Hansard

Legislative Council October 10 2017

1792 – Roads, Maritime and Freight – NSW PORTS GOVERNMENT CAP

Nile, Fred to the Minister for Primary Industries, Minister for Regional Water, Minister for Trade and Industry representing the minister for Roads, Maritime and Freight

  1. Does the Ports Assets (Authorised Transactions) Act 2012 authorise the Government lease the Port of Newcastle?
  2. Did the Government enter into an agreement with NSW Ports in April 2013 to pay NSW Ports for container shipments above the Government’s cap at the Port of Newcastle?
  3. Is the use of consolidated revenue to pay NSW Ports for container shipments above the Government’s cap at the Port of Newcastle authorised by the 2012 Act, and if so, under what section?
  4. Does the Government fine the lessee of the Port of Newcastle under the 2012 Act for container shipments above the Government cap?
  5. Is the consolidated revenue to pay NSW Ports for container shipments above the Government’s cap at the Port of Newcastle authorised by the Ports Assets (Authorised Transactions) Amendment Act 2013, and if so, under what section?

Answer November 14 2017-

  1. Yes.
  2. The State entered into Commitment Deeds in May 2013, which can require payments by the State, in certain circumstances. To date, the State has not made any such payments under these Deeds.
  3. No.
  4. The Ports Assets (Authorised Transactions) Act 2012 does not contain provisions to fine parties to the Commitment Deeds in respect of payments under the Commitment Deeds.
  5. No.

LEGISLATIVE ASSEMBLY

May 25 2017

5764 – CONTAINER TERMINAL AT THE PORT OF NEWCASTLE

Crakanthorp, Tim to the Treasurer, and Minister for Industrial Relations

  1. Did the Government decide in 2009 to develop a container terminal at the Port of Newcastle?
  2. Was a decision made in 2012 to require any future operator of a container terminal at the Port of Newcastle to make the government whole for any cost the government incurred from paying the operator of Port Botany in respect of future container capacity development at the Port of Newcastle?
  3. Was Newcastle Stevedores Consortium required in 2013 to make the Government whole for any cost the Government incurred from paying NSW Ports in respect of future container capacity development at the Port of Newcastle?
  4. Was a decision made in 2013 to require any future lessee of the Port of Newcastle to make the Government whole for any cost the Government incurred from paying NSW Ports in respect of future container capacity development at the Port of Newcastle?
  5. Was the lessee of the Port of Newcastle required in 2014 to make the Government whole for any cost the Government incurred from paying NSW Ports in respect of future container capacity development at the Port of Newcastle?
  6. Did the Government inform the Australian Competition and Consumer Commission in 2012 that the Government decided not to develop a container terminal at the Port of Newcastle?

Answer June 29 2017

  1. This Government was not in office in 2009.
  2. No.
  3. Newcastle Ports Corporation did not conclude a contract to build a container terminal with Newcastle Stevedores Consortium in 2013.
  4. Any decision regarding NSW ports is consistent with the Government’s policy that Port Kembla will be the State’s next major container terminal after Port Botany has reached capacity.
  5. No compensation payments to NSW Ports were incurred in 2014.
  6. The Government’s transaction team engaged extensively with the Australian Competition and Consumer Commission regarding the competition and regulatory framework supporting the port transactions.

LEGISLATIVE ASSEMBLY

May 11 2017

5670 – PORT OF NEWCASTLE

Crakanthorp, Tim to the Treasurer, and Minister for Industrial Relations

On which date did the Government inform the Australian Competition and Consumer Commission of its formal decision to invite Newcastle Stevedores Consortium to develop a container terminal at the Port of Newcastle subject to Newcastle Stevedores Consortium making the Government whole for any cost the Government incurred to NSW Ports in respect of this development?

Answer June 15 2017

The Government’s transaction team engaged with the ACCC from the early stages of all the port transactions regarding the competition and regulatory framework supporting the transactions.

Legislative Assembly May 4 2017

5508 – PORT OF NEWCASTLE

Crakanthorp, Tim to the Minister for Roads, Maritime and Freight
  1. Did the Australian Competition and Consumer Commission (ACCC) advise that the Government was carrying on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 in respect of the Government’s ‘Invitation To Submit Detailed Proposal, Mayfield Site’ contract as signed by Newcastle Stevedores Consortium in 2010?
  1. Did the ACCC advise the Government that the Government was not carrying on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 in respect of the Government’s ‘Invitation To Submit Detailed Proposal, Mayfield Site’ contract as signed by Newcastle Stevedores Consortium in 2010?
  1. What is the reason for the Government’s contractual commitment to pay NSW Ports in respect of future container capacity development at the Port of Newcastle?
  1. What is the reason for the Government requiring Port of Newcastle Investments to make the Government whole for any cost the Government incurs to NSW Ports in respect of future container capacity development at the Port of Newcastle?

Answer June 8 2017

No. The Government has arrangements with NSW Ports and the Port of Newcastle, which recognise that Port Botany has significant capacity for container growth. Future demand for containers is expected in the South West of Sydney which is closer to Port Kembla.

Legislative Assembly

February 14 2017

4716 – INFRASTRUCTURE AT THE PORT OF NEWCASTLE

Crakanthorp, Tim to the Minister for Roads, Maritime and Freight

Considering your media statement on September 27 2016 about there being a massive requirement for infrastructure to support a container terminal at the Port of Newcastle, what infrastructure did the government identify as associated with a container terminal at the Port of Newcastle?

Answer – March 21 2017

I refer the member to the previous answer to question LA 4617.

November 17 2016

4617 – INFRASTUCTURE IDENTIFIED AT THE PORT OF NEWCASTLE

Crakanthorp, Tim to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council

What infrastructure did the Government identify as associated with a container terminal at the Port of Newcastle?

Answer December 22 2016

Analysis was carried out as part of the development of the NSW Freight and Ports Strategy. This included examination of capital investment costs required for the port infrastructure and supporting road and rail enhancements, associated with a container terminal at Newcastle.

November 17 2016

4621 – PORT OF NEWCASTLE

Crakanthorp, Tim to the Treasurer, and Minister for Industrial Relations

  1. Did the Government advise Newcastle Stevedores Consortium that the Government considered itself to be exempt from the Commonwealth Competition and Consumer Act 2010 in respect of the negotiations that occurred between Newcastle Port Corporation and Newcastle Stevedores Consortium pursuant to a tender conducted by Newcastle Port Corporation?
  2. Did the Government advise the Australian Competition and Consumer Commission that the Government considered itself to be exempt from the Commonwealth Competition and Consumer Act 2010 in respect of the negotiations that occurred between Newcastle Port Corporation and Newcastle Stevedores Consortium pursuant to a tender conducted by Newcastle Port Corporation?
  3. In answering part (3) of Question On Notice 4008, was the Minister referring to section 51(1) of the Commonwealth Competition and Consumer Act 2010, which provides that conduct that would normally contravene the law may be permitted if it is specifically authorised under other Australian, state or territory legislation?
  4. Did the Government establish that changing the Term Sheets with Newcastle Stevedores Consortium by way of requiring payment of a fee for “containers”, complied with the Commonwealth Competition and Consumer Act 2010?

Answer December 22 2016

(1) and (4) 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.

(2) Please see my answer to question 4271, dated 17 November 2016. [Answer to 4271: I am advised that no exemption was claimed.]

(3) As the response to question 4008 was provided by the Minister, points of clarification should be directed to the Minister.

November 17 2016

4617 – INFRASTUCTURE IDENTIFIED AT THE PORT OF NEWCASTLE

Crakanthorp, Tim to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council

What infrastructure did the Government identify as associated with a container terminal at the Port of Newcastle?

Answer December 22 2016

Analysis was carried out as part of the development of the NSW Freight and Ports Strategy. This included examination of capital investment costs required for the port infrastructure and supporting road and rail enhancements, associated with a container terminal at Newcastle.

November 17 2016

4612 – CONTAINERS AT THE PORT OF NEWCASTLE

Crakanthorp, Tim to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council

  1. How many containers passed through the Port of Newcastle in the 12 months to 30 June 2016?
  2. In the 12 months to 30 June 2016, what was the maximum number of containers permitted to pass through the Port of Newcastle before compensation became payable to NSW Ports?
  3. In the 12 months to 30 June 2016, was the maximum number of containers permitted to pass through the Port of Newcastle before compensation became payable to NSW Ports in the amount of 35,916?
  4. How does the Government determine the number of containers that pass through the Port of Newcastle annually?
  5. For purposes of the Government’s lease agreement with “Port of Newcastle Investments”, does the meaning of container have the same meaning as contained in the “Port Commitment – Port Botany and Port Kembla”?

Answer December 22 2016

(1) to (4) The Port of Newcastle is managed by a private port operator.

(5) The details of container in the Port Commitment Deeds are commercial in confidence.

November 17 2016

4611 – INFRASTRUCTURE AT THE PORT OF NEWCASTLE

Crakanthorp, Tim to the Premier, and Minister for Western Sydney

Considering your media statement on September 27 2016 about there being a massive requirement for infrastructure to support a container terminal at the Port of Newcastle, what infrastructure did the government identify as associated with a container terminal at the Port of Newcastle?

Answer:

As this matter primarily relates to the portfolio of the Minister for Roads, Maritime and Freight, I have referred the question to the Hon Duncan Gay MLC.

November 10 2016

4475 – CONTAINER MOVEMENTS AT THE PORT OF NEWCASTLE

Crakanthorp, Tim to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council

  1. What is the reason for the Government charging a fee for container movements at the Port of Newcastle?
  2. What is the reason for the Government paying compensation to NSW Ports for container movements at the Port of Newcastle?

Answer December 15 2016

I am advised:

The Government does not charge a fee for container movements at the Port of Newcastle and no compensation payments have been paid.

LEGISLATIVE ASSEMBLY OCTOBER 13 2016

4271 – PORT OF NEWCASTLE

Crakanthorp, Tim to the Treasurer, and Minister for Industrial Relations

Did the Government claim exemption from the Trade Practices Act 1974 (as replaced on 1 January 2011 by the Competition and Consumer Act 2010) when Newcastle Port Corporation conducted a tender in 2010 for a multi-purpose terminal, including a container terminal with minimum capacity of 1 million twenty-foot container equivalent unit (TEU) per year, at the Port of Newcastle?

Answer November 17  2016-

I am advised that no exemption was claimed.

LEGISLATIVE COUNCIL 13 OCTOBER 2016
 
1166 – Planning – MOOREBANK INTERMODAL FREIGHT TERMINAL
 
Faruqi, Mehreen to the Minister for Ageing, Minister for Disability Services and Minister for Multiculturalism representing the Minister for Planning

1.

Regarding the Planning Assessment Commission planning approval of the Moorebank Intermodal Freight Terminal, which places a condition that 250,000 twenty-foot equivalent unit not exceed the current capacity of the transport network?

a. Is the only possible road transport solution through the Liverpool Military Area?

b. What is the current status of the Liverpool Military Area? Can its status be altered and if so, how?

2.

Relating to the answer to question 127 in the supplementary questions for the 2016⁄2017 Budget Estimates hearing for the portfolio of Roads, Maritime and Freight, specifically that: “The NSW Government has committed $3.4 million to progress studies into road infrastructure options to manage traffic impacts from the proposed Moorebank Intermodal Terminal and forecast growth in the broader Liverpool and Moorebank area.”

a. What is the purpose of these studies?

b.Have all previous planning studies been sufficient for the Government to decide the Moorebank Intermodal Terminal planning application?

c. If so, why is the Government conducting studies?

d. Has the Government released the scope of each study?

e. If not, will you release it?

f. Are the studies confidential?

g. If so, why?

h. What circumstances caused the Government to undertake the studies?

i. Who is undertaking the studies?

j. Are the project proponents participating in the studies?

k. Is the local community participating in the studies?

l. Has approval to develop the project been given subject to these studies?

m. If so, what features of previous studies, if any, are being rectified by the Government

n. Will community comment be invited in respect of the studies before the studies are adopted?

o. Who is funding the rail connection between the Southern Sydney Freight Line and the terminal site?

p. Will the Government release the cost of necessary road upgrades before deciding the project application?

q.What proportion of necessary road upgrades will be paid by the terminal operator if planning approval is given?

Answer November 17 2016-

I am advised-

1.

a. The EIS proposed access from Moorebank Ave. b. This is a matter for the Department of Defence.

2.

a.This question should be directed to the Minster for Roads, Maritime and Freight.

b.Yes

c. These questions should be directed to the Minster for Roads, Maritime and Freight.

d. These questions should be directed to the Minster for Roads, Maritime and Freight.

e. These questions should be directed to the Minster for Roads, Maritime and Freight.

f. These questions should be directed to the Minster for Roads, Maritime and Freight.

g. These questions should be directed to the Minster for Roads, Maritime and Freight.

h. These questions should be directed to the Minster for Roads, Maritime and Freight.

i. These questions should be directed to the Minster for Roads, Maritime and Freight.

j. These questions should be directed to the Minster for Roads, Maritime and Freight.

k. These questions should be directed to the Minster for Roads, Maritime and Freight.

l. No

m. Not applicable.

n. This question should be directed to the Minster for Roads, Maritime and Freight.

o. This is not a matter for the Minister for Planning.

p. This question should be directed to the Minster for Roads, Maritime and Freight.

q.This would be a matter subject to assessment of future staged applications if they are made.

Legislative Assembly
15 September 2016

 

4008 – PORT OF NEWCASTLE

 

Crakanthorp, Tim to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council

  1. Has the operator of the Port of Newcastle entered into an agreement for the development of a container terminal at the Port of Newcastle?
  2. If a container terminal was developed in Newcastle during this term of Government, does the Government plan to charge the port operator, or the operator of the container terminal, a fee for container movements?
  3. Did the Government claim immunity from the Commonwealth Competition and Consumer Act 2010 in respect of the Term Sheets with Newcastle Stevedores Consortium?

Answer October 20 2016-

(1) This is a matter for the operator of the Port of Newcastle.

(2) and (3) No.

Legislative Council
13 September 2016

 PORT OF NEWCASTLE

The Hon. PAUL GREEN ( 16:17 ): My question without notice is directed to the Minister for Roads, Maritime and Freight. On 28 July the Newcastle Herald published that it had received a strictly confidential port commitment document outlining that an operator of the Newcastle container terminal would have to pay compensation to the Government if it moved more than 30,000 containers per year, which would cost a minimum of $1 million. Will the Minister comment on the validity of this claim? Is this true? Given that the unemployment rate in Newcastle is 12 per cent and higher for youth unemployment at 20 per cent, should not the Government be working towards building shipments through the Port of Newcastle in order to provide additional employment opportunities?

The PRESIDENT: Order! I call the Hon. Sophie Cotsis to order for the first time.

The Hon. DUNCAN GAY (Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council) ( 16:17 ): I thank the honourable member for his question and I know that it is an issue for certain people in the Newcastle area, not the least of which is the fine periodical, the Newcastle Herald.

The Hon.Walt Secord: It is a journal.

The Hon. DUNCAN GAY: It is unbelievable that the Labor Party is mocking the Newcastle Herald.

The Hon.Walt Secord: Point of order: I cannot let this pass. Hansard must show that the Opposition was not mocking the Newcastle Herald; it loves that publication.

The PRESIDENT: I will leave the matter there. The Minister has the call.

The Hon. DUNCAN GAY: 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. In fact, there is ample opportunity for increased container trade at the port. The port transaction deeds do not trigger any cross‑payments until a threshold container throughput is reached. That threshold is based on 30,000 containers each year, plus an extra 6 per cent growth in volume. Based on current growth rates, it is highly unlikely that current container trade at Newcastle will reach the applicable threshold—

The PRESIDENT: Order! I am having difficulty hearing the Minister. There is too much audible conversation in the Chamber.

The Hon. DUNCAN GAY: before such time as Newcastle is required to establish high-intensity container terminals to meet the forecasted population and business needs of the Hunter. Yearly container trade at Newcastle is currently holding steady at about 9,000 boxes. Remember, 30,000 is the threshold, plus 6 per cent growth in volume per annum. It is not within a bull’s roar of that trigger. In other words, it would take a massive 230 per cent increase in container trade volume to reach the 30,000 twenty-foot equivalent unit [TEU] threshold—and that is before one applies the extra 6 per cent growth rate.

There is a long way to go. If we apply the formula to the outer years we see that by 2030 the threshold at Newcastle will be approximately 80,000 boxes. By 2040 it will be 144,000 boxes and by 2050 it will be almost 260,000 boxes. That is the trend. The Port of Newcastle will continue to be the primary coal export facility for New South Wales and will continue to diversify into bulk grain and other commodities. The recent diversification into fuel is very important for Newcastle and the Hunter region. The Government worked closely with the Australian Competition and Consumer Commission [ACCC] and other regulatory bodies as part of the transactions.

Port Botany remains the key container facility for New South Wales, for a range of logistical and commercial reasons. It is the second largest container facility in Australia—just behind the Port of Melbourne—and acts as a gateway to the most populous city in the nation. Approximately 85 per cent of imported containers landing at Port Botany are distributed within 40 to 50 kilometres of the terminal. That is important to note. A person sending a container wants it to go to its destination for the least cost. Eighty-five per cent of containers go to Sydney. [Time expired.]

The PRESIDENT: Order! The Minister will resume his seat.

BUDGET ESTIMATES 2016-2017
Supplementary Questions
General Purpose Standing Committee No. 1
TREASURY, INDUSTRIAL RELATIONS
Hearing: Thursday 1 September 2016
Answers: Tuesday 27 September 2016

 Questions from the Hon Shaoquett Moselmane MLC (on behalf of the NSW Labor Opposition)

Newcastle Port

  1. When did you become aware of the content of the Port Commitment Deeds for Ports Botany and Kembla?

Answer: As you are aware the NSW Government was a counterparty to the port transactions.

  1. Did the Government advise the Australian Competition and Consumer Commission (ACCC) of the content of the Port Commitment Deeds for Ports Botany and Kembla and its content before entering into any lease for Port Botany and Port Kembla?

Answer: I am advised 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.

  1. If the answer to 2. is yes, what was the response of the ACCC?

Answer: I am advised 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.

  1. Now that the Port Commitment Deeds for Ports Botany and Kembla have been released into the public arena, have the terms in the document been agreed to by the NSW Government?

Answer: Please see response by my colleague, Minister Gay, available on the Legislative Council’s Hansard.

  1. Was there, or is there agreement between the Government and the ACCC that the Government was carrying on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 at the Port of Newcastle, when the government-owned Newcastle Port Corporation was the port’s operator?

Answer: I am advised that the extent to which the Government carries on a business for the purposes of the Competition and Consumer Act 2010 is a matter of law not agreement.

  1. Was there, or is there agreement between the Government and the ACCC about the date upon which the NSW Government ceased carrying on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 at the Port of Newcastle, when the government-owned Newcastle Port Corporation was the port’s operator? If so, what is that date?

Answer: I am advised that the extent to which the Government carries on a business for the purposes of the Competition and Consumer Act 2010 is a matter of law not agreement.

  1. Does the Government’s charge on containers at the Port of Newcastle potentially breach Section 45 of the Commonwealth Competition and Consumer Act 2010?

Answer: I am advised 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.

  1. When did the NSW Government claim immunity from competition law regarding the Port Commitment Deeds?

Answer: I am advised 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.

  1. What contact or discussions with the ACCC has the NSW Government, or any part of the NSW Government, had regarding the Port Commitment Deeds?

Answer: I am advised 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.

  1. Why did the government advise this Committee on 22 August 2014 that a container terminal at the Port of Newcastle was “uneconomic enterprise contrary to market demand” but fail to advise it of the cap on container movements and the payment required for exceeding the cap contained in the Port Commitment Deeds?

Answer: The Government’s comprehensive NSW Freight and Ports Strategy noted that the Port would continue to be NSW’s primary coal export and will continue to service bulk grain and other commodities.

  1. Why did the government agree to the cap for container movements at the Port of Newcastle and the payment required for breaching the cap Port Commitment Deeds?

Answer: The Government’s comprehensive NSW Freight and Ports Strategy noted that the Port would continue to be NSW’s primary coal export and will continue to service bulk grain and other commodities.

Newcastle Port

  1. When did the Treasurer and/or NSW Treasury become aware of the content of the Port Commitment Deeds for Ports Botany and Kembla?

Answer: I refer you to answers 41- 51

  1. Did the Government advise the Australian Competition and Consumer Commission (ACCC) of the content of the Port Commitment Deeds for Ports Botany and Kembla and its content before entering into any lease for Port Botany and Port Kembla?

(a) If yes, what was the response of the ACCC?

Answer: I refer you to answers 41- 51

  1. Was there, or is there agreement between the Government and the ACCC that the Government was carrying on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 at the Port of Newcastle, when the government-owned Newcastle Port Corporation was the port’s operator?

Answer: I refer you to answers 41- 51

  1. Was there, or is there agreement between the Government and the ACCC about the date upon which the NSW Government ceased carrying on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 at the Port of Newcastle, when the government-owned Newcastle Port Corporation was the port’s operator? If so, what is that date?

Answer: I refer you to answers 41- 51

  1. Does the Government’s charge on containers at the Port of Newcastle potentially breach Section 45 of the Commonwealth Competition and Consumer Act 2010?

Answer: I refer you to answers 41- 51

  1. When did the NSW Government claim immunity from competition law regarding the Port Commitment Deeds?

Answer: I refer you to answers 41- 51

  1. What contact or discussions with the ACCC has the NSW Government, or any part of the NSW Government, had regarding the Port Commitment Deeds?

Answer: I refer you to answers 41- 51

  1. Why did the government advise this Committee on 22 August 2014 that a container terminal at the Port of Newcastle was “uneconomic enterprise contrary to market demand” but fail to advise it of the cap on container movements and the payment required for exceeding the cap contained in the Port Commitment Deeds?

Answer: I refer you to answers 41- 51

  1. Why did the government agree to the cap for container movements at the Port of Newcastle and the payment required for breaching the cap Port Commitment Deeds?

Answer: I refer you to answers 41- 51

  1. Did the NSW Government receive any advice that entering into the Port Commitment Deed would increase the proceeds that the NSW Government would receive from the port transactions?

(a) If so, will you release this advice?

Answer: The Government seeks advice on a range of issues when undertaking significant transactions and much of this advice is commercial in confidence to ensure value for money for NSW taxpayers.

  1. Did the NSW Government receive any advice that selling Port Botany and Port Kembla to the same buyer would increase the proceeds that the NSW Government would receive from the transaction?

(a) If so, will you release this advice?

Answer: The Government seeks advice on a range of issues when undertaking significant transactions and much of this advice is commercial in confidence to ensure value for money for NSW taxpayers.

Port of Newcastle

  1. Did the government claim immunity from the “Competition and Consumer Act 2010” in respect of Term Sheets with Newcastle Stevedores Consortium requiring Mayfield Development Corporation Pty Ltd to make the State of New South Wales whole for any cost the State incurred to NSW Ports in respect of future container capacity development at the Port of Newcastle?

Answer: I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.

  1. Was the government subject to the “Competition and Consumer Act 2010” in respect of Term Sheets with Newcastle Stevedores Consortium requiring Mayfield Development Corporation Pty Ltd to make the State of New South Wales whole for any cost the State incurred to NSW Ports in respect of future container capacity development at the Port of Newcastle?

Answer: I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.

  1. Was the Government excluded from the requirements of the Commonwealth Competition and Consumer Act 2010 in respect of Newcastle Port Corporation:

(a) Conducting a public tender in 2010 for a multi-purpose terminal, including a 1-million per year capacity container terminal, at the Port of Newcastle?

(b) Changing its requirements pursuant to its 2010 tender?

(c) Charging Anglo Ports Pty Ltd a fee for container movements at the Port of Newcastle, pursuant to its tender conducted in 2010?

Answer: I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.

  1. On what date did the Government inform the Australian Competition and Consumer Commission about Newcastle Port Corporation charging a fee for container movements at the Port of Newcastle?

Answer: I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.

  1. Was the Government excluded from the requirements of the Commonwealth Competition and Consumer Act 2010 in respect of charging a fee for container movements at the Port of Newcastle after Newcastle Port Corporation terminated its negotiations with Anglo Ports?

Answer: I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.

  1. On what date did the Government impose a charge on containers at the Port of Newcastle?

Answer: I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.

  1. Does the Government use its charge on containers at the Port of Newcastle to fund compensation payments to NSW Ports in respect of container movements at the Port of Newcastle?

(a) If not, what is the source of the funds for these payments?

Answer: I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.

  1. When was the Treasurer first made aware of the Port Commitment Port Botany and Port Kembla document?

Answer: Please refer to the response to question 41. [As you are aware the NSW Government was a counterparty to the port transactions.]

  1. When was the Treasurer first made aware of the “contractual commitments” outlined in the Port Commitment Port Botany and Port Kembla document?

Answer: Please refer to the response to question 41 [As you are aware the NSW Government was a counterparty to the port transactions.]

  1. The Minister for Roads, Maritime and Freight recently stated that cross payments are required to be made between the operator of the Port of Newcastle and the operator of Port Botany and Kembla, does the Treasurer understand these cross payments to be lawful?

(a) Does the Treasurer accept these payments are of an anti-competitive nature?

Answer: Please refer to the response to question 135. [I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.]

  1. Why does the Government charge a fee for container movements at the Port of Newcastle?

Answer: Please refer to the response to questions 50. [The Government’s comprehensive NSW Freight and Ports Strategy noted that the Port would continue to be NSW’s primary coal export and will continue to service bulk grain and other commodities.]

  1. Why did the Government keep secret its charging a fee for container movements at the Port of Newcastle until 10 August 2016?

Answer: Please refer to the response to questions 50. [The Government’s comprehensive NSW Freight and Ports Strategy noted that the Port would continue to be NSW’s primary coal export and will continue to service bulk grain and other commodities.]

  1. Why does the Government pay NSW Ports compensation in respect of container movements at the Port of Newcastle?

Answer: Please refer to the response to questions 50. [The Government’s comprehensive NSW Freight and Ports Strategy noted that the Port would continue to be NSW’s primary coal export and will continue to service bulk grain and other commodities.]

  1. How does the Government define the term “container” in respect of charging a fee for container movements at the Port of Newcastle?

Answer: Please refer to the response to questions 50. [The Government’s comprehensive NSW Freight and Ports Strategy noted that the Port would continue to be NSW’s primary coal export and will continue to service bulk grain and other commodities.]

  1. Does the Government charging a fee for container movements at the Port of Newcastle affect the commercial viability of developing a container terminal?

Answer: Please refer to the response to questions 50. [The Government’s comprehensive NSW Freight and Ports Strategy noted that the Port would continue to be NSW’s primary coal export and will continue to service bulk grain and other commodities.]

  1. Does the Government claim immunity from the Commonwealth Competition and Consumer Act 2010 in respect of charging a fee for container movements at the Port of Newcastle?

Answer: Please refer to the response to question 135. [I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.]

  1. Did the Government claim immunity from the Commonwealth Competition and Consumer Act 2010 when it requested Newcastle Stevedores Consortium and Mayfield Development Corporation Pty Ltd to pay a fee for container movements at the Port of Newcastle?

Answer: Please refer to the response to question 135. [I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.]

  1. Was Newcastle Port Corporation’s contract with Anglo Ports, pursuant to its 2010 tender, subject to the government’s “Working With Government Guidelines”?

Answer: I am advised that Newcastle Port Corporation did not conclude a contract with Anglo Ports.

  1. Did the government claim immunity from the Commonwealth Competition and Consumer Act 2010 in respect of its contract with Anglo Ports pursuant to Newcastle Port Corporation’s 2010 tender?

Answer: Please refer to the response to questions 135 and 152. [I am advised 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. No compensation payments have been payable in respect to container movements at the Port of Newcastle.

  1. Does the government support a court determining whether a breach of the Commonwealth Competition and Consumer Act 2010 occurred when the government required Anglo Ports to pay a fee for container movements?

Answer: Please refer to the response to question 152. [I am advised that Newcastle Port Corporation did not conclude a contract with Anglo Ports.]

  1. When the government instructed Anglo Ports not to build a container terminal, on 30 August 2012 and 26 July 2013, but required payment of a fee for container movements based on a container terminal, did the government terminate the tender because Anglo Ports did not withdraw its proposal?

Answer: Please refer to the response to question 152. [I am advised that Newcastle Port Corporation did not conclude a contract with Anglo Ports.]

  1. Why did the government advise this Committee on 22 August 2014 that a container terminal at the Port of Newcastle was “uneconomic enterprise contrary to market demand” but fail to advise that it charges a fee for container movements?

Answer: Please refer to the response to question 50. [The Government’s comprehensive NSW Freight and Ports Strategy noted that the Port would continue to be NSW’s primary coal export and will continue to service bulk grain and other commodities.]

  1. Why does the government charge a fee for container movements at the Port of Newcastle?

Answer: Please refer to the response to question 47. [I am advised 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.]

  1. Would a container terminal at the Port of Newcastle be “an uneconomic enterprise contrary to market demand” if the government abolished its fee charged for container movements?

Answer: The Port of Newcastle is not prevented from developing container facilities.

  1. Can the private operator of the Port of Newcastle develop a container terminal if it wished to do so subject to paying the government’s fee charged for container movements above a threshold level?

Answer: The Port of Newcastle is not prevented from developing container facilities.

BUDGET ESTIMATES 2016-2017
GENERAL PURPOSE STANDING COMMITTEE NO. 1
Thursday, 1 September 2016
Examination of proposed expenditure for the portfolio area
TREASURY AND INDUSTRIAL RELATIONS
UNCORRECTED PROOF

The Committee met at 9:00

MEMBERS

Reverend the Hon. F. Nile (Chairman)
Mr J. Buckingham
The Hon. S. Farlow
The Hon. B. Franklin
The Hon. D. Mookhey
The Hon. P. Primrose
The Hon. A. Searle
The Hon. B. Taylor
PRESENT

The Hon. G. Berejiklian, Treasurer, and Minister for Industrial Relations

Page 24

The Hon. ADAM SEARLE: I would like to ask you some questions about the Port of Newcastle and the cap on containers. Last year we asked whether or not a cap was put on the number of containers that could be put through the Port of Newcastle. You were very careful to say there was no legislated container cap.

Ms GLADYS BEREJIKLIAN: Correct.

The Hon. ADAM SEARLE: We asked also whether there was any other restriction in the sale or lease documents and you answered, “Not that I am aware of.” We also gave you some questions on notice about this and we referred you specifically to the port commitment deeds, which you refused to release. Now we know thanks to the Newcastle Herald, which published the port commitment deeds for Port Botany and Port Kembla, that there was in fact as part of the arrangement a cap on container movements through the Port of Newcastle. If they exceeded the cap the operator would have to pay to the State Government essentially a fine and your Government would then pay that to the operator of Port Botany and Port Kembla. Why were you not frank and honest with the Committee last year about the fact that there was, as a result of your Government’s policy and actions, a cap on container movements through the Port of Newcastle?

Ms GLADYS BEREJIKLIAN: I appreciate your question and I am happy to go into detail around those arrangements, but my concern at the time was that I was not sure what was subject to commercial in confidence and what was not.

The Hon. ADAM SEARLE: I asked you whether there was a cap. You were very careful to say there was no legislated cap.

Ms GLADYS BEREJIKLIAN: Correct.

The Hon. ADAM SEARLE: And I asked you whether there was anything else in the sale or the lease documents.

Ms GLADYS BEREJIKLIAN: That is why I had to go back.

The Hon. ADAM SEARLE: But you did not come back to us. You were dissembling. You said there was no legislated cap. When did you know about the cap and why did you not inform the Committee? Why have you tried to hide this?

Ms GLADYS BEREJIKLIAN: As I stated, I was very clear on what was publicly available at that time. I am telling you now the reason why I did not elaborate beyond what I knew was a fact was because I wanted to seek some advice as to what was commercial in confidence and what was publicly available.

The Hon. ADAM SEARLE: These are monopoly assets. You leased them out to monopoly operators. There is no commercial in confidence. That is just rubbish.

Ms GLADYS BEREJIKLIAN: No, there are specific terms within contracts of transactions which are subject to commercial in confidence.

The Hon. ADAM SEARLE: Treasurer, this deal is so bad for consumers in New South Wales that we have had the head of the ACCC saying the deal is so bad for consumers he is changing his mind on privatisation.

Ms GLADYS BEREJIKLIAN: What is your question?

The Hon. ADAM SEARLE: Why did your Government engage in a transaction that has put a brake on the economic development of Newcastle and the Hunter region for the better part of a century?

Ms GLADYS BEREJIKLIAN: I am really pleased to answer this question because I find the premise of your question quite affronting.

The Hon. ADAM SEARLE: So does the ACCC. They say they would prosecute the State Government but you claim an immunity.

The Hon. BEN FRANKLIN: Point of order—

The Hon. ADAM SEARLE: When did you claim the immunity?

The Hon. BEN FRANKLIN: Point of order—

The Hon. ADAM SEARLE: When did you claim the immunity from the trade practices legislation?

Ms GLADYS BEREJIKLIAN: There is nothing like a bit of excitement in an estimates hearing.

The Hon. BEN FRANKLIN: The point of order is that the Treasurer was answering the question.

The Hon. ADAM SEARLE: The Treasurer lied to us last year, Benjamin.

The Hon. BEN FRANKLIN: The Treasurer was answering your question, Mr Searle.

The Hon. ADAM SEARLE: She did not come clean.

