newcastle. The questions for the ACCC are:

 

  1. Was the ACCC aware before May 31 2013 of the government’s decision to apply the penalty?

 

  1. Was the ACCC aware on June 7 2013 of the government’s decision to apply the penalty?

 

  1. On what date did the ACCC become aware that on August 6 2013 the penalty was included in the government’s Term Sheets with Mayfield Development Corporation Pty Ltd (MDC)?

 

  1. On what date did the ACCC become aware that on October 14 2013 MDC informed Newcastle Port Corporation that it considered the penalty to be illegal under the Competition and Consumer Act 2010 (CCA)?

 

  1. On what date did the ACCC become aware that on October 18 2013 MDC informed the government that it considered the penalty to be illegal under the CCA?

 

  1. On what date did the ACCC become aware that on October 28 2013 the government announced that no decision had been made to lease the Port of Newcastle to the private sector?

 

  1. On what date did the ACCC become aware of the government’s announcement dated November 5 2013 that a decision had been made to lease the Port of Newcastle to the private sector?

 

  1. On what date did the ACCC become aware that on November 8 2013 the government terminated its negotiations with MDC?

 

  1. On what date did the ACCC become aware that the government reached a settlement with MDC at the end of 2013?

 

  1. Did the government prevent the ACCC from enforcing the CCA by concealing the penalty in 2013?

 

  1. On what date did the ACCC become aware of the penalty?

 

  1. On what date did the ACCC advise the government that it considered the penalty to be illegal under the CCA?

 

NSW government’s confidential settlement with Mayfield Development Corporation

 

The NSW government reached a confidential settlement with Mayfield at the end of 2013 for the purpose of concealing the government’s terms for developing a container terminal at the Port of Newcastle from the public, Parliament and ACCC.

 

In October 2013, Mayfield advised the government that it considered the terms for developing a container terminal to be illegal under the “Competition and Consumer Act 2010” (CCA). Shortly after, on November 8, the government terminated the negotiation.

 

The Port of Newcastle could not have been leased to Port of Newcastle Investments Pty Ltd (PoN) on May 30 2014 had the public known that the ACCC considered the terms for developing a container terminal to be illegal.

 

The ACCC is now seeking details of the settlement from the government for its court action against the lessee of Port Botany and Port Kembla, NSW Ports.

 

Mayfield, which is jointly owned by Maersk Line and Anglo Ports Pty Ltd, is also taking court action against NSW Ports. Mayfield is alleging that NSW Ports contravened the CCA for the same reasons alleged by the ACCC.

 

Mayfield claims that it would have signed a contract with the government in 2013 to develop a container terminal at the Port of Newcastle, if NSW Ports had not entered into lease arrangements with the government which Mayfield alleges were illegal under the CCA.

 

Treasury was required to advise Cabinet that the settlement with Mayfield satisfied government guidelines.

 

It was incumbent on Treasury to establish with the ACCC that the terms for developing a container terminal at the Port of Newcastle were likely to comply with the CCA.

 

However, Treasury did not consult the ACCC.

 

Had Treasury consulted the ACCC, it would have advised Treasury that the terms were likely to be illegal under the CCA.

 

The government repeatedly told the public and Parliament that once Port Botany reached capacity, Port Kembla would be developed as the next long-term container facility. The development of a dedicated container terminal at the Port of Newcastle would be considered when both Ports Botany and Kembla become fully developed.

 

However, the terms for developing a container terminal at the Port of Newcastle enable a container terminal to be developed immediately.

 

Government policy that the state’s next container terminal will be developed at the Port of Newcastle was confirmed on September 29 2015 by the (then) Treasurer, the Hon Gladys Berejiklian MP, when she informed Parliament, “The lessee [of the Port of Newcastle] could develop a container terminal at the Port of Newcastle if it wished to do so.”

 

PoN is vigorously pursuing its intention to develop a $1.8 billion, two million TEU per year-capacity container terminal.

 

PoN has a contractual right to develop a container terminal under its 98-year lease agreement with the NSW government signed in May 2014.

 

The ACCC is taking court action against NSW Ports for the purpose of PoN proceeding to develop a container terminal in competition with NSW Ports.

 

The ACCC is asking the Federal Court for declarations that compensation provisions in NSW Ports’ lease arrangements with the government for Port Botany and Port Kembla contravene the CCA, injunctions restraining NSW Ports from seeking compensation from the government under these arrangements, pecuniary penalties and costs.

 

When PoN leased the Port of Newcastle from the government, it agreed to fund the lease arrangements between the government and NSW Ports by paying the government for container traffic above a minimal specific cap at the Port of Newcastle.

 

The cap was set at 30,000 containers a year from July 1 2013, increasing by six per cent a year, for 50 years. The amount of payment for each container above the cap is equal to the Port Botany wharfage. At current wharfage, the government must pay NSW Ports more than $200 million a year for a container terminal at Newcastle handling two million containers a year. 

 

If the ACCC succeeds in having the payment removed, this will enable competition in the supply of container port services in NSW, which is the ACCC’s objective.

 

In July 2019, NSW Ports commenced proceedings against PoN and the NSW government, alleging that the Newcastle lease arrangement is anti-competitive. As a consequence, PoN and the government became respondents to the ACCC’s proceedings.

 

The ACCC is not seeking orders against PoN or the government.

 

The trial was conducted from October 12 – 29 2020 and re-commences on December 1. 

