OPINION: Restrictions may be unlawful – Newcastle Herald

By GREG CAMERON

Nov. 20, 2014, 9:30 p.m.

IT is anti-competitive to prevent a container terminal being built at the Port of Newcastle by imposing conditions that make the investment unprofitable.

A cap on container movements at the port that restricts or prevents competition with Port Botany may be unlawful and unenforceable under the Competition and Consumer Act 2010.

It is anti-competitive to charge a fee for container movements at the Port of Newcastle, but not for container movements at Port Botany. Paying compensation to NSW Ports, the Port Botany leaseholder, for container movements at the Port of Newcastle, is also anti-competitive.

Hidden provisions in the ports lease agreements may contain details of the deal between the government and the leaseholders in relation to the cap. Hiding the details is not the appropriate way for the government to engineer its policy outcome of a container terminal at Port Kembla to augment Port Botany.

There was no cap prior to the government announcing a “scoping study” into leasing Port Botany in December 2011. The cap may have been in place for the government’s announcement on July 27, 2012, that the state’s next container terminal would be at Port Kembla. The cap was only revealed on October 17, 2013, by Minister for Roads and Freight, Duncan Gay, in answer to a question in Parliament.

The Port of Newcastle lease does not prevent the development of a container terminal, nor is there a legislated cap on container movements. At public hearings in May and August, the Independent Commission Against Corruption investigated negotiations between the Newcastle Port Corporation and the Grup TCB/Anglo Ports Consortium for developing a container terminal at the Port of Newcastle in December 2010. Sharon Grierson, former member for the federal seat of Newcastle, reported to Parliament that the consortium learnt about the government terminating contract negotiations through press reports on July 28, 2012. The Port of Newcastle lease may have been worth more if there was no cap on container movements because of the opportunity to develop a profitable container terminal.

On November 6, the state member for Newcastle, Tim Crakanthorp, asked the following questions of Gladys Berejiklian, the Minister for Transport, and Minister for the Hunter representing the Minister for Roads and Freight:

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 ports of Newcastle and 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 NSW 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?
6. Does the government forecast a four-fold increase in container movements by truck between Port Botany and Western Sydney by 2046?
7. What steps are the government taking to secure a corridor for a rail freight bypass of Sydney?

Should the cap on container movements at the Port of Newcastle prove to be unlawful, the question is whether NSW Ports is entitled to compensation for losing its monopoly if a container terminal is built at the Port of Newcastle.

Relocating the Port Botany container terminal to Newcastle would solve the problem and save the government $5.4 billion.

Completing stages 2 and 3 of the Northern Sydney Freight Corridor will cost $4.4 billion in present value terms; and, building the Western Sydney Freight Line, between Chullora and Eastern Creek, will cost $1 billion. A rail freight bypass of Sydney – between the Port of Newcastle and Glenfield – is paid for by railing containers between Newcastle and Badgerys Creek.

Sydney Airport’s short parallel runway (2600 metres) is too short for next-generation aircraft, which require 4000 -metre runways. The runway can be extended to 4000 metres when the displaced facilities are relocated to the Port Botany container terminal site.

It might also be possible to save building a rail passenger tunnel between Chatswood and the CBD at a cost of $6 billion by converting freight capacity to passenger services between Epping and Strathfield as an alternative connection to the CBD for the North West rail line.

Greg Cameron is a policy analyst based in Canberra.

http://www.theherald.com.au/story/2710824/opinion-restrictions-may-be-unlawful/?cs=308