The Hon. BEN FRANKLIN: You asked the question. She is answering the question.

The Hon. ADAM SEARLE: Treasurer, why did you not come clean to this Committee last year?

The Hon. BEN FRANKLIN: You should have more respect for this process, Mr Searle. You know better than that.

The Hon. ADAM SEARLE: Why are you putting a brake on economic development in Newcastle for a century?

The Hon. SCOTT FARLOW: There is a point of order.

The CHAIR: Mr Searle, let the Treasurer answer the question.

Ms GLADYS BEREJIKLIAN: Can I say, Mr Searle, the premise of your question is wrong at best. As you appreciate, the New South Wales Government—

The Hon. ADAM SEARLE: Did you get the approval of the ACCC before you engaged in the transaction?

The CHAIR: Let the Treasurer answer the question, Mr Searle.

Ms GLADYS BEREJIKLIAN: The New South Wales Government has a very detailed freight and ports strategy and we have been very public about that.

The Hon. ADAM SEARLE: Yes, to rip off the consumers.

Ms GLADYS BEREJIKLIAN: We have said very publicly that we see the particular role of the port at Newcastle to be primarily for coal and other bulk commodities.

The Hon. DANIEL MOOKHEY: It will be for now.

Ms GLADYS BEREJIKLIAN: No. When we came to government there was no freight strategy in New South Wales. You did not have a ports strategy.

The Hon. ADAM SEARLE: I was not here, Treasurer. Answer the question I have asked you.

Ms GLADYS BEREJIKLIAN: I am trying to if you would stop interrupting me.

The Hon. ADAM SEARLE: You are obfuscating. You dodged the question last year.

The Hon. SCOTT FARLOW: Point of order—

The Hon. ADAM SEARLE: You lied to the Committee last year. Now answer the question.

The Hon. BEN FRANKLIN: Let her answer the question.

The Hon. ADAM SEARLE: If only she would, Ben.

The CHAIR: Let the Treasurer answer the question.

The Hon. ADAM SEARLE: She is not answering the question. She is obfuscating again.

The Hon. SCOTT FARLOW: You are not letting her answer the question.

Mr JEREMY BUCKINGHAM: No more coffee.

Ms GLADYS BEREJIKLIAN: Can I please answer the question? We have been extremely public about the NSW Freight and Ports Strategy and what we view as the role of each major port in New South Wales. There is no doubt that we have said right at the outset that we believe Port Botany to be the main container port in New South Wales and I will tell you why.

The Hon. DANIEL MOOKHEY: It will be now.

Ms GLADYS BEREJIKLIAN: Eighty-five per cent of all containers that come off the port at Port Botany are distributed within 40 kilometres. Major freight operators do not want multiple ports of stops when they are bringing their goods to New South Wales. As a government we have to make some really sound decisions on what the primary use of each port should be to make sure we maximise the opportunities of increasing capacity at all of our ports in relation to our strategy. That is why the Government, obviously before my time, entered into arrangements. I do know for a fact because after I was asked those questions I did go back and check with the team that there was ongoing consultation. There was ongoing consultation with the ACCC during that process and ongoing consultation with all the relevant agencies.

Also I note not only have we been very clear and up-front about what the role of each port is but also, as my colleague in the other place identified, there are still enormous growth opportunities in Newcastle within what was agreed by Government during the transaction process. That is without doubt. Regrettably during your 16 years of government you did not invest in the Hunter. We now have record investment in infrastructure and record investment in revitalising Newcastle and the greater Hunter region, which has been made possible in part by this transaction. We are investing I think in the order of half a billion dollars and more in transport infrastructure upgrades which would not have been possible without the transaction. The reason why I find your question affronting is we made this decision to support the revitalisation of Newcastle and to reassert the Government’s strategy in relation to our ports and freight. There was no—

The Hon. PETER PRIMROSE: You were affronted because you were caught out.

Ms GLADYS BEREJIKLIAN: No.

The Hon. PETER PRIMROSE: You did not come back to this Committee.

The Hon. BEN FRANKLIN: Point of order: The Opposition’s time for question has expired.

Ms GLADYS BEREJIKLIAN: You asked me a question and I answered to the best of my ability at that time.

The Hon. PETER PRIMROSE: You did not come back and correct it.

Ms GLADYS BEREJIKLIAN: No, because what I told you was correct. Mr Searle even accepts that.

The Hon. ADAM SEARLE: Yes, but you did not give the full answer.

Ms GLADYS BEREJIKLIAN: What I told you was correct.

The Hon. PETER PRIMROSE: Talk about dissembling.

Ms GLADYS BEREJIKLIAN: Please. Getting back to the point, I think the whole argument you are running that somehow this transaction was done intentionally to the detriment of Newcastle and the Hunter—

The Hon. ADAM SEARLE: The ACCC seems to think so.

Ms GLADYS BEREJIKLIAN: —is an affront and it is wrong. I will keep referring to the ports strategy.

The Hon. PETER PRIMROSE: And we will keep referring to the ACCC.

Ms GLADYS BEREJIKLIAN: I have outlined the rationale as to why Port Botany is the main container port for New South Wales. I have outlined the rationale for the main purpose of the Newcastle port. As I have stated previously, there was and is no legislated cap. I think it is very concerning that a party who after 16 years did not even have a ports strategy—

The Hon. PETER PRIMROSE: The ACCC.

Ms GLADYS BEREJIKLIAN: Yes, what about them?

The Hon. PETER PRIMROSE: The ACCC.

Ms GLADYS BEREJIKLIAN: What about them?

Mr JEREMY BUCKINGHAM: Point of order: It is my time to ask questions.

The CHAIR: We will move on to Mr Buckingham’s time.

BUDGET ESTIMATES 2016-2017
Supplementary Questions General Purpose Standing Committee No. 2
ROADS, MARITIME AND FREIGHT
Hearing: Monday 29 August 2016
Answers: Thursday 22 September 2016

Questions from Hon Shaoquett Moselmane MLC (on behalf of the NSW Labor Opposition)

Newcastle Port Privatisation

  1. Did the Government intentionally mislead the people of Newcastle by not giving any information about the cap placed on the Port of Newcastle until the Newcastle Herald uncovered the Port Commitment Deed, yes or no?

Answer: These are matters for the Treasurer.

  1. Does the Government’s charge on containers at the Port of Newcastle render a container terminal an uneconomic enterprise?

Answer: These are matters for the Treasurer.

  1. Is economic development in northern NSW constrained by access to Port Botany container terminal?

Answer: These are matters for the Treasurer.

  1. Given that intermediate goods comprise 50 per cent of imported containers into Port Botany (source: NSW Ports Master Plan page 36) is this the reason why manufacturing firms locate as close as they can to Port Botany?

Answer: Decisions about locating or relocating a business to a regional area is a matter for individual businesses. Manufacturing firms set up their operations in areas where land is zoned for that purpose.

  1. Is the impediment to manufacturing firms locating in regional areas of NSW because they need direct, low-cost access to a container port?

Answer: Decisions about locating or relocating a business to a regional area is a matter for individual businesses. Manufacturing firms set up their operations in areas where land is zoned for that purpose.

  1. Does the Government’s charge on containers at the Port of Newcastle potentially breach Section 45 of the Commonwealth Competition and Consumer Act 2010?

Answer: These are matters for the Treasurer.

Port of Newcastle

  1. Was the Government excluded from the requirements of the Commonwealth Competition and Consumer Act 2010 in respect of Newcastle Port Corporation:

(a) Conducting a public tender in 2010 for a multi-purpose terminal, including a 1-million per year capacity container terminal, at the Port of Newcastle?

(b) Changing its requirements pursuant to its 2010 tender?

(c) Charging Anglo Ports Pty Ltd a fee for container movements at the Port of Newcastle, pursuant to its tender conducted in 2010?

Answer: This is a matter for the Treasurer.

  1. On what date did the Government inform the Australian Competition and Consumer Commission about Newcastle Port Corporation charging a fee for container movements at the Port of Newcastle?

Answer: This is a matter for the Treasurer.

  1. Was the Government excluded from the requirements of the Commonwealth Competition and Consumer Act 2010 in respect of charging a fee for container movements at the Port of Newcastle after Newcastle Port Corporation terminated its negotiations with Anglo Ports?

Answer: This is a matter for the Treasurer.

  1. On what date did the Government claim immunity from the Commonwealth Competition and Consumer Act 2010 in respect of its charge on containers at the Port of Newcastle?

Answer: This is a matter for the Treasurer.

  1. On what date did the Government impose a charge on containers at the Port of Newcastle?

Answer: This is a matter for the Treasurer.

  1. Does the Government use its charge on containers at the Port of Newcastle to fund compensation payments to NSW Ports in respect of container movements at the Port of Newcastle?

(a) If not, what is the source of the funds for these payments?

Answer: This is a matter for the Treasurer.

  1. When was the Minister first made aware of the Port Commitment Port Botany and Port Kembla document?

Answer: This is a matter for the Treasurer.

  1. When was the Minister first made aware of the “contractual commitments” outlined in the Port Commitment Port Botany and Port Kembla document?

Answer: This is a matter for the Treasurer.

  1. The Minister recently stated that cross payments are required to be made between the operator of the Port of Newcastle and the operator of Port Botany and Kembla, does the Minister understand these cross payments to be lawful?

(a) Does the Minister accept these payments are of an anti-competitive nature?

Answer: This is a matter for the Treasurer.

  1. Why does the Government charge a fee for container movements at the Port of Newcastle?

Answer: This is a matter for the Treasurer.

  1. Why did the Government keep secret its charging a fee for container movements at the Port of Newcastle until 10 August 2016?

Answer: This is a matter for the Treasurer.

  1. Why does the Government pay NSW Ports compensation in respect of container movements at the Port of Newcastle?

Answer: This is a matter for the Treasurer.

  1. How does the Government define the term “container” in respect of charging a fee for container movements at the Port of Newcastle?

Answer: This is a matter for the Treasurer.

  1. Does the Government charging a fee for container movements at the Port of Newcastle affect the commercial viability of developing a container terminal?

Answer: This is a matter for the Treasurer.

  1. Does the Government claim immunity from the Commonwealth Competition and Consumer Act 2010 in respect of charging a fee for container movements at the Port of Newcastle?

Answer: This is a matter for the Treasurer.

  1. Did the Government claim immunity from the Commonwealth Competition and Consumer Act 2010 when it requested Newcastle Stevedores Consortium and Mayfield Development Corporation Pty Ltd to pay a fee for container movements at the Port of Newcastle?

Answer: This is a matter for the Treasurer.

Freight

  1. Will the Government fund the cost of building the Western Sydney Freight Line?

Answer: I am advised: Transport for NSW is currently undertaking preliminary work to identify a corridor for the Western Sydney Freight Line for corridor protection. At this stage, the delivery model for its construction has not been determined.

  1. Will the Government pay the cost of connecting the Southern Sydney Freight Line to the Moorebank intermodal terminal site?

Answer: This is a matter for the Federal Government.

  1. What is the cost of road upgrades for the Moorebank intermodal terminal proposal?

Answer: The NSW Government has committed $3.4 million to progress studies into road infrastructure options to manage traffic impacts from the proposed Moorebank Intermodal Terminal and forecast growth in the broader Liverpool and Moorebank area.

  1. The Government promised $14 Million for initial funding for the Hexham to Fassifern rail bypass – what will this money be spent on?
  • Will the government commit to funding the construction of the by-pass?

Answer: I am advised: The Lower Hunter Freight Corridor was allocated $14 million in the 2016-17 NSW Budget for Planning and Pre-Construction. This includes extensive consultation with the community and key stakeholders, route investigation and identifying and securing potential environmental offset lands.

Questions from Dr Mehreen Faruqi MLC

Ports

Answer:

  1. Did the NSW Government claim it was not carrying on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 at the Port of Newcastle during its long term lease?

Answer: This is a matter for the Treasurer.

  1. Did the NSW Government claim it was not carrying on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 at the Port of Botany during its long term lease?

Answer: This is a matter for the Treasurer.

  1. Did the NSW Government claim it has never carried on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 at the Port of Newcastle?

Answer: This is a matter for the Treasurer.

Freight Rail

  1. What is the current percentage of freight that is moved by rail in NSW?

Answer: I am advised: As outlined in the November 2013 NSW Freight and Ports Strategy, 33 per cent of freight is moved by rail. The next iteration of the Freight and Ports Strategy is due in 2017.

  1. What is the current percentage of freight that is moved by rail from Port Botany?

Answer: I am advised: As outlined in the November 2013 NSW Freight and Ports Strategy, 33 per cent of freight is moved by rail. The next iteration of the Freight and Ports Strategy is due in 2017.

Moorebank Intermodal Freight Terminal (MIFT)

  1. What specific transport infrastructure is required to be built / enhanced to ameliorate current traffic congestion, background growth, and the introduction into East Liverpool of heavy truck movements into the East Liverpool bridge traffic?

(a) What is the cost of this specific transport infrastructure?

Answer: The NSW Government has committed $3.4 million to progress studies into road infrastructure options to manage traffic impacts from the proposed Moorebank Intermodal Terminal and forecast growth in the broader Liverpool and Moorebank area.

  1. What specific transport infrastructure is required through the Liverpool suburbs West of its CBD to meet the demands of the MIFT heavy vehicle transport to the Cumberland Highway as a major route to the freight’s final destination.?

Answer: The NSW Government has committed $3.4 million to progress studies into road infrastructure options to manage traffic impacts from the proposed Moorebank Intermodal Terminal and forecast growth in the broader Liverpool and Moorebank area.

  1. Are there plans to develop roads from the M5 freeway west of the Hume Highway through the Liverpool open flood zone spaces to the Cumberland Highway?

Answer: The NSW Government has committed $3.4 million to progress studies into road infrastructure options to manage traffic impacts from the proposed Moorebank Intermodal Terminal and forecast growth in the broader Liverpool and Moorebank area.

  1. The Planning Assessment Commission in its planning approvals has placed a condition for approval of MIFT operations beyond 250,000 TEU to not “exceed the capacity of the transport network” Is the only possible road transport solution for the proposed MIFT through the Liverpool Military Area?

(a) What is the current status of this land? Can its use be altered? If so, how?

Answer: This is a matter for the Minister for Planning.

 

LEGISLATIVE ASSEMBLY – 25 AUGUST 2016

3885 – PORT OF NEWCASTLE

Crakanthorp, Tim to The Treasurer, and Minister for Industrial Relations

1. Was the Government excluded from the requirements of the Commonwealth Competition and Consumer Act 2010 in respect of Newcastle Port Corporation:

a. Conducting a public tender in 2010 for a multi-purpose terminal, including a 1-million per year capacity container terminal, at the Port of Newcastle?

b. Changing its requirements pursuant to its 2010 tender?

c. Charging Anglo Ports Pty Ltd a fee for container movements at the Port of Newcastle, pursuant to its tender conducted in 2010?

2. On what date did the Government inform the Australian Competition and Consumer Commission about Newcastle Port Corporation charging a fee for container movements at the Port of Newcastle?

3. Was the Government excluded from the requirements of the Commonwealth Competition and Consumer Act 2010 in respect of charging a fee for container movements at the Port of Newcastle after Newcastle Port Corporation terminated its negotiations with Anglo Ports?

Answer: 28 September 2016.

 1) to (3) 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.

Legislative Council

Thursday, 11 August 2016

PORTS PRIVATISATION

 

The Hon. ADAM SEARLE (14:30):  My question without notice is directed to the Minister for Roads, Maritime and Freight. What is the Government’s response to community and business concerns expressed by Rod Sims, Chair of the Australian Competition and Consumer Commission, about the Government’s privatisation of ports Botany, Kembla and Newcastle and his repudiation of this approach as a tax on consumers?

The Hon. Greg Donnelly:  Be careful.

The Hon. DUNCAN GAY (Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council) (14:30):  I am always careful. In large part I answered this question earlier in the week. I probably gave too much information. Being the generous man that I am, I thought it was appropriate. I will go back over that information. When the Government sought to lease the ports, the arrangements were properly examined by the then chair of the commission. Mr Sims was not the commissioner at that time. I think it was his predecessor, Mr Samuel. I am seeing nods around the Chamber. The Government went through all proper processes to ensure that everything received the appropriate approval. Mr Sims has made public comments and it is within his purview to do that. I can only reiterate my answer from earlier in the week, which is that the Government went through the proper processes at the time.

NEW SOUTH WALES PORTS PRIVATISATION

The Hon. SHAOQUETT MOSELMANE (14:55):  My question without notice is directed to the Minister for Roads, Maritime and Freight. What is the Government’s response to comments by Australian Competition and Consumer Commission chairman Rod Sims, who said of the New South Wales ports privatisation, “… there’s no regulation on how they set the price of a monopoly. How dopey is that?”

The Hon. DUNCAN GAY (Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council) (14:55):  Despite the temptation to add comment to Mr Sim’s words, I point out that I am relying on the Hon. Shaoquett Moselmane as to the accuracy of the quote. Sometimes in the past that accuracy has not quite been there. I believe I have answered that in large part in response to a previous question. In fact, I believe I have answered all of it.

Legislative Council Hansard – 10 August 2016

PORT OF NEWCASTLE PRIVATISATION

The Hon. ADAM SEARLE (14:30):  My question without notice is directed to the Minister for Roads, Maritime and Freight. Following the release of the confidential Newcastle port commitment documents revealing the details of caps and penalties applying to container movements, will the Minister now admit that his Government’s port privatisation will restrict Newcastle’s economic development for the next 100 years?

The Hon. DUNCAN GAY (Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council) (14:30):  Will I admit that the Government’s port privatisation will restrict Newcastle’s economic development for the next 100 years? No, absolutely not—never ever. We have done more for Newcastle than any other government has in the last several decades. Gone is the day when the Labor Party got the votes out of Newcastle but left it to become a rust belt. We are working to encourage and fix up Newcastle. As the Government has consistently said, the leasing terms of Botany and Port Kembla do not prohibit the development of a container terminal at the Port of Newcastle. In fact, there is ample opportunity for increased container trade at the port.

This is the important thing that the Labor Party does not understand. The port transaction deeds do not trigger any cross-payments until a threshold container throughput is reached. That threshold is based on 30,000 containers each year, plus an extra 6 per cent growth in volume each year—and that 6 per cent compounds. Based on current growth rates, it is highly unlikely current container trade in Newcastle will reach the applicable threshold before such time as Newcastle is required to establish high-intensity container terminals to meet the forecast population and business needs of the Hunter.

Yearly trade at Newcastle is currently at a steady 9,000 containers. In other words, it would take a massive 230 per cent increase in container trade volume just to reach the 30,000 TEU threshold. That is where it is now. It is at 9,000 and it can go to 30,000. That is a 230 per cent increase to get to that threshold—and that still does not take into account the compounding 6 per cent growth allowed for each year.  Labor Party members have had their Cuisenaire rods out, but they have not been adding up properly.

The Hon. Greg Donnelly:  What rods?

The Hon. DUNCAN GAY:  Cuisenaire rods. It is what our grandfathers would have used to do arithmetic in days gone by. Applying the formula to the outer years gives the result that by 2030 the threshold at Newcastle will be approximately 80,000 boxes, by 2040 it will be 144,000 boxes, and by 2050 it will be almost 260,000 boxes. The Port of Newcastle will continue to be the primary coal export facility for New South Wales and will continue to diversify into bulk grain and other commodities, including fuel. The New South Wales Government engaged closely with the Australian Competition and Consumer Commission and other regulatory bodies as part of these transactions. Port Botany remains the key container facility for New South Wales for a range of logistical and commercial reasons. [Time expired.]

The Hon. ADAM SEARLE (14:34):  I ask a supplementary question. Given his answer, can the Minister elucidate on why the port commitment documents have a container terminal cap in the first place?

The Hon. DUNCAN GAY (Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council) (14:34):  I really appreciate that supplementary question—it is good to work together— because I had not reached the key part of my answer. About 85 per cent of the imported containers landing at Port Botany are distributed within 40 or 50 kilometres of the terminal gates, to warehouses, distribution centres and freight hubs in western and south-western Sydney. This is key. We are not running a cargo cult in New South Wales. If the stuff is intended to go into Sydney, it should come to Sydney. We are not going to pay people to clog up the M1 and the rail infrastructure between Newcastle and Sydney. We are not going to pay them, as some sort of inverse cargo cult, to send things up to Newcastle just for them to come back again.

That is something the Labor Party did. People will remember when it decided that shipments of cars would go to Port Kembla rather than Sydney. I was the shadow Minister at the time and—as a diligent shadow Minister—I found that there was a parking lot on Glebe Island. Those black BMWs that were shipped down to Port Kembla were then put on a truck and brought back to Sydney, because that is where they were going to be sold—to those rich Labor supporters in the eastern suburbs. That was the wrong thing to do.

What we need to do is develop Newcastle, and there is huge scope for development in niche areas, so that it can provide for the Hunter region. It is a great port and it will be even better—and it will become even better because we are making sensible, grown-up decisions in this State. We are not running cargo cults as the Labor Party did.

Legislative Council Notice Paper No. 66—Wednesday 10 August 2016

  1. Mr Searle to move—
  1. That General Purpose Standing Committee No. 2 inquire into and report on the privatisation of New South Wales ports, and in particular:

(a) the terms of the Port Commitment Deeds for Botany, Kembla and Newcastle,

(b) whether the privatisation of the New South Wales ports was structured to limit competition, or has that effect,

(c) whether anti-competitive restrictions have been imposed on the development of the Port of Newcastle as part of the sale strategy followed by the NSW Government,

(d) whether any agreement has been designed to restrict the development of container capacity at Newcastle by imposing a financial penalty that would make such a development economically unviable,

(e) the nature and effectiveness of port pricing regulatory arrangements and the impacts that these arrangements may have on port users, consumers and the economy, and

(f) any other related matter.

  1. That the committee report by 24 November 2016.

(Notice given 9 August 2016—expires Notice Paper No. 85)

LEGISLATIVE ASSEMBLY 4 August 2016

3686 – PORT OF NEWCASTLE

  

Crakanthorp, Tim to the Treasurer, and Minister for Industrial Relations

  1. When was the Treasurer first made aware of the Port Commitment Port Botany and Port Kembla document?
  2. When was the Treasurer first made aware of the “contractual commitments” outlined in the Port Commitment Port Botany and Port Kembla document?
  3. When did the Government first advise the Australian Competition and Consumer Commission (ACCC) of the Port Commitment Port Botany and Port Kembla document and its content?
  4. When did the Government first advise the ACCC of the “contractual commitments” outline in the Port Commitment Port Botany and Port Kembla document?
  5. Now that the Port Commitment Port Botany and Port Kembla has been released into the public arena, will the Treasurer now indicate whether the Port Commitment Terms in the document have been agreed to?
  6. The Port Commitment Port Botany and Port Kembla document outlines that after the 30,000 containers have passed through the Port of Newcastle compensation must be paid to the Government which is then provided to the private operator of Port Botany and Port Kembla, can the Treasurer confirm this is correct?
  7. The Port Commitment Port Botany and Port Kembla document outlines that approximately $1 million in compensation per ship has to be paid to the Government which is then provided to the private operator of Port Botany and Port Kembla, after 30,000 containers have passed through the Port of Newcastle, can the Treasurer confirm this is correct?
  8. Is there agreement between the Government and the ACCC that the Government was carrying on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 at the Port of Newcastle, when the government-owned Newcastle Port Corporation was the port’s operator?
  9. Is there agreement between the Government and the ACCC about the date upon which the NSW Government ceased carrying on a business for the purposes of the Commonwealth Competition and Consumer Act 2010 at the Port of Newcastle, when the government-owned Newcastle Port Corporation was the port’s operator?

(a) If so, what is that date?

Answer 7 September 2016-

(1) to (2) As you are aware the Government was a counterparty to the Port Botany and Port Kembla lease, and the Port of Newcastle lease, which occurred in 2013 and 2014 respectively.

(3) to (4) I am advised 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.

(5) to (7) Please see response by my colleague, Minister Gay, available on the Legislative Council’s Hansard.

(8) to (9) I am advised that the extent to which the Government carries on a business for the purposes of the Competition and Consumer Act 2010 is a matter of law not agreement

LEGISLATIVE ASSEMBLY 4 August 2016

 3687 – PORT OF NEWCASTLE

 

 Crakanthorp, Tim to the Premier, and Minister for Western Sydney

  1. When was the Premier first made aware of the Port Commitment Port Botany and Port Kembla document and its content?
  2. When was the Premier first made aware of the ‘contractual commitments’ outlined in the Port Commitment Port Botany and Port Kembla document?
  3. When did the Government first advise the Australian Competition and Consumer Commission (ACCC) of the Port Commitment Port Botany and Port Kembla document and its content?
  4. When did the Government first advise the ACCC of the “contractual commitments” outlined in the Port Commitment Port Botany and Port Kembla document?
  5. The Port Commitment Port Botany and Port Kembla document outlines that after the 30,000 containers have passed through the Port of Newcastle compensation must be paid to the Government which is then provided to the private operator of Port Botany and Port Kembla, can the Premier confirm this is correct?
  6. The Port Commitment Port Botany and Port Kembla document outlines that approximately $1 million in compensation per ship has to be paid to the Government which is then provided to the private operator of Port Botany and Port Kembla, after 30,000 containers have passed through the Port of Newcastle, can the Premier confirm this is correct?

Answer due on 8 September 2016

LEGISLATIVE ASSEMBLY

3 August 2016

NEWCASTLE CONTAINER TERMINAL

Mr TIM CRAKANTHORP ( Newcastle ) ( 15:35 ): I move:

That the General Business Notice of Motion (General Notice) given by me this day [Newcastle Container Terminal] have precedence on Thursday 4 August 2016.

The House should consider my motion because of the huge impact that dodgy port privatisations will have not only on the people of Newcastle and the Hunter but also on all the people of New South Wales. Since my first day in this place I have been working to get answers from this Liberal Government on the detail of the dodgy deal done to privatise the Port of Newcastle. It is a dodgy deal that penalises the Port of Newcastle for competing against Port Botany and Port Kembla for shipping container trade for close to the next 100 years.

The SPEAKER: Order! Government members will cease interjecting or I will grant the member a further five minutes.

Mr TIM CRAKANTHORP: Please do. I have asked 37 questions in Parliament about this matter, only to be given non-answers, redirections and contradictions. In total, 160 questions have been asked about this issue and ignored.

The SPEAKER: Order! Opposition members will cease interjecting. They are not assisting the member.

Mr TIM CRAKANTHORP: This Government has been avoiding questions for long enough. We now have some answers in the strictly confidential port document exposed by the Newcastle Herald. It explains that the operator of any future Newcastle container terminal will have to pay compensation to the Government, Port Kembla and Port Botany. It states:

The State of New South Wales has made contractual commitments to the private lessee of Port Botany and Port Kembla to make certain payments to New South Wales ports in respect of future container capacity development for the Port of Newcastle.

It is no wonder that Australian Competition and Consumer Commission Chairman Rod Sims says that the privatisation of New South Wales ports was designed to limit competition and, having proceeded without any pricing regulation, it is a failure he regards as “dopey”. This document reveals that after 30,000 containers, or three ships, the Port of Newcastle must pay $1 million per ship in compensation. That would make any container capacity in Newcastle unviable. This Government is robbing Newcastle blind. It is robbing us of jobs and opportunity for investment and that is why we are calling for a parliamentary inquiry into this issue. The Premier was Treasurer when he sold those ports and he has his fingerprints all over this deal. He needs to step up and tell the truth. The only way that the people of Newcastle will get the truth about how much they are being ripped off by this Government is through a parliamentary inquiry. [Time expired]

The SPEAKER: The question is that the notice of motion standing in the name of the member for Drummoyne have precedence tomorrow on Thursday 4 August 2016.

The House divided.

Ayes49

Noes34

Majority15

LEGISLATIVE ASSEMBLY 2 August 2016

 

PORT OF NEWCASTLE

Mr TIM CRAKANTHORP ( Newcastle ) ( 13:07 ): Since October 2014 when I was elected to this Parliament I have been working to obtain answers from this Liberal Government about the detail of the dodgy deal done to privatise Newcastle port. That dodgy deal penalises the Port of Newcastle if it competes against other privatised ports in the State in relation to shipping containers coming into Newcastle. I have asked 37 questions in Parliament about this issue only to receive non-answers, redirection and contradictory responses. In total, 160 questions have been asked and ignored. This Government has been lying through its teeth for a long time, but now we have the answers.

The Newcastle Herald has exposed this strictly confidential port commitment in a document that explains how the operator of any future Newcastle container terminal will have to pay compensation to the government, and ultimately to Port Botany and Port Kembla. The document states: “The State of New South Wales has made contractual commitments to the private lessee of Port Botany and Port Kembla to make certain payments to New South Wales ports in respect of future container capacity development at the Port of Newcastle”. This document reveals that Newcastle will have to pay compensation of more than $1 million per ship to rival ports if it moves more than 30,000 containers per year. That amounts to only three ships before payments have to be made.

What was the Treasurer’s response to this dodgy deal? It has been to provide more non-answers, more redirections, and more contradictory statements. It is outrageous that the Treasurer has failed to acknowledge the dodgy deal that the Government has done to the detriment of the people of Newcastle, but it is not surprising given this Government’s past behaviour. On face value, this dodgy deal could rob Newcastle of jobs, investment and opportunities. The Government would have the Parliament and my constituents believe that it is trying to revive Newcastle and to make it a world-class city, but it is simply robbing us blind. Not only has it given the job of manufacturing the light rail components to Spain, closed down regional State government offices, and continued to slash and burn TAFE to the ground, but it has also destroyed future jobs, industry and opportunities in Newcastle.

Newcastle is home to a major port that could be developed as a container terminal, which would supercharge local job opportunities, improve linkages across the State, and provide new commercial opportunities. This document demonstrates that the privatisation process includes provisions designed to restrict the development of container capacity in Newcastle by imposing a financial penalty that would make such a development uneconomical. I was concerned when I read this document because it is designed to present a serious obstacle to the development of a container terminal and to prevent jobs creation in Newcastle. It will also have an anti‑competitive effect on the provision of port services in New South Wales.

The Opposition is calling for a parliamentary inquiry into this secret government agreement because it penalises the Port of Newcastle for competing against other ports in the State. We need an inquiry into all the terms of the deal so that the public is fully aware of any other details the Government has hidden. It is time that the Government set the record straight. The only way that the people will know how they are being ripped off by Mike Baird is if we have a parliamentary inquiry. Mike Baird was the Treasurer when the ports were sold. Were these secret agreements drafted by his team? He must step up, face the music and be clear about what happened.

Mike Baird would rather treat Novocastrians as mushrooms—forever kept in the dark. We will not accept that, nor should we. This dodgy deal is an outrage, and it has Mike Baird’s fingerprints all over it. The Premier should tell the people of Newcastle the truth, and establishing a parliamentary inquiry is the only way to ensure that happens. Newcastle has been artificially restrained for the benefit of the private owners of Port Kembla and Port Botany. This is an absolute disgrace.

Mr GARETH WARD ( Kiama ) ( 13:12 ): I will not be lectured to by the Labor Party about dodgy privatisation deals. It was the Labor Party that shut down Parliament to stop an inquiry into its sale of the State’s electricity generators in the dying days of its last term in government. The Labor Government sold NSW Lotteries and the electricity retailers without any recourse to the public. The member for Newcastle continues to oppose a transaction that shifted old capital from one side of the balance sheet to the other so that the proceeds could be reinvested in his community. He opposed and voted against investment in his community. He talks in this place about dividing communities while supporting the retention of the rail line running through the middle of Newcastle and voting in his capacity as a local councillor to extend the light rail. The member for Newcastle is a basket of contradictions, and what we have witnessed today demonstrates that he is a basket case in action.

 

LEGISLATIVE COUNCIL, 23 JUNE 2016

1064 – Treasurer – PORT OF NEWCASTLE

The Hon. Lynda Jane Voltz to the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council representing the Treasurer, and Minister for Industrial Relations

            1. What are the terms and conditions for the Government undertaking to pay compensation to NSW Ports?
            1. What is the date that the Government undertook to pay compensation to NSW Ports?
            1. What is the amount of compensation the Government undertook to pay NSW Ports?
            1. What is the Government’s source of funds for paying compensation to NSW Ports?
            1. Does the Government’s cap on numbers at the Port of Newcastle mean the number of containers for which the Government does not apply a charge? If not, what does the cap on numbers mean?
            1. Did the Government undertake to pay compensation to NSW Ports for loss of business when container ships use the Port of Newcastle instead of Port Botany?
            1. What is the date nominated by the Government that Newcastle Port Corporation ceased carrying on a business for the purpose of the Commonwealth Competition and Consumer Act 2010?
            1. Did Newcastle Port Corporation amend the terms of its tender conducted in 2010 for a multi-purpose terminal at the Port of Newcastle? If so, how was the tender amended and on what dates?
            1. Did Newcastle Port Corporation amend the terms of this tender to include a charge on containers? If so, on what date was this amendment made?
            1. Did Newcastle Port Corporation advise Anglo Ports Pty Ltd of any amendments to the terms of the tender it conducted in 2010 for a multi-purpose terminal at the Port of Newcastle and for which this company was the selected tenderer? If so, on what date or dates?
Answer –
1.     to 6. I am advised this information is contained within previous answers, available on the NSW Parliament website.
7. I am advised there has been no nomination.
8 to 10. I am advised this information is commercial in confidence.
Question asked on 23 June 2016 (session 56-1) and published in Questions & Answers Paper No. 65
Answer received on 28 July 2016 and to be printed in a Questions & Answers Paper on 9 August 2016

2802—PORT OF NEWCASTLE CAP

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

            1. Did the Government make a cap on numbers at the Port of Newcastle a rule for a scoping study into leasing Port Botany?
            2. Did the Government appoint Morgan Stanley in December 2011 to undertake a scoping study into leasing Port Botany?
            3. Did the Government include a cap on numbers at the Port of Newcastle in the negotiations with Anglo Ports Pty Ltd pursuant to a tender conducted by Newcastle Port Corporation in 2010?
            4. Does the cap on numbers at the Port of Newcastle conform to the Competition and Consumer Act 2010?