 

Treasury breached NSW PPP Guidelines

 

The NSW “Independent Commission Against Corruption” (ICAC) reported in August 2016:

 

“As a statutory state-owned corporation, the NPC [Newcastle Port Corporation] was obliged to comply with the NSW Government’s “Working with Government Guidelines”. Mr Webb [Chief Executive Officer of NPC] explained that, in accordance with the guidelines, the NPC had conducted “direct negotiations” with the NSC [Newcastle Stevedores Consortium Pty Ltd, owner of MDC]. By 2010, the direct negotiations had been completed and the process had moved to the point where the NSC had been identified as the preferred proponent. From this point, the NPC could enter “commercial negotiations” with the NSC with a view to concluding a final contract. This required ministerial approval and the NPC was seeking that permission from [NSW Treasurer] Mr Roozendaal.”

 

The government’s “Working With Government Guidelines” dated 2006 were updated in August 2012 and re-named “NSW Public Private Partnerships Guidelines”.

 

The NSW Treasury web site says, “Public Private Partnerships (PPPs) are one of the options the Government uses to procure infrastructure and offers opportunities to improve services and better value for money, primarily through appropriate risk transfer, encouraging innovation, greater asset utilisation and integrated whole-of-life management.”

 

Under the “Working With Government Guidelines” and the 2012 PPP Guidelines, NPC was required to receive approval from Treasury for the Term Sheets with NSC. When Mayfield informed Treasury and NPC that it considered the Port Commitment Deeds (PCD) to be illegal, thereby obliging Treasury to seek advice from the ACCC, Treasury terminated the negotiation between NPC and Mayfield on November 8 2013.

 

Presumably, Treasury concealed the terms from the ACCC. Had Treasury sought the ACCC’s advice, that advice would have been that the PCDs were likely to be illegal.

 

Under the 2012 PPP Guidelines, Treasury had authority to pay compensation to Mayfield:

 

“4.3.4 REIMBURSEMENT OF BID COSTS

While processes outlined in these Guidelines endeavour to minimise the bid costs for the private sector, Government will not normally reimburse bidding costs.

 

In certain circumstances, consideration may be given to the full or partial reimbursement of bidders’ reasonable bidding costs. Any reimbursement will be based on the quality and quantity of information supplied by the proponent(s). Where reimbursement is paid, the agency will retain the proprietary rights to the bidding material. 

 

Any reimbursement will be at the sole discretion of the NSW Government with Cabinet approval, based on recommendations by NSW Treasury.”

 

The purpose of the settlement was to conceal the government’s terms for developing a container terminal at the Port of Newcastle, which Mayfield alleged were illegal, from the public and Parliament.

 

The Port of Newcastle would not have been leased to PoN with terms that were likely to be illegal, as now alleged by the ACCC.

 

How the public, Parliament and ACCC were misled

 

A contract between the NSW government and PoN, made on May 30 2014, allows PoN to develop a container terminal “if it wished to do so”.

 

Ms Berejiklian was asked supplementary question 29 on September 29 2015:  “Has the NSW Government entered into any agreements that create a disincentive or obstacle to develop a container terminal at the Port of Newcastle? Answer: I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.”

 

 Ms Berejiklian told Budget Estimates on September 5 2019 that the government penalises container traffic at the Port of Newcastle.

 

PoN agreed to fund contracts called “Port Commitment Deeds” (PCD) made on May 31 2013 between the government and NSW Ports. Under the PCDs, the government will pay NSW Ports for container traffic above the minimal specific cap at the Port of Newcastle.

 

Ms Berejiklian told Parliament on September 3 2015 that she was unaware of any restrictions on container traffic at the Port of Newcastle in the lease documents. She was asked on May 12 2020 when she became aware but declined to answer. 

 

The government is not authorised to fund the PCDs using consolidated revenue. When Port Botany and Port Kembla were leased to NSW Ports on May 31 2013, the government’s intended source of funds for the PCDs was Mayfield.

 

Mayfield told the government on October 18 2013 that it “disputed the legality of the Port Commitment Deeds arising from its anti-competitive nature” – see clause 35(a) page 14.

 

The government announced a decision to lease the Port of Newcastle to the private sector on November 5 2013. However, the government announced on October 28 2013 that no decision had been made to lease the port. The decision to lease the port was made between October 28 and November 5. The government’s decision made it exempt from the CCA.

 

When Mayfield did not withdraw its proposal, the government terminated the negotiation, on November 8 2013. The government reached a settlement with Mayfield. Its purpose and effect was to conceal the requirement to fund the PCDs.

 

The ACCC commenced court action against NSW Ports in the Federal Court on December 10 2018. The ACCC alleges that NSW Ports acted illegally by agreeing to the PCDs . The ACCC alleges that it became uneconomical for PoN to develop a container terminal at the Port of Newcastle when it agreed to fund the PCDs. 

 

“The ACCC is seeking declarations that the compensation provisions in the 2013 Port Commitment Deeds contravene the Competition and Consumer Act 2010 (CCA), injunctions restraining the operators of Port Botany and Port Kembla from seeking compensation under these provisions, pecuniary penalties and costs,” the ACCC said.

 

The ACCC took no action in 2013 because the government concealed the PCDs from the public, Parliament and ACCC. The ACCC considered that the government was unlikely to be operating under the CCA because of a decision announced on July 27 2012 that a container terminal would not be developed at the Port of Newcastle before Port Botany reached capacity followed by Port Kembla.

 

NSW Treasurer, the Hon Dominic Perrottet MP, was asked on March 9 2020:

 

Question 78: On what date did the Government inform the public and Parliament about the Government’s terms for developing a container terminal at the Port of Newcastle?

 

Answer April 23 2020: Please refer to the media release of The Hon Mike Baird MP and The Hon Duncan Gay MP dated July 27 2012 ‘Green Light Given for Long Term Lease of Port Botany and Port Kembla’. The Government’s position was confirmed in the NSW Freight and Port Strategy which was published subsequently.

 

The media release included the announcement that a container terminal would not be developed at the Port of Newcastle before Port Botany reached capacity followed by Port Kembla.

