Competition Policy
Whether the NSW government claimed immunity from the “Competition and Consumer Act 2010” (CCA) in relation to leases for Port Botany, Port Kembla and the Port of Newcastle, is not known. It is presumed that immunity was not claimed and that the CCA applies to the three leases.
Lease arrangements are confidential and it is not possible to examine whether arrangements in relation to a “cap on numbers” at the Port of Newcastle, or the terms of compensation payable to NSW Ports, are compliant with the CCA.
The Port of Newcastle was leased on 30 April 2014.
On 11 May 2014, the “Newcastle Herald” reported:
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.
The government did not disclose details of these clauses in the lease arrangements.
The Australian Competition and Consumer Commission (ACCC) said, on 25 June 2014:
However, 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”. (p.38)
The ACCC does not disclose what information it possessed about the ports lease arrangements before 11 May 2014. Apart from the disclosure by The Hon. Duncan Gay MLC on 17 October 2013, it is presumed the ACCC had no information about a “cap on numbers”.
On 12 December 2014, (former) Treasurer, The Hon. Andrew Constance MP, was asked by Member for Newcastle, Mr Tim Crakanthorp MP:
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?
Answer (16 January 2015):
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 ACCC has not disclosed what it was advised, if anything, about an unlegislated “cap on numbers” at the Port of Newcastle after 11 May 2014.
On 30 October 2014, the ACCC warned about governments imposing “restrictions on competition” that “may be unlawful and could be unenforceable”:
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. (p.21)
On 26 November 2014, the ACCC said the leasing arrangements “may restrict Newcastle from competing against Botany and Kembla for containers”:
However, 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. (p.32)
Numerous questions were asked in parliament between October 2014 and December 2015, as reported in Hansard. Mr Gay and The Hon. Gladys Berejiklian MP, Treasurer, said there was no legislated cap on container movements at the Port of Newcastle.
The “cap on numbers”, however, was not legislated. The Ministers provided no information about the unlegislated “cap on numbers”.
On 29 October 2015, Mr Crakanthorp asked Mr Gay:
When did the Competition and Consumer Act 2010 stop applying to the Government in respect to the operation of the Port of Newcastle?
Do the Port Commitment Deeds include a fee on container throughput at Newcastle Port under certain specified conditions?
Answer (4 December 2015):
This is a matter for the Treasurer.
The CCA stopped applying to the government when it stopped operating the ports businesses at Port Botany, Port Kembla and the Port of Newcastle. However, a government may claim immunity from the CCA in respect of a public asset while it is privatising that asset. As noted above, the government has not indicated whether or not it claimed such immunity before leasing the respective businesses.
On 19 November 2015 Mr Crakanthorp asked Ms Berejiklian:
Did the Treasury, or any entity of which the Treasurer is a shareholder, receive a request for information from the Australian Competition and Consumer Commission in 2015?
Did the Treasury, or any entity of which the Treasurer is a shareholder, receive a notice from the Australian Competition and Consumer Commission under section 155 of the Competition and Consumer Act 2010 in 2015?
Answer (18 December 2015):
As a normal part of my role as Treasurer I receive correspondence from a variety of organisations.
For information regarding correspondence to individual entities, you may wish to contact them directly.
Section 155 of the CCA gives the ACCC authority to require provision of information where a breach of the CCA may have occurred. The ACCC is able to clarify this matter.