20 April 2016

Answer—

(1) to (4) There is material already available on the NSW Parliament website that addresses these questions, including:

            • my response to questions   24 and 25 in Budget Estimates 2015: Answers to Supplementary Questions General Purpose Standing Committee 1, dated 3 September 2015
            • the answer to question LA 2191 -Newcastle Port- published in Questions and Answers Paper No. 61, dated 22 March 2016
            • the answer to question LA 0765 – Cap on Container Movement- published in Questions and Answers Paper No. 26 dated 8 September 2015
            • the answers to question LC 0001 – Port of Newcastle- published in Questions and Answers Paper No. 12, dated 23 June 2015
            • the answers to question LA 6677 – Port of Newcastle and Port Botany Leases – published in Question and Answers Paper No. 24, dated 2 March 2015.

LEGISLATIVE ASSEMBLY 18 FEBRUARY 2016

2326—PORT OF NEWCASTLE

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

What is the cap on numbers at the Port of Newcastle?

Answer 23 March 2016

Please see my anser to this question in Budget Estimates 2015: Answers to Supplementary Questions General Purpose Standing Committee 1, dated 3 September and available on the NSW Parliament website.

Ms Berejiklian’s answer on 29 September 2015 was:

25. Is there a cap on container movements at the Port of Newcastle?

a. If so, what is it? Is it a charge per container?

b. If the cap is breached, is a fee, fine or charge imposed? Who pays it? Who do they pay the money to?

c. If the cap is breached, are any monies paid to the operators of Port Botany and/or Port Kembla? If so, how much is paid? Who pays it?

d. When were these arrangements agreed?

Answer:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

LEGISLATIVE ASSEMBLY – 16 February 2016

2191 – Newcastle Port

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

            1. When did the Competition and Consumer Act 2010 stop applying to the Government in respect to the operation of the Port of Newcastle?
            1. Do the Port Commitment Deeds include a fee on container throughput at Newcastle Port under certain specified conditions?

Answer 22 March 2016:

1.The operation of the Port of Newcastle is the responsibility of the private sector lessee, Port of Newcastle Investments.

2. Please refer to my response to questions 24 & 25 at Budget Estimates 2015, Answers to Supplementary Questions, General Purpose Standing Committee 1, 9 am, Thursday 3 September 2015.

* The answer Ms Berejiklian gave to questions 24 and 25 was the same for both: “There is no legislated cap on the number of containers that can travel through the Port of Newcastle.”

Comment:

Q: When did the Competition and Consumer Act 2010 stop applying to the Government in respect to the operation of the Port of Newcastle?

The answer is the date that Newcastle Port Corporation ceased carrying on a business for the purpose of this Act.

Q: Do the Port Commitment Deeds include a fee on container throughput at Newcastle Port under certain specified conditions?

This “Port Commitment” document reveals the contractual arrangement.

LEGISLATIVE ASSEMBLY 19 November 2015

2107—AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

1. 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?

2. 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?

18 December 2015

Answer—

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.

Comment: The “Competition and Consumer Act 2010” (CCA) applied to the government when it was leasing Port Botany, Port Kembla and the Port of Newcastle unless the government claimed immunity.

A government may claim immunity from the CCA in respect of a public asset while it is privatising that asset. The government has not disclosed that it claimed immunity from the CCA when leasing the ports. It is presumed the government did not claim immunity.

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 whether it sought information from the government under section 155.

LEGISLATIVE ASSEMBLY 29 October 2015

1848—NEWCASTLE PORT

Mr Tim Crakanthorp to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council—

1. When did the Competition and Consumer Act 2010 stop applying to the Government in respect to the operation of the Port of Newcastle?

2. Do the Port Commitment Deeds include a fee on container throughput at Newcastle Port under certain specified conditions?

Answer 4 December 2015:

I am advised :

This is a matter for the Treasurer.

Comment:

1. The government and the ACCC have not disclosed when the “Competition and Consumer Act 2010” (CCA) stopped applying to the government in relation to the businesses the government was “carrying on” at Port Botany, Port Kembla and the Port of Newcastle.

The CCA applies to governments to the extent they “carry on a business”. The NSW government was “carrying on” businesses at the three ports. The CCA stopped applying when the government stopped “carrying on” those businesses for the purposes of the CCA. It is presumed that the CCA stopped applying to the government in respect of Port Botany and Port Kembla, when they were leased on 12 April 2014; and, in respect of the Port of Newcastle, when Port of Newcastle Investments became the port operator on 30 May 2014, after becoming the leaseholder on 30 April 2014.

However, a government that is “carrying on” a business may claim immunity from the CCA when it is in the process of privatising that business. The government and the ACCC have not disclosed that the government claimed immunity from the CCA in respect of the ports leases. It is presumed that the government did not claim immunity.

2. The Port Commitment Deeds “include a fee on container throughput at Newcastle Port under certain specified conditions” as disclosed in this document.

The government disclosed its unlegislated “cap on numbers” at the Port of Newcastle on 17 October 2013. This “cap on numbers” is presumed to be included in the Port Commitment Deeds. The Hon. Gladys Berejiklian MP disclosed on 9 June 2015 that the terms of the government’s compensation payment to NSW Ports are included in the Port Commitment Deeds:

Question 1.

(a) Is compensation payable to the Port Botany leaseholder if container movements exceed an annual threshold at the Port of Newcastle?

(b) If so, what is the annual threshold?

(c) What is the amount of compensation per twenty-foot equivalent unit (TEU)?

Answer:

(a) The terms of the Port Botany transaction are consistent with the NSW Freight and Ports Strategy which was released in 2013. The Port Botany lease is a public document.

(b) The details of the container arrangements in the Port Commitment Deeds are commercial in confidence.

The source of funds for paying compensation to NSW Ports is a fee applied to the Port of Newcastle operator as disclosed in this document.

LEGISLATIVE ASSEMBLY 10 September 2015

1337—PRIVATE OPERATOR OF PORT BOTANY

Mr Tim Crakanthorp to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council—

Is compensation payable to the private operator of Port Botany for container throughput at Newcastle port in excess of a cap?

15 October 2015

Answer

This is a matter for the Treasurer.

LEGISLATIVE ASSEMBLY 15 October 2015

1612—PRIVATE OPERATOR OF PORT BOTANY

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

Is compensation payable to the private operator of Port Botany for container throughput at Newcastle port in excess of a cap?

16 November 2015

Answer:

Please refer to my response to questions 24 & 25 at Budget Estimates 2015 Answers to Supplementary Questions, General Purpose Standing Committee 1, 9 am, Thursday 3 September 2015.

PORTS ISSUES

24. Has the NSW Government imposed any restrictions on the movement of containers through the Port of Newcastle?

25. Is there a cap on container movements at the Port of Newcastle?

a. If so, what is it? Is it a charge per container?
b. If the cap is breached, is a fee, fine or charge imposed? Who pays it? Who do they pay the money to?
c. If the cap is breached, are any monies paid to the operators of Port Botany and/or Port Kembla? If so, how much is paid? Who pays it?
d. When were these arrangements agreed?

Answer 24-25:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

Comment: Container terminal policy in NSW is for the state government to compensate NSW Ports every time a container ship visits the Port of Newcastle that otherwise would visit Port Botany. The government sees no need to put any funds in place because there is no container terminal at the Port of Newcastle and the government’s unlegislated “cap on numbers” will not be extended.

This “cap on numbers” is 30,000 container movements per year as at 1 July 2013 increasing by six per cent a year. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss.

This unlegislated “cap on numbers” is confidential and cannot be examined for lawfulness, enforceability and benefit. It may have been imposed when former Treasurer, The Hon. Mike Baird MP, announced the appointment of Morgan Stanley as the government’s financial advisor for leasing Port Botany on 14 December 2011.

A “cap on numbers” was a “rule” the government set for a Port Botany lease “Scoping Study”, as disclosed by The Hon. Duncan Gay MLC on 17 October 2013. Mr Gay disclosed that the government did not envisage a need to put any funds in place to pay compensation to the Port Botany leaseholder when he answered this question from The Hon. Adam Searle MLC:

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?

NSW Treasurer, The Hon. Gladys Berejiklian MP, does not consider the unlegislated “cap on numbers” to be a “disincentive or obstacle” to building a container terminal at the Port of Newcastle. At a NSW Budget Estimates hearing on 3 September 2015, Ms Berejiklian was asked:

Question 29: 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 29 September 2015:

I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.

Ms Berejiklian’s disclosure overturns government policy as announced by Mr Baird on 27 July 2012:

The development of intermodal terminals across South and West Sydney, [sic] the Government’s freight strategy to be released later in 2012 would seek to develop Port Kembla as the logical next long term tranche of container capacity after Port Botany.

In February 2013, government policy was described by Newcastle Port Corporation in the following terms:

In July 2012 the NSW Government announced that Port Kembla will be the logical next long-term tranche of container capacity after Port Botany. In accordance with the government’s announcement, subject to any relevant government approvals, any future container terminal development at Newcastle will occur only once Port Botany and Port Kembla are fully developed and developable handling capacity is fully utilised at both Port Botany and Port Kembla. (Newcastle Port Corporation, Draft Strategic Development Plan for the Port of Newcastle, February 2013, page 23)

In statement to media on 1 May 2014, NSW Treasury described government policy in the following terms:

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.

Ms Berejiklian disclosed that a container terminal can be built at the Port of Newcastle at any time, including immediately, if Port of Newcastle Investments “wished to do so”.

There is no mention of an unlegislated “cap on numbers” at the Port of Newcastle, or a fee for exceeding it, in the “NSW Freight and Ports Strategy” dated November 2013; the “Draft Strategy” dated November 2012; and, the “Discussion Paper” dated February 2012.

BUDGET ESTIMATES 2015-2016
Supplementary Questions
General Purpose Standing Committee No. 1 Treasury, Industrial Relations
Thursday 3 September 2015
Answers 29 September 2015

Questions from The Hon. Shaoquett Moselmane MLC

PORTS ISSUES

Question:

24. Has the NSW Government imposed any restrictions on the movement of containers through the Port of Newcastle?

Answer:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

Comment:

The “cap on numbers at the Port of Newcastle” is the number of container movements for which no government compensation is payable to NSW Ports. The government charges the Port of Newcastle operator a fee when container movements exceed this cap and container ships visit the Port of Newcastle instead of Port Botany.

There has never been a cap on the number of containers that can travel through the Port of Newcastle. There has never even been a proposal to cap the number of containers that can travel through the Port of Newcastle. A container terminal has not even been built at the Port of Newcastle, because of government intervention.

And yet, NSW Treasury claims that a container terminal at the Port of Newcastle would be “an uneconomic enterprise contrary to market demand” but all the while relying on a secret fee on container movements. The need to impose a fee, obviously, demonstrates that a container terminal is commercially viable. The test is to remove this fee.

This fee is secret because it may not conform to Section 45 of the “Competition and Consumer Act 2010” (CCA). Section 45 makes it unlawful for a corporation to lessen competition.  Newcastle Port Corporation (NPC) was conducting a business for the purpose of the CCA. The government refuses to disclose when NPC ceased carrying on this business because the government seeks to prevent the fee being examined for conforming to Section 45.

The government’s “cap on numbers” at the Port of Newcastle is  30,000 container movements per year as at 1 July 2013, increasing by six per cent per year. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss. Shipping lines would not use the Port of Newcastle when the fee per container was $200 compared with $100 at Port Botany. For example, the extra cost for an average container ship carrying 5,000 containers into port would be $500,000. When 5,000 containers were exported, the extra cost per port visit would be $1 million.

This unlegislated “cap on numbers” at the Port of Newcastle is confidential and cannot be examined for lawfulness, enforceability and benefit. It was probably imposed when former Treasurer, The Hon. Mike Baird MP, announced the appointment of Morgan Stanley as the government’s financial advisor for leasing Port Botany on 14 December 2011.

A “cap on numbers” at the Port of Newcastle was a “rule” the government set for a Port Botany lease “Scoping Study”, as disclosed by The Hon. Duncan Gay MLC on 17 October 2013. Mr Gay disclosed that the government did not envisage a need to put any funds in place to pay compensation to the Port Botany leaseholder when he answered this question from The Hon. Adam Searle MLC:

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?

Ms Berejiklian does not consider the unlegislated “cap on numbers” at the Port of Newcastle to be a “disincentive or obstacle” to building a container terminal at the Port of Newcastle. Ms Berejiklian was asked at question 29:

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’s disclosure overturns government policy as announced by Mr Baird on 27 July 2012:

The development of intermodal terminals across South and West Sydney, [sic] the Government’s freight strategy to be released later in 2012 would seek to develop Port Kembla as the logical next long term tranche of container capacity after Port Botany.

In February 2013, government policy was described by Newcastle Port Corporation in the following terms:

In July 2012 the NSW Government announced that Port Kembla will be the logical next long-term tranche of container capacity after Port Botany. In accordance with the government’s announcement, subject to any relevant government approvals, any future container terminal development at Newcastle will occur only once Port Botany and Port Kembla are fully developed and developable handling capacity is fully utilised at both Port Botany and Port Kembla. (Newcastle Port Corporation, Draft Strategic Development Plan for the Port of Newcastle, February 2013, page 23)

In statement to media on 1 May 2014, NSW Treasury described government policy in the following terms:

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.

Ms Berejiklian disclosed that a container terminal can be built at the Port of Newcastle at any time, including immediately, if Port of Newcastle Investments “wished to do so”. There is no recognition in any NSW government document of the “Port Commitment” arrangements described in this document.

There is no mention of an unlegislated “cap on numbers” at the Port of Newcastle, or a fee for exceeding it, in the “NSW Freight and Ports Strategy” dated November 2013; the “Draft Strategy” dated November 2012; and, the “Discussion Paper” dated February 2012.

Question:

25. Is there a cap on container movements at the Port of Newcastle?

a. If so, what is it? Is it a charge per container?
b. If the cap is breached, is a fee, fine or charge imposed? Who pays it? Who do they pay the money to?
c. If the cap is breached, are any monies paid to the operators of Port Botany and/or Port Kembla? If so, how much is paid? Who pays it?
d. When were these arrangements agreed?

Answer:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

Comment: See comment 24.

Question:

26. In the interest of transparency, will you release the Port Commitment Deeds that set out details of arrangements for containers?

Answer:

The Port Commitment Deeds are commercial in confidence documents.

Comment: The container leasing arrangements, particularly the unlegislated “cap on numbers” at the Port of Newcastle, cannot be examined for lawfulness and enforceability because they are confidential. For details see Home page.

Question:

27. Now that the port transactions are concluded, will you release the Scoping Study that was undertaken ahead of the transaction for the three ports?

Answer:

The Scoping Study documents remain Cabinet-in-confidence. The Government, and previous Governments, have not released Scoping Studies for previous transactions.

Comment: The confidential Scoping Study for the Port Botany lease was the basis of the government’s decision to make Port Kembla the location of the state’s next container terminal instead of the Port of Newcastle. The unlegislated “cap on numbers” at the Port of Newcastle cannot be examined for lawfulness and enforceability because it is included in the Scoping Study – see comment 24 and Home Page for details.

Question:

28. Minister Gay has said: “The only time an extension is allowed is when a specific number is reached and tripped in Port Botany and Port Kembla.” What is the number? For Port Kembla? For Port Botany?

Answer:

28: See http://freight.transport.nsw.gov.au/strategy/

a. How much money was raised by the sale/lease of Newcastle port?
b. What was money spent on?
c. How much has gone into consolidated revenue?
d. How much has been allocated to, or spent in, the Newcastle electorate?

(a) – (d): For publicly available information, see http://www.transport.nsw.gov.au/media-releases/transforming-newcastle-port-lease-securesfunds-revitalisation

Comment: When announcing a “cap on numbers” at the Port of Newcastle on 17 October 2013, Mr Gay did not disclose specific numbers for Port Botany and Port Kembla container capacity, recognising that a container terminal has not even been built at Port Kembla. The extension is “tripped” when both ports’ container terminals are “full”, as defined in this document.

In statement to media on 1 May 2014, NSW Treasury described government policy in the following terms:

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.

In February 2013, government policy was described by Newcastle Port Corporation in the following terms:

In July 2012 the NSW Government announced that Port Kembla will be the logical next long-term tranche of container capacity after Port Botany. In accordance with the government’s announcement, subject to any relevant government approvals, any future container terminal development at Newcastle will occur only once Port Botany and Port Kembla are fully developed and developable handling capacity is fully utilised at both Port Botany and Port Kembla. (Newcastle Port Corporation, Draft Strategic Development Plan for the Port of Newcastle, February 2013, page 23)

The “cap on numbers” at the Port of Newcastle is detailed in this document. In the following question, Ms Berejiklian disclosed that Port of Newcastle Investments can develop a container terminal “if it wished to do so”. As noted in comment 24 above, this overturns government policy for Port Kembla to be the location of the state’s next container terminal.

Question:

29. 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.

Comment: The answer is yes – see comment 24.

Question:

30. Has the NSW Government entered into any agreements that create a disincentive or obstacle to increase the number of containers that pass through Newcastle?

Answer: There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

Comment: The answer is “yes” – see comment 24. The “cap on numbers” at the Port of Newcastle is contractual.

Question:

31. Has the NSW Government entered into any arrangement [sic] that create a financial penalty if the number of containers moved through the Port of Newcastle exceeds a set threshold?

a. If so, what is the threshold?

Answer:  There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

Question:

32. Is the leaseholder of Port Botany entitled to receive a payment should the number of containers moved through the Port of Newcastle exceed a set figure?

Answer:

There is no legislated cap on the number of containers that can move through the Port of Newcastle.

Comment: The answer is yes – see comment 24.

Question:

33. If so, what is the payment and who pays it?

Answer: There is no legislated cap on the number of containers that can move through the Port of Newcastle.

Comment: Since NSW Ports charges an average fee of $100 per container at Port Botany, the amount of compensation should be $100 per container. Port of Newcastle Investments pays the government and the government pays NSW Ports. The government refuses to deny that these are the arrangements. Also see comment 24.

Question:

34. Do the Port Commitment Deeds establish any limitations or restrictions on the operation of Port Kembla or the Port of Newcastle?

Answer:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

Comment: The limitation on the operation of the Port of Newcastle is a fee on container movements when movements exceed a “no-fee-cap”, and container ships use the Port of Newcastle instead of Port Botany – see comment 24.

Question:

35. Will you release the Port Commitment Deeds for the port transactions?

Answer:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

Comment: The answer does not relate to the question.

Question:

36. Will you release the Scoping Study for the port transactions?

Answer:

Please refer to answer 27. [The Scoping Study documents remain Cabinet-in-confidence. The Government, and previous Governments, have not released Scoping Studies for previous transactions.]

Comment: The “cap on numbers” at the Port of Newcastle cannot be examined for lawfulness and enforceability because it is contained in the confidential Scoping Study and in confidential “Port Commitment Deeds”.

OMISSION TO ANSWER QUESTION ON NOTICE
GENERAL PURPOSE STANDING COMMITTEE NO. 1
Thursday 3 September 2015
Answer 29 September 2015

The Hon. Gladys Berejiklian MP omitted to answer a “Question On Notice” asked by The Hon. Adam Searle MLC at the Budget Estimates hearing on 3 September 2015. The question concerned any restrictions on container throughput at the Port of Newcastle in lease contracts. The words struck out did not appear in the answer provided on 29 September 2015, but did appear in the original transcript on 3 September 2015.

The Hon. ADAM SEARLE: When you sold the Port of Newcastle was a cap put on the number of containers that can be moved through the Port of Newcastle?

Ms GLADYS BEREJIKLIAN: I understand there is no legislated container cap.

The Hon. ADAM SEARLE: So there is no cap on container movements there?

Ms GLADYS BEREJIKLIAN: There is no legislated container cap.

The Hon. ADAM SEARLE: Is there any other restriction in the sale of the lease documents?

Ms GLADYS BEREJIKLIAN: I am not aware of that.

The Hon. ADAM SEARLE: What about in the contracts?

Ms GLADYS BEREJIKLIAN: I am not aware.

The Hon. ADAM SEARLE: Will you take that on notice?

Ms GLADYS BEREJIKLIAN: I am happy to take that on notice.

The Hon. ADAM SEARLE: You are aware of the $20 20-foot equivalent container charge at the Port Botany on throughput that was in place for a number of years?

Ms GLADYS BEREJIKLIAN: I will ask Mr Spencer to answer your questions in this regard.

The Hon. ADAM SEARLE: Mr Spencer, are you aware of that container tax, if I can put it that way?

Mr SPENCER: For clarification, was it what was called a port container charge?

The Hon. ADAM SEARLE: I think it was a $20 charge on every 20-foot equivalent unit. It was originally to build a truck marshalling yard but when the marshalling was constructed it remained in place. At the moment, the value, I think, over the life of the lease would be in excess of the price that was achieved for the lease of Port Botany. The Government did not talk about that when the sale of the lease went through. Will the Minister confirm her understanding that that is still in place and is still being charged?

Mr SPENCER*: To provide an accurate answer, I will take that question on notice.

(*TIMOTHY JOHN SPENCER, Deputy Secretary, Commercial Group, NSW Treasury)

Answer:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

The Port Botany Landside Improvement Strategy function now rests with Transport for NSW and is funded from TfNSW’s annual allocation from the State Budget.

BUDGET ESTIMATES 2015-2016
Supplementary Questions
General Purpose Standing Committee No. 2 Roads, Maritime and Freight
Monday 31 August 2015
Answers: Thursday 24 September 2015

Questions from The Hon Shaoquett Moselmane MLC [on behalf of the NSW Labor Opposition]

Question:

31. I refer to the comments you made in the Legislative Council on 17 October 2013 about the movement of containers through the Port of Newcastle that, “part of the lease and the rationalisation was a cap on numbers there.” What are the arrangements that cap, inhibit or restrict the number of containers that pass through the Port of Newcastle?

Answer:

I am advised:

There is no legislated container cap at Port of Newcastle. The Government fully expects that organic growth of containers at Newcastle will continue.

Comment: Container terminal policy in NSW is for the state government to compensate NSW Ports every time a container ship visits the Port of Newcastle that otherwise would visit Port Botany. The government sees no need to put any funds in place because there is no container terminal at the Port of Newcastle and the government’s unlegislated “cap on numbers” will not be extended.

This “cap on numbers” is 30,000 container movements per year, increasing by six per cent per year as disclosed in this document. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss

Question:

32. 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:

The port leases do not seek to constrain trade, but aim to incentivise trade and port development in a manner that is consistent with the Freight and Ports Strategy.

Comment: See comment 31. The “NSW Freight and Ports Strategy” is dated November 2013. This Strategy reflects the government’s “rule” of an unlegislated “cap on numbers” at the Port of Newcastle. There is no mention in this Strategy of an unlegislated “cap on numbers” or a fee for exceeding it.

Question

33.

Has the NSW Government entered into any agreements that create a disincentive or obstacle to increase the number of containers that pass through Newcastle?

Answer:

The port leases do not seek to constrain trade, but aim to incentivise trade and port development in a manner that is consistent with the Freight and Ports Strategy.

Comment: See comment 31.

Question:

34. I refer to your comments in the Legislative Council on 17 October 2013 about containers and the Port of Newcastle, that “the only time an extension is allowed is when a specific number is reached and tripped in Port Botany and Port Kembla.”

(a) What is the number for Port Kembla?

(b) What is the number for Port Botany?

Answer:

The transaction arrangements that the State entered into with the successful bidders for Port Botany and Kembla and the Port of Newcastle reflect the Freight and Ports Strategy.

Comment: NSW Treasurer, The Hon. Gladys Berejiklian MP, does not consider the unlegislated “cap on numbers” to be a “disincentive or obstacle” to building a container terminal at the Port of Newcastle. At a NSW Budget Estimates hearing on 3 September 2015, Ms Berejiklian was asked:

Question 29: 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 29 September 2015:

I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.

Ms Berejiklian’s disclosure overturns government policy as announced by Mr Baird on 27 July 2012:

The development of intermodal terminals across South and West Sydney, [sic] the Government’s freight strategy to be released later in 2012 would seek to develop Port Kembla as the logical next long term tranche of container capacity after Port Botany.

In February 2013, government policy was described by Newcastle Port Corporation in the following terms:

In July 2012 the NSW Government announced that Port Kembla will be the logical next long-term tranche of container capacity after Port Botany. In accordance with the government’s announcement, subject to any relevant government approvals, any future container terminal development at Newcastle will occur only once Port Botany and Port Kembla are fully developed and developable handling capacity is fully utilised at both Port Botany and Port Kembla. (Newcastle Port Corporation, Draft Strategic Development Plan for the Port of Newcastle, February 2013, page 23)

In statement to media on 1 May 2014, NSW Treasury described government policy in the following terms:

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.

Ms Berejiklian disclosed that a container terminal can be built at the Port of Newcastle at any time, including immediately, if Port of Newcastle Investments “wished to do so”.

There is no mention of an unlegislated “cap on numbers” at the Port of Newcastle, or a fee for exceeding it, in the “NSW Freight and Ports Strategy” dated November 2013; the “Draft Strategy” dated November 2012; and, the “Discussion Paper” dated February 2012.

Questions from Dr Mehreen Faruqi MLC

Question:

179. Two-thirds of the projects in the NSW Freight and Ports Strategy Infrastructure Program are road-freight projects, and only 1/3 are rail freight. Moreover, 73% of the fully-funded projects are road-freight. How does the government intend to reach the target of 28% rail share of containers moved through port? (a) Is this still the target? (b) Will the government reach the target in this term of government?

Answer:

I am advised:

The Government maintains its 28% rail share target and since November 2014, the highest volumes of rail freight have been handled at Port Botany in five years.

The Cargo Movement Coordination Centre, established in 2014 in accordance with the objectives in the NSW Freight and Ports Strategy, has been working to increase freight rail by addressing issues around reliability, available intermodal terminal capacity, transit time and cost.

The 2015-16 Budget provides $6 million for the Airport East Precinct project, which includes removal of the General Holmes Drive level crossing on the Port Botany freight rail line to allow freight trains to travel at increased speeds. The project will also involve building twin rail bridges over the Wentworth Avenue underpass, which will allow for future duplication of the rail line.

Customer education about the advantages of rail has led to the transition of major freight customers from road to rail. This includes Kmart, Bunnings and Officeworks, and the movement of Visy shipments from Melbourne to Sydney.

Capacity at intermodal terminals drives increased demand for rail over road. The NSW Government policy is to identify and protect land and freight corridors for future intermodal capacity.

Comment: Increasing the rail component of container transportation requires completion of the following projects:

Stages 2 and 3 of the Northern Sydney Freight Corridor (NSFC), costing $5 billion, would provide the equivalent of a dedicated rail freight line between Newcastle and Strathfield, which is required by 2028 to meet predicted freight demand. There are no funds available for building stages 2 and 3 of the NSFC. Presumably, these stages will not be built. An option for the government to increase freight capacity on the rail line between Newcastle and Strathfield is to reduce passenger services.

The Western Sydney Freight Line, between Chullora and Eastern Creek, costing about $1 billion, is required to rail containers between Port Botany and Eastern Creek, which is the proposed site for an intermodal terminal. However, there are no funds available for building the Western Sydney Freight Line. Presumably, this line will not be built.

A new rail freight line is required between Port Botany and Mascot. Funding for this line has not been disclosed.

In February 2014 the NSW Bureau of Transport Statistics released detailed forecasts of container movements to and from Port Botany. These estimates were in line with estimates by NSW Ports. NSW Ports estimated container movements by truck between the port and western Sydney to increase from 2 million in 2014 to 5.4 million in 2045. Movement of containers by rail is estimated to increase from 0.3 million in 2014 to 3 million by 2045. No analysis is provided for how the increase in container transportation by rail will be achieved.

The NSW government had not disclosed the economic implications of trucking containers between Port Botany and western Sydney destinations. In a report dated 3 June 2011, Deloitte Access Economics evaluated the cost of truck transportation of freight compared with rail transportation. This report indicates that the full real cost of freight transportation by road is not recovered.

The RTA reports that a container truck using the M5 East westbound tunnel is the equivalent of six passenger cars and the equivalent of three passenger cars using the eastbound tunnel. Container trucks are 2 per cent of vehicle use on the M5 East (NSW Ports). In the eastbound tunnel, this equates to 6 per cent of capacity and in the westbound tunnel it equates to 3 per cent of capacity. In 2045, when container trucks will require 4 per cent of current M5 East capacity, this will equate to 12 per cent of the current westbound tunnel and 6 per cent of the eastbound tunnel.

Question:

180. What is the status of the Inland Rail project? What is the NSW Government doing to make sure this important freight connection is built?

(a) The Inland Rail website says an Implementation Group will provide the delivery plan and business case for Inland Rail to the federal government by mid-2015. Is this project on track?

(b) Given that most of this will be constructed in NSW, has the NSW government seen the plan and business case?

Answer:

I am advised:

(a) On 11 September 2015, the Inland Rail Implementation Group’s Chair, the Hon John Anderson AO delivered the Final Report on the proposed Melbourne to Brisbane Inland Rail and the Australian Rail Track Corporation’s 2015 Inland Rail Programme Business Case to the Hon. Warren Truss, MP, Deputy Prime Minister and Minister for Infrastructure and Regional Development.

Transport for NSW’s Secretary is a member of the Australian Government’s Inland Rail Implementation Group and Transport for NSW has been represented at meetings to date.

Transport for NSW has now established a NSW Interagency Steering Committee to provide a whole-of-government position to facilitate advancing the Inland Rail.

(b) Yes.

Comment: A rail freight bypass of Sydney – between the Port of Newcastle and Glenfield – would compete for freight between Melbourne-Sydney and Brisbane-Sydney,  where Sydney is the end destination.

Question:

198. What is the purpose of the container throughput cap at Newcastle port?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: Container terminal policy in NSW is for the state government to compensate NSW Ports every time a container ship visits the Port of Newcastle that otherwise would visit Port Botany. The government sees no need to put any funds in place because there is no container terminal at the Port of Newcastle and the government’s unlegislated “cap on numbers” will not be extended.

This “cap on numbers” is 30,000 container movements per year, increasing by six per cent per year as disclosed in this document. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss.

This unlegislated “cap on numbers” is confidential and cannot be examined for lawfulness, enforceability and benefit. It was imposed when former Treasurer, The Hon. Mike Baird MP, announced the appointment of Morgan Stanley as the government’s financial advisor for leasing Port Botany on 14 December 2011.

A “cap on numbers” was a “rule” the government set for a Port Botany lease “Scoping Study”, as disclosed by The Hon. Duncan Gay MLC on 17 October 2013. Mr Gay disclosed that the government did not envisage a need to put any funds in place to pay compensation to the Port Botany leaseholder when he answered this question from The Hon. Adam Searle MLC:

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?

NSW Treasurer, The Hon. Gladys Berejiklian MP, does not consider the unlegislated “cap on numbers” to be a “disincentive or obstacle” to building a container terminal at the Port of Newcastle. At a NSW Budget Estimates hearing on 3 September 2015, Ms Berejiklian was asked:

Question 29: 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 29 September 2015:

I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.

Ms Berejiklian’s disclosure overturns government policy as announced by Mr Baird on 27 July 2012:

The development of intermodal terminals across South and West Sydney, [sic] the Government’s freight strategy to be released later in 2012 would seek to develop Port Kembla as the logical next long term tranche of container capacity after Port Botany.

In February 2013, government policy was described by Newcastle Port Corporation in the following terms:

In July 2012 the NSW Government announced that Port Kembla will be the logical next long-term tranche of container capacity after Port Botany. In accordance with the government’s announcement, subject to any relevant government approvals, any future container terminal development at Newcastle will occur only once Port Botany and Port Kembla are fully developed and developable handling capacity is fully utilised at both Port Botany and Port Kembla. (Newcastle Port Corporation, Draft Strategic Development Plan for the Port of Newcastle, February 2013, page 23)

In statement to media on 1 May 2014, NSW Treasury described government policy in the following terms:

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.

Ms Berejiklian disclosed that a container terminal can be built at the Port of Newcastle at any time, including immediately, if Port of Newcastle Investments “wished to do so”.

There is no mention of an unlegislated “cap on numbers” at the Port of Newcastle, or a fee for exceeding it, in the “NSW Freight and Ports Strategy” dated November 2013; the “Draft Strategy” dated November 2012; and, the “Discussion Paper” dated February 2012.

Question:

199. What is the purpose of paying compensation to the Port Botany leaseholder if the container throughput cap at Newcastle port is exceeded during the term of the Port Botany lease?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: See comment 198.

Question:

200. How much compensation is payable to the Port Botany leaseholder per container if the container throughput cap is exceeded at Newcastle port?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: Compensation is not payable to NSW Ports when containers imported and exported by the Port of Newcastle are less than 30,000 per year as at 1 July 2013, increasing annually by six per cent. Once this no-payment “cap” is exceeded, NSW Ports may claim compensation.