 

Mr Perrottet misled Parliament because Ms Berejiklian confirmed on September 1 2016 that the PCDs were confidential before they were disclosed to Parliament on August 10 2016

 

The PCDs were exposed by the “Newcastle Herald” on July 28 2016. They were confirmed by the government on August 10 2016 and January 14 2019.

 

The (then) Federal Shadow Minister for Infrastructure and Transport, the Hon Anthony Albanese MP, said on July 29 2016: “The Baird Government must end the secrecy over its reported undertaking that if the Port of Newcastle seeks to handle shipping containers, it will be required to pay compensation to the private operators of Port Botany and Port Kembla.”

 

The PCDs are not subjudice. What is subjudice is whether NSW Ports acted illegally by agreeing to the PCDs.

 

The government misled the public, Parliament and the ACCC by concealing the PCDs.

 

The PCDs prove that the government nullified its decision not to develop a container terminal at the Port of Newcastle before it leased Port Botany and Port Kembla to NSW Ports. It is unlikely the government was exempt from the CCA when it leased the ports to NSW Ports.

 

The ACCC commenced an examination of the government’s decision on April 26 2013, after receiving a complaint (from Greg Cameron, who is the author of this web site) that the decision not to develop a container terminal at the Port of Newcastle was anti-competitive.

 

The ACCC said: “From the information provided, it was unlikely that the NSW government was carrying on a business when it decided not to develop a container terminal at the Port of Newcastle. As such, policy or planning decisions are likely to fall outside the operation of the Act, therefore the ACCC will not be taking any further action.”

 

There can be no doubt that, had the ACCC known about the PCDs, it would have advised the government that requiring Mayfield to fund the PCDs was likely to be illegal under the CCA.

 

The ACCC still did not know about the PCDs before the decision was announced on November 5 2013 to lease the Port of Newcastle to the private sector.

 

There can be no doubt that the ACCC would have advised the government that requiring PoN to fund the PCDs was likely to place NSW Ports in contravention of the CCA.

 

The (then) Treasurer, the Hon Andrew Constance MP, said on January 16 2015 that “the government’s transaction team engaged extensively with the Australian Competition and Consumer Commission regarding the competition and regulatory framework, including the container arrangements”.

 

The government said on January 14 2019 that “when Newcastle Port was leased in 2014, some of the State’s obligations to NSW Ports were contractually passed through to the Lessee of Newcastle Port. This arrangement was known to bidders and the ACCC ahead of the transaction and is documented in the Port of Newcastle PCD.”

 

The ACCC does not corroborate the government’s claim, or what advice it gave the government, if any.

 

NSW Ports said on January 21 2019 and January 31 2019 that it only became aware of where the funds were coming from to pay for the PCDs through an article published in “The Newcastle Herald” on July 28 2016.

 

It is unlikely that Port Botany and Port Kembla would have been leased to NSW Ports on May 31 2013 had the government disclosed the PCDs and how they were to be funded.

 

It is unlikely that Parliament would have authorised the use of government funds to support NSW Ports in the form of foregone wharfage.

 

Parliament, obviously, did not authorise leasing arrangements for Port Botany and Port Kembla which the ACCC now alleges are illegal under the CCA.

 

By contractually committing to the PCDs, the government achieved an inflated lease price for the Port Botany and Port Kembla assets. However, the government gave a commitment in 2012 not to lease the ports if the lease price did not exceed the retention value. A reasonable conclusion is that the leases would have been worth less than the retention value if the terms for developing a container terminal at Newcastle were public knowledge.

 

Newcastle Port Corporation container terminal development approval

 

In 2008 the government gave approval to Newcastle Port Corporation (NPC), a statutory state-owned corporation, to develop a dedicated container terminal and a new container terminal for general cargo ships at the Port of Newcastle. NPC called public tenders in 2009. A requirement was that the dedicated container terminal must have minimum capacity of one million TEUs a year. NPC selected a “Preferred Proponent”, Newcastle Stevedores Consortium Pty Ltd (NSC), in 2010. Term Sheets were agreed by the end of 2010. In December 2011, NSC formed Mayfield Development Corporation Pty Ltd (MDC) to implement its proposal. 

 

The government’s terms for developing a container terminal at the Port of Newcastle apply to development of a dedicated container terminal, a new container terminal for general cargo ships and an existing container terminal for general cargo ships. 

 

Premier Berejiklian said on September 5 2019: “You would need to triple container movements at the Port of Newcastle before any penalties came into play. So I say to those communities that want to increase their container movements at the [port], there is capacity to triple that under the current arrangements. …. Unless I am mistaken, there would need to be a significant increase in the number of containers moving to and from that port before any type of financial impediment was struck.”

 

There is an existing container terminal at the Port of Newcastle for general cargo ships. Annual throughput is 10,000 TEUs carried on 500 general cargo ships averaging 20 TEUs per ship. In comparison, one container ship visiting an Australian container port averages 10,000 TEUs – 5,000 import and 5,000 export.

 

Under the terms for developing a container terminal, a “container” is defined to mean “any moveable device, designed for continuous use in loading and unloading cargoes on and from ships including boxes, crates, cylinders, tanks, TEUs, other stackable units and any similar cargo-carrying device which is designated as a container by international stevedoring standards from time to time”. Containers, as defined, are a main cargo carried on general cargo ships at the Port of Newcastle.

 

The Federal Court ordered on March 26 2020: “Nothing in these Orders prevents the [Australian Competition and Consumer] Commission from considering, commenting on or investigating the terms of any variation to a Port Commitment Deed.”

 

A container terminal received government planning approval on July 16 2012. But on August 30 2012 and again on July 26 2013, the government directed MDC not to develop a container terminal. However, on August 6 2013 the government required MDC to agree to the changed terms for developing a container terminal.