When claiming payment, NSW Ports must satisfy the State that either of Port Botany and Port Kembla are not operating at full capacity. NSW Ports must also demonstrate to the satisfaction of the State that the number of containers imported and exported by Port Botany was less than it would have been had not the cap been exceeded at the Port of Newcastle and that there is both a reasonable, and a material, causal connection and correlation between the amount of excess above the cap and the amount of reduction at Port Botany. Since Port Botany is the only container port in NSW, any use of a container terminal developed at the Port of Newcastle fits these criteria.

Payment per container to NSW Ports comprises the weighted average per TEU of the wharfage charge actually imposed by NSW Ports at Port Botany on users of Port Botany in respect of containers at Port Botany. The weighted average is currently about  $100 per container. For a typical container ship with capacity for 5,000 TEU, visiting the Port of Newcastle fully loaded, and leaving fully loaded, will cost $1 million more than visiting Port Botany.

Question:

201. What is the source of funds for paying compensation to the Port Botany leaseholder if the container throughput cap at Newcastle port is exceeded?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: See above.

Question:

202. Are stevedore tenants of Newcastle port charged a fee for each container that exceeds the container throughput cap?

(a) If so, what is the amount?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: See question 200.

Question:

203. Did the government decide not to put any funds in place to pay compensation to the Port Botany leaseholder if the container throughput cap is exceeded at Newcastle port because no extension will be allowed in the container throughput cap until an unspecified container throughput is reached at Port Botany and Port Kembla?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: See comment 198.

Question:

204. Is Minister Gay responsible for enforcing the container throughput cap at Newcastle port?

(a) If not, which Minister is responsible?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: It is presumed the unlegislated “cap on numbers” is a provision in the confidential ports leasing arrangements, which are the responsibility of the Treasurer.

Question:

205. Has the government claimed an exemption from complying with the ”Competition and Consumer Act 2010” in respect of Port Commitment Deeds?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: The government has not disclosed that it claimed an exemption from the “Competition and Consumer Act 2010” (CCA) in respect of the Port Commitment Deeds. It is presumed the government did not claim an exemption and that the CCA applies to the unlegislated “cap on numbers”, and fee for exceeding it.

Question:

206. How many Port Commitment Deeds are there?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: Leasing arrangements for Port Botany, Port Kembla and Port of Newcastle are contained in confidential “Port Commitment Deeds”. It is presumed there are three such Deeds.

Question:

207. Did the government provide the ACCC with all Port Commitment Deeds?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: The government does not disclose what information was provided to the ACCC, including in relation to the “cap on numbers” and fee charged for exceeding it. The ACCC does not disclose what information, if any, was provided by the government in relation to the ports leasing arrangements, including the Port Commitment Deeds.

Question:

208. If not, did the government supply the ACCC with extracts of Port Commitment Deeds?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: See 207 above.

Question:

209. Do the ports lease arrangements prohibit the development of a container terminal at the Port of Newcastle and enable the growth of container volumes through Newcastle servicing that region?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: A container terminal at the Port of Newcastle is a permissible development and Port of Newcastle Investments may develop a container terminal if it wishes to do so. The government does not consider the unlegislated “cap on numbers” to be a “disincentive or obstacle” to building a container terminal at the Port of Newcastle, as disclosed by Ms Berejiklian on 29 September 2015. See also comment 198 and 200.

Question:

210. Did the government decide not to put any funds in place to pay compensation to the Port Botany leaseholder because no extension will be allowed in the container throughput cap at Newcastle port until an unspecified container throughput is reached at Port Botany and Port Kembla?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: See comment 198 and 200.

Question:

211. Has the government been clear that while general cargo will be allowed at Newcastle, there will be no extension until a specific number of containers is reached and exceeded in Port Botany and Port Kembla?

a. If so, to whom has the government communicated this information?

Answer: This transaction was led by Treasury and should be referred to the Treasurer.

Comment: The only disclosure by the government about an unlegislated “cap on numbers” and compensation being payable to NSW Ports was made on 17 October 2013.

LEGISLATIVE ASSEMBLY 10 September 2015

1337—PRIVATE OPERATOR OF PORT BOTANY

Mr Tim Crakanthorp to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council—

Is compensation payable to the private operator of Port Botany for container throughput at Newcastle port in excess of a cap?

15 October 2015

Answer

This is a matter for the Treasurer.

LEGISLATIVE ASSEMBLY 15 October 2015

1612—PRIVATE OPERATOR OF PORT BOTANY

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

Is compensation payable to the private operator of Port Botany for container throughput at Newcastle port in excess of a cap?

16 November 2015

Answer:

Please refer to my response to questions 24 & 25 at Budget Estimates 2015 Answers to Supplementary Questions, General Purpose Standing Committee 1, 9 am, Thursday 3 September 2015.

PORTS ISSUES

24. Has the NSW Government imposed any restrictions on the movement of containers through the Port of Newcastle?

25. Is there a cap on container movements at the Port of Newcastle?

a. If so, what is it? Is it a charge per container?
b. If the cap is breached, is a fee, fine or charge imposed? Who pays it? Who do they pay the money to?
c. If the cap is breached, are any monies paid to the operators of Port Botany and/or Port Kembla? If so, how much is paid? Who pays it?
d. When were these arrangements agreed?

Answer 24-25:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

Comment: Container terminal policy in NSW is for the state government to compensate NSW Ports every time a container ship visits the Port of Newcastle that otherwise would visit Port Botany. The government sees no need to put any funds in place because there is no container terminal at the Port of Newcastle and the government’s unlegislated “cap on numbers” will not be extended.

This “cap on numbers” is 30,000 container movements per year, increasing by six per cent per year as described in this document. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss.

This unlegislated “cap on numbers” is confidential and cannot be examined for lawfulness, enforceability and benefit. It was imposed when former Treasurer, The Hon. Mike Baird MP, announced the appointment of Morgan Stanley as the government’s financial advisor for leasing Port Botany on 14 December 2011.

A “cap on numbers” was a “rule” the government set for a Port Botany lease “Scoping Study”, as disclosed by The Hon. Duncan Gay MLC on 17 October 2013. Mr Gay disclosed that the government did not envisage a need to put any funds in place to pay compensation to the Port Botany leaseholder when he answered this question from The Hon. Adam Searle MLC:

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?

NSW Treasurer, The Hon. Gladys Berejiklian MP, does not consider the unlegislated “cap on numbers” to be a “disincentive or obstacle” to building a container terminal at the Port of Newcastle. At a NSW Budget Estimates hearing on 3 September 2015, Ms Berejiklian was asked:

Question 29: 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 29 September 2015:

I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.

Ms Berejiklian’s disclosure overturns government policy as announced by Mr Baird on 27 July 2012:

The development of intermodal terminals across South and West Sydney, [sic] the Government’s freight strategy to be released later in 2012 would seek to develop Port Kembla as the logical next long term tranche of container capacity after Port Botany.

In February 2013, government policy was described by Newcastle Port Corporation in the following terms:

In July 2012 the NSW Government announced that Port Kembla will be the logical next long-term tranche of container capacity after Port Botany. In accordance with the government’s announcement, subject to any relevant government approvals, any future container terminal development at Newcastle will occur only once Port Botany and Port Kembla are fully developed and developable handling capacity is fully utilised at both Port Botany and Port Kembla. (Newcastle Port Corporation, Draft Strategic Development Plan for the Port of Newcastle, February 2013, page 23)

In statement to media on 1 May 2014, NSW Treasury described government policy in the following terms:

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.

Ms Berejiklian disclosed that a container terminal can be built at the Port of Newcastle at any time, including immediately, if Port of Newcastle Investments “wished to do so”.

There is no mention of an unlegislated “cap on numbers” at the Port of Newcastle, or a fee for exceeding it, in the “NSW Freight and Ports Strategy” dated November 2013; the “Draft Strategy” dated November 2012; and, the “Discussion Paper” dated February 2012.

GENERAL PURPOSE STANDING COMMITTEE NO. 1 Thursday 3 September 2015

The Hon. ADAM SEARLE: When you sold the Port of Newcastle was a cap put on the number of containers that can be moved through the Port of Newcastle?

Ms GLADYS BEREJIKLIAN: I understand there is no legislated container cap.

Comment: On 17 October 2013 The Hon. Duncan Gay MLC disclosed an unlegislated “cap on numbers” at the Port of Newcastle. This unlegislated “cap on numbers” was a “rule” issued by the government to Morgan Stanley for preparing the Port Botany Scoping Study. Morgan Stanley’s appointment as the government’s financial advisor was announced by (former) Treasurer, The Hon. Mike Baird MP, on 14 December 2011. The government’s acceptance of  Morgan Stanley’s recommendations was announced by Mr Baird on 27 July 2012.

The Hon. ADAM SEARLE: So there is no cap on container movements there?

Ms GLADYS BEREJIKLIAN: There is no legislated container cap.

The Hon. ADAM SEARLE: Is there any other restriction in the sale of the lease documents?

Ms GLADYS BEREJIKLIAN: I am not aware of that.

The Hon. ADAM SEARLE: What about in the contracts?

Ms GLADYS BEREJIKLIAN: I am not aware.

Comment: Compensation payable to NSW Ports is contained in the “Port Commitment Deeds” and is detailed in this document. The unlegislated “cap on numbers” is presumed to be included in these Deeds.

The Hon. ADAM SEARLE: Will you take that on notice?

Ms GLADYS BEREJIKLIAN: I am happy to take that on notice.

Comment: This question on notice was not answered in the answers to questions on notice provided on 29 September 2015.

The Hon. ADAM SEARLE: You are aware of the $20 20-foot equivalent container charge at the Port Botany on throughput that was in place for a number of years?

Ms GLADYS BEREJIKLIAN: I will ask Mr Spencer to answer your questions in this regard.

The Hon. ADAM SEARLE: Mr Spencer, are you aware of that container tax, if I can put it that way?

Mr SPENCER: For clarification, was it what was called a port container charge?

The Hon. ADAM SEARLE: I think it was a $20 charge on every 20-foot equivalent unit. It was originally to build a truck marshalling yard but when the marshalling was constructed it remained in place. At the moment, the value, I think, over the life of the lease would be in excess of the price that was achieved for the lease of Port Botany. The Government did not talk about that when the sale of the lease went through. Will the Minister confirm her understanding that that is still in place and is still being charged?

Mr SPENCER: To provide an accurate answer, I will take that question on notice.

(TIMOTHY JOHN SPENCER, Deputy Secretary, Commercial Group, NSW Treasury)

GENERAL PURPOSE STANDING COMMITTEE NO. 2 Monday 31 August 2015

The Hon. SOPHIE COTSIS: Is there a cap on container movements at the Port of Newcastle? If so, what is it?

The Hon. DUNCAN GAY: No.

The Hon. SOPHIE COTSIS: You are sure about that answer?

The Hon. DUNCAN GAY: Yes.

Comment: There is an unlegislated “cap on numbers” at the Port of Newcastle, as Mr Gay disclosed on 17 October 2013. The cap on numbers is detailed in this document.

The Hon. SOPHIE COTSIS: In answer to a question in October 2013 you said in part: 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. Are you saying that statement in October is wrong?

Comment: Mr Gay disclosed an unlegislated “cap on numbers” on 17 October 2013.

The Hon. DUNCAN GAY: My understanding is there is not a cap into Newcastle. We have indicated a preference and a sensible way of doing it. The large majority of boxes come into New South Wales through Port Botany. The bulk of those boxes need to get to Sydney so the best location to put them into is Sydney in the first instance. Secondly it is Port Kembla, which is half the distance of Newcastle to bring them up. Once we reach a number where there are too many, certainly we would be looking at a spillage into Newcastle. The general freight and boxes that need to go to Newcastle certainly will be going to Newcastle.

Comment: The statement “there is not a cap into Newcastle” contrasts with the statement on 17 October 2013 that “part of the lease and the rationalisation was a cap on numbers there”. This “cap on numbers” is contractual.

The Hon. SOPHIE COTSIS: It is my understanding that there is a cap on container movements. We would like that confirmed. If there is a cap and if it is breached, is a fee, fine or a charge imposed? Who pays for it? Where does the money go? It is my understanding that there is a cap and you indicated in your answer on 17 October that part of the lease and the rationalisation was a cap on numbers there. Were you misleading the House?

The Hon. DUNCAN GAY: There is no container cap at the Port of Newcastle. I indicated that there is a cap in New South Wales at Sydney and once that is reached we then look at other places. But you specifically asked me a question whether there was a cap at Newcastle and I specifically answered that there is not.

Comment: There is a contractual “cap on numbers” at the Port of Newcastle.

The Hon. SOPHIE COTSIS: On container movements?

The Hon. DUNCAN GAY: There is no legislated cap.

Comment: As disclosed on 17 October 2013, a “cap on numbers” was a “rule” issued to Morgan Stanley for preparing the Port Botany Scoping Study.

The Hon. SOPHIE COTSIS: Is there an internal document?

The Hon. DUNCAN GAY: I think I have answered the question. I am happy to keep going around.

The Hon. SOPHIE COTSIS: You said one thing in the House and you are saying another thing to the Committee.

The Hon. DUNCAN GAY: No, I have said the same thing in both places.

Comment: The House was informed about a “cap on numbers” at the Port of Newcastle on 17 October 2013.

The Hon. SOPHIE COTSIS: I am not going to waste my time, but you are quoted as saying in the House that part of the lease and the rationalisation was a cap on numbers there. Now you are saying that there is no cap. About the movement of containers through Newcastle you also said on 17 October 2013: The only time an extension is allowed is when a specific number is reached and is tripped in Port Botany and Port Kembla. What is the number for Port Kembla and what is the number for Port Botany?

The Hon. DUNCAN GAY: Which is exactly what I said a moment ago. I will have to come back to you with that number.

The Hon. SOPHIE COTSIS: Will you release the scoping study for the sale of the ports?

The Hon. DUNCAN GAY: That is not a question for me. That is a question for either Treasury or Finance.

The Hon. SOPHIE COTSIS: Will you take that on notice?

The Hon. DUNCAN GAY: No.

The Hon. SOPHIE COTSIS: Will you release the port commitment deeds?

The Hon. DUNCAN GAY: No, for the same reasons as the previous answer.

The Hon. Dr PETER PHELPS: It is the wrong portfolio.

The Hon. SOPHIE COTSIS: I refer to a media release by the head of the Australian Competition and Consumer Commission [ACCC] issued on 23 April in which Mr Sims outlines a number of concerns about actions taken by governments to sell significant assets without appropriate market structures and regulatory arrangements. He cited the example of the recent sale of Port Botany and Port Kembla to the same owner. He stated: We need to be careful to ensure that privatisation boosts economic efficiency rather than detracts from it … Otherwise we risk giving privatisation a bad name because consumers will continue to associate privatisation with higher prices. Do you agree with Mr Sims that the sale of Port Botany and Port Kembla proceeded without appropriate market structures and regulatory arrangements being put in place?

The Hon. DUNCAN GAY: The Government had all the proper procedures in place. It was not a sale; it was a lease. The lease of Newcastle went to a different body. So the concerns you are raising on behalf of that gentleman have been addressed within that, if they were valid.

Comment: The ACCC does not disclose what information, if any, it possesses about the “cap on numbers”. Chairman Mr Rod Sims commented on the nature of confidential information supplied by the NSW government in this report in The Newcastle Herald on 30 July 2016.

The Hon. SOPHIE COTSIS: That gentleman is the chair of the ACCC and he has grave concerns about competition and governments selling—

The Hon. DUNCAN GAY: I just answered that. I just indicated that the lease that happened for Port Botany and Port Kembla went to one group; the lease for the Port of Newcastle went to a different group. There is competition. Do not forget that we are also in competition with Melbourne and Brisbane every day of the week—and beating them. We are beating them hands down, so it cannot be too bad. I do, however, have the ability to refer the port to the Independent Pricing and Regulatory Tribunal if the pricing behaviour of the port’s lessee is inappropriate.

Comment: Container terminal policy in NSW is for the state government to compensate NSW Ports every time a container ship visits the Port of Newcastle that otherwise would visit Port Botany. The government sees no need to put any funds in place because there is no container terminal at the Port of Newcastle and the government’s contractual “cap on numbers” will not be extended.

This “cap on numbers” is 30,000 container movements per year, increasing by six per cent per year as detailed in this document. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss.

This contractual “cap on numbers” is confidential and cannot be examined for lawfulness, enforceability and benefit. It was imposed when former Treasurer, The Hon. Mike Baird MP, announced the appointment of Morgan Stanley as the government’s financial advisor for leasing Port Botany on 14 December 2011.

A “cap on numbers” was a “rule” the government set for a Port Botany lease “Scoping Study”, as disclosed by The Hon. Duncan Gay MLC on 17 October 2013. Mr Gay disclosed that the government did not envisage a need to put any funds in place to pay compensation to the Port Botany leaseholder when he answered this question from The Hon. Adam Searle MLC:

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?

NSW Treasurer, The Hon. Gladys Berejiklian MP, does not consider the “cap on numbers” to be a “disincentive or obstacle” to building a container terminal at the Port of Newcastle. At a NSW Budget Estimates hearing on 3 September 2015, Ms Berejiklian was asked:

Question 29: 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 29 September 2015:

I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.

Ms Berejiklian’s disclosure overturns government policy as announced by Mr Baird on 27 July 2012:

The development of intermodal terminals across South and West Sydney, [sic] the Government’s freight strategy to be released later in 2012 would seek to develop Port Kembla as the logical next long term tranche of container capacity after Port Botany.

In February 2013, government policy was described by Newcastle Port Corporation in the following terms:

In July 2012 the NSW Government announced that Port Kembla will be the logical next long-term tranche of container capacity after Port Botany. In accordance with the government’s announcement, subject to any relevant government approvals, any future container terminal development at Newcastle will occur only once Port Botany and Port Kembla are fully developed and developable handling capacity is fully utilised at both Port Botany and Port Kembla. (Newcastle Port Corporation, Draft Strategic Development Plan for the Port of Newcastle, February 2013, page 23)

In statement to media on 1 May 2014, NSW Treasury described government policy in the following terms:

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.

Ms Berejiklian disclosed that a container terminal can be built at the Port of Newcastle at any time, including immediately, if Port of Newcastle Investments “wished to do so”.

There is no mention of a “cap on numbers” at the Port of Newcastle, or a fee for exceeding it, in the “NSW Freight and Ports Strategy” dated November 2013; the “Draft Strategy” dated November 2012; and, the “Discussion Paper” dated February 2012.

The ACCC has commented extensively on the ports leasing arrangements – see Home Page for details.

The Hon. SOPHIE COTSIS: What can that trigger?

The Hon. DUNCAN GAY: It would be very much part of price monitoring.

The Hon. SOPHIE COTSIS: In terms of the cap on containers, are any fees paid if the number of containers through Newcastle exceeds a set amount?

The Hon. DUNCAN GAY: Not that I am aware of.

The Hon. SOPHIE COTSIS: You are not aware of that?

The Hon. DUNCAN GAY: You asked me whether there was a cap in Newcastle and I said there is not. Now you are asking me whether there is a fee paid if they go beyond a certain number. General cargo containers are part of what happens in Newcastle. My understanding is that within the general cargo that needs to go to Newcastle that is fine.

Comment: There is a contractual “cap on numbers” at the Port of Newcastle.

The Hon. SOPHIE COTSIS: Will you speak to your bureaucrats and take that on notice?

The Hon. DUNCAN GAY: If we need to deliver more of an answer we will.

The Hon. SOPHIE COTSIS: The ACCC submission to the Harper competition report stated: 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”. What is your response to the ACCC’s concerns about reducing the prospect of competitive provision of port services?

The Hon. DUNCAN GAY: I think you will notice, as I said earlier, that people wishing to use the New South Wales ports are voting with their feet—they are coming to us. Rather than there being a lack of competition, there appears to be better pricing and more competition in New South Wales than we have seen in Queensland and Victoria. For the first time, we are getting trade out of the Riverina in New South Wales. It is coming back to Port Botany whereas in the past it traditionally went to the Port of Melbourne. I will ask the chief executive officer of Sydney Ports whether he wishes to add anything at this point.

Comment: See comment, above.

Mr GILFILLAN: During the transaction process over the ports at Port Botany, Port Kembla and Newcastle a lot of consideration was given to the issue of competition. As the Minister said, the reality is that there is very limited scope for competition between these ports because of the transport issues between the ports and the fact that each port is geared towards a specific type of cargo. Some things are contestable—for example, cars were moved from Sydney down to Port Kembla in November 2008. That was contestable and the Government took a position on that and moved cars. For most other commodities, from a financial and a commercial perspective, it simply does not make sense for these ports to compete between each other. In fact, it gives a perverse outcome—you end up with the commodity costing more because you incur more transport costs. Despite what the Australian Competition and Consumer Commission [ACCC] may have said, the reality is that there is very little scope for competition between our main ports adjacent to Sydney. As the Minister said, our reality is that we lose more cargo to Melbourne from our ports than we do internally between our ports in New South Wales. So competition is not really an issue.

Comment: For comment in relation to these arguments see the Home Page discussion. It “makes sense” to develop a container terminal at the Port of Newcastle to supply the northern NSW market and to provide the commercial base load to pay for a rail freight bypass of Sydney.

The Hon. SOPHIE COTSIS: Have you spoken to the ACCC about the concerns it has raised? These are pretty big concerns.

Mr GILFILLAN: I was not a party to any conversation with the ACCC. This process during the transaction—

The Hon. DUNCAN GAY: This is not Mr Gilfillan’s area. I invite Mr Reardon to add something here.

Mr REARDON: In terms of any lease or sale process within government of a public asset, there will always be a consideration by the ACCC about the market, market reform and market structure. At the end of the day, the processes have gone forward. It would be a unique situation if the ACCC did not have a comment on it in terms of what the market structure would be—whether it is ports, banks or any other part of the economy. As we pointed out, though, competition within ports is a whole of east coast matter. It is not simply a matter for Newcastle, Port Kembla or Port Botany. It is also about the Port of Melbourne and the Port of Brisbane. I have to add that places like the Port of Brisbane have grown quite strongly.

So I would not subscribe to the view that there is not competition because of the leases. There is competition on the east coast, and it is up to New South Wales to position itself as strongly as possible within that to ensure its ports continue to grow. As the Minister has pointed out also, in terms of a legislative cap within Newcastle there is no such thing. So in terms of what we are focused on it is the growth of Port Botany.

Comment: The ACCC has not disclosed what information, if any, it possessed about restrictive provisions in the ports leasing arrangements before reading a report in The “Newcastle Herald” dated 11 May 2014. Chairman Mr Rod Sims discussed the nature of information provided by the NSW government in this report in “The Newcastle Herald” on 30 July 2016. The government has not disclosed what information, if any, it provided to the ACCC in relation to the contractual “cap on numbers”.

Competition between ports on the east coast of Australia will be between private companies when the Port of Melbourne is leased. A rail freight bypass of Sydney – between the Port of Newcastle and Glenfield – would enable Port of Newcastle to compete with Port Botany and with Port of Melbourne.

CHAIR: The Minister said there was no cap at all, not that there was no legislative cap. The Minister said there was no cap at all. That was his answer. You are now talking about a legislative cap. I think this is where there is some confusion creeping in.

The Hon. DUNCAN GAY: No, I said both. I said there is no cap in Newcastle and there is no legislative cap overall.

Comment: On 17 October 2013 Mr Gay disclosed an unlegislated “cap on numbers”, which is contractual, as disclosed by this document.

………

The Hon. PAUL GREEN: I have a question about container caps and the leasing of ports. We were discussing the possibility of up to eight million containers moving around Port Botany, and large numbers at Port Kembla and Newcastle. If Botany were leased and had a cap of several million, would there be statutory caps?

The Hon. DUNCAN GAY: I answered that earlier. My answer now is no different.

The Hon. PAUL GREEN: Are there caps for Port Kembla?

The Hon. DUNCAN GAY: No.

The Hon. PAUL GREEN: So it is open to any number?

The Hon. DUNCAN GAY: Yes.

The Hon. Dr PETER PHELPS: Let us hope that it gets bigger.

The Hon. PAUL GREEN: The problem is that the freight comes onto the roads.

The Hon. Dr PETER PHELPS: Unless the Maldon to Dombarton railway is built.

The Hon. PAUL GREEN: That is right. I will have a problem if it gets bigger and the railway is not built.

The Hon. DUNCAN GAY: It is in our interest to grow all of them but not to unnecessarily use one to take freight that could have gone to another and been carried by road or rail. We need to be sensible. The ports need to specialise and grow. New South Wales ports are doing well compared to interstate ports.

Comment: NSW government policy was for Port Botany to operate as the only container port in NSW until it reached capacity after which capacity would be developed at Port Kembla. Both ports were leased to the one company, NSW Ports. This policy was overturned as disclosed on 29 September 2015 when Ms Berejiklian disclosed that the Port of Newcastle lessee could develop a container terminal “if it wished to do so”.

CHAIR: The Minister said earlier that there are no caps, legislative or otherwise, on the Port of Newcastle.

The Hon. DUNCAN GAY: That is correct. That is for Newcastle.

Comment: There is a contractual “cap on numbers” at the Port of Newcastle.

The Hon. PAUL GREEN: So Port Kembla could grow to any size, as long as the containers keep coming in.

The Hon. DUNCAN GAY: It can grow within the constraints of its infrastructure.

The Hon. PAUL GREEN: There would have to be a cap, according to the capacity of that infrastructure?

The Hon. DUNCAN GAY: The infrastructure is the cap. Mr Reardon would like to clarify an earlier answer on Infrastructure NSW.

Grant Gilfillan Chief Executive Officer, Sydney Ports

Tim Reardon Secretary, Transport for NSW

LEGISLATIVE ASSEMBLY 13 August 2015

PORT OF NEWCASTLE

Mr LUKE FOLEY: My question is directed to the Treasurer. Why has the Government imposed constraints on the growth of container movements through the Port of Newcastle?

Ms GLADYS BEREJIKLIAN: The Labor Party opposed at every stage the Government’s improvements to the port and maritime strategy. At every stage the Labor Party opposed asset recycling in Newcastle. Now the proceeds of that asset recycling are going back into the community.

Mr Michael Daley: On a point of order: My point of order is taken under Standing Order 129. The Minister does not know the answer and she has no notes.

The SPEAKER: Order! The member for Maroubra has no knowledge of those matters. There is no point of order.

Ms GLADYS BEREJIKLIAN: We are yet to find out—

The SPEAKER: Order! Members will be directed to leave the Chamber if the interjections continue.

Ms GLADYS BEREJIKLIAN: The Leader of the Opposition has previously highlighted his opposition to what this Government has done in the Port of Newcastle. He has no credibility raising the issue now. The Government ensures that it uses the State’s assets in the best way possible and returns the proceeds to the community, where they belong. Daily in this place, members from the Hunter region talk about jobs, infrastructure, education and health—

Mr Michael Daley: Point of order: You had better coach her; she has got no idea, Premier.

The SPEAKER: Order! Members should not make inappropriate comments when they take a point of order.

Mr Michael Daley: I apologise. My point of order is taken under Standing Order 129. It was a simple question: Why is there a cap on containers coming out of Newcastle? That is constraining the growth of the Port of Newcastle.

The SPEAKER: Order! The Treasurer is being relevant to the question. There is no point of order

Ms GLADYS BEREJIKLIAN: I find it quite ironic that those opposite care about growth and activity when they opposed the Government’s plans to maximise that asset for the people of New South Wales. They have no credibility on this issue. They opposed everything that this Government proposed to do in relation to the ports. As I was saying, before I was rudely interrupted by the member for Maroubra—who does not know very much about this or any other issue regarding the budget—whilst the current member for Newcastle, the Leader of the Opposition and all those opposite, including the members for the Hunter, come in here and complain about lack of jobs in the Hunter and other issues, this side of the House is using the proceeds from that asset recycling to invest back into the community.

The SPEAKER: Order! I call the member for Maitland to order for the first time. I call the member for Maitland to order for the second time.

Ms GLADYS BEREJIKLIAN: I was extremely pleased when every time I had the pleasure of visiting the Hunter—

The SPEAKER: Order! The member for Maitland will come to order.

Mr Michael Daley: Point of order: It is under Standing Order 129 again. If the Treasurer does not know the answer she can take the question on notice. The Port of Newcastle is being constrained and the Minister will not answer the question. The question is very, very simple.

The SPEAKER: Order! The Minister is being relevant to the question and, pursuant to the standing order, that is all I can ask of her.

Ms GLADYS BEREJIKLIAN: I reiterate the hypocrisy of the Labor Government’s question in relation to this matter. Why does it not care about investment in the Hunter?

Ms Linda Burney: Point of order: I suggest if the Minister does not know the answer and cannot get a note she should sit down.

The SPEAKER: Order! There is no point of order.

Ms GLADYS BEREJIKLIAN: When those opposite have a straight answer on what they want for the Hunter and about what they want for the port strategy then they will have the right to ask about it. I say to those opposite: Do not stop progress in the Hunter, because that is what matters to the people of this State.

LEGISLATIVE ASSEMBLY 13 August 2015

PORT OF NEWCASTLE

Mr TIM CRAKANTHORP: My question is directed to the Treasurer. Why, when there is double digit unemployment in the Hunter, has the Government imposed restrictions on growing Newcastle port just to increase the sale price of Port Botany?

The SPEAKER: Order! The member for Hornsby will come to order.

Ms GLADYS BEREJIKLIAN: The member for Newcastle raises an important issue regarding growth and jobs in Newcastle and the Hunter. I was extremely disappointed when this side of the House brought in the Jobs Action Plan legislation to support more job creation in this State the member for Newcastle and every other member on that side of the House opposed that legislation.

The SPEAKER: Order! Opposition members will come to order.

Ms GLADYS BEREJIKLIAN: I put this to the member of the Newcastle: Why is it when this side of House determined that funds from asset recycling should go back into revitalising Newcastle and the Hunter region the member for Newcastle again opposed this Government’s actions to revitalise Newcastle and the Hunter?

Ms Jodi McKay: Point of order: My point of order is Standing Order 129.

The SPEAKER: Order! I call the member for Hornsby and the member for Kiama to order for the first time. Members will be heard in silence.

Ms Jodi McKay: It appears that the Treasurer does not know the answer to the question.

The SPEAKER: Order! That is not a point of order. The member is just entering into an argument and making inappropriate comments. It is up to me to decide relevance. The Treasurer has been relevant. There is no point of order.

Ms GLADYS BEREJIKLIAN: I refer the former member for Newcastle and the current member for Newcastle, the member for Maroubra and the Leader of the Opposition—

The SPEAKER: Order! I warn the member for Maitland that she is already on three calls to order.

Ms GLADYS BEREJIKLIAN: —to the Government’s New South Wales—

The SPEAKER: Order! The member for Maitland will remove herself from the Chamber until the conclusion of question time.

[Pursuant to sessional order the member for Maitland left the Chamber at 2.34 p.m.]

The SPEAKER: Order! I call the member for Hornsby and the member for Kiama to order for the second time.

Ms GLADYS BEREJIKLIAN: I say to those opposite that when we came to government, after 16 years they did not have a New South Wales ports or maritime strategy. What have we done?

The SPEAKER: Order! The member for Strathfield will come to order. The Treasurer remains relevant.

Mr Michael Daley: Point of order: I ask that the Treasurer take the question on notice. The former Treasurer knows the answer to this but he will not help her.

The SPEAKER: Order! The member for Maroubra will resume his seat. I call the member for Maroubra to order for the second time.

Ms GLADYS BEREJIKLIAN: I say to members opposite: When the Government wants to recycle assets such as ports why do they oppose them? They now come into this House and question policies that will support growth and investment in the Hunter. I say to the member for Newcastle and the former member for Newcastle: if they care about jobs, infrastructure and growth in the Hunter region, they will support the Government’s investment strategy. There is no doubt that there is a serious issue with the growth of employment in the Hunter region. That is why this side of the House is investing millions and millions of dollars in infrastructure and millions and millions in revitalising Newcastle.

Mr Tim Crakanthorp: Point of order: My point of order is under Standing Order 129. The question was about restrictions on growing the port; it was very specific.

The SPEAKER: Order! The Treasurer remains relevant. There is no point of order.

Ms GLADYS BEREJIKLIAN: This is the Labor Party’s hopeless attempt to win back the support of the business community in the Hunter. For the last 20 years— [Time expired.]

———-

LEGISLATIVE ASSEMBLY 13 August 2015

 

PORT OF NEWCASTLE

Mr TIM CRAKANTHORP (Newcastle) [6.06 p.m.]: Since 2013 the city of Newcastle has been waiting—waiting for an answer from the Government, waiting for the benefits of the $1.75 billion sale of the Port of Newcastle to come home and be invested into the new future for our harbour city. More than two years later we are still waiting and it has been revealed that will become the status quo because the Government does indeed have plans for the port, they just do not involve investing in Newcastle.

Mr Gareth Ward: You don’t want it though.

Mr Matt Kean: We’re building you a tramline, aren’t we?

Mr TIM CRAKANTHORP: In fact, you gave us $400 million in the last budget and you took it away this year. How about that? Shame.

ACTING-SPEAKER (Mr Bruce Notley-Smith): Order! The member will be heard in silence.

Mr TIM CRAKANTHORP: This week in the Newcastle Herald the topic was reignited when it was rumoured that the private operator of the Port of Newcastle may have been looking at a container terminal for Newcastle, the first project proposed by BHP as the replacement for the steelworks. Journalist Ian Kirkwood has shared my interest in the topic over the years. On Tuesday last he attended a lunch with the Port of Newcastle executive manager of trade and business development, Peter Francis. He wrote that when Mr Francis was asked about the potential for containers in the port he said: “… the challenge for containers is being able to get the inbound container trade into Newcastle given that the majority of NSW container freight is consumed within the Sydney basin area; that becomes a bit challenging.” That comment was as close as anyone has come to admitting that the way the State Government had leased the Port of Newcastle restricted or effectively prohibited Newcastle from building a major container terminal.

This discussion has been coming for a long time. In the late 1990s BHP’s major parting gift to the region was a plan to convert the steelworks site into a multipurpose terminal that would compete with or rival Botany as the State’s premier container port. But it never happened. Longstanding caps on the size of Botany Bay were lifted and then scrapped altogether and Newcastle lost its place as the next container port to Kembla. The development of a container terminal at the Port of Newcastle would give the city and surrounding Hunter area a massive economic boost. Industry has left the city of Newcastle with the closure of the steelworks and the downturn of the coal industry. Manufacturing is closing with Goninan and EDI Downer begging for the Sydney train contacts, and Forgacs is hanging in the balance if it does not get more Federal defence contracts. Our city needs growth. It needs jobs and it needs the support of the Government to do it.

Under this Government we have had our poles and wires and our port proceeds flogged off. The Government also cut our mass public transport network to the central business district. Enough is enough. It is now time for our fair share and it is the best time for the Government to make a contribution to the unemployment epidemic. If Newcastle was granted the development of a container terminal a new distribution hub could be created and it could utilise the existing heavy rail freight network to service the Hunter region.

Although Newcastle is a major coal port, developing a container terminal would supercharge local job opportunities, improve linkages across the State and provide new commercial opportunities. The Baird Government stopped this happening before it could start by making an anti-competitive decision to impose a cap on the number of containers moving across Newcastle wharves. The Government’s ineptitude regarding this matter was made abundantly clear today in question time when the Treasurer was asked by the Leader of the Opposition: “Why has the Government imposed constraints on the growth of container movements?” The answer from the Treasurer was abysmal. I then asked the Treasurer, “Why, when unemployment has reached double digits in the Hunter, has the Government imposed restrictions on growing the Port of Newcastle just to increase the sale price of Botany?” The answer was even more abysmal and prompted Newcastle Herald journalist Michelle Harris to tweet: “Govt’s farcical efforts to avoid giving an actual answer on port container cap questions reaches new low in QT today.” What a disgrace.

Worse still are intimations that should Newcastle ever exceed its mega cap, the owners of Port Botany will be financially compensated. This makes the development of a container terminal at Newcastle very difficult. Restricting port activity in Newcastle protects the container monopoly at Port Botany from facing competition. Preserving the monopoly at Port Botany is how the Government inflated its sale price—it fattened the pig when it was privatised. Restricting activity at Newcastle and protecting Botany’s monopoly is market rigging by the New South Wales Government at the highest level. Ports are strategic assets for open trading economies like ours. Many of the goods we consume arrive in containers. The port should be freely competing for sea trade cargo. I want Newcastle to be a vibrant, smart city that nurtures creativity and innovation that attracts investment. Premier Baird must be held accountable for hurting Newcastle and its prospects.

Mr MATT KEAN (Hornsby—Parliamentary Secretary) [6.11 p.m.]: I appreciate the member for Newcastle has passion for his community but while he is entitled to his own opinions, he is not entitled to his own facts. The reality is that the proceeds from the sale of the Port of Newcastle are going exactly where the member for Newcastle wants them—back into Newcastle. In addition to the $120 million allocated by the Government for the revitalisation of the Newcastle central business district, proceeds to the value of $340 million is being allocated for the project. The only flaw in the argument made by the member for Newcastle is that he voted against the money going to Newcastle in the first place.

ACTING-SPEAKER (Mr Bruce Notley-Smith): Order! The member for Newcastle will restrain himself.

Mr MATT KEAN: I appreciate that the member is advocating for his community and that he is passionate about achieving the best deal for it, but the money is flowing back to Newcastle for its revitalisation. It is long overdue because it was put on hold by the former Labor Government.

———-
LEGISLATIVE ASSEMBLY 13 August 2015

1030—LEASE OF THE PORT OF NEWCASTLE

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

How much of the $1.75 billion from the long term lease of the Port of Newcastle has been spent in Newcastle?

16 September 2015

Answer—

(1) Details of the Restart NSW projects can be found at insw.com⁄restart-nsw.aspx.

LEGISLATIVE ASSEMBLY 4 August 2015

0765—CAP ON CONTAINER MOVEMENT

Mr Tim Crakanthorp to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council—

1. Does a cap on container movement currently apply to the Port of Newcastle?

(a) If so, does the Government charge a fee for each container shipped through the Port of Newcastle above the prescribed cap?

(b) Is that fee paid as compensation to the operator of Port Botany?

8 September 2015

Answer—

I am advised:

The terms of the Port Botany transaction are consistent with the NSW Freight and Ports Strategy which was released in 2013. The Port Botany lease is a public document.

The details of the container arrangements in the Port Commitment Deeds are commercial in confidence.

There is no legislated container cap at the Port of Newcastle.

Comment:

Q: 1. Does a cap on container movement currently apply to the Port of Newcastle?

The answer is yes. A cap applies to the number of containers that may be moved through the Port of Newcastle without compensation being payable to NSW Ports.

Q: If so, does the Government charge a fee for each container shipped through the Port of Newcastle above the prescribed cap?

The answer is yes. The fee is charged to fund compensation payable to NSW Ports. Compensation is payable to NSW Ports when the cap is exceeded and container ships use the Port of Newcastle instead of Port Botany, as detailed in this document.

Q: Is that fee paid as compensation to the operator of Port Botany?

The answer is yes.

LEGISLATIVE ASSEMBLY 4 August 2015

0794—LEASE SCOPING STUDIES

Ms Jodi McKay to the Treasurer, and Minister for Industrial Relations—

1. Were scoping studies prepared for the transactions to lease Port Botany, Port Kembla and the Port of Newcastle?

(a) If not, why not?

(b) If so, will the Minister release the scoping studies considering that the transactions have now been completed?

8 September 2015

1.1 I have advice that there were.

(a)N⁄A.

(b) Scoping study documents are commercial in confidence documents. It is standard government practice not to release scoping studies to ensure value for money for NSW taxpayers is optimised.

Comment: Ms Berejiklian said on 9 June 2015:

The scoping study for the transaction included analysis of the freight transport task, landside logistics chains, container demand patterns and logistics costs across the State.

The Hon. Mike Baird MP was NSW Treasurer when Morgan Stanley was appointed on 14 December 2011 to undertake a Scoping Study for leasing Port Botany. One of the “rules” the Treasurer issued for this study was an unlegislated “cap on numbers” at the Port of Newcastle. This “cap on numbers” was disclosed by The Hon. Duncan Gay MLC on 17 October 2013. Details are contained in this document.

There is no mention of a “cap on numbers” at the Port of Newcastle, or a fee for exceeding it, in the “NSW Freight and Ports Strategy” dated November 2013; the “Draft Strategy” dated November 2012; and, the “Discussion Paper” dated February 2012.

 

LEGISLATIVE ASSEMBLY 25 June 2015

0701 CAP ON CONTAINER MOVEMENT—Mr Tim Crakanthorp to ask the Premier, and Minister for Western Sydney—

Does a cap on container movement currently apply to the Port of Newcastle?

(a) If so, does the Government charge a fee for each container shipped through the Port of Newcastle above the prescribed cap?

(b) Is that fee paid as compensation to the operator of Port Botany?

30 July 2015

Answer:

Given this question relates to the portfolio of the Minister for Roads, Maritime and Freight, I have referred this question to Minister Gay.

Comment: The Hon. Mike Baird MP was Treasurer when Morgan Stanley was appointed on 14 December 2011 to undertake a Scoping Study for leasing Port Botany. One of the “rules” the Treasurer set for this Scoping Study was a “cap on numbers” at the Port of Newcastle. This “cap on numbers” was disclosed by The Hon. Duncan Gay MLC on 17 October 2013. Details are contained in this document.

LEGISLATIVE ASSEMBLY 4 June 2015

0490 PORT OF NEWCASTLE—Mr Tim Crakanthorp to ask the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council—

Does the cap on container movements at the Port of Newcastle still exist?

(a) If so, is the cap on container movements lawful?

(b) Is the cap on container movements enforceable?

9 July 2015

Answer:

I am advised:

The container arrangements at the Port of Newcastle are consistent with the NSW Freight and Ports Strategy which was released in 2013.

Comment: There is no mention of a “cap on numbers” at the Port of Newcastle, or a fee for exceeding it, in the “NSW Freight and Ports Strategy” dated November 2013; the “Draft Strategy” dated November 2012; and, the “Discussion Paper” dated February 2012.

Container terminal policy in NSW is for the state government to compensate NSW Ports every time a container ship visits the Port of Newcastle that otherwise would visit Port Botany. The government sees no need to put any funds in place because there is no container terminal at the Port of Newcastle and the government’s contractual  “cap on numbers” will not be extended.

This “cap on numbers” is 30,000 container movements per year, adjusted increasing by six per cent per year. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss.

This “cap on numbers” is confidential and cannot be examined for lawfulness, enforceability and benefit. It was imposed when former Treasurer, The Hon. Mike Baird MP, announced the appointment of Morgan Stanley as the government’s financial advisor for leasing Port Botany on 14 December 2011.

A “cap on numbers” was a “rule” the government set for a Port Botany lease “Scoping Study”, as disclosed by The Hon. Duncan Gay MLC on 17 October 2013. Mr Gay disclosed that the government did not envisage a need to put any funds in place to pay compensation to the Port Botany leaseholder when he answered this question from The Hon. Adam Searle MLC:

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?

NSW Treasurer, The Hon. Gladys Berejiklian MP, does not consider the unlegislated “cap on numbers” to be a “disincentive or obstacle” to building a container terminal at the Port of Newcastle. At a NSW Budget Estimates hearing on 3 September 2015, Ms Berejiklian was asked:

Question 29: 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 29 September 2015:

I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.

Ms Berejiklian’s disclosure overturns government policy as announced by Mr Baird on 27 July 2012:

The development of intermodal terminals across South and West Sydney, [sic] the Government’s freight strategy to be released later in 2012 would seek to develop Port Kembla as the logical next long term tranche of container capacity after Port Botany.

In February 2013, government policy was described by Newcastle Port Corporation in the following terms:

In July 2012 the NSW Government announced that Port Kembla will be the logical next long-term tranche of container capacity after Port Botany. In accordance with the government’s announcement, subject to any relevant government approvals, any future container terminal development at Newcastle will occur only once Port Botany and Port Kembla are fully developed and developable handling capacity is fully utilised at both Port Botany and Port Kembla. (Newcastle Port Corporation, Draft Strategic Development Plan for the Port of Newcastle, February 2013, page 23)

In statement to media on 1 May 2014, NSW Treasury described government policy in the following terms:

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.

Ms Berejiklian disclosed that a container terminal can be built at the Port of Newcastle at any time, including immediately, if Port of Newcastle Investments “wished to do so”.

LEGISLATIVE COUNCIL 5 May 2015

0001—Treasurer—PORT OF NEWCASTLE

Dr Faruqi to the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council representing the Treasurer, and Minister for Industrial Relations—

Question:

1.

(a) Is compensation payable to the Port Botany leaseholder if container movements exceed an annual threshold at the Port of Newcastle?

(b) If so, what is the annual threshold?

(c) What is the amount of compensation per twenty-foot equivalent unit (TEU)?

9 June 2015

Answer:

(a) The terms of the Port Botany transaction are consistent with the NSW Freight and Ports Strategy which was released in 2013. The Port Botany lease is a public document.

(b) The details of the container arrangements in the Port Commitment Deeds are commercial in confidence.

(c) Please see the answer to question 1 (b).

Comment: The Hon Duncan Gay MLC disclosed that compensation is payable to the Port Botany leaseholder in answer to a question from The Hon. Adam Searle MLC on 17 October 2013.

The government imposed a contractual “cap on numbers” at the Port of Newcastle as detailed in this document.

The “cap on numbers” is estimated to be 30,000 container movements per year, adjusted for CPI. To pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Compensation is not payable to NSW Ports until the “cap on numbers” at the Port of Newcastle is exceeded by container ships using this port instead of Port Botany.

Question:

2.

(a) Is the Port of Newcastle leaseholder required to pay the Government a fee for container movements through the Port of Newcastle on the same or similar terms as the Government is required to compensate the Port Botany leaseholder?

(b) If so, when did the Government undertake to pay compensation to the Port Botany leaseholder and to impose a fee on the Port of Newcastle leaseholder?

Answer:

(a) The terms of the Port of Newcastle transaction are consistent with the NSW Freight and Ports Strategy which was released in 2013. The Port of Newcastle lease is a public document.

(b) Please refer to the answer to questions 1 (a) and 2(a).

Comment: As for 1. above. Presumably, agreement to pay compensation was in place when Port Botany lease negotiations concluded on 12 April 2013. There is no disclosure of a “cap on numbers” at the Port of Newcastle in the Strategy.

Question:

3.

How many containers must be moved through Port Botany and Port Kembla before an extension is allowed in the number of container movements at the Port of Newcastle that do not attract the compensation payment and fee respectively?

Answer:

Please refer to the answers to questions 1 (a) and 2(a). The details of the Port Commitment Deeds are commercial in confidence.

Comment: Mr Gay disclosed, on 17 October 2013, that “the only time an extension is allowed [to the “cap on numbers” at the Port of Newcastle] is when a specific number is reached and is tripped in Port Botany and Port Kembla”. In a media statement on 1 May 2014, NSW Treasury referred to Port Botany and Port Kembla capacity becoming “full”:

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.

In February 2013, Newcastle Port Corporation noted:

In July 2012 the NSW Government announced that Port Kembla will be the logical next long-term tranche of container capacity after Port Botany. In accordance with the government’s announcement, subject to any relevant government approvals, any future container terminal development at Newcastle will occur only once Port Botany and Port Kembla are fully developed and developable handling capacity is fully utilised at both Port Botany and Port Kembla. (Newcastle Port Corporation, Draft Strategic Development Plan for the Port of Newcastle, February 2013, page 23)

Question:

4.

(a) Is the purpose of the fee charged of the Port of Newcastle leaseholder to constrain the number of containers passing through the Port of Newcastle?

(b) If not, what is the purpose of the fee?

Answer:

(a) Please refer to the answer to question 2(a).

(b) Please refer to the answer above.

Comment: The unlegislated “cap on numbers” at the Port of Newcastle is estimated to be 30,000 container movements per year, adjusted for CPI. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss. Shipping lines would not use the Port of Newcastle and pay $200 per container when the charge at Port Botany is $100 per container. The effect of a fee on container movements at the Port of Newcastle is to make a container terminal commercially unviable and, therefore, a terminal will not be built.

Question:

5.

(a) Is the purpose of the fee charged of the Port of Newcastle leaseholder to prevent development of a container terminal at the Port of Newcastle?

(b) If not, what is the purpose of the fee?

Answer:

(a) Please refer to the answer to question 2(a).

(b) Please refer to the answer above.

Comment: See comment 4 above.

Question:

6.

Did the Government abolish the cap on container movements at Port Botany to increase the value of the lease to potential purchasers?

Answer:

Please refer to former Treasurer Baird’s second reading speech on introducing the Ports Assets (Authorised Transactions) Bill 2012.

Comment: In his second reading speech for the “Ports Assets (Authorised Transactions) Bill” on 17 October 2012, The Hon. Mike Baird said:

By allowing for the throughput limit to be removed, the Government is ensuring that taxpayers receive value for the investment, which has been made already; aligns Port Botany with major ports around the world, none of which has such a cap; and allows the State to receive full value for the lease.

Leasing Port Botany enabled repaying Sydney Port Corporation’s residual debt of $622 million (in 2012).

The ACCC said, on 25 June 2014 (p.38):

The ACCC remains concerned over arrangements designed to maximise proceeds received by a government by reducing the prospect of competitive provision of port services, of which the leasing of Port Botany and the Port of Newcastle were examples.

The Sydney Morning Herald reported on 31 July 2012:

THE state government will allow unrestricted container movements from Port Botany as a carrot to the private sector bidding for the port, a move the opposition says will worsen congestion on some of Sydney’s most clogged roads.

The Treasurer, Mike Baird, confirmed the government intends to lift the existing cap of 3.2 million container movements as part of the transaction of the port in a 99-year lease.

The cap was established following widespread expansion of the port under the former Labor government and fears that unrestricted movement would worsen congestion.

But the adviser to the state government on the port sale, investment bank Morgan Stanley, told the government the sale price would be more than $1 billion higher if the cap was lifted.

Mr Baird said the cap needed to be removed in the short to medium term. ”On current estimates, Port Botany is likely to reach the cap by approximately 2017 – many years earlier than originally anticipated,” he said. ”The removal of the cap is in line with the recommendations of the scoping study to get the best outcome for NSW taxpayers.”

It was reported that there was a “marked increase” between indicative bids for Port Botany/ Kembla between December 2012 and April 2013. “The Australian” newspaper wrote on 21 June 2013:

What transpired was one of the closest races for a major asset seen in Australia. Research by the deal makes it clear that there was a marked increase between the indicative bids given to the government advisers in December [2012] and the final numbers submitted in April [2013]. In the end, according to sources, the top two contenders were separated by less than $20 million.

“The Australian Financial Review” described the Port Botany cap as “antiquated” in commentary about the Port Botany lease, on 3 January 2014:

There were two important reasons the [leasing] process had attracted four seemingly serious offers.

…The second reason was Baird’s decision to scrap a cap limiting the number of containers that could be moved at the ports. The antiquated rule was even more silly, given the NSW government had just spent $1 billion expanding the port by a third. This meant bidders were offered a near monopoly on container shipping in NSW with increased capacity. Port Botany handles almost three-quarters of the two million containers that move through the state’s ports, transporting everything from furniture to heavy machinery.

Mr Baird did not mention an unlegislated “cap on numbers” at the Port of Newcastle or payment of compensation to the Port Botany lessee in his second reading speech on 17 October 2012:

The vast majority—some 85 per cent of all containers—has an origin or destination within 40 kilometres of the port. It is clear that the ongoing imposition of the cap on throughput at Port Botany would result in a massive inefficiency in the future that would greatly constrain the State’s economy.

Port Botany’s dominant market position relies exclusively on its monopoly status as the state’s only container port. Most containers are trucked within 40 km of Port Botany to minimise cost. Government policy supports an increase in container transportation by truck from 2 million per year in 2014 to 5.4 million per year by 2045.

Government policy supports railing 3 million containers in 2045 up from 0.3 million in 2014. But achieving this 10-fold increase in rail transportation requires building a new rail freight line, the “Western Sydney Freight Line”, between Chullora and Eastern Creek. The cost, $1 billion, is unfunded. Additionally, a new rail freight line is required between Port Botany and Mascot. This line, too, is unfunded. The government is unable to demonstrate how a major increase in rail transportation will be accomplished.

The optimum use of Sydney’s existing rail network is people, not freight. Deloitte Access Economics commented extensively on the cost comparison between road and rail for freight transportation in its June 2011 report, “The True Value of Rail”, see extracts.

Question:

7.

Did the Government agree to compensate the Port Botany leaseholder in respect of container movements at the Port of Newcastle to preserve the commercial value of the Port Botany lease?

Answer:

The terms of the Port Botany transaction reflect the Government’s NSW Freight and Ports Strategy which was released in 2013.

Comment: Compensation is payable to NSW Ports when container movements at the Port of Newcastle exceed the unlegislated and confidential, “cap on numbers” at the Port of Newcastle. It is presumed that paying compensation preserves the commercial value of the Port Botany lease.

The “NSW Freight and Ports Strategy” reflects the Scoping Study and its unlegislated “cap on numbers” at the Port of Newcastle. There is no mention of a “cap on numbers” at the Port of Newcastle, or a fee for exceeding it, in the “NSW Freight and Ports Strategy” dated November 2013; the “Draft Strategy” dated November 2012;  and, the “Discussion Paper” dated February 2012.

Question:

8.

(a) Was a cost-benefit study of the proposal to compensate the Port Botany leaseholder if container movements exceed an annual threshold at the Port of Newcastle undertaken?

(b) If so, will the Government release it?

Answer:

(a) The scoping study for the transaction included analysis of the freight transport task, landside logistics chains, container demand patterns and logistics costs across the State.

(b) The scoping study is Commercial in Confidence.

Comment: As disclosed in questions 10 and 11 below, the government transport planning section, “Transport for NSW”, did not “specifically” analyse (1) the additional costs to the Northern New South Wales economy to require goods to be transported to Port Botany by truck for export as opposed to the Port of Newcastle; and (2) the additional costs to the Northern New South Wales economy to require imported goods to be transported between Port Botany and western Sydney before being transported by truck to northern New South Wales.

However, the government is able to disclose its “non-specific” analysis.

Presumably, Morgan Stanley advised the government about the transport, economic and commercial implications of applying an unlegislated “cap on numbers” at the Port of Newcastle, and charging a fee for exceeding it. However, such information not has been disclosed by the government for analysis because the Scoping Study is confidential. Confidentiality also prevents the unlegislated “cap on numbers” at the Port of Newcastle from being examined for lawfulness and enforceability.

On 3 September 2015, Ms Berejiklian was asked:

25. Is there a cap on container movements at the Port of Newcastle?

a. If so, what is it? Is it a charge per container?
b. If the cap is breached, is a fee, fine or charge imposed? Who pays it? Who do they pay the money to?
c. If the cap is breached, are any monies paid to the operators of Port Botany and/or Port Kembla? If so, how much is paid? Who pays it?
d. When were these arrangements agreed?

Ms Berejiklian answered on 29 September 2015:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

Ms Berejiklian did not acknowledge the unlegislated “cap on numbers” at the Port of Newcastle.

Question:

9.

What will be the impact on the New South Wales economy of preventing competition between New South Wales ports for handling containers?

Answer:

The New South Wales ports are not prevented from competing for handling of containers.

Comment: The unlegislated “cap on numbers” at the Port of Newcastle prevents competition on equal terms with Port Botany.

This “cap on numbers” is estimated to be 30,000 container movements per year, adjusted for CPI. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss.

The ACCC said, on 25 June 2014 (p.38):

The ACCC remains concerned over arrangements designed to maximise proceeds received by a government by reducing the prospect of competitive provision of port services, of which the leasing of Port Botany and the Port of Newcastle were examples.

Ms Berejiklian’s answer to a similar question asked on 5 May 2015, was:

The New South Wales ports are not prevented from competing for handling of containers.

Question:

10.

What are the estimated additional costs to the Northern New South Wales economy to require goods to be transported to Port Botany by truck for export as opposed to the Port of Newcastle?

Answer:

This question should be referred to the Minister for Roads, Maritime and Freight.

When this question was directed to Mr Gay on 23 October 2014, the answer provided was:

Specific analysis of this nature has not been undertaken by Transport for NSW. However, a significant proportion of exports originating in northern NSW are bulk exports, which can be processed at the Port of Newcastle.

Question:

11.

What are the estimated additional costs to the Northern New South Wales economy to require imported goods to be transported between Port Botany and western Sydney before being transported by truck to northern New South Wales?

Answer:

This question should be referred to the Minister for Roads, Maritime and Freight.

When this question was directed to Mr Gay on 23 October 2014, the answer provided was:

Specific analysis of this nature has not been undertaken by Transport for NSW. However, 85 percent of Port Botany container imports have a destination within the greater Sydney metropolitan area.

Comment on answers 10 and 11: The government transport planning section, “Transport for NSW”, did not undertake “specific analysis”. However, the Minister is able to disclose non-specific analysis of: (1) the additional costs to the Northern New South Wales economy to require goods to be transported to Port Botany by truck for export as opposed to the Port of Newcastle; and (2) the additional costs to the Northern New South Wales economy to require imported goods to be transported between Port Botany and western Sydney before being transported by truck to northern New South Wales.

Ms Berejiklian disclosed in answer to question 8 above:

The scoping study for the [Port Botany lease] transaction included analysis of the freight transport task, landside logistics chains, container demand patterns and logistics costs across the State.

Morgan Stanley’s analysis for the Scoping Study may or may not have included implications of the government’s unlegislated “cap on numbers” at the Port of Newcastle for the northern NSW economy. However, container freight policy is based on this Scoping Study. The government decided against developing a container terminal at the Port of Newcastle after considering this confidential Scoping Study, as disclosed on 27 July 2012. A container terminal at the Port of Newcastle would be competitive without a government fee, and an unlegislated “cap on numbers” at this port.

Question:

12.

What will be the impact on the New South Wales economy of predicating future growth in Port Botany container movements on transportation by truck?

Answer:

This question should be referred to the Minister for Roads, Maritime and Freight.

Comment: When Mr Gay was asked a similar question on 23 October 2014, the answer provided was:

It is necessary to model road and rail forecasts for container movements to and from Port Botany, so the NSW Government can respond with appropriate policy levers, and so industry can respond with appropriate business models. NSW Government forecasts of road and rail container movements take into account our commitment to double the 2011-12 container rail mode share by 2020.

In February 2014 the NSW Bureau of Transport Statistics released its forecast of container movements to and from Port Botany. These estimates were in line with estimates by NSW Ports. NSW Ports estimated container movements by truck between the port and western Sydney to increase from 2 million in 2014 to 5.4 million in 2045. Movement of containers by rail is estimated to increase from 0.3 million in 2014 to 3 million by 2045. No specific analysis is provided for how the increase in container transportation by rail will be achieved, or funded.

The NSW government is able to disclose the economic implications of trucking containers between Port Botany and western Sydney destinations. Deloitte Access Economics evaluated the cost of truck transportation compared with rail. This report indicates that the full cost of freight transportation by road is not recovered, see report extracts.

The RTA reports that a container truck using the M5 East westbound tunnel is the equivalent of six passenger cars and the equivalent of three passenger cars using the eastbound tunnel. Container trucks are 2 per cent of vehicle use on the M5 East (NSW Ports). In the eastbound tunnel, this equates to 6 per cent of capacity and in the westbound tunnel it equates to 3 per cent of capacity. In 2045, when container trucks will require 4 per cent of current M5 East capacity, this will equate to 12 per cent of the current westbound tunnel and 6 per cent of the eastbound tunnel.

Increasing the rail component of container transportation requires completion of three major rail projects.

Stages 2 and 3 of the Northern Sydney Freight Corridor (NSFC), costing $5 billion, would provide the equivalent of a dedicated rail freight line between Newcastle and Strathfield, which is required by 2028 to meet predicted freight demand. There are no funds available for building stages 2 and 3 of the NSFC. Presumably, these stages will not be built. An option for the government to increase freight capacity on the rail line between Newcastle and Strathfield is to reduce passenger services.

The Western Sydney Freight Line, between Chullora and Eastern Creek, costing about $1 billion, is required to rail containers between Port Botany and Eastern Creek, which is the proposed site for an intermodal terminal after Moorebank. However, there are no funds available for building the Western Sydney Freight Line. Presumably, this line will not be built.

A new rail freight line is required between Port Botany and Mascot. Funding for this line has not been disclosed.

Question:

13.

What is the container-carrying capacity of the rail line serving Port Botany?

Answer:

This question should be referred to the Minister for Roads, Maritime and Freight.

When Mr Gay was asked this question on 23 October 2014, the answer provided was:

The Australian Rail Track Corporation is the network operator of the Port Botany rail line, which forms part of the Metropolitan Freight Network. Any questions relating to the network capacity are a matter for the Australian Rail Track Corporation.

Comment: Mr Gay did not disclose the container carrying capacity of the rail line serving Port Botany.

In answer to question 8, Ms Berejiklian said:

The scoping study for the [Port Botany lease] transaction included analysis of the freight transport task, landside logistics chains, container demand patterns and logistics costs across the State.

The confidential Scoping Study was deficient if it failed to estimate the container-carrying capacity of the rail line serving Port Botany. This Scoping Study was the basis of the government deciding on 27 July 2012 not to develop a container at the Port of Newcastle. The government considers a container terminal at the Port of Newcastle is “uneconomic”, as disclosed on 22 August 2014.

In 2014, 0.3 million containers were railed between Port Botany and western Sydney. NSW Ports estimates this number will increase to 3 million by 2045. Building the increased capacity will require a new rail freight line between Port Botany and Mascot; a new rail freight line – the Western Sydney Freight Line – between Chullora and Eastern Creek; and, completing stages 2 and 3 of the Northern Sydney Freight Corridor. No plans have been disclosed for building or financing these lines, or how the increased use of rail will be accomplished

Question:

14.

(a) Will the Government fund the Western Sydney Freight Line?

(b) If not, who will fund this line?

Answer:

This question should be referred to the Minister for Roads, Maritime and Freight.

Comment: When Mr Gay was asked this question on 23 October 2014, the answer provided was:

This is yet to be determined.

The government is unable to fund the Western Sydney Freight line, between Chullora and Eastern Creek, and no other source of funds has been identified. This line is not required if a rail freight bypass is built between the Port of Newcastle and Glenfield and is paid for by railing containers and general freight to intermodal terminals in western Sydney. The cost of the Western Sydney Freight Line will be in the order of $1 billion.

Question:

15.

When will the Commonwealth Government respond to the Government’s request for funds to build stages 2 and 3 of the Northern Sydney Freight Corridor?

Answer:

This question should be referred to the Minister for Roads, Maritime and Freight.

Comment: When Mr Gay was asked this question on 23 October 2014, the answer provided was:

This is a matter for the Commonwealth Government.

Comment: The Commonwealth Government has not responded to the NSW government’s request to funds stages 2 and 3 of the NSFC costing approximately $5 billion. It is unlikely the Commonwealth will fund this line. The stages are required to be finished before 2028 to provide the equivalent of a dedicated rail freight line between Newcastle and Strathfield, using the existing passenger line corridor. The NSFC is not required if a rail freight bypass is built between the Port of Newcastle and Glenfield and paid for by railing containers and general freight.

An option for the NSW government is to increase freight capacity on the NSFC by reducing passenger capacity. Alternatively, the government can cancel plans for stages 2 and 3 of the NSFC, and remove all freight so that all capacity is used for passengers. This can be accomplished by developing a rail freight bypass line, between the Port of Newcastle and Glenfield.

A report by Deloitte Access Economics “provides evidence on the level of the benefits not captured in prices or costs that arise from shifting passengers or freight from road to rail”. The following are extracts from this report, ”The true value of rail, 3 June 2011”:

page ii

Benefits of rail

A key part of ensuring correct investment decisions are made is to recognise the true value of rail. This report provides evidence on the level of the benefits not captured in prices or costs that arise from shifting passengers or freight from road to rail. The benefits identified are:

Passenger transport:

            • Road travel produces more than 40% more carbon pollution than rail travel per passenger kilometre.
            • Road transport generates almost eight times the amount of accident costs as rail transport does.
            • In the longer term, high speed rail provides the potential to alleviate pressures that will emerge to move people between major cities and along east coast corridors as Australia’s population grows.

Urban passenger transport:

            • An additional commuter journey by rail reduces congestion costs alone by between around $2 and $7.
            • For every passenger journey made on rail rather than road in Australia’s four largest cities, between $3 and $8.50 can be saved in congestion, safety and carbon emission costs.
            • In Sydney, for example, if rail absorbed 30% of the forecast increase in urban travel then congestion, safety and carbon emission costs could be reduced by around $1 billion a year by 2025.

Interstate freight transport:

            • Heavy vehicle road freight users do not face the full maintenance costs that they cause. Under-recovery of these costs has been estimated at between $7,000 and $10,500 per truck each year (Productivity Commission 2006 and NTC 2006). The National Transport Commission (NTC) has recommended changes which seek to address this issue.
            • Freight moved between Melbourne and Brisbane by rail instead of road reduces carbon costs by around $56 per container and reduces accident costs by around $92 per container.
            • Along the North-South freight corridor, for example, if rail was to achieve a 40% share of the market then savings, in terms of carbon pollution and accidents, would currently be around $300m a year or $630m a year by 2030.

Freight transport within urban centres:

            • Along with the use of the mass transit of people, a greater use of rail for freight within, especially, Sydney and Melbourne will be needed to alleviate the increasing congestion on road networks. Environmental and safety benefits would also accrue.
            • The NSW and Victorian Governments have recognised the need to develop more effective rail freight services within their cities and have set targets accordingly. These goals aim to ease congestion on arterial roads and improve use of existing rail infrastructure and port land. These costs have tangible effects on the lives of all Australian’s and the economy. Congestion eats away at leisure time and reduces economic productivity as workers and goods take longer to reach their destination and cost more to transport. Carbon pollution creates social costs to be borne by future generations who will face the duel costs of a changed climate and the need to reduce emissions. In addition to deaths caused by vehicle accidents, injuries create ongoing effects in terms of pain, reduced ability to work and the need for care.

page iv

There are currently some key bottlenecks holding back the efficient use of rail in Australia. Freight movements between Melbourne and Brisbane are constrained by congestion in northern Sydney. The North Sydney Freight Corridor would go a long way to addressing this issue. Fixing this key point of infrastructure is estimated to cost around $4.4 billion today. A number of other projects on this route such as modern intermodal facilities in Sydney and Melbourne and many minor adjustments to the track might also be needed.