 

2012 scoping study

 

The government’s policy on container facility development originated in a scoping study conducted in the first half of 2012 into long-term leases for Port Botany and Port Kembla. The “optimal container strategy for NSW” formed part of the scoping study, as disclosed on March 22 2012 and April 26 2012.

 

The Federal Court, on February 28 2020, ordered the government to provide a “copy of the minutes from the meeting or any other document recording the oral communication on Thursday 25 July 2013 by the Honourable Mike Baird MP, NSW Treasurer and the Honourable Duncan Gay MP, Minister for Roads and Ports to the Newcastle Stevedores Consortium and Newcastle Port Corporation that the State did not support the then current form of the proposal for development of a container terminal”.

 

The Federal Court also ordered the government to provide a “copy of the minutes from the meeting or any other documents recording or evidencing, or tabled in relation to, the meeting between representatives of NSW Treasury, Newcastle Port Corporation and the Newcastle Stevedores Consortium held on or around 6 August 2013”. 

 

At that meeting, the government amended its Term Sheets with NSC to include the changed terms for developing a container terminal.

 

Parliament was alerted to the government’s actions on October 17 2013:

 

“The Hon. ADAM SEARLE: My question is directed to the Minister for Roads and Ports. How much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port?

“The Hon. DUNCAN GAY: The rules in the organisation that did the scoping study for Port Botany and Port Kembla and introduced guidelines there indicate that while general cargo is allowed there will not be an extension under the rules for the lease of Newcastle Port. So the short answer to the question is that we do not envisage that any compensation will need to be put in place. The Government has been clear on this all the way through the process, even before it indicated it would lease the port at the stage when Newcastle Port Corporation was in place. I have indicated in the House, as I have in Newcastle—indeed, I made a special visit to Newcastle to talk to the board, the chief executive officer and the local community—that part of the lease and the rationalisation was a cap on numbers there. I am not saying that there will be no containers into Newcastle. Certainly, a number of containers will come in under general cargo, but there will not be an extension. The only time an extension is allowed is when a specific number is reached and is tripped in Port Botany and Port Kembla.”

 

Mr Gay informed Parliament on August 31 2015 that the “cap on numbers” was not related to the terms for developing a container terminal.

 

MDC action against NSW Ports

 

MDC, which is jointly owned by Maersk Line and Anglo Ports Pty Ltd, commenced an action in the Federal Court against NSW Ports on May 31 2019. Doubtless, MDC’s action was precipitated by the ACCC’s action against NSW Ports. It is also probable that NSW Ports’ July 18 2019 Cross Claim against the government and PoN, was precipitated by MDC’s action.

 

When the Federal Court stayed the MDC proceedings on August 19 2019, it said that “the ACCC proceeding involves several issues for determination that are threshold issues with respect to the Mayfield proceedings, with significant overlap in the factual allegations”. On February 26 2020 the Federal Court heard MDC’s application to lift the stay in proceedings.

 

MDC’s application was dismissed on March 5. The Court said: “If, as MDC foreshadowed, the ACCC proceeding settles or is otherwise to be resolved on the basis of limited agreed facts, then MDC could apply at that time to lift the stay and the delay it may suffer will not be as great as might otherwise be the case. Similarly, if the hearing of the ACCC proceeding is itself delayed by unforeseen circumstances, it may be possible to achieve the concurrent hearing of the two proceedings. MDC will be able to re-agitate its claim to lift the stay in any of these circumstances.”

 

The ACCC did not foresee that the government’s 2012 decision not to develop a container terminal at the Port of Newcastle had the purpose and effect of concealing the government’s terms for developing a container terminal at the Port of Newcastle.

 

Timeline and References 

 

Government policy statements to January 2020 are here.

 

2008 March 6: Member for Newcastle, Ms Jodi McKay, informs Parliament of government decision to develop a container terminal at the Port of Newcastle.

 

Timeline and References 

 

Government policy statements to January 2020 are here.

 

2008 March 6: Member for Newcastle, Ms Jodi McKay, informs Parliament of government decision to develop a container terminal at the Port of Newcastle. 

 

2009 November: Newcastle Port Corporation (NPC), a statutory state-owned corporation, receives government approval to develop a container terminal with minimum capacity of 1 million TEUs a year, calls for expressions of interest.

 

2010 February 11: Newcastle Stevedores Consortium Pty Ltd (NSC)  submits detailed proposal to NPC.  NPC negotiates with NSC. Term Sheets are prepared. NPC seeks approval from the NSW Treasurer to enter into a contract with NSC. 

 

In its “Statement of Corporate Intent” for 2010-11, Newcastle Port Corporation says:

“6.2 Executing NPC’s Container Strategy

NPC’s strategy for establishing the next container terminal in New South Wales on the Mayfield site is:

to ensure the NSW Ports Plan confirms that the Mayfield site in the Port of Newcastle would be the site for the next major international container terminal in the State;

to ensure State and National reviews (such as the NSW Freight Strategy) are informed on the opportunities that the Mayfield site offers as a future container terminal site that is capable of being delivered at low cost to the State; and

to seek a suitable partner to establish a container facility on Mayfield ahead of the facilities at Port Botany reaching capacity.”

 

NPC seeks formal planning approval for its “Concept Plan” for developing the Mayfield Site.

 

2010 May 5: NPC invites NSC (and no other bidder) to engage in further discussions regarding the development and operation of cargo terminals at Mayfield. 

 

2011 March 26: NPC does not receive government approval to enter into a contract with NSC before the March 26 2011 state election for the reasons noted by the NSW “Independent Commission Against Corruption”.