These investments are costly but will help drive a modal shift towards rail freight which creates benefits from reduced carbon pollution and accidents. If rail was to achieve a 40% market share then by 2030 the savings from accidents and carbon pollution could be worth well over $600 million a year.

The key choke point for freight is intimately linked with Sydney’s metropolitan network. The metropolitan network is currently constrained by capacity through the city. Expanding capacity in the city, through the Western Express project, would currently cost around $4.5 billion. Again, there are large savings in carbon pollution, accident and congestion costs which work to offset the initial infrastructure investment. If a congestion charge and carbon tax were introduced, this could result in around 150 million extra rail journeys a year. All these extra passengers would reduce carbon pollution, congestion and accident costs on the roads by around $1.2 billion a year.

page 50

5.1.3 Required investments

The initial investment required to free up capacity on the north-south corridor is to establish the northern Sydney freight corridor (NSFC). A project outline for the NSFC has recently been made by Transport NSW (2010a). The proposed NSFC is not a separate freight line but is, instead, a series of augmentations to the existing shared network which would allow passenger and freight trains to interoperate more freely and would therefore create additional freight train paths. The proposed NSFC would operate in three stages, initially increasing the daily number of train paths from 16 to 26 in both directions while stage two would increase this to at least 33 paths in both directions. Stage three would transition towards a dedicated freight line

The NSFC is forecast to cost around $1.2bn for stage one, $3.4bn for stage two and $3.2bn for stage three, for a total of around $7.8bn. This expenditure would be spread over the next 12 years and so, in present value terms the capital cost is around $5.2bn. Of this, $0.8bn has already been allocated under the Nation Building program. This leaves an unfunded capital cost of around $4.4bn in present value terms.

page 65

On the north-south corridor, where there is significant room for rail to grow its market share, it is currently being held back by inefficient network infrastructure which leads to reliability issues. The main constraint on the north-south corridor is currently in the Sydney metropolitan network. Trains attempting to move through the network must avoid peak passenger periods. This is complicated by a lack of necessary infrastructure in the north of Sydney. There is currently only a single extra freight train path available each day heading north out of Sydney and this path is likely to be used up within the next year or two. The north-south corridor is therefore facing imminent capacity constraints which will hamper any growth in rail freight along the east coast. This constraint could be alleviated with investment in the north Sydney rail freight corridor, which has been proposed to Infrastructure Australia but is currently only partially funded.

Question:

16.

Are there state or Commonwealth Government funds available for building the Western Sydney Freight Line and stages 2 and 3 of the Northern Sydney Freight Corridor?

Answer:

This question should be referred to the Minister for Roads, Maritime and Freight.

Comment: When a similar question was asked of Mr Gay on 23 October 2014, the answer was:

Transport for NSW has allocated funding for planning works associated with the Western Sydney Freight Line. Residual funds from stage one of the Northern Sydney Freight Line have been allocated for planning for stage two.

There are no funds allocated for building stages 2 and 3 of the Northern Sydney Freight Corridor at a cost of around $5 billion. Without funding, the stages will not be built.

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?

16 January 2015

Answer:

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.

Comment: The questions are capable of being answered “yes” or “no”. For policy comment, see Home Page.

Question:

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?

Comment: It is not known what, if anything, the government advised the ACCC about an unlegislated “cap on numbers” at the Port of Newcastle. The ACCC would have been aware of an unlegislated “cap on numbers” at the Port of Newcastle from the Hansard of 17 October 2013 The government capped the number of containers for which there is no fee payable by Port of Newcastle Investments to the government. When this “cap” is exceeded and container ships use the Port of Newcastle instead of Port Botany, the government is liable to pay compensation to NSW Ports for every container above the “cap”.

The ACCC became aware of restrictive clauses in the ports leasing arrangements from a report in The Newcastle Herald on 11 May 2014. The ACCC said, on 25 June 2014 (p.38):

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”.

Question:

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

Comment: Compensation is payable to NSW Ports when an unlegislated “cap on numbers” at the Port of Newcastle is exceeded, as disclosed by The Hon. Duncan Gay MLC on 17 October 2013 and container ships visit the Port of Newcastle instead of Port Botany.

Question:

(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?

Comment: The government has not disclosed that it advised bidders to consult the ACCC in relation to the unlegislated “cap on numbers” at the Port of Newcastle, as disclosed by Mr Gay on 17 October 2013. Additionally, the ACCC has not disclosed if bidders sought information from the ACCC in respect of the unlegislated “cap on numbers” at the Port of Newcastle.

It is improbable that bidders would not have examined a fee on container movements at the Port of Newcastle for conformity to Section 45 of the “Competition and Consumer Act 2010” (CCA). However, bidders might have been unaware that the government, trading as Newcastle Port Corporation (NPC), was conducting negotiations with Anglo Ports pursuant to a tender conducted by NPC in 2010. NPC was carrying on a business for the purpose of the CCA and the government was obliged to disclose to Anglo Ports changes to its requirements under the tender. NPC stopped carrying on a business for the purpose of the CCA on a specific date. The government refuses to disclose this date.

Question:

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

Comment: The unlegislated “cap on numbers” at the Port of Newcastle will reduce competition between ports in New South Wales for the container trade by providing for trade on unequal terms.

This “cap on numbers” at the Port of Newcastle  is estimated to be 30,000 container movements per year, adjusted for CPI. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when the government charges a fee of $100 per container for exceeding its “cap on numbers” at the Port of Newcastle. A container terminal would not be built to operate at a loss.

Question:

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?

Comment: The ACCC does not disclose what, if anything, it knows about an unlegislated “cap on numbers” at the Port of Newcastle. The ACCC does not disclose what, if anything, it has advised the government about a “cap on numbers” at the Port of Newcastle.

An example of advice the ACCC has given the government is included in ”Container stevedoring monitoring report No. 16” dated 30 October 2014, page 21:

(1) The structure and/or conditions of the sale should promote competition

The ACCC considers that the sale of port assets should promote competition where possible, for example by separating rather than integrating potentially competitive facilities and avoiding anti-competitive provisions from agreements with successful bidders.

For instance, once Port Botany and the Port of Newcastle were privatised, it was reported that:

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 Newcastle herald, 11 May 2014]

The ACCC notes that Port Kembla has been identified by the NSW Government as the location for the development of a future container terminal to augment the capacity of Port Botany when required and notes that the NSW Government considers that:

Port Kembla is naturally placed to accommodate Sydney’s future container growth when Port Botany reaches capacity, due to its proximity to Sydney as well as existing and planned transport links, including several intermodal facilities planned for south-west Sydney…

Importing containers through the Port of Newcastle is less attractive than importing them through Port Botany or Port Kembla due to the landside transport infrastructure upgrades that would be required and the port’s distance from Sydney’s logistics centres, which are located primarily in the Botany industrial area and in south-west and western Sydney.

While there may be legitimate reasons why a government would want to plan for port development, for example, given the significant investments in road and rail connections required to support a container port, any sale conditions designed to boost asset sale prices by reducing potential competitive pressures on the asset operator would be of concern to the ACCC.

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.

LEGISLATIVE ASSEMBLY 6 November 2014

6494—PORT OF NEWCASTLE AND PORT BOTANY LEASES

Mr Tim Crakanthorp to the Minister for Transport, and Minister for the Hunter representing the Minister for Roads and Freight, Minister for the North Coast, and Vice-President of the Executive Council—

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?

Answers 11 December 2014:

Questions 1 – 5:  This is a matter for the Treasurer.

Comment: On 12 December 2014, Mr Crakanthorp referred questions 1 – 5 to the Treasurer who answered them on 16 January 2015.

Question:

6.

Does the Government forecast a four-fold increase in container movements by truck between Port Botany and Western Sydney by 2046?

Answer: With the opening of new intermodal terminals in Western Sydney, it is anticipated that the growth in truck trips from Port Botany to Western Sydney will be lower than the overall growth at Port Botany.

Comment: In February 2014, the NSW Bureau of Transport Statistics estimated the number of container movements through Port Botany in 2046 at 10,851,400 with 64 per cent, or  6,944, 896 being transported by road.

NSW Ports estimates that containers trucked between Port Botany and western Sydney will increase from 2 million in 2014 to 5.4 million in 2045. By 2045, NSW Ports hopes to achieve 3 million containers on rail, compared with 0.3 million in 2014.

7. What steps is the Government taking to secure a corridor for a rail freight bypass of Sydney?

Answer: The Australian Government has commissioned Australian Rail Track Corporation to design and construct an inland rail route between Melbourne and Brisbane. A New South Wales Inter-agency Steering Group with representatives from core agencies will be established to provide whole of- government input from New South Wales.

Comment: The Inland Rail Line is for freight between Melbourne and Brisbane. A rail freight bypass of Sydney applies to Melbourne-Sydney freight and Brisbane-Sydney freight. Government rail bypass policy is for a line between Newcastle and Glenfield. Presumably, steps are being taken to secure a corridor for this rail freight bypass of Sydney.

A rail freight bypass is self-funding by railing containers between the Port of Newcastle and outer western Sydney, southern NSW and possibly Victoria. Road freight between Melbourne-Sydney and Brisbane-Sydney can be transferred to rail. Without a rail freight bypass, stages 2 and 3 of the Northern Sydney Freight corridor are required, costing $5 billion; the Western Sydney Freight Line is required, costing $1 billion; and a new rail freight line is required between Port Botany and Mascot.

A rail freight bypass removes the need for these lines and allows all of Sydney’s rail capacity to be used for passengers, with the significant economic benefits described by Deloitte Access Economics, see report extracts.

The following are government policy statements in relation to a rail freight bypass:

Northern Sydney Freight Corridor Scoping Phase Completion Report, 9 February 2012

page 37
Sydney rail bypass

As part of its options development phase, TCA considered alternatives for bypassing Sydney. Given the existing congestion on the Main North Line and restrictions on freight train movements into Sydney, a rail bypass may offer benefits if it can be constructed as a dedicated freight corridor capable of servicing all east coast markets. In order to provide at least four reliable paths per hour in each direction, the bypass would need to be double track from the outset.

More than 75% of road and rail interstate traffic entering the Sydney metropolitan area has its destination within Sydney. Consequently a bypass rail route would need dedicated links to the Metropolitan Freight Network and Sydney rail freight terminals (including Port Botany), in order to remove trains serving Sydney from the congested Main North Line. These include through-services between Melbourne and Brisbane that add and detach wagons in Sydney. This occurs regularly as the traffic volumes available to particular operators do not, at present, support separate services for each destination (refer to Figure 10).

A route could come off the Main South Line, in the vicinity of Glenfield, parallel to the alignment of the Westlink Motorway. Following completion of the SSFL, unrestricted freight access from that direction will be secured.

There is the possibility of a line further west between Campbelltown and Penrith. This is a much longer route that resembles the original proposal for a line from St Marys, intended to divert western coal around Sydney to the proposed Maldon-Dombarton Line and beyond to Port Kembla.

If freight rail connections are constructed from Leightonfield to a new rail freight terminal at Eastern Creek, it would be possible to link this facility directly to the northern portion of a Sydney rail bypass. This could provide access to the south if sufficient capacity was available on the SSFL.

Development of a suitable new rail alignment around the north of Sydney is a difficult task. It would involve the resumption of a large number of properties and require numerous grade separations of existing roads and water courses. In addition, it would impact areas of national parks. The route could be considered jointly with that for a far western Sydney road bypass. The differing requirements of the two modes in terms of alignments would, however, pose significant challenges to the possibility of a joint corridor. The rail curvature and gradients would have to be much gentler than that required for a road alignment, particularly if operating speeds of approximately 115 kilometres per hour are to be achieved.

Consideration would have to be given to how Sydney-bound freight trains might use a northern Sydney bypass line to avoid the existing route as, without re-routing these trains, the current problems with congestion on the existing Main North Line would remain. The Main West Line is already busy, particularly through Parramatta and is more constrained than the Main North corridor. Amplification of the Main West Rail Line in order to feed trains to a northern Sydney rail bypass would be very difficult. The concept of constructing a rail bypass around Sydney is therefore a long-term proposition. It needs to include a link to the metropolitan freight network and would require detailed alignment analysis, environmental impact assessment and route acquisition prior to commencement of construction. In order to be of benefit the entire project would have to be completed in one stage and would need to have a dedicated connection to an extended metropolitan freight network. Whilst it is premature to estimate the possible cost, it could be expected to run into many billions of dollars and could take in the order of 10-15 years to complete. Given the components of this project could not come online incrementally, the capacity benefits of this approach would not be realised until completion.

Northern Sydney Freight Corridor Strategic Review Report, July 2012

page 21
4.5 Potential medium to long-term alternatives

If demand in the Melbourne–Sydney and Sydney–Brisbane markets continues to grow considerably, an upgrade of the infrastructure through Sydney would be necessary. This would need to involve either further investment in the NSFC Program (realignment of the Main North Line), or construction of a new bypass route within the Sydney Basin.

page 24
Sydney rail bypass

As part of its options development assessment for the NSFC Program, TfNSW considered alternatives for bypassing Sydney. Given the existing congestion on the Main North Line and restrictions on freight train movements into Sydney, a rail bypass may offer benefits if it could be constructed as a dedicated freight corridor capable of servicing all East Coast markets. In order to provide at least four reliable paths per hour in each direction, the bypass would need to be double track from the outset.

More than 75 per cent of road and rail interstate traffic entering the Sydney metropolitan area has its destination within Sydney. Consequently, a rail bypass route would need dedicated links to the metropolitan freight network and Sydney rail freight terminals (including Port Botany), in order to remove trains serving Sydney, from the congested Main North Line. These trains include through-services between Melbourne and Brisbane that add and detach wagons in Sydney. This occurs regularly, as the traffic volumes available to particular operators do not, at present, support separate services for each destination (refer Figure 9).

A rail bypass could come off the Main South Line, in the vicinity of Glenfield, parallel to the alignment of the Westlink Motorway. Following completion of the SSFL, unrestricted freight access from that direction will be secured. There is also the possibility of a line further west between Campbelltown and Penrith. This is a much longer route that resembles the original proposal for a line from St Marys, to divert western coal around Sydney to the potential Maldon-Dombarton Line and beyond to Port Kembla. If freight rail connections are constructed from Leightonfield to a new rail freight terminal at Eastern Creek, it would be possible to link this facility directly to the northern portion of a Sydney rail bypass. This could provide access to the south if sufficient capacity was available on the SSFL.

Development of a suitable new rail alignment around the north of Sydney is a difficult task. It would involve the resumption of a large number of properties and require numerous bridges over existing roads and watercourses. In addition, it would impact areas of national park. The route could be considered jointly with that for a far western Sydney road bypass. However, the differing requirements of the two modes in terms of alignment would pose significant challenges to the possibility of a joint corridor. The rail curvature and gradients would have to be much gentler than that required for a road alignment, particularly if optimal operating speeds are to be achieved.

Consideration would also have to be given to how Sydney-bound freight trains might use a northern Sydney rail bypass to avoid the existing route as, without re-routing these trains, the current problems with congestion on the existing Main North Line would remain. The Main West Line is already busy, particularly through Parramatta, and this line is more constrained than the Main North Line corridor. Amplification of the Main West Line in order to feed trains to a northern Sydney rail bypass would be very difficult. The concept of constructing a rail bypass around Sydney is, therefore, a long-term proposition. As well as investigating an appropriate link to the metropolitan freight network, the option would require detailed alignment analysis, environmental impact assessment and route acquisition prior to commencement of construction. In order to be of benefit, the entire project would have to be completed in one stage and would need to have a dedicated connection to an extended metropolitan freight network. Whilst it is premature to estimate the possible cost, it could be expected to run into many billions of dollars and could take in the order of 10-15 years to complete. Given the components of this option could not come online incrementally, the capacity benefits of this approach would not be realised until completion.

Draft NSW Freight and Ports Strategy, November 2012

Case Study 10

Proposed long term corridors support freight growth and provide opportunities to move a greater share of freight around the Sydney metropolitan area on rail. Examples of such corridors include the Outer Sydney Orbital, Inland Rail Line, Western Sydney Freight Line and Maldon to Dombarton Rail Line.

The potential for a new Outer Sydney Orbital corridor has been considered for some time as the means to address the significant industrial development occurring in the west of Sydney.

The 2007 Pearlman Review into the F3 to M7 corridor selection recommended that work commence on the identification and reservation of a corridor for a new orbital link to the west of the current M7 Motorway.

Identifying a new Outer Sydney Orbital corridor and protecting it from incompatible development is an increasingly urgent priority, particularly as the corridor is of key strategic significance to both the road and the rail task.

While the corridor offers the potential to improve mobility between emerging suburbs and employment locations on Sydney’s fringe, it is also a key enabler in progressing the separation of the passenger and freight rail networks in the Sydney metropolitan area.

The initial driver for a dedicated freight network includes the interstate freight rail task, as this traffic is the most difficult to accommodate within a densely trafficked, metropolitan passenger system (see Action 2C). The movement of coal around Sydney is another potential driver that would facilitate alternatives to the congested Metropolitan Rail Network and, in particular, the Illawarra Line.

Analysis carried out by Infrastructure Australia suggests that a multi-modal corridor from Western Sydney north to the Central Coast and lower Hunter may provide a more effective long term connection between Sydney, the Illawarra and areas to the north.

An adaptive Outer Sydney Orbital corridor would support a new level of integrated transport planning. It would potentially allow four significant modal problems to be resolved through one integrated corridor. An Outer Sydney Orbital would:

            • Provide a dedicated rail freight line north from Sydney, beyond the current Northern Sydney Freight Corridor Project
            • Identify and reserve a corridor for the new orbital road link
            • Provide a Western Sydney Freight Line
            • Provide a corridor for an Inland Rail Route.

An additional consideration is that it may be possible for energy and water infrastructure to use this corridor, where it is sensible to do so.

NSW Freight and Ports Strategy, November 2013:

Case Study 13: (Same as Case Study 10 as contained in the draft strategy, November 2012)

NSW Freight and Ports Strategy, November 2013: Page 209

Other long term infrastructure projects such as the Outer Sydney Orbital and Western Sydney Freight Corridor are unlikely to commence construction within the next 10 to 15 years. However, work is needed to plan and implement corridor preservation requirements to expand network capacity.

Operational expenditure will also need to be directed to investigate key transport corridors benefiting freight. Identifying and protecting these corridors is imperative, as the land is already under pressure from urban growth and encroachment.

LEGISLATIVE COUNCIL 23 October 2014

0144—Treasurer—LEASES FOR PORT BOTANY, PORT KEMBLA AND PORT OF NEWCASTLE

Dr Kaye to the Minister for Fair Trading representing the Treasurer, and Minister for Industrial Relations—

1. In regard to compensation payable to NSW Ports, the Port Botany leaseholder, if container movements exceed an annual threshold at the Port of Newcastle:

a. what is the annual threshold?
b. how much compensation is payable per container?

2. Did the Government consult the Australian Competition and Consumer Commission when inserting compensation provisions into the leases for Port Botany, Port Kembla and Port of Newcastle?

3. Is the amount of compensation an amount between $76 per twenty-foot equivalent unit (teu) and $120 per teu, where $76 is the fee currently charged by NSW Ports for an export container and $120 is the fee currently charged for an import container?

4.

a. Is the Port of Newcastle leaseholder required to pay the Government a fee for container movements through the Port of Newcastle on the same or similar terms as the Government is required to compensate the Port Botany leaseholder?

If so, when did the Government undertake to pay compensation to the Port Botany leaseholder and to impose a fee on the Port of Newcastle leaseholder?

5. How many containers must be moved through Port Botany and Port Kembla before an extension is allowed in the number of container movements at the Port of Newcastle that do not attract the compensation payment and fee respectively?

27 November 2014

Answer—

This question should be re-directed to the Minister for Roads and Freight.

Comment: The questions were asked by The Hon. Dr Mehreen Faruqi of The Hon. Duncan Gay MLC, Minister for Roads and Freight, on 23 October 2014. Mr Gay answered on 27 November 2014 that the questions should be re-directed to the Treasurer. Dr Faruqi asked the Treasurer the questions on 5 May 2015 and they were answered.

The “Newcastle Herald” reported these responses on 16 December 2014.

Government accused of port deal “cover up”

THE state government has been accused of a ‘‘blatant attempt at a cover up’’ after two ministers claimed the other was responsible for answering questions about whether a secret cap exists on the number of containers that can be moved through the Port of Newcastle.

Roads and Freight Minister Duncan Gay and Treasurer Andrew Constance referred to each other identical questions lodged in State Parliament by two Greens MPs about whether compensation is payable to the lease holder of Port Botany if container movements through the Port of Newcastle exceed a threshold.

Mr Gay initially referred the string of questions put by Greens MLC Mehreen Faruqi to the Treasurer. Last week, Mr Constance said the questions, lodged separately by Greens MLC John Kaye, were a matter for Mr Gay.

Container terminal advocate Greg Cameron separately contacted the Treasurer’s office on Friday and was given yet another response – ‘‘the matters you have raised are the responsibility of the Minister for Environment [Rob Stokes]’’.

The government has refused to disclose the cap, or the compensation payable, despite Mr Gay telling Parliament last year ‘‘the government has been clear on this all the way through the process…that part of the lease and the rationalisation was a cap on numbers there [Newcastle]’’.

‘‘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,’’ Mr Gay said in 2013.

Dr Kaye accused the government of seeking to keep secret whatever restriction had been put in place as part of the leasing of the state’s ports, including Newcastle, and said it should come clean on such significant arrangements for the state.

‘‘This is a blatant attempt at a cover up. The people of Newcastle are being treated with complete contempt,’’ Dr Kaye said.

Contacted by the Newcastle Herald, a spokesman for the Treasurer said ‘‘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,’’ the spokesman said.

In a report released in October, the ACCC said: ‘‘any sale conditions designed to boost asset sale prices by reducing potential competitive pressures on the asset operator would be of concern to the ACCC’’.

LEGISLATIVE COUNCIL 23 October 2014

0143—Roads and Freight—PORT BOTANY, PORT KEMBLA AND PORT OF NEWCASTLE

Dr Faruqi to the Minister for Roads and Freight, Minister for the North Coast, and Vice-President of the Executive Council—

Question:

1.

(a) Is compensation payable to the Port Botany leaseholder if container movements exceed an annual threshold at the Port of Newcastle?

(b) If so, what is the annual threshold?

(c) What is the amount of compensation per twenty-foot equivalent unit (TEU)?

Answer 27 November 2014: These are matters for the Treasurer.

The Treasurer, The Hon. Gladys Berejiklian MP, was asked the question on 5 May 2015 and provided the following answer on 9 June 2015:

(a) The terms of the Port Botany transaction are consistent with the NSW Freight and Ports Strategy which was released in 2013. The Port Botany lease is a public document.

(b) The details of the container arrangements in the Port Commitment Deeds are commercial in confidence.

(c) Please see the answer to question 1 (b).

Comment: The Hon. Duncan Gay MLC disclosed that compensation is payable to the Port Botany leaseholder in answer to a question from The Hon. Adam Searle MLC on 17 October 2013.

The government imposed an unlegislated “cap on numbers”, which cannot be examined for lawfulness, enforceability and benefit, because it is confidential.

The “cap on numbers” is estimated to be 30,000 container movements per year, adjusted for CPI. To pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Question:

2.

(a) Is the Port of Newcastle leaseholder required to pay the Government a fee for container movements through the Port of Newcastle on the same or similar terms as the Government is required to compensate the Port Botany leaseholder?

(b) If so, when did the Government undertake to pay compensation to the Port Botany leaseholder and to impose a fee on the Port of Newcastle leaseholder?

Answer 27 November 2014: These are matters for the Treasurer.

The Treasurer, The Hon. Gladys Berejiklian MP, was asked the question on 5 May 2015 and provided the following answer on 9 June 2015:

(a) The terms of the Port of Newcastle transaction are consistent with the NSW Freight and Ports Strategy which was released in 2013. The Port of Newcastle lease is a public document.

(b) Please refer to the answer to questions 1 (a) and 2(a).

Comment: As for 1. above. Presumably, agreement to pay compensation was in place when Port Botany lease negotiations concluded on 12 April 2013.

Question:

3.

How many containers must be moved through Port Botany and Port Kembla before an extension is allowed in the number of container movements at the Port of Newcastle that do not attract the compensation payment and fee respectively?

Answer 27 November 2014: These are matters for the Treasurer.

The Treasurer, The Hon. Gladys Berejiklian MP, was asked the question on 5 May 2015 and provided the following answer on 9 June 2015:

Please refer to the answers to questions 1 (a) and 2(a). The details of the Port Commitment Deeds are commercial in confidence.

Comment: Mr Gay disclosed, on 17 October 2013, that “the only time an extension is allowed [to the “cap on numbers”] is when a specific number is reached and is tripped in Port Botany and Port Kembla”. In a media statement on 1 May 2014, NSW Treasury referred to Port Botany and Port Kembla capacity becoming “full”:

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.

In February 2013, Newcastle Port Corporation noted:

In July 2012 the NSW Government announced that Port Kembla will be the logical next long-term tranche of container capacity after Port Botany. In accordance with the government’s announcement, subject to any relevant government approvals, any future container terminal development at Newcastle will occur only once Port Botany and Port Kembla are fully developed and developable handling capacity is fully utilised at both Port Botany and Port Kembla. (Newcastle Port Corporation, Draft Strategic Development Plan for the Port of Newcastle, February 2013, page 23)

Question:

4.

(a) Is the purpose of the fee charged of the Port of Newcastle leaseholder to constrain the number of containers passing through the Port of Newcastle?

(b) If not, what is the purpose of the fee?

Answer 27 November 2014: These are matters for the Treasurer.

The Treasurer, The Hon. Gladys Berejiklian MP, was asked the question on 5 May 2015 and provided the following answer on 9 June 2015:

(a) Please refer to the answer to question 2(a).

(b) Please refer to the answer above.

Comment: The unlegislated “cap on numbers” is estimated to be 30,000 container movements per year, adjusted for CPI. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss.

Question:

5.

(a) Is the purpose of the fee charged of the Port of Newcastle leaseholder to prevent development of a container terminal at the Port of Newcastle?

(b) If not, what is the purpose of the fee?

Answer 27 November 2014: These are matters for the Treasurer.

The Treasurer, The Hon. Gladys Berejiklian MP, was asked the question on 5 May 2015 and provided the following answer on 9 June 2015:

(a) Please refer to the answer to question 2(a).

(b) Please refer to the answer above.

Comment: See comment 4 above.

Question:

6.

Did the Government abolish the cap on container movements at Port Botany to increase the value of the lease to potential purchasers?

Answer 27 November 2014: These are matters for the Treasurer.

The Treasurer, The Hon. Gladys Berejiklian MP, was asked the question on 5 May 2015 and provided the following answer on 9 June 2015:

Please refer to former Treasurer Baird’s second reading speech on 17 October 2012 for the Ports Assets (Authorised Transactions) Bill 2012.

Comment: In his second reading speech for the “Ports Assets (Authorised Transactions) Bill” on 17 October 2012, The Hon. Mike Baird said:

By allowing for the throughput limit to be removed, the Government is ensuring that taxpayers receive value for the investment, which has been made already; aligns Port Botany with major ports around the world, none of which has such a cap; and allows the State to receive full value for the lease.

Leasing Port Botany enabled repaying Sydney Port Corporation’s residual debt of $622 million (in 2012).

The ACCC said, on 25 June 2014 (p.38):

The ACCC remains concerned over arrangements designed to maximise proceeds received by a government by reducing the prospect of competitive provision of port services, of which the leasing of Port Botany and the Port of Newcastle were examples.

The Sydney Morning Herald reported on 31 July 2012:

THE state government will allow unrestricted container movements from Port Botany as a carrot to the private sector bidding for the port, a move the opposition says will worsen congestion on some of Sydney’s most clogged roads.

The Treasurer, Mike Baird, confirmed the government intends to lift the existing cap of 3.2 million container movements as part of the transaction of the port in a 99-year lease.

The cap was established following widespread expansion of the port under the former Labor government and fears that unrestricted movement would worsen congestion.

But the adviser to the state government on the port sale, investment bank Morgan Stanley, told the government the sale price would be more than $1 billion higher if the cap was lifted.

Mr Baird said the cap needed to be removed in the short to medium term. ”On current estimates, Port Botany is likely to reach the cap by approximately 2017 – many years earlier than originally anticipated,” he said. ”The removal of the cap is in line with the recommendations of the scoping study to get the best outcome for NSW taxpayers.”

It was reported that there was a “marked increase” between indicative bids for Port Botany/ Kembla between December 2012 and April 2013. “The Australian” newspaper wrote on 21 June 2013:

What transpired was one of the closest races for a major asset seen in Australia. Research by the deal makes it clear that there was a marked increase between the indicative bids given to the government advisers in December [2012] and the final numbers submitted in April [2013]. In the end, according to sources, the top two contenders were separated by less than $20 million.

“The Australian Financial Review” described the Port Botany cap as “antiquated” in commentary about the Port Botany lease, on 3 January 2014:

There were two important reasons the [leasing] process had attracted four seemingly serious offers.

…The second reason was Baird’s decision to scrap a cap limiting the number of containers that could be moved at the ports. The antiquated rule was even more silly, given the NSW government had just spent $1 billion expanding the port by a third. This meant bidders were offered a near monopoly on container shipping in NSW with increased capacity. Port Botany handles almost three-quarters of the two million containers that move through the state’s ports, transporting everything from furniture to heavy machinery.

Mr Baird did not mention an unlegislated “cap on numbers” at the Port of Newcastle or payment of compensation to the Port Botany lessee in his second reading speech on 17 October 2012:

The vast majority—some 85 per cent of all containers—has an origin or destination within 40 kilometres of the port. It is clear that the ongoing imposition of the cap on throughput at Port Botany would result in a massive inefficiency in the future that would greatly constrain the State’s economy.

Port Botany’s dominant market position relies exclusively on its monopoly status as the state’s only container port. Most containers are trucked within 40 km of Port Botany to minimise cost. Government policy supports an increase in container transportation by truck from 2 million per year in 2014 to 5.4 million per year by 2045.

Government policy supports railing 3 million containers in 2045 up from 0.3 million in 2014. But achieving this 10-fold increase in rail transportation requires building a new rail freight line, the “Western Sydney Freight Line”, between Chullora and Eastern Creek. The cost, $1 billion, is unfunded. Additionally, a new rail freight line is required between Port Botany and Mascot. This line, too, is unfunded. The government is unable to demonstrate how a major increase in rail transportation will be accomplished.

The optimum use of Sydney’s existing rail network is people, not freight. Deloitte Access Economics commented extensively on the cost comparison between road and rail for freight transportation in its June 2011 report, “The True Value of Rail”, see report extracts.

Question:

7.

Did the Government agree to compensate the Port Botany leaseholder in respect of container movements at the Port of Newcastle to preserve the commercial value of the Port Botany lease?

Answer 27 November 2014: These are matters for the Treasurer.

The Treasurer, The Hon. Gladys Berejiklian MP, was asked the question on 5 May 2015 and provided the following answer on 9 June 2015:

The terms of the Port Botany transaction reflect the Government’s NSW Freight and Ports Strategy which was released in 2013.

Comment: Compensation is payable to NSW Ports when container movements at the Port of Newcastle exceed the unlegislated and confidential, “cap on numbers”. It is presumed that paying compensation preserves the commercial value of the Port Botany lease.

The “NSW Freight and Ports Strategy” reflects the Scoping Study and its unlegislated “cap on numbers”. There is no mention of a “cap on numbers” at the Port of Newcastle, or a fee for exceeding it, in the “NSW Freight and Ports Strategy” dated November 2013; the “Draft Strategy” dated November 2012;  and, the “Discussion Paper” dated February 2012.

Question:

8.

(a) Was a cost-benefit study of the proposal to compensate the Port Botany leaseholder if container movements exceed an annual threshold at the Port of Newcastle undertaken?

(b) If so, will the Government release it?

Answer 27 November 2014: These are matters for the Treasurer.

The Treasurer, The Hon. Gladys Berejiklian MP, was asked the question on 5 May 2015 and provided the following answer on 9 June 2015:

(a) The scoping study for the transaction included analysis of the freight transport task, landside logistics chains, container demand patterns and logistics costs across the State.

(b) The scoping study is Commercial in Confidence.

Comment: As disclosed in questions 10 and 11 below, the government transport planning section, “Transport for NSW”, did not “specifically” analyse (1) the additional costs to the Northern New South Wales economy to require goods to be transported to Port Botany by truck for export as opposed to the Port of Newcastle; and (2) the additional costs to the Northern New South Wales economy to require imported goods to be transported between Port Botany and western Sydney before being transported by truck to northern New South Wales.

The government is able to disclose its “non-specific” analysis.

Presumably, Morgan Stanley advised the government about the transport, economic and commercial implications of applying an unlegislated “cap on numbers” at the Port of Newcastle, and charging a fee for exceeding it. However, such information not has been disclosed by the government for analysis because the Scoping Study is confidential. Confidentiality also prevents the unlegislated “cap on numbers” from being examined for lawfulness and enforceability.