 

2011 April 12: NPC endorses NSC as preferred proponent for the development a Container Terminal and other port infrastructure at Mayfield; commences negotiating the terms of leases and project delivery agreements, the execution of which would require approval of NPC’s board of directors and the government. 

 

2011 October 24: NPC and NSC complete negotiation of agreements for development by NSC of a Container Terminal and other port infrastructure at Mayfield.

 

2011 November 3: NPC’s Board resolves to seek government approval for NPC to execute the proposed project agreements .

 

2011 December 9: Government decides to conduct a scoping and strategy study in respect of its proposed lease of Port Botany and will not consider approving the execution by NPC of the proposed project agreements until the scoping and strategy study are concluded.

 

2011 December 14Mayfield Development Corporation Pty Ltd (MDC) is registered by NSC. MDC is owned 61 per cent by Grup Maritim TCB and 39 per cent by Anglo Ports Pty Ltd.

 

Morgan Stanley is appointed to conduct a scoping study, in the first-half of 2012, into leasing Port Botany and Port Kembla. Government instructs Morgan Stanley to include a container “cap” for the purpose of making it uneconomical to develop a container terminal at the Port of Newcastle. 

 

2012 March 2Written brief to Hon M Baird proposing rail freight bypass  

 

2012 March 22: Reply from Hon M Baird 

 

2012 April: Bidders for Port Botany advise government that a competing container terminal at the Port of Newcastle could negatively affect perceived value of Port Botany to potential bidders.

 

2012 April 4Written brief to Hon M Baird about Newcastle rail bypass

 

2012 April 26Hon M Baird advises “at this stage, a decision is yet to be made about whether to proceed with a container terminal at Newcastle”.

 

2012 July 16: Minister for Planning and Infrastructure approves NPC’s “Concept Plan” under the “Environmental Planning and Assessment Act 1979”.

 

2012 July 27Government announces a decision to lease Port Botany and Port Kembla. Included in this announcement is a decision not to develop a container terminal at the Port of Newcastle. The government’s intention to require MDC to pay the penalty is concealed from the public, parliament, NPC and MDC.

 

2012 August 30: Treasurer informs NSC the government will not approve a proposal that involves developing a Container Terminal at the Port of Newcastle before the developable container handling capacity at Port Botany and Port Kembla has been developed and is being fully utilised; and, the government will not execute the proposed project agreements negotiated by NSC and NPC. The government conceals its intention to apply the penalty to MDC.

 

2012 October 17 2nd reading of “Ports Assets (Authorised Transactions) Bill 2012” committing government not to lease Ports Botany and Kembla unless lease values exceed retention values.

 

2012 November 22Parliament passes the “Ports Assets (Authorised Transactions) Act 2012”.

 

2013 March 15: Government provides bidders for Port Botany/Port Kembla with draft Port Commitment Deeds and a memorandum concerning the development of multi-cargo facilities at the Port of Newcastle. Did this memorandum inform bidders about the government’s intention to require payment from MDC for developing a container terminal?

 

2013 April 26Letter requesting ACCC examination of “decision” not to develop a container terminal at the Port of Newcastle. 

 

2013 May 30: Port Botany and Port Kembla are leased to NSW Ports Pty Ltd. The government contractually commits to pay NSW Ports for losing container business to the Port of Newcastle. NSW Ports is aware that a container terminal may be developed at the Port of Newcastle contrary to government policy. 

 

2013 June 7: ACCC responds to the April 26 request to examine the government’s “decision” not to develop a Newcastle container terminal; decides to take no action to enforce the CCA in the belief that the CCA does not apply to the government due to government policy that a container terminal will not be developed at the Port of Newcastle. The government’s intention to apply the penalty to MDC is concealed from the ACCC because the penalty disproves the government’s policy. 

 

2013 June 18: Treasurer Baird announces a scoping study into leasing the Port of Newcastle.

 

2013 June 23: Parliament passes “Ports Assets (Authorised Transactions) Amendment Act 2013” enabling the Port of Newcastle to be leased while concealing its unfunded contractual commitment to pay NSW Ports and its intention to apply the Port of Newcastle container penalty to MDC.

 

2013 July 23 – letter from Hon A Albanese

 

2013 July 26NSW Treasurer again “dictates” to MDC that “a container port not proceed at Newcastle”. The government conceals its intention to apply the penalty to MDC.

 

2013 August 5: MDC is informed about the penalty (see 6 i, j). NPC is required to include the penalty in the Term Sheets with MDC. NPC Board is obliged to satisfy itself that the penalty is legal under the CCA.

 

2013 October 17Minister advises Parliament that the NPC Board was informed about a “cap on numbers”, but does not disclose that NPC’s Term Sheets with MDC were amended to include the penalty. NPC Board is aware that no decision has been made to lease the Port of Newcastle. NPC Board is aware that NPC is not exempt from the CCA in respect of the penalty.

 

2013 October 28: Treasurer Baird announces that no decision has been made to lease the Port of Newcastle.

 

2013 November: NPC terminates its negotiation with MDC on an undisclosed date because the penalty is likely to contravene the CCA. 

 

2013 November 5A decision to lease the Port of Newcastle is announced.

 

2014 March 4: Hon M Baird confirms official container terminal policy.

 

2014 May 1: NSW Treasury advises media: “The [Port of Newcastle] lease has been drawn up in accordance with the current NSW Government freight policy of Port Botany being the first container facility priority, with Port Kembla designated to take the overflow once Port Botany is full. Newcastle will be further developed once Port Kembla is full. Newcastle container throughput is, in the meantime, fully able to grow organically.” The contractual commitment to pay NSW Ports is not disclosed. The inclusion of the penalty in the lease to PoN is not disclosed.