On 3 September 2015, Ms Berejiklian was asked:

25. Is there a cap on container movements at the Port of Newcastle?

a. If so, what is it? Is it a charge per container?
b. If the cap is breached, is a fee, fine or charge imposed? Who pays it? Who do they pay the money to?
c. If the cap is breached, are any monies paid to the operators of Port Botany and/or Port Kembla? If so, how much is paid? Who pays it?
d. When were these arrangements agreed?

Ms Berejiklian answered on 29 September 2015:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

Ms Berejiklian did not acknowledge the unlegislated “cap on numbers” at the Port of Newcastle.

Question:

9.

(a) Does it benefit the New South Wales economy to prevent competition between New South Wales ports for handling containers?

(b) If so, how?

Answer: (a) and (b) Refer to my answer to Budget Estimates 2014-15 Supplementary Question 249.

BUDGET ESTIMATES 2014-2015
SUPPLEMENTARY QUESTIONS ON NOTICE
The Illawarra

249. Has the State Government completed the work relating to the Maldon-Dombarton rail link for the Federal Government? If so, on what date was the report provided to the Federal Government?
I am advised:
The NSW Government delivered work relating to the Maldon to Dombarton rail link to the Australian Government on 31 July 2014.

Comment: Answer to question 249, above, does not relate in any obvious way to the question.

The unlegislated “cap on numbers” at the Port of Newcastle prevents competition on equal terms with Port Botany.

This “cap on numbers” is estimated to be 30,000 container movements per year, adjusted for CPI. In order to pay compensation to NSW Ports, the government would need to charge Port of Newcastle Investments a fee of $100 per container because this is the average fee NSW Ports charges at Port Botany.

Building a container terminal at the Port of Newcastle is unprofitable when paying the government a fee of $100 per container for exceeding this “cap on numbers”. A container terminal would not be built to operate at a loss.

The ACCC said, on 25 June 2014 (p.38):

The ACCC remains concerned over arrangements designed to maximise proceeds received by a government by reducing the prospect of competitive provision of port services, of which the leasing of Port Botany and the Port of Newcastle were examples.

Ms Berejiklian’s answer to a similar question asked on 5 May 2015, was:

The New South Wales ports are not prevented from competing for handling of containers.

Question:

10.

What are the estimated additional costs to the Northern New South Wales economy to require goods to be transported to Port Botany by truck for export as opposed to the Port of Newcastle?

Answer: Specific analysis of this nature has not been undertaken by Transport for NSW. However, a significant proportion of exports originating in northern NSW are bulk exports, which can be processed at the Port of Newcastle.

Question:

11.

What are the estimated additional costs to the Northern New South Wales economy to require imported goods to be transported between Port Botany and western Sydney before being transported by truck to northern New South Wales?

Answer: Specific analysis of this nature has not been undertaken by Transport for NSW. However, 85 percent of Port Botany container imports have a destination within the greater Sydney metropolitan area.

Comment on answers 10 and 11: The government transport planning section, “Transport for NSW”, did not undertake “specific analysis”. However, the Minister is able to disclose non-specific analysis of: (1) the additional costs to the Northern New South Wales economy to require goods to be transported to Port Botany by truck for export as opposed to the Port of Newcastle; and (2) the additional costs to the Northern New South Wales economy to require imported goods to be transported between Port Botany and western Sydney before being transported by truck to northern New South Wales.

Ms Berejiklian disclosed in answer to question 8 above:

The scoping study for the [Port Botany lease] transaction included analysis of the freight transport task, landside logistics chains, container demand patterns and logistics costs across the State.

Morgan Stanley’s analysis for the Scoping Study may or may not have included implications of the government’s unlegislated “cap on numbers” for the northern NSW economy. However, container freight policy is based on this Scoping Study. The government decided against developing a container terminal at the Port of Newcastle after considering this confidential Scoping Study, as disclosed on 27 July 2012. A container terminal at the Port of Newcastle would be competitive without a government fee, and an unlegislated “cap on numbers”.

Question:

12.

Does it benefit the New South Wales economy to predicate future growth in Port Botany container movements on transportation by truck?

Answer:

It is necessary to model road and rail forecasts for container movements to and from Port Botany, so the NSW Government can respond with appropriate policy levers, and so industry can respond with appropriate business models. NSW Government forecasts of road and rail container movements take into account our commitment to double the 2011-12 container rail mode share by 2020.

Comment: In February 2014 the NSW Bureau of Transport Statistics released its forecast of container movements to and from Port Botany. These estimates were in line with estimates by NSW Ports. NSW Ports estimated container movements by truck between the port and western Sydney to increase from 2 million in 2014 to 5.4 million in 2045. Movement of containers by rail is estimated to increase from 0.3 million in 2014 to 3 million by 2045. No specific analysis is provided for how the increase in container transportation by rail will be achieved, or funded.

The NSW government is able to disclose the economic implications of trucking containers between Port Botany and western Sydney destinations. Deloitte Access Economics evaluated the cost of truck transportation compared with rail. This report indicates that the full cost of freight transportation by road is not recovered, see report extracts.

According to the RTA, a container truck using the M5 East westbound tunnel is the equivalent of six passenger cars and the equivalent of three passenger cars using the eastbound tunnel. Container trucks are 2 per cent of vehicle use on the M5 East. In the eastbound tunnel, this equates to 6 per cent of capacity and in the wesbound tunnel it equates to 3 per cent of capacity.

In 2045, when container trucks will require 4 per cent of current M5 East capacity, this will equate to 12 per cent of the current westbound tunnel and 6 per cent of the eastbound tunnel.

Increasing the rail component of container transportation requires completion of three major rail projects.

Stages 2 and 3 of the Northern Sydney Freight Corridor (NSFC), costing $5 billion, would provide the equivalent of a dedicated rail freight line between Newcastle and Strathfield, which is required by 2028 to meet predicted freight demand. There are no funds available for building stages 2 and 3 of the NSFC. Presumably, these stages will not be built. An option for the government to increase freight capacity on the rail line between Newcastle and Strathfield is to reduce passenger services.

The Western Sydney Freight Line, between Chullora and Eastern Creek, costing about $1 billion, is required to rail containers between Port Botany and Eastern Creek, which is the proposed site for an intermodal terminal after Moorebank. However, there are no funds available for building the Western Sydney Freight Line. Presumably, this line will not be built.

A new rail freight line is required between Port Botany and Mascot. Funding for this line has not been disclosed.

Question:

13.

What is the container-carrying capacity of the rail line serving Port Botany?

Answer:

The Australian Rail Track Corporation is the network operator of the Port Botany rail line, which forms part of the Metropolitan Freight Network. Any questions relating to the network capacity are a matter for the Australian Rail Track Corporation.

Comment: Mr Gay did not disclose the container carrying capacity of the rail line serving Port Botany.

In answer to question 8, Ms Berejiklian said:

The scoping study for the [Port Botany lease] transaction included analysis of the freight transport task, landside logistics chains, container demand patterns and logistics costs across the State.

The confidential Scoping Study was deficient if it failed to estimate the container-carrying capacity of the rail line serving Port Botany. This Scoping Study was the basis of the government deciding on 27 July 2012 not to develop a container at the Port of Newcastle. The government considers a container terminal at the Port of Newcastle is “uneconomic”, as disclosed on 22 August 2014.

In 2014, 0.3 million containers were railed between Port Botany and western Sydney. NSW Ports estimates this number will increase to 3 million by 2045. Building the increased capacity will require a new rail freight line between Port Botany and Mascot; a new rail freight line – the Western Sydney Freight Line – between Chullora and Eastern Creek; and, completing stages 2 and 3 of the Northern Sydney Freight Corridor. No plans have been disclosed for building or financing these lines, or how the increased use of rail will be accomplished

Question:

14.

(a) Will the Government fund the Western Sydney Freight Line?

(b) If not, who will fund this line?

Answer: (a) and (b) This is yet to be determined.

Comment: The government is unable to fund the Western Sydney Freight line, between Chullora and Eastern Creek, and no other source of funds has been identified. This line is not required if a rail freight bypass is built between the Port of Newcastle and Glenfield and is paid for by railing containers and general freight to intermodal terminals in western Sydney. The cost of the Western Sydney Freight Line will be in the order of $1 billion.

Question:

15.

When will the Commonwealth Government respond to the Government’s request for funds to build stages 2 and 3 of the Northern Sydney Freight Corridor (NSFC)?

Answer: This is a matter for the Commonwealth Government.

Comment: The Commonwealth Government has not responded to the NSW government’s request to funds stages 2 and 3 of the NSFC costing approximately $5 billion. It is unlikely the Commonwealth will fund this line. The stages are required to be finished before 2028 to provide the equivalent of a dedicated rail freight line between Newcastle and Strathfield, using the existing passenger line corridor. The NSFC is not required if a rail freight bypass is built between the Port of Newcastle and Glenfield and paid for by railing containers and general freight.

An option for the NSW government is to increase freight capacity on the NSFC by reducing passenger capacity. Alternatively, the government can cancel plans for stages 2 and 3 of the NSFC, and remove all freight so that all capacity is used for passengers. This can be accomplished by developing a rail freight bypass line, between the Port of Newcastle and Glenfield.

A report by Deloitte Access Economics “provides evidence on the level of the benefits not captured in prices or costs that arise from shifting passengers or freight from road to rail”. The following are extracts from this report, ”The true value of rail, 3 June 2011”:

page ii

Benefits of rail

A key part of ensuring correct investment decisions are made is to recognise the true value of rail. This report provides evidence on the level of the benefits not captured in prices or costs that arise from shifting passengers or freight from road to rail. The benefits identified are:

Passenger transport:

            • Road travel produces more than 40% more carbon pollution than rail travel per passenger kilometre.
            • Road transport generates almost eight times the amount of accident costs as rail transport does.
            • In the longer term, high speed rail provides the potential to alleviate pressures that will emerge to move people between major cities and along east coast corridors as Australia’s population grows.

Urban passenger transport:

            • An additional commuter journey by rail reduces congestion costs alone by between around $2 and $7.
            • For every passenger journey made on rail rather than road in Australia’s four largest cities, between $3 and $8.50 can be saved in congestion, safety and carbon emission costs.
            • In Sydney, for example, if rail absorbed 30% of the forecast increase in urban travel then congestion, safety and carbon emission costs could be reduced by around $1 billion a year by 2025.

Interstate freight transport:

            • Heavy vehicle road freight users do not face the full maintenance costs that they cause. Under-recovery of these costs has been estimated at between $7,000 and $10,500 per truck each year (Productivity Commission 2006 and NTC 2006). The National Transport Commission (NTC) has recommended changes which seek to address this issue.
            • Freight moved between Melbourne and Brisbane by rail instead of road reduces carbon costs by around $56 per container and reduces accident costs by around $92 per container.
            • Along the North-South freight corridor, for example, if rail was to achieve a 40% share of the market then savings, in terms of carbon pollution and accidents, would currently be around $300m a year or $630m a year by 2030.

Freight transport within urban centres:

            • Along with the use of the mass transit of people, a greater use of rail for freight within, especially, Sydney and Melbourne will be needed to alleviate the increasing congestion on road networks. Environmental and safety benefits would also accrue.
            • The NSW and Victorian Governments have recognised the need to develop more effective rail freight services within their cities and have set targets accordingly. These goals aim to ease congestion on arterial roads and improve use of existing rail infrastructure and port land. These costs have tangible effects on the lives of all Australian’s and the economy. Congestion eats away at leisure time and reduces economic productivity as workers and goods take longer to reach their destination and cost more to transport. Carbon pollution creates social costs to be borne by future generations who will face the duel costs of a changed climate and the need to reduce emissions. In addition to deaths caused by vehicle accidents, injuries create ongoing effects in terms of pain, reduced ability to work and the need for care.

page iv

There are currently some key bottlenecks holding back the efficient use of rail in Australia. Freight movements between Melbourne and Brisbane are constrained by congestion in northern Sydney. The North Sydney Freight Corridor would go a long way to addressing this issue. Fixing this key point of infrastructure is estimated to cost around $4.4 billion today. A number of other projects on this route such as modern intermodal facilities in Sydney and Melbourne and many minor adjustments to the track might also be needed.

These investments are costly but will help drive a modal shift towards rail freight which creates benefits from reduced carbon pollution and accidents. If rail was to achieve a 40% market share then by 2030 the savings from accidents and carbon pollution could be worth well over $600 million a year.

The key choke point for freight is intimately linked with Sydney’s metropolitan network. The metropolitan network is currently constrained by capacity through the city. Expanding capacity in the city, through the Western Express project, would currently cost around $4.5 billion. Again, there are large savings in carbon pollution, accident and congestion costs which work to offset the initial infrastructure investment. If a congestion charge and carbon tax were introduced, this could result in around 150 million extra rail journeys a year. All these extra passengers would reduce carbon pollution, congestion and accident costs on the roads by around $1.2 billion a year.

page 50

5.1.3 Required investments

The initial investment required to free up capacity on the north-south corridor is to establish the northern Sydney freight corridor (NSFC). A project outline for the NSFC has recently been made by Transport NSW (2010a). The proposed NSFC is not a separate freight line but is, instead, a series of augmentations to the existing shared network which would allow passenger and freight trains to interoperate more freely and would therefore create additional freight train paths. The proposed NSFC would operate in three stages, initially increasing the daily number of train paths from 16 to 26 in both directions while stage two would increase this to at least 33 paths in both directions. Stage three would transition towards a dedicated freight line

The NSFC is forecast to cost around $1.2bn for stage one, $3.4bn for stage two and $3.2bn for stage three, for a total of around $7.8bn. This expenditure would be spread over the next 12 years and so, in present value terms the capital cost is around $5.2bn. Of this, $0.8bn has already been allocated under the Nation Building program. This leaves an unfunded capital cost of around $4.4bn in present value terms.

page 65

On the north-south corridor, where there is significant room for rail to grow its market share, it is currently being held back by inefficient network infrastructure which leads to reliability issues. The main constraint on the north-south corridor is currently in the Sydney metropolitan network. Trains attempting to move through the network must avoid peak passenger periods. This is complicated by a lack of necessary infrastructure in the north of Sydney. There is currently only a single extra freight train path available each day heading north out of Sydney and this path is likely to be used up within the next year or two. The north-south corridor is therefore facing imminent capacity constraints which will hamper any growth in rail freight along the east coast. This constraint could be alleviated with investment in the north Sydney rail freight corridor, which has been proposed to Infrastructure Australia but is currently only partially funded.

Question:

16.

Is it true that there are no state or Commonwealth Government funds available for building the Western Sydney Freight Line and stages 2 and 3 of the Northern Sydney Freight Corridor?

Answer: Transport for NSW has allocated funding for planning works associated with the Western Sydney Freight Line. Residual funds from stage one of the Northern Sydney Freight Line have been allocated for planning for stage two.

Comment: There are no funds allocated for building stages 2 and 3 of the Northern Sydney Freight Corridor at a cost of around $5 billion. Without funding, the stages will not be built.

BUDGET ESTIMATES 2014-2015 SUPPLEMENTARY QUESTIONS ON NOTICE TREASURY, INDUSTRIAL RELATIONS 22 August 2014

The Hon. Dr John Kaye:

Question:

53. Given that there has been significant allegations of at least influence peddling and political interference under Labor surrounding proposals to the [sic] develop a container facility in Newcastle, will Treasury be reviewing that decision?
(a) If so please provide details
(b) If not why not

Answer:

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.

Comment:

In August 2014, the ”Independent Commission Against Corruption” (ICAC) was conducting its ”Operation Spicer” investigation into political donations in NSW.

The ICAC investigated the leaking of extracts from a NSW Treasury report dated 4 February 2011 to the ”The Newcastle Herald”. This material was reported on 18 February 2011:

The 22-page document titled Review of Proposed Uses of Mayfield and Intertrade Lands at Newcastle Port was prepared for Mr Roozendaal on February 4.

It states that Treasury had not been provided with a rigorous analysis of the demand forecast for containers and bulk goods.

“A 2006 PWC [Port Waratah Coal] study for bulk goods berth on the [Mayfield] site was based on the Newcastle Port Corporation-generated demand forecasts that were not subjected to critical analysis,” the report says.

“A 2003 study [updated in 2009] into container demand to Newcastle identified a total current demand of 266,000 TEU [20 tonne equivalent units] pa, which is dwarfed by the current and potential capacity of Port Botany.”

Anglo Ports and Newcastle Stevedores have expressed interest in operating a Newcastle container terminal. “There is an irrefutable business case for such a terminal,” Anglo Ports spokesman Richard Setchell said.

The ICAC investigation did not uncover the person who leaked the material to the newspaper.

The ICAC investigated the Herald article in the context of negotiations between Anglo Ports and Newcastle Port Corporation for development of a multi-purpose terminal.

The author of the Treasury report, Mr Dominic Schuster, was questioned about the circumstances under which this report was prepared.

Mr Gary Webb was CEO of Newcastle Port Corporation at the time negotiations were being conducted with Anglo Ports. In testimony (page 5658) on 19 August 2014, Mr Webb was asked:

Question: What was the next phase that you were going to enter?

Mr Webb:

Well, the next phase was to develop detailed project delivery documents, lease documents so that the principles, everything that had been negotiated would be developed into final documents that could be thoroughly reviewed so that then there could be a signature.

Anglo Ports responded to the Treasury statement on 10 February 2015.

LEGISLATIVE COUNCIL 17 October 2013

PORT BOTANY CONTAINER TERMINAL

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.

In 2012, the NSW government decided to pay compensation to a future leaseholder of Port Botany and Port Kembla based on the number of containers handled at the Port of Newcastle. The government made this decision before announcing, on June 6 2012, the inclusion of Port Kembla in a scoping study for leasing Port Botany.

The government decided to set a limit, or “cap”, on the number of containers handled at the Port of Newcastle for which compensation would not be payable to the leaseholder of Port Botany and Port Kembla. Compensation became payable only when the “cap” was exceeded. For purposes of calculating this “cap” the government defined “container” 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 and Containerised has a corresponding meaning.

Container includes:

(a) overseas import containers;

(b) overseas export containers; and,

(c) local containers (coastal inwards or outwards); and

(d) empty containers and transhipped containers.

Source: Port Commitment – Port Botany and Port Kembla

The amount of payment is calculated by multiplying the weighted average charged per TEU container handled at Port Botany by the number of TEU containers handled at the Port of Newcastle above the “cap”.

The government decided that a future operator of a container terminal at the Port of Newcastle would be required to make the government whole for any cost the government incurred to a future leaseholder of Port Botany and Port Kembla in respect of the “cap” being exceeded. The government took this decision because a source of funds other than government consolidated revenue was required.

In 2009 the government decided to develop a container terminal at the Port of Newcastle and did not change this decision in 2012 because to do so would be to deny the government its source of funds. It is highly likely the “cap” is exceeded every year despite there being no specialised terminal for TEU containers. However, only TEU container movements are counted at the Port of Newcastle.

The government contractually committed to paying compensation to NSW Ports, which leased Port Botany and Port Kembla on April 12 2013, by setting the “cap” at the Port of Newcastle at 30,000 “containers” (as defined) per year, as at July 1 2013, increasing by six per cent per year, for 50 years.

Container ships are unable to use the Port of Newcastle because there is no container terminal. In 2014, general cargo ships carried 10,000 TEU containers through the port. General cargo ships carry their own cranes and do not require a dedicated terminal for TEU containers.

Mr Gay was reported by the “Newcastle Herald” on 15 September 2015 as saying that Port of Newcastle container freight was expected to “more than triple by 2031”:

Mr Gay said Newcastle container freight was expected to ‘‘more than triple’’ by 2031 but in an answer to a question about a Newcastle container terminal he said the current arrangements were working well.

A tripling in container movements from 10,000 per year is 30,000 per year.

In a media statement on 1 May 2014, NSW Treasury referred to “organic” growth of container throughput at the Port of Newcastle:

The 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 “Draft Strategic Development Plan for the Port of Newcastle, February 2013” referred to growth at the port “connected to population growth”.

page 18
Some import cargoes service the expanding population of the region, such as fuels and cement. In time the port will handle containerised cargoes to service the expanding population. Growth in these sectors will be connected to population growth. Some cargoes are necessary to supply industry in the Hunter Region, such as the aluminium industry, where the port handles both the input raw materials and the exported product.

References to “organic” growth and growth “connected to population growth” are references to the cap on numbers increasing at the rate of six per cent per year.

The weighted average charge at Port Botany is nearly $100 per container. For a typical container ship with capacity for 5,000 TEU, visiting the Port of Newcastle fully loaded, and leaving fully loaded, will cost $1 million more than visiting Port Botany.

Mr Gay informed Budget Estimates on 31 August 2015 that there is no “cap” at the Port of Newcastle but “within the general cargo that needs to go to Newcastle that is fine”:

The Hon. SOPHIE COTSIS: In terms of the cap on containers, are any fees paid if the number of containers through Newcastle exceeds a set amount?

The Hon. DUNCAN GAY: Not that I am aware of.

The Hon. SOPHIE COTSIS: You are not aware of that?

The Hon. DUNCAN GAY: You asked me whether there was a cap in Newcastle and I said there is not. Now you are asking me whether there is a fee paid if they go beyond a certain number. General cargo containers are part of what happens in Newcastle. My understanding is that within the general cargo that needs to go to Newcastle that is fine.

LEGISLATIVE COUNCIL 17 October 2013

PORT BOTANY CONTAINER TERMINAL

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.

In 2012, the NSW government decided to pay compensation to a future leaseholder of Port Botany and Port Kembla based on the number of containers handled at the Port of Newcastle. The government made this decision before announcing, on June 6 2012, the inclusion of Port Kembla in a scoping study for leasing Port Botany.

The government decided to set a limit, or “cap”, on the number of containers handled at the Port of Newcastle for which compensation would not be payable to the leaseholder of Port Botany and Port Kembla. Compensation became payable only when the “cap” was exceeded. For purposes of calculating this “cap” the government defined “container” 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 and Containerised has a corresponding meaning.

Container includes:

(a) overseas import containers;

(b) overseas export containers; and,

(c) local containers (coastal inwards or outwards); and

(d) empty containers and transhipped containers.

Source: Port Commitment – Port Botany and Port Kembla

The amount of payment is calculated by multiplying the weighted average charged per TEU container handled at Port Botany by the number of TEU containers handled at the Port of Newcastle above the “cap”.

The government decided that a future operator of a container terminal at the Port of Newcastle would be required to make the government whole for any cost the government incurred to a future leaseholder of Port Botany and Port Kembla in respect of the “cap” being exceeded. The government took this decision because a source of funds other than government consolidated revenue was required.

In 2009 the government decided to develop a container terminal at the Port of Newcastle and did not change this decision in 2012 because to do so would be to deny the government its source of funds. It is highly likely the “cap” is exceeded every year despite there being no specialised terminal for TEU containers. However, only TEU container movements are counted at the Port of Newcastle.

The government contractually committed to paying compensation to NSW Ports, which leased Port Botany and Port Kembla on April 12 2013, by setting the “cap” at the Port of Newcastle at 30,000 “containers” (as defined) per year, as at July 1 2013, increasing by six per cent per year, for 50 years.

Container ships are unable to use the Port of Newcastle because there is no container terminal. In 2014, general cargo ships carried 10,000 TEU containers through the port. General cargo ships carry their own cranes and do not require a dedicated terminal for TEU containers.

Mr Gay was reported by the “Newcastle Herald” on 15 September 2015 as saying that Port of Newcastle container freight was expected to “more than triple by 2031”:

Mr Gay said Newcastle container freight was expected to ‘‘more than triple’’ by 2031 but in an answer to a question about a Newcastle container terminal he said the current arrangements were working well.

A tripling in container movements from 10,000 per year is 30,000 per year.

In a media statement on 1 May 2014, NSW Treasury referred to “organic” growth of container throughput at the Port of Newcastle:

The 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 “Draft Strategic Development Plan for the Port of Newcastle, February 2013” referred to growth at the port “connected to population growth”.

page 18
Some import cargoes service the expanding population of the region, such as fuels and cement. In time the port will handle containerised cargoes to service the expanding population. Growth in these sectors will be connected to population growth. Some cargoes are necessary to supply industry in the Hunter Region, such as the aluminium industry, where the port handles both the input raw materials and the exported product.

References to “organic” growth and growth “connected to population growth” are references to the cap on numbers increasing at the rate of six per cent per year.

The weighted average charge at Port Botany is nearly $100 per container. For a typical container ship with capacity for 5,000 TEU, visiting the Port of Newcastle fully loaded, and leaving fully loaded, will cost $1 million more than visiting Port Botany.

Mr Gay informed Budget Estimates on 31 August 2015 that there is no “cap” at the Port of Newcastle but “within the general cargo that needs to go to Newcastle that is fine”:

The Hon. SOPHIE COTSIS: In terms of the cap on containers, are any fees paid if the number of containers through Newcastle exceeds a set amount?

The Hon. DUNCAN GAY: Not that I am aware of.

The Hon. SOPHIE COTSIS: You are not aware of that?

The Hon. DUNCAN GAY: You asked me whether there was a cap in Newcastle and I said there is not. Now you are asking me whether there is a fee paid if they go beyond a certain number. General cargo containers are part of what happens in Newcastle. My understanding is that within the general cargo that needs to go to Newcastle that is fine.

The Hon. DUNCAN GAY: Earlier in question time I was asked a question by the Hon. Cate Faehrmann. I provide the following detailed answer:

Newcastle Port Corporation is currently working to finalise its Strategic Development Plan for the Port of Newcastle.

The Strategic Development Plan will guide the development of the Port of Newcastle over the next 30 years.

The plan sets out how the port will grow and develop over time taking into account global shipping trends, expected growth in task and volumes of goods, safety, channel and marine access and landside transport needs.

The plan is consistent with the planning recommended under the National Ports Strategy and will complement the NSW Freight and Ports Strategy being developed and delivered by the Freight and Regional Development Division of Transport for NSW.

The NSW Freight and Ports Strategy will be delivered later this year.

Newcastle Port Corporation will undertake public consultation about the Strategic Development Plan, once it is finalised.

Question Without Notice 12 June 2012: PORTS PRIVATISATION Page: 12534

The Hon. SOPHIE COTSIS: My question is directed to the Minister for Roads and Ports. I refer to statements the Minister made to this House on 4 August 2011 and 13 September 2011 respectively, “I have no plans to privatise New South Wales ports” and “There are no plans before me to privatise Newcastle or Port Kembla.” Given that the Minister now has announced his intention to privatise both Port Botany and Port Kembla, in direct contradiction to these statements, how does he justify these actions to local residents and the port employees?

The Hon. DUNCAN GAY: Can I simply say that my comments to the House were accurate at the time and at no stage have I misled the House on this matter.

The Hon. CATE FAEHRMANN: My question is directed to the Minister for Roads and Ports. Yesterday the Sydney Morning Herald reported that the chief executive officer of Infrastructure NSW, Paul Broad, said that Newcastle will not be developed as a container port. However, in January 2012 the Premier said that Mayfield “is more suited to handling multi-product, container, general cargo and dry bulk terminal freight”. Does the Minister agree with Infrastructure NSW or the Premier’s comments?

The Hon. DUNCAN GAY: That is a very good but tough question. If the Opposition was worthwhile it would have asked this question. On Monday and Tuesday mornings my office anticipated possible hostile questions, and that question remained each day. The member has asked an important question.

The Hon. Greg Donnelly: Then answer it.

The Hon. DUNCAN GAY: I will answer if members opposite stop interjecting. Colonel Blimp sitting on the losers lounge keeps interjecting while I am trying to answer. The Government has established some new sections in Transport for NSW, including the Freight and Regional Development Section, which is headed by Rachel Johnson. She is a terrific deputy director general who has a private enterprise background. Her job is to review the sector and the roles of the various ports. That review is underway and people will be able to express their views, either publicly or not. I know that there was a newspaper report, but I do not know whether Mr Broad said what was attributed to him. A review is underway and members will have to wait until it is completed. It is a statewide review involving not only the Port of Newcastle but also Port Botany and Port Kembla, and it will examine freight movements from roads to the ports.

24 October 2006 LEGISLATIVE COUNCIL 3149

The Hon. GREG PEARCE [3.52 p.m.]: I will speak briefly in support of the comments made by the Hon. Melinda Pavey during her excellent contribution to this debate. Having listened to the last part of the debate, it is obvious to me that there is an issue relating to the role of the Minister. The integrity of the Minister relates not only to the public interest but also to public confidence and, more generally, the economic prosperityof this State. The manner in which the ports portfolio has been managed in the past has revealed inadequate strategic planning and integration of ports with transport networks.

In the other place the Minister for Ports and Waterways cited figures relating to trade and made the point that the ports are integral to maintaining the strength of the New South Wales economy. I will not deal in detail with those figures except to say that they emphasise the paramount importance of ports and underline the basis for doubt on the part of the Opposition and many members of the community that this Government has the ability to properly administer this State’s ports or the portfolio. Concerns have also been expressed about the massive increase in trade through Port Botany as a result of recent expansion and its concomitant impact upon surrounding areas as well as transport generally. People who use the M5 East know that already it has reached its capacity and that the increased traffic associated with Port Botany will only exacerbate the M5 East’s problems.

The Government’s policy is for 40 per cent of containers to be transported by rail. However, successive Ministers have failed to implement an integrated ports development, and that is not new. Papers provided several years ago by the Government relating to the approval of the ports expansion strategy by Cabinet in 2003 show that Cabinet considered a report from Mr Chris Wilson, who was then the Director, Major Development Assessment of the then Department of Infrastructure, Planning and Natural Resources. Mr Wilson noted, when considering concerns related to the development application and the environmental impact statement for Port Botany at that stage, that there was inadequate supporting information on the wider strategic issues, particularly transport. He also noted that any consent for the port’s expansion, regardless of whether a commission of inquiry was undertaken, would not address the significant off-site issues that exist.

In the same bundle of papers, Mr Greg McDowell, Manager, Project Development of the infrastructure co-ordination unit of the Department of Infrastructure, Planning and Natural Resources, also expressed concern about the basis relied upon by the Government to determine its policy. He queried whether we really want to keep concentrating economic activity in the Sydney Basin, thereby creating further pollution, traffic and other environmental pressures, because that was what the expansion of Port Botany would do. He also questioned whether the expansion of Port Botany should proceed or whether the Government should instead consider ports development in Newcastle and Port Kembla. Although those views concern wider issues, they relate to the whole question of whether this Government can be trusted to undertake the management of vital ports in New South Wales.

I could cite many concerns expressed by other commentators and experts relating to rail freight and the failure of this Government to integrate the planning of ports development with the New South Wales transport network. Most honourable members would have read an article in the Sydney Morning Herald on 14 October by Michael Duffy dealing with the works undertaken by the Patrick Corporation in expanding its operations at Port Botany. He noted that notwithstanding that the port has the most up-to-date equipment one could expect in port operations, in his view the State Government had let down everyone else. He referred to the proposal to move 40 per cent of containers through Sydney by rail, with which everyone agrees, and noted with some concern that only half that rate has been achieved. That is a major problem that the Government has not addressed in relation to Sydney’s ports development.

The Minister in the other place was very proud of the growth of the port, something that is fundamental to the future prosperity of New South Wales. The figures for the increase in traffic through the three ports are quite extraordinary and reflect the growth of New South Wales, in spite of any proper integrated planning by the succession of Labor Ministers who have had responsibility for ports and planning. The bill deals with some administrative issues. Perhaps Ms Sylvia Hale misunderstood the legal nature of the description of the need to address purported consents and purported decisions that may have been made. Certainly the Opposition does not have any opposition to addressing any administrative oversight; that is not to say that we in any way excuse the Government for its inability to properly manage this portfolio.

Pursuant to sessional orders business interrupted.

PORT BOTANY CONTAINER TERMINAL
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.

———-

BUDGET ESTIMATES 2014-2015 SUPPLEMENTARY QUESTIONS ON NOTICE TREASURY, INDUSTRIAL RELATIONS 22 August 2014

The Hon. Dr John Kaye:

Question:
53. Given that there has been significant allegations of at least influence peddling and political interference under Labor surrounding proposals to the [sic] develop a container facility in Newcastle, will Treasury be reviewing that decision?
(a) If so please provide details
(b) If not why not

Answer:

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.

———-

LEGISLATIVE COUNCIL 23 October 2014

0144—Treasurer—LEASES FOR PORT BOTANY, PORT KEMBLA AND PORT OF NEWCASTLE

Dr Kaye to the Minister for Fair Trading representing the Treasurer, and Minister for Industrial Relations—

1. In regard to compensation payable to NSW Ports, the Port Botany leaseholder, if container movements exceed an annual threshold at the Port of Newcastle:

a. what is the annual threshold?
b. how much compensation is payable per container?

2. Did the Government consult the Australian Competition and Consumer Commission when inserting compensation provisions into the leases for Port Botany, Port Kembla and Port of Newcastle?

3. Is the amount of compensation an amount between $76 per twenty-foot equivalent unit (teu) and $120 per teu, where $76 is the fee currently charged by NSW Ports for an export container and $120 is the fee currently charged for an import container?

4.

a. Is the Port of Newcastle leaseholder required to pay the Government a fee for container movements through the Port of Newcastle on the same or similar terms as the Government is required to compensate the Port Botany leaseholder?
b. If so, when did the Government undertake to pay compensation to the Port Botany leaseholder and to impose a fee on the Port of Newcastle leaseholder?

5. How many containers must be moved through Port Botany and Port Kembla before an extension is allowed in the number of container movements at the Port of Newcastle that do not attract the compensation payment and fee respectively?