 

2014 May 7: Parliament is informed that the proposed lease of the Port of Newcastle does not contain any provision that prevents a container terminal being developed on the former steelworks site. The inclusion of the penalty in the lease arrangements with PoN is not disclosed.

 

2014 May 11Newcastle Herald reports:

 

“The government has confirmed it leased Botany with a clause that prevented Newcastle from competing against it with a container terminal.

“And the Newcastle lease is believed to contain a similar undertaking.”

 

2014 May 31: Port of Newcastle Investments Pty Ltd (PoN) signs a lease agreement with the government for the Port of Newcastle. The penalty is concealed from the public, parliament and NSW Ports.

 

2014 June 11: The Hon Gladys Berejiklian representing the Minister for Roads and Freight answers QON 5536 asked on May 7 2014: “Does the proposed lease of the Port of Newcastle contain any provision that prevents a container terminal being developed on the former steelworks site? Answer: No.”

 

2014 June 25ACCC says:  

 

 “… the ACCC remains concerned over arrangements designed to maximise proceeds received by a government by reducing the prospect of competitive provision of port services. Another example relates to Port Botany and the Port of Newcastle. An article in the Newcastle Herald on 11 May 2014 stated:

“The government has confirmed it leased Botany with a clause that prevented Newcastle from competing against it with a container terminal.

And the Newcastle lease is believed to contain a similar undertaking”.

(“Reinvigorating Australia’s Competition Policy”, ACCC, Submission to the Competition Policy Review, 25 June 2014, p.38)

 

2014 October 30ACCC says:

 

 “The ACCC encourages early engagement from State governments on any competition issues that may arise in relation to the proposed sale structures or sale conditions for any monopoly or near monopoly assets, including any restrictions on competition proposed in the arrangements. Such restrictions may be unlawful and could be unenforceable.”

(“Container Stevedoring Monitoring Report No.16”, ACCC, October 2014, p.21)

 

2014 November 26ACCC says:

 

“… since the 1990s, Australian governments have increasingly been participating in markets in ways that may not amount to “carrying on a business” for the purpose of competition law. Market-based mechanisms are used by governments to finance, manage and provide government goods and services (described as “contractualised governance” for the delivery of public services). Such mechanisms have the potential to significantly improve efficiency but also have the potential to harm competition – for example, by incorporating, in the contract, provisions that are likely to have the purpose or effect of restricting competition. The ACCC’s Initial Submission (section 3.3.1) includes the examples of:

Sydney airport – where the Commonwealth government leased Sydney Airport with the right of first refusal to operate a second Sydney airport at Badgery’s Creek.

Ports Botany and Kembla and the Port of Newcastle – where the NSW government leased the ports with clauses that may restrict Newcastle from competing against Botany and Kembla for container trade.”

(“Submission to the Competition Policy Review – Response to the Draft Report 26 November 2014”, ACCC, p.32)

 

2015 January 16: Treasurer, The Hon Andrew Constance MP, answers Question On Notice 6677  

 

LEGISLATIVE ASSEMBLY 12 December 2014

*6677 PORT OF NEWCASTLE AND PORT BOTANY LEASES—Mr Tim Crakanthorp asked the Treasurer, and Minister for Industrial Relations

(1)      Did the Government advise the Australian Competition and Consumer Commission (ACCC) of a cap on container numbers at the Port of Newcastle prior to leasing the Port of Newcastle and Port Botany?

(2)      Did the Government agree to compensate NSW Ports for container numbers in excess of the cap at the Port of Newcastle?

(3)      Did the Government advise bidders for the ports leases to obtain regulatory approval from the ACCC in relation to the cap on container numbers at the Port of Newcastle?

(4)      Will the cap on container numbers at the Port of Newcastle reduce competition between ports in New South Wales for the container trade?

(5)      Has the ACCC advised the Government that the cap on container numbers at the Port of Newcastle may be unlawful and could be unenforceable?

Answer (16 January 2015):

The transaction arrangements that the State entered into with the successful bidders for Port Botany and Kembla and the Port of Newcastle reflect its Freight and Ports Strategy, that Port Kembla should be the State’s next container terminal once Port Botany reaches capacity.

This strategy recognises that Port Botany has significant capacity for container growth; most containers travel within a relatively short distance of Port Botany; future demand for containers is expected to occur in the South West of Sydney and thereby closer to Port Kembla than Newcastle; and the landside infrastructure costs to support a major container facility at Newcastle are higher than for Port Kembla.

The arrangements do not prohibit the development of a container terminal at the Port of Newcastle and enable the growth of container volumes through Newcastle servicing that region.

The Government’s transaction team engaged extensively with the Australian Competition and Consumer Commission regarding the competition and regulatory framework, including the container arrangements.

 

2015PoN enters into an exclusive agreement with DP World to develop a container terminal. 

 

2015 February 10: Anglo Ports statement published on NSW Parliament web site. 

 

2015 August 31: The (former) Minister for Roads, Maritime and Freight, The Hon Duncan Gay MLC, denies there is a container “cap” at the Port of Newcastle.

 

2015 September 3: Hon Gladys Berejiklian denies there is  a container “cap” at the Port of Newcastle.

 

2015 September 29: Hon Gladys Berejiklian continues to deny there is a container “cap”. Ms Berejiklian confirms: “I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.” (See question 29)

 

2016 March 9: Maersk Group completes $1 billion acquisition of Grup Maritim TCB’s rail and port interests, including MDC, which it owns with Anglo Ports Pty Ltd.

 

2016 July 28: “The Newcastle Herald” exposes the Port of Newcastle container “cap”.

 

2016 July 29 – Hon A Albanese media release

 

2016 August 10: Following media exposure of the container “cap” at the Port of Newcastle, the (former) Minister for Roads, Maritime and Freight, The Hon Duncan Gay MLC, provides some details.

 

2016 August 30ICAC releases “Operation Spicer” report detailing negotiations in 2010 between Newcastle Port Corporation and Newcastle Stevedores Consortium.

 

2016 September 1/2015 September 3: Budget Estimates testimony Hon G Berejiklian MP

 

2016 September 1: Hon Gladys Berejiklian defends her denial in 2015 that there is a container “cap” at the Port of Newcastle, on grounds that the “cap” is confidential.

 

2016 September 27: Hon Gladys Berejiklian advises that the “Government’s transaction team engaged extensively with the ACCC from the early stages of all the port transactions regarding the competition and regulatory framework supporting the transactions”.

 

2017 January 27 – letter on behalf of Federal Treasurer, Hon S Morrison

 

2017 February 23ACCC confirms advice provided on June 7 2013 that the CCA does not apply to the government in respect of a container terminal at the Port of Newcastle due to the government’s decision on July 27 2012 not to develop a container terminal at the Port of Newcastle.

 

2017 October 10Government confirms that “the use of consolidated revenue to pay NSW Ports for container shipments above the Government’s cap at the Port of Newcastle” is not authorised by the PA Act.

 

2018 August 16: PoN’s exclusive contract with DP World to develop a container terminal lapses. PoN to proceed with developing a container terminal itself.

 

2018 December 10ACCC commences court action in the Federal Court against NSW Ports for making agreements with the NSW government that the ACCC alleges “had an anti-competitive purpose and effect” (see pages 7 and 30).

 

2019 January 14: Government provides details about the penalty but does not acknowledge that the penalty and the “cap on numbers” are the same thing.

 

Government states: “When Newcastle Port was leased in 2014, some of the State’s obligations to NSW Ports were contractually passed through to the Lessee of Newcastle Port. This arrangement was known to bidders and the ACCC ahead of the transaction and is documented in the Port of Newcastle PCD.”

 

2019 January 21NSW Ports was aware of the government’s actual container terminal policy but not the penalty.

 

2019 January 31NSW Ports says it became aware of the government’s funding arrangements – the penalty – when a report was published by “The Newcastle Herald” in July 2016. 

 

2019 February 12PoN answers supplementary questions from the Public Works Committee.

 

2019 May 15Federal Court order revealing MDC “transaction parameters”.

 

2019 May 31: MDC commences legal proceedings against NSW Ports in the Federal Court.

 

2019 July 18NSW Ports makes a cross claim against the NSW government and PoN – see page 31

 

2019 August 19: MDC and NSW Ports Pty Ltd agree in the Federal Court to stay proceedings.

 

2019 September 5Hon Gladys Berejiklian tells parliament:

 

“You would need to triple container movements at the Port of Newcastle before any penalties came into play. So I say to those communities that want to increase their container movements at the point, there is capacity to triple that under the current arrangements…. Unless I am mistaken, there would need to be a significant increase in the number of containers moving to and from that port before any type of financial impediment was struck.”

 

TEU containers are carried as incidental cargo on general cargo ships at the Port of Newcastle and the annual total is around 10,000. A dedicated TEU container ship carries around 10,000 import/export TEUs per port visit. The purpose of the government’s penalty is to create a financial impediment sufficient to make it uneconomical to develop a TEU container terminal in competition with Port Botany. 

 

2019 October 11Federal Court orders include this:

 

“52.3

… at all relevant times prior to 31 May 2013 …

(E) …. any prospect that the operator of Port Kembla and/or the operator of the Port of Newcastle could materially increase supply of Container Services including by development and use of a Container Terminal at Port Kembla and/or the Port of Newcastle was so slight or hypothetical as not to be a relevant competitive constraint on the operator of Port Botany.

(F) the policy position of the State of New South Wales was that any new Container Terminal at Port Kembla or the Port of Newcastle would not be built until Port Botany reached full capacity.”

 

At all relevant times prior to May 31 2013, and until November 2013, the government’s preferred proponent for developing a container terminal at the Port of Newcastle was NSC. A container terminal could be developed under the government’s planning approval dated July 16 2012. 

 

2019 November 6ACCC releases “Container Stevedoring Monitoring Report 2018-2019”.

 

2019 November 27: The government’s meaning of container is confidential and sub judice (see question 16 here).

 

There is a dispute between the government and the ACCC (see question 8 here) about the date the ACCC was told the developer of a container terminal at the Port of Newcastle is required to pay the government for container volumes exceeding a threshold level.

 

The Treasurer, The Hon Dominic Perrottet MP, claims (see question 18 here) that the current Minister for Transport, The Hon Andrew Constance MP, was not the Treasurer when the Treasurer answered supplementary question 53 on August 22 2014. Treasurer Constance said: “Attempts by Government to dictate uneconomic enterprises contrary to market demand are examples of the kind of rent seeking activity likely to encourage influence peddling or corruption. As the container port did not proceed, there is no decision to review.”

 

2019 December 4 : Government policy features prominently in Federal Court orders

 

2019 December 12: The Federal Court orders the parties to the ACCC’s action to agree a mediator by no later than January 31 2020. The parties are to attend a conference with the mediator by no later than April 3 2020.

 

2020 February 3: MDC files affidavit and interlocutory application with Federal Court. A Court hearing date is set for February 11 2020.

 

2020 February 10: Federal Court order ACCC V NSW Ports 

 

2020 February 11: Federal Court order MDC V NSW Ports

 

2020 February 26: Judgement reserved in Federal Court hearing. 

 

2020 February 28: Federal Court order in ACCC V NSW Ports; Court orders discovery of MDC documents  

 

2020 March 5: Federal Court dismisses MDC’s application to lift the stay in proceedings. The Court said: “24  If, as MDC foreshadowed, the ACCC proceeding settles or is otherwise to be resolved on the basis of limited agreed facts, then MDC could apply at that time to lift the stay and the delay it may suffer will not be as great as might otherwise be the case. Similarly, if the hearing of the ACCC proceeding is itself delayed by unforeseen circumstances, it may be possible to achieve the concurrent hearing of the two proceedings. MDC will be able to re-agitate its claim to lift the stay in any of these circumstances.”

 

2020 March 9 – Treasurer is asked eight supplementary questions at Budget Estimates about the terms for developing a container terminal at the Port of Newcastle. 

 

2020 March 26Federal Court orders

 

2020 April 23Treasurer Perrottet answers supplementary question 78

 

2020 May 26Revised MDC Statement of Claim

 

A better way

 

The NSW government does not support removing container trucks from Sydney’s roads.

 

Moorebank Intermodal Terminal Company Ltd (see Table 3-7 here) estimates that by 2040, there will be six million container trucks movements a year through Port Botany, which will reduce to five million if the Moorebank Intermodal Terminal operates at full capacity. Current container truck movements through Port Botany are one million a year. However, the government is unable to identify the capacity of the rail freight network serving the Moorebank Intermodal Terminal.

 

Industry super funds own 80 percent of NSW Ports and 50 percent of Port of Newcastle Investments. These funds represent more than six million Australian workers and retired workers. Their responsibility to their members obliges then to act in the best interests of the Australian economy. It is in the best interests of the economy to transfer container terminal operations from Port Botany to the Port of Newcastle and Port Kembla, enabled by building a rail freight line between the Port of Newcastle, Badgery’s Creek and Port Kembla.

 

A rail freight bypass of Sydney – between Newcastle, Badgery’s Creek and Port Kembla – could be paid for by developing a container terminal at the Port of Newcastle and railing all containers for the entire NSW market.

 

A bi-partisan approach between the government and the opposition in the Parliament is required. Collaboration between NSW Ports and Port of Newcastle Investments is required. Development of a commercial arrangement to enhance all investors’ commercial returns by properly engaging the ACCC, is required. The objective is to develop an economic development strategy that is demonstrably better for the NSW economy than current arrangements.

 

This is what an investigation will involve:

 

Funding

 

Railing containers, rather than trucking them, will pay for privately funding, building and operating a rail freight bypass of Sydney, between the Port of Newcastle, Badgery’s Creek and Port Kembla. The compelling benefits of a rail-based freight transport strategy were provided in the “Deloitte Access Economics” report “The True Value of Rail, in June 2011.

 

Intermodal terminals

 

Intermodal terminals would be established along the rail freight line to maximise logistics efficiency. Intermodal terminals established in regional areas would enable long term planning of the state’s future development based on rail transportation of containerised goods.

 

Regional economic development

 

Rail-based access to a container port is a prerequisite for regional economic development because 95% of world trade in goods is conducted using containers. Linked container terminals at the Port of Newcastle and Port Kembla would enable Sydney firms to profitably relocate to regional areas to take advantage of under-utilised regional infrastructure.

 

WestConnex

 

Around 85% of Port Botany’s containers are trucked. Currently, there are one million container truck movements a year through Port Botany. By 2040, there will be six million container truck movements a year. Even if the Moorebank Intermodal Terminal operates at full capacity, it will reduce the total by a mere one million a year.

 

A container truck carrying a full container in the M5 East west-bound tunnel is the equivalent of six passenger cars. A container truck in the east-bound M5 East tunnel is the equivalent of three passenger cars. Without WestConnex, there is no road capacity to handle the predicted increase in container truck movements through Port Botany.

 

However, it is necessary to connect WestConnex to Port Botany. This significant cost can be avoided if all containers are railed from the Port of Newcastle, with back-up from Port Kembla.

 

Port Botany

 

Port Botany would be closed as a container port after capacity was developed at Newcastle and Port Kembla, and the rail freight bypass was completed. While this work was underway, Botany freight would be railed via Glenfield to intermodal terminals at Badgery’s Creek or Eastern Creek, once built.

 

Increased rail passenger capacity

 

Removing freight from Sydney’s existing rail network would enable the capacity to be used for passenger services. Likewise removing freight from the existing rail lines between Newcastle and Sydney, and Port Kembla and Sydney, would allow the capacity to be used for passenger services. The economic value of converting rail freight capacity to passenger capacity is examined in “The True Value of Rail”.

 

Moorebank Intermodal Terminal

 

There would be no intermodal terminal at Moorebank because the existing rail freight capacity would be used for passenger services.

 

Northern Sydney Freight Corridor

 

The $1 billion “Northern Sydney Freight Corridor Stage One” will reach capacity by 2026. Stages 2 and 3 – to create the equivalent of a dedicated freight line between Newcastle and Strathfield – will cost at least $5 billion. This cost would be saved by building a rail freight bypass that would also have capacity to carry freight that would otherwise be trucked into Sydney, not only from the north but also from the south and west.

 

Maldon-Dombarton freight line

 

The $800 million cost of the Maldon-Dombarton freight line – connecting Port Kembla to the main southern line, extending to Badgery’s Creek and the Port of Newcastle – would be met by railing containers after Port Botany was closed.

 

Western Sydney Freight Line

 

There would be no need to build the $1 billion Western Sydney Freight Line, between Chullora and Eastern Creek.

 

Port Botany Rail Freight Line

 

There would be no need to spend $400 million upgrading the Port Botany rail freight line.

 

Hawkesbury River bridge

 

A vital second rail bridge would be built over the Hawkesbury River as part of the rail freight bypass.

 

Sydney Airport

 

Removing container ships from Port Botany would enable the short parallel runway at Sydney airport to be extended from 2600 metres to 4000 metres.

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