27 November 2014

Answer—

This question should be re-directed to the Minister for Roads and Freight.

———-

LEGISLATIVE COUNCIL 23 October 2014

0143—Roads and Freight—PORT BOTANY, PORT KEMBLA AND PORT OF NEWCASTLE

Dr Faruqi to the Minister for Roads and Freight, Minister for the North Coast, and Vice-President of the Executive Council—

1.

a. Is compensation payable to the Port Botany leaseholder if container movements exceed an annual threshold at the Port of Newcastle?
b. If so, what is the annual threshold?
c. What is the amount of compensation per twenty-foot equivalent unit (TEU)?

2.

a. Is the Port of Newcastle leaseholder required to pay the Government a fee for container movements through the Port of Newcastle on the same or similar terms as the Government is required to compensate the Port Botany leaseholder?
b. If so, when did the Government undertake to pay compensation to the Port Botany leaseholder and to impose a fee on the Port of Newcastle leaseholder?

3. How many containers must be moved through Port Botany and Port Kembla before an extension is allowed in the number of container movements at the Port of Newcastle that do not attract the compensation payment and fee respectively?

4.

a. Is the purpose of the fee charged of the Port of Newcastle leaseholder to constrain the number of containers passing through the Port of Newcastle?
b. If not, what is the purpose of the fee?

5.

a. Is the purpose of the fee charged of the Port of Newcastle leaseholder to prevent development of a container terminal at the Port of Newcastle?
b. If not, what is the purpose of the fee?

6. Did the Government abolish the cap on container movements at Port Botany to increase the value of the lease to potential purchasers?

7. Did the Government agree to compensate the Port Botany leaseholder in respect of container movements at the Port of Newcastle to preserve the commercial value of the Port Botany lease?

8.

a. Was a cost-benefit study of the proposal to compensate the Port Botany leaseholder if container movements exceed an annual threshold at the Port of Newcastle undertaken?
b. If so, will the Government release it?

9.

a. Does it benefit the New South Wales economy to prevent competition between New South Wales ports for handling containers?
b. If so, how?

10. What are the estimated additional costs to the Northern New South Wales economy to require goods to be transported to Port Botany by truck for export as opposed to the Port of Newcastle?

11. What are the estimated additional costs to the Northern New South Wales economy to require imported goods to be transported between Port Botany and western Sydney before being transported by truck to northern New South Wales?

12. Does it benefit the New South Wales economy to predicate future growth in Port Botany container movements on transportation by truck?

13. What is the container-carrying capacity of the rail line serving Port Botany?

14.

a. Will the Government fund the Western Sydney Freight Line?
b. If not, who will fund this line?

15. When will the Commonwealth Government respond to the Government’s request for funds to build stages 2 and 3 of the Northern Sydney Freight Corridor?

16. Is it true that there are no state or Commonwealth Government funds available for building the Western Sydney Freight Line and stages 2 and 3 of the Northern Sydney Freight Corridor?

27 November 2014

Answer—

I am advised:

1. to (8) These are matters for the Treasurer.

(9)
and (b) Refer to my answer to Budget Estimates 2014-15 Supplementary Question 249.

(10) Specific analysis of this nature has not been undertaken by Transport for NSW. However, a significant proportion of exports originating in northern NSW are bulk exports, which can be processed at the Port of Newcastle.
(11) Specific analysis of this nature has not been undertaken by Transport for NSW. However, 85 percent of Port Botany container imports have a destination within the greater Sydney metropolitan area.
(12) It is necessary to model road and rail forecasts for container movements to and from Port Botany, so the NSW Government can respond with appropriate policy levers, and so industry can respond with appropriate business models. NSW Government forecasts of road and rail container movements take into account our commitment to double the 2011-12 container rail mode share by 2020.
(13) The Australian Rail Track Corporation is the network operator of the port Botany rail line, which forms part of the Metropolitan Freight Network. Any questions relating to the network capacity are a matter for the Australian Rail Track Corporation.
(14)

(a) and (b) This is yet to be determined.

(15) This is a matter for the Commonwealth Government.

(16) Transport for NSW has allocated funding for planning works associated with the Western Sydney Freight Line. Residual funds from stage one of the Northern Sydney Freight Line have been allocated for planning for stage two.

———-

BUDGET ESTIMATES 2014-2015

SUPPLEMENTARY QUESTIONS ON NOTICE

The Illawarra

249. Has the State Government completed the work relating to the MaldonDombarton rail link for the Federal Government? If so, on what date was the report provided to the Federal Government?
I am advised:
The NSW Government delivered work relating to the Maldon to Dombarton rail link to the Australian Government on 31 July 2014.

———-

LEGISLATIVE ASSEMBLY 6 November 2014

6494—PORT OF NEWCASTLE AND PORT BOTANY LEASES

Mr Tim Crakanthorp to the Minister for Transport, and Minister for the Hunter representing the Minister for Roads and Freight, Minister for the North Coast, and Vice-President of the Executive Council—
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?
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 is the Government taking to secure a corridor for a rail freight bypass of Sydney?

11 December 2014

Answer—

I am advised:

(1) to (5) This is a matter for the Treasurer.

(6) With the opening of new intermodal terminals in Western Sydney, it is anticipated that the growth in truck trips from Port Botany to Western Sydney will be lower than the overall growth at Port Botany.

(7) The Australian Government has commissioned Australian Rail Track Corporation to design and construct an inland rail route between Melbourne and Brisbane. A New South Wales Inter-agency Steering Group with representatives from core agencies will be established to provide whole of- government input from New South Wales.

———-

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?

16 January 2015

Answer—

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.

———-

LEGISLATIVE COUNCIL 5 May 2015

0001—Treasurer—PORT OF NEWCASTLE

Dr Faruqi to the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council representing the Treasurer, and Minister for Industrial Relations—

1.

a. Is compensation payable to the Port Botany leaseholder if container movements exceed an annual threshold at the Port of Newcastle?
b. If so, what is the annual threshold?
c. What is the amount of compensation per twenty-foot equivalent unit (TEU)?

2.

a. Is the Port of Newcastle leaseholder required to pay the Government a fee for container movements through the Port of Newcastle on the same or similar terms as the Government is required to compensate the Port Botany leaseholder?
b. If so, when did the Government undertake to pay compensation to the Port Botany leaseholder and to impose a fee on the Port of Newcastle leaseholder?

3. How many containers must be moved through Port Botany and Port Kembla before an extension is allowed in the number of container movements at the Port of Newcastle that do not attract the compensation payment and fee respectively?

4.

a. Is the purpose of the fee charged of the Port of Newcastle leaseholder to constrain the number of containers passing through the Port of Newcastle?
b. If not, what is the purpose of the fee?

5.

a. Is the purpose of the fee charged of the Port of Newcastle leaseholder to prevent development of a container terminal at the Port of Newcastle?
b. If not, what is the purpose of the fee?

6. Did the Government abolish the cap on container movements at Port Botany to increase the value of the lease to potential purchasers?

7. Did the Government agree to compensate the Port Botany leaseholder in respect of container movements at the Port of Newcastle to preserve the commercial value of the Port Botany lease?

8.

a. Was a cost-benefit study of the proposal to compensate the Port Botany leaseholder if container movements exceed an annual threshold at the Port of Newcastle undertaken?
b. If so, will the Government release it?

9. What will be the impact on the New South Wales economy of preventing competition between New South Wales ports for handling containers?

10. What are the estimated additional costs to the Northern New South Wales economy to require goods to be transported to Port Botany by truck for export as opposed to the Port of Newcastle?

11. What are the estimated additional costs to the Northern New South Wales economy to require imported goods to be transported between Port Botany and western Sydney before being transported by truck to northern New South Wales?

12. What will be the impact on the New South Wales economy of predicating future growth in Port Botany container movements on transportation by truck?

13. What is the container-carrying capacity of the rail line serving Port Botany?

14.

a. Will the Government fund the Western Sydney Freight Line?
b. If not, who will fund this line?

15. When will the Commonwealth Government respond to the Government’s request for funds to build stages 2 and 3 of the Northern Sydney Freight Corridor?

16. Are there state or Commonwealth Government funds available for building the Western Sydney Freight Line and stages 2 and 3 of the Northern Sydney Freight Corridor?

9 June 2015

Answer—

1.

a. The terms of the Port Botany transaction are consistent with the NSW Freight and Ports Strategy which was released in 2013. The Port Botany lease is a public document.
b. The details of the container arrangements in the Port Commitment Deeds are commercial in confidence.
c. Please see the answer to question 1 (b).

2.

a. The terms of the Port of Newcastle transaction are consistent with the NSW Freight and Ports Strategy which was released in 2013. The Port of Newcastle lease is a public document.
b. Please refer to the answer to questions 1 (a) and 2(a).

3. Please refer to the answers to questions 1 (a) and 2(a). The details of the Port Commitment Deeds are commercial in confidence.

4.

a. Please refer to the answer to question 2(a).
Please refer to the answer above.

5.

a. The Newcastle Port transaction arrangements do not prevent the development of a container terminal at the Port of Newcastle.
b. Please refer to the answer to question 4(a).

6.Please refer to former Treasurer Baird’s second reading speech on introducing the Ports Assets (Authorised Transactions) Bill 2012.

7. The terms of the Port Botany transaction reflect the Government’s NSW Freight and Ports Strategy which was released in 2013.

8.

a. The scoping study for the transaction included analysis of the freight transport task, landside logistics chains, container demand patterns and logistics costs across the State
b. The scoping study is Commercial in Confidence.

9. The New South Wales ports are not prevented from competing for handling of containers.

10. This question should be referred to the Minister for Roads, Maritime and Freight

11. This question should be referred to the Minister for Roads, Maritime and Freight

12. This question should be referred to the Minister for Roads, Maritime and Freight

13. This question should be referred to the Minister for Roads, Maritime and Freight

14. This question should be referred to the Minister for Roads, Maritime and Freight

15. This question should be referred to the Minister for Roads, Maritime and Freight

16. This question should be directed to the Minister for Roads, Maritime and Freight

———-

LEGISLATIVE ASSEMBLY 4 June 2015

0490 PORT OF NEWCASTLE—Mr Tim Crakanthorp to ask the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council—

Does the cap on container movements at the Port of Newcastle still exist?

(a) If so, is the cap on container movements lawful?

(b) Is the cap on container movements enforceable?

9 July 2015

Answer—

I am advised:

The container arrangements at the Port of Newcastle are consistent with the NSW Freight and Ports Strategy which was released in 2013.

———-

LEGISLATIVE ASSEMBLY 25 June 2015

0701 CAP ON CONTAINER MOVEMENT—Mr Tim Crakanthorp to ask the Premier, and Minister for Western Sydney—

Does a cap on container movement currently apply to the Port of Newcastle?

(a) If so, does the Government charge a fee for each container shipped through the Port of Newcastle above the prescribed cap?

(b) Is that fee paid as compensation to the operator of Port Botany?

30 July 2015

Answer:

Given this question relates to the portfolio of the Minister for Roads, Maritime and Freight, I have referred this question to Minister Gay.

———-

LEGISLATIVE ASSEMBLY 4 August 2015

0765—CAP ON CONTAINER MOVEMENT

Mr Tim Crakanthorp to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council—

1. Does a cap on container movement currently apply to the Port of Newcastle?

(a) If so, does the Government charge a fee for each container shipped through the Port of Newcastle above the prescribed cap?

(b) Is that fee paid as compensation to the operator of Port Botany?

8 September 2015

Answer—

I am advised:

The terms of the Port Botany transaction are consistent with the NSW Freight and Ports Strategy which was released in 2013. The Port Botany lease is a public document.

The details of the container arrangements in the Port Commitment Deeds are commercial in confidence.

There is no legislated container cap at the Port of Newcastle.

———-

LEGISLATIVE ASSEMBLY 4 August 2015

0794—LEASE SCOPING STUDIES

Ms Jodi McKay to the Treasurer, and Minister for Industrial Relations—

1. Were scoping studies prepared for the transactions to lease Port Botany, Port Kembla and the Port of Newcastle?

(a) If not, why not?

(b) If so, will the Minister release the scoping studies considering that the transactions have now been completed?

8 September 2015

1. I have advice that there were.

(a)N⁄A.

(b) Scoping study documents are commercial in confidence documents. It is standard government practice not to release scoping studies to ensure value for money for NSW taxpayers is optimised.

———-

LEGISLATIVE ASSEMBLY 13 August 2015

PORT OF NEWCASTLE

Mr LUKE FOLEY: My question is directed to the Treasurer. Why has the Government imposed constraints on the growth of container movements through the Port of Newcastle?

Ms GLADYS BEREJIKLIAN: The Labor Party opposed at every stage the Government’s improvements to the port and maritime strategy. At every stage the Labor Party opposed asset recycling in Newcastle. Now the proceeds of that asset recycling are going back into the community.

Mr Michael Daley: On a point of order: My point of order is taken under Standing Order 129. The Minister does not know the answer and she has no notes.

The SPEAKER: Order! The member for Maroubra has no knowledge of those matters. There is no point of order.

Ms GLADYS BEREJIKLIAN: We are yet to find out—

The SPEAKER: Order! Members will be directed to leave the Chamber if the interjections continue.

Ms GLADYS BEREJIKLIAN: The Leader of the Opposition has previously highlighted his opposition to what this Government has done in the Port of Newcastle. He has no credibility raising the issue now. The Government ensures that it uses the State’s assets in the best way possible and returns the proceeds to the community, where they belong. Daily in this place, members from the Hunter region talk about jobs, infrastructure, education and health—

Mr Michael Daley: Point of order: You had better coach her; she has got no idea, Premier.

The SPEAKER: Order! Members should not make inappropriate comments when they take a point of order.

Mr Michael Daley: I apologise. My point of order is taken under Standing Order 129. It was a simple question: Why is there a cap on containers coming out of Newcastle? That is constraining the growth of the Port of Newcastle.

The SPEAKER: Order! The Treasurer is being relevant to the question. There is no point of order

Ms GLADYS BEREJIKLIAN: I find it quite ironic that those opposite care about growth and activity when they opposed the Government’s plans to maximise that asset for the people of New South Wales. They have no credibility on this issue. They opposed everything that this Government proposed to do in relation to the ports. As I was saying, before I was rudely interrupted by the member for Maroubra—who does not know very much about this or any other issue regarding the budget—whilst the current member for Newcastle, the Leader of the Opposition and all those opposite, including the members for the Hunter, come in here and complain about lack of jobs in the Hunter and other issues, this side of the House is using the proceeds from that asset recycling to invest back into the community.

The SPEAKER: Order! I call the member for Maitland to order for the first time. I call the member for Maitland to order for the second time.

Ms GLADYS BEREJIKLIAN: I was extremely pleased when every time I had the pleasure of visiting the Hunter—

The SPEAKER: Order! The member for Maitland will come to order.

Mr Michael Daley: Point of order: It is under Standing Order 129 again. If the Treasurer does not know the answer she can take the question on notice. The Port of Newcastle is being constrained and the Minister will not answer the question. The question is very, very simple.

The SPEAKER: Order! The Minister is being relevant to the question and, pursuant to the standing order, that is all I can ask of her.

Ms GLADYS BEREJIKLIAN: I reiterate the hypocrisy of the Labor Government’s question in relation to this matter. Why does it not care about investment in the Hunter?

Ms Linda Burney: Point of order: I suggest if the Minister does not know the answer and cannot get a note she should sit down.

The SPEAKER: Order! There is no point of order.

Ms GLADYS BEREJIKLIAN: When those opposite have a straight answer on what they want for the Hunter and about what they want for the port strategy then they will have the right to ask about it. I say to those opposite: Do not stop progress in the Hunter, because that is what matters to the people of this State.

———-

LEGISLATIVE ASSEMBLY 13 August 2015

PORT OF NEWCASTLE

Mr TIM CRAKANTHORP: My question is directed to the Treasurer. Why, when there is double digit unemployment in the Hunter, has the Government imposed restrictions on growing Newcastle port just to increase the sale price of Port Botany?

The SPEAKER: Order! The member for Hornsby will come to order.

Ms GLADYS BEREJIKLIAN: The member for Newcastle raises an important issue regarding growth and jobs in Newcastle and the Hunter. I was extremely disappointed when this side of the House brought in the Jobs Action Plan legislation to support more job creation in this State the member for Newcastle and every other member on that side of the House opposed that legislation.

The SPEAKER: Order! Opposition members will come to order.

Ms GLADYS BEREJIKLIAN: I put this to the member of the Newcastle: Why is it when this side of House determined that funds from asset recycling should go back into revitalising Newcastle and the Hunter region the member for Newcastle again opposed this Government’s actions to revitalise Newcastle and the Hunter?

Ms Jodi McKay: Point of order: My point of order is Standing Order 129.

The SPEAKER: Order! I call the member for Hornsby and the member for Kiama to order for the first time. Members will be heard in silence.

Ms Jodi McKay: It appears that the Treasurer does not know the answer to the question.

The SPEAKER: Order! That is not a point of order. The member is just entering into an argument and making inappropriate comments. It is up to me to decide relevance. The Treasurer has been relevant. There is no point of order.

Ms GLADYS BEREJIKLIAN: I refer the former member for Newcastle and the current member for Newcastle, the member for Maroubra and the Leader of the Opposition—

The SPEAKER: Order! I warn the member for Maitland that she is already on three calls to order.

Ms GLADYS BEREJIKLIAN: —to the Government’s New South Wales—

The SPEAKER: Order! The member for Maitland will remove herself from the Chamber until the conclusion of question time.

[Pursuant to sessional order the member for Maitland left the Chamber at 2.34 p.m.]

The SPEAKER: Order! I call the member for Hornsby and the member for Kiama to order for the second time.

Ms GLADYS BEREJIKLIAN: I say to those opposite that when we came to government, after 16 years they did not have a New South Wales ports or maritime strategy. What have we done?

The SPEAKER: Order! The member for Strathfield will come to order. The Treasurer remains relevant.

Mr Michael Daley: Point of order: I ask that the Treasurer take the question on notice. The former Treasurer knows the answer to this but he will not help her.

The SPEAKER: Order! The member for Maroubra will resume his seat. I call the member for Maroubra to order for the second time.

Ms GLADYS BEREJIKLIAN: I say to members opposite: When the Government wants to recycle assets such as ports why do they oppose them? They now come into this House and question policies that will support growth and investment in the Hunter. I say to the member for Newcastle and the former member for Newcastle: if they care about jobs, infrastructure and growth in the Hunter region, they will support the Government’s investment strategy. There is no doubt that there is a serious issue with the growth of employment in the Hunter region. That is why this side of the House is investing millions and millions of dollars in infrastructure and millions and millions in revitalising Newcastle.

Mr Tim Crakanthorp: Point of order: My point of order is under Standing Order 129. The question was about restrictions on growing the port; it was very specific.

The SPEAKER: Order! The Treasurer remains relevant. There is no point of order.

Ms GLADYS BEREJIKLIAN: This is the Labor Party’s hopeless attempt to win back the support of the business community in the Hunter. For the last 20 years— [Time expired.]

———-

LEGISLATIVE ASSEMBLY 13 August 2015

PORT OF NEWCASTLE

Mr TIM CRAKANTHORP (Newcastle) [6.06 p.m.]: Since 2013 the city of Newcastle has been waiting—waiting for an answer from the Government, waiting for the benefits of the $1.75 billion sale of the Port of Newcastle to come home and be invested into the new future for our harbour city. More than two years later we are still waiting and it has been revealed that will become the status quo because the Government does indeed have plans for the port, they just do not involve investing in Newcastle.

Mr Gareth Ward: You don’t want it though.

Mr Matt Kean: We’re building you a tramline, aren’t we?

Mr TIM CRAKANTHORP: In fact, you gave us $400 million in the last budget and you took it away this year. How about that? Shame.

ACTING-SPEAKER (Mr Bruce Notley-Smith): Order! The member will be heard in silence.

Mr TIM CRAKANTHORP: This week in the Newcastle Herald the topic was reignited when it was rumoured that the private operator of the Port of Newcastle may have been looking at a container terminal for Newcastle, the first project proposed by BHP as the replacement for the steelworks. Journalist Ian Kirkwood has shared my interest in the topic over the years. On Tuesday last he attended a lunch with the Port of Newcastle executive manager of trade and business development, Peter Francis. He wrote that when Mr Francis was asked about the potential for containers in the port he said: “… the challenge for containers is being able to get the inbound container trade into Newcastle given that the majority of NSW container freight is consumed within the Sydney basin area; that becomes a bit challenging.” That comment was as close as anyone has come to admitting that the way the State Government had leased the Port of Newcastle restricted or effectively prohibited Newcastle from building a major container terminal.

This discussion has been coming for a long time. In the late 1990s BHP’s major parting gift to the region was a plan to convert the steelworks site into a multipurpose terminal that would compete with or rival Botany as the State’s premier container port. But it never happened. Longstanding caps on the size of Botany Bay were lifted and then scrapped altogether and Newcastle lost its place as the next container port to Kembla. The development of a container terminal at the Port of Newcastle would give the city and surrounding Hunter area a massive economic boost. Industry has left the city of Newcastle with the closure of the steelworks and the downturn of the coal industry. Manufacturing is closing with Goninan and EDI Downer begging for the Sydney train contacts, and Forgacs is hanging in the balance if it does not get more Federal defence contracts. Our city needs growth. It needs jobs and it needs the support of the Government to do it.

Under this Government we have had our poles and wires and our port proceeds flogged off. The Government also cut our mass public transport network to the central business district. Enough is enough. It is now time for our fair share and it is the best time for the Government to make a contribution to the unemployment epidemic. If Newcastle was granted the development of a container terminal a new distribution hub could be created and it could utilise the existing heavy rail freight network to service the Hunter region.

Although Newcastle is a major coal port, developing a container terminal would supercharge local job opportunities, improve linkages across the State and provide new commercial opportunities. The Baird Government stopped this happening before it could start by making an anti-competitive decision to impose a cap on the number of containers moving across Newcastle wharves. The Government’s ineptitude regarding this matter was made abundantly clear today in question time when the Treasurer was asked by the Leader of the Opposition: “Why has the Government imposed constraints on the growth of container movements?” The answer from the Treasurer was abysmal. I then asked the Treasurer, “Why, when unemployment has reached double digits in the Hunter, has the Government imposed restrictions on growing the Port of Newcastle just to increase the sale price of Botany?” The answer was even more abysmal and prompted Newcastle Herald journalist Michelle Harris to tweet: “Govt’s farcical efforts to avoid giving an actual answer on port container cap questions reaches new low in QT today.” What a disgrace.

Worse still are intimations that should Newcastle ever exceed its mega cap, the owners of Port Botany will be financially compensated. This makes the development of a container terminal at Newcastle very difficult. Restricting port activity in Newcastle protects the container monopoly at Port Botany from facing competition. Preserving the monopoly at Port Botany is how the Government inflated its sale price—it fattened the pig when it was privatised. Restricting activity at Newcastle and protecting Botany’s monopoly is market rigging by the New South Wales Government at the highest level. Ports are strategic assets for open trading economies like ours. Many of the goods we consume arrive in containers. The port should be freely competing for sea trade cargo. I want Newcastle to be a vibrant, smart city that nurtures creativity and innovation that attracts investment. Premier Baird must be held accountable for hurting Newcastle and its prospects.

Mr MATT KEAN (Hornsby—Parliamentary Secretary) [6.11 p.m.]: I appreciate the member for Newcastle has passion for his community but while he is entitled to his own opinions, he is not entitled to his own facts. The reality is that the proceeds from the sale of the Port of Newcastle are going exactly where the member for Newcastle wants them—back into Newcastle. In addition to the $120 million allocated by the Government for the revitalisation of the Newcastle central business district, proceeds to the value of $340 million is being allocated for the project. The only flaw in the argument made by the member for Newcastle is that he voted against the money going to Newcastle in the first place.

ACTING-SPEAKER (Mr Bruce Notley-Smith): Order! The member for Newcastle will restrain himself.

Mr MATT KEAN: I appreciate that the member is advocating for his community and that he is passionate about achieving the best deal for it, but the money is flowing back to Newcastle for its revitalisation. It is long overdue because it was put on hold by the former Labor Government.

———-
LEGISLATIVE ASSEMBLY 13 August 2015

1030—LEASE OF THE PORT OF NEWCASTLE

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

How much of the $1.75 billion from the long term lease of the Port of Newcastle has been spent in Newcastle?

16 September 2015

Answer—

(1) Details of the Restart NSW projects can be found at insw.com⁄restart-nsw.aspx.

———-

GENERAL PURPOSE STANDING COMMITTEE NO. 2 Monday 31 August 2015

The Hon. SOPHIE COTSIS: Is there a cap on container movements at the Port of Newcastle? If so, what is it?

The Hon. DUNCAN GAY: No.

The Hon. SOPHIE COTSIS: You are sure about that answer?

The Hon. DUNCAN GAY: Yes.

The Hon. SOPHIE COTSIS: In answer to a question in October 2013 you said in part: 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. Are you saying that statement in October is wrong?

The Hon. DUNCAN GAY: My understanding is there is not a cap into Newcastle. We have indicated a preference and a sensible way of doing it. The large majority of boxes come into New South Wales through Port Botany. The bulk of those boxes need to get to Sydney so the best location to put them into is Sydney in the first instance. Secondly it is Port Kembla, which is half the distance of Newcastle to bring them up. Once we reach a number where there are too many, certainly we would be looking at a spillage into Newcastle. The general freight and boxes that need to go to Newcastle certainly will be going to Newcastle.

The Hon. SOPHIE COTSIS: It is my understanding that there is a cap on container movements. We would like that confirmed. If there is a cap and if it is breached, is a fee, fine or a charge imposed? Who pays for it? Where does the money go? It is my understanding that there is a cap and you indicated in your answer on 17 October that part of the lease and the rationalisation was a cap on numbers there. Were you misleading the House?

The Hon. DUNCAN GAY: There is no container cap at the Port of Newcastle. I indicated that there is a cap in New South Wales at Sydney and once that is reached we then look at other places. But you specifically asked me a question whether there was a cap at Newcastle and I specifically answered that there is not.

The Hon. SOPHIE COTSIS: On container movements?

The Hon. DUNCAN GAY: There is no legislated cap.

The Hon. SOPHIE COTSIS: Is there an internal document?

The Hon. DUNCAN GAY: I think I have answered the question. I am happy to keep going around.

The Hon. SOPHIE COTSIS: You said one thing in the House and you are saying another thing to the Committee.

The Hon. DUNCAN GAY: No, I have said the same thing in both places.

The Hon. SOPHIE COTSIS: I am not going to waste my time, but you are quoted as saying in the House that part of the lease and the rationalisation was a cap on numbers there. Now you are saying that there is no cap. About the movement of containers through Newcastle you also said on 17 October 2013: The only time an extension is allowed is when a specific number is reached and is tripped in Port Botany and Port Kembla. What is the number for Port Kembla and what is the number for Port Botany?

The Hon. DUNCAN GAY: Which is exactly what I said a moment ago. I will have to come back to you with that number.

The Hon. SOPHIE COTSIS: Will you release the scoping study for the sale of the ports?

The Hon. DUNCAN GAY: That is not a question for me. That is a question for either Treasury or Finance.

The Hon. SOPHIE COTSIS: Will you take that on notice?

The Hon. DUNCAN GAY: No.

The Hon. SOPHIE COTSIS: Will you release the port commitment deeds?

The Hon. DUNCAN GAY: No, for the same reasons as the previous answer.

The Hon. Dr PETER PHELPS: It is the wrong portfolio.

The Hon. SOPHIE COTSIS: I refer to a media release by the head of the Australian Competition and Consumer Commission [ACCC] issued on 23 April in which Mr Sims outlines a number of concerns about actions taken by governments to sell significant assets without appropriate market structures and regulatory arrangements. He cited the example of the recent sale of Port Botany and Port Kembla to the same owner. He stated: We need to be careful to ensure that privatisation boosts economic efficiency rather than detracts from it … Otherwise we risk giving privatisation a bad name because consumers will continue to associate privatisation with higher prices. Do you agree with Mr Sims that the sale of Port Botany and Port Kembla proceeded without appropriate market structures and regulatory arrangements being put in place?

The Hon. DUNCAN GAY: The Government had all the proper procedures in place. It was not a sale; it was a lease. The lease of Newcastle went to a different body. So the concerns you are raising on behalf of that gentleman have been addressed within that, if they were valid.

The Hon. SOPHIE COTSIS: That gentleman is the chair of the ACCC and he has grave concerns about competition and governments selling—

The Hon. DUNCAN GAY: I just answered that. I just indicated that the lease that happened for Port Botany and Port Kembla went to one group; the lease for the Port of Newcastle went to a different group. There is competition. Do not forget that we are also in competition with Melbourne and Brisbane every day of the week—and beating them. We are beating them hands down, so it cannot be too bad. I do, however, have the ability to refer the port to the Independent Pricing and Regulatory Tribunal if the pricing behaviour of the port’s lessee is inappropriate.

The Hon. SOPHIE COTSIS: What can that trigger?

The Hon. DUNCAN GAY: It would be very much part of price monitoring.

The Hon. SOPHIE COTSIS: In terms of the cap on containers, are any fees paid if the number of containers through Newcastle exceeds a set amount?

The Hon. DUNCAN GAY: Not that I am aware of.

The Hon. SOPHIE COTSIS: You are not aware of that?

The Hon. DUNCAN GAY: You asked me whether there was a cap in Newcastle and I said there is not. Now you are asking me whether there is a fee paid if they go beyond a certain number. General cargo containers are part of what happens in Newcastle. My understanding is that within the general cargo that needs to go to Newcastle that is fine.

The Hon. SOPHIE COTSIS: Will you speak to your bureaucrats and take that on notice?

The Hon. DUNCAN GAY: If we need to deliver more of an answer we will.

The Hon. SOPHIE COTSIS: The ACCC submission to the Harper competition report stated: 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”. What is your response to the ACCC’s concerns about reducing the prospect of competitive provision of port services?

The Hon. DUNCAN GAY: I think you will notice, as I said earlier, that people wishing to use the New South Wales ports are voting with their feet—they are coming to us. Rather than there being a lack of competition, there appears to be better pricing and more competition in New South Wales than we have seen in Queensland and Victoria. For the first time, we are getting trade out of the Riverina in New South Wales. It is coming back to Port Botany whereas in the past it traditionally went to the Port of Melbourne. I will ask the chief executive officer of Sydney Ports whether he wishes to add anything at this point.

Mr GILFILLAN: During the transaction process over the ports at Port Botany, Port Kembla and Newcastle a lot of consideration was given to the issue of competition. As the Minister said, the reality is that there is very limited scope for competition between these ports because of the transport issues between the ports and the fact that each port is geared towards a specific type of cargo. Some things are contestable—for example, cars were moved from Sydney down to Port Kembla in November 2008. That was contestable and the Government took a position on that and moved cars. For most other commodities, from a financial and a commercial perspective, it simply does not make sense for these ports to compete between each other. In fact, it gives a perverse outcome—you end up with the commodity costing more because you incur more transport costs. Despite what the Australian Competition and Consumer Commission [ACCC] may have said, the reality is that there is very little scope for competition between our main ports adjacent to Sydney. As the Minister said, our reality is that we lose more cargo to Melbourne from our ports than we do internally between our ports in New South Wales. So competition is not really an issue.

The Hon. SOPHIE COTSIS: Have you spoken to the ACCC about the concerns it has raised? These are pretty big concerns.

Mr GILFILLAN: I was not a party to any conversation with the ACCC. This process during the transaction—

The Hon. DUNCAN GAY: This is not Mr Gilfillan’s area. I invite Mr Reardon to add something here.

Mr REARDON: In terms of any lease or sale process within government of a public asset, there will always be a consideration by the ACCC about the market, market reform and market structure. At the end of the day, the processes have gone forward. It would be a unique situation if the ACCC did not have a comment on it in terms of what the market structure would be—whether it is ports, banks or any other part of the economy. As we pointed out, though, competition within ports is a whole of east coast matter. It is not simply a matter for Newcastle, Port Kembla or Port Botany. It is also about the Port of Melbourne and the Port of Brisbane. I have to add that places like the Port of Brisbane have grown quite strongly.

So I would not subscribe to the view that there is not competition because of the leases. There is competition on the east coast, and it is up to New South Wales to position itself as strongly as possible within that to ensure its ports continue to grow. As the Minister has pointed out also, in terms of a legislative cap within Newcastle there is no such thing. So in terms of what we are focused on it is the growth of Port Botany.

CHAIR: The Minister said there was no cap at all, not that there was no legislative cap. The Minister said there was no cap at all. That was his answer. You are now talking about a legislative cap. I think this is where there is some confusion creeping in.

The Hon. DUNCAN GAY: No, I said both. I said there is no cap in Newcastle and there is no legislative cap overall.

………

The Hon. PAUL GREEN: I have a question about container caps and the leasing of ports. We were discussing the possibility of up to eight million containers moving around Port Botany, and large numbers at Port Kembla and Newcastle. If Botany were leased and had a cap of several million, would there be statutory caps?

The Hon. DUNCAN GAY: I answered that earlier. My answer now is no different.

The Hon. PAUL GREEN: Are there caps for Port Kembla?

The Hon. DUNCAN GAY: No.

The Hon. PAUL GREEN: So it is open to any number?

The Hon. DUNCAN GAY: Yes.

The Hon. Dr PETER PHELPS: Let us hope that it gets bigger.

The Hon. PAUL GREEN: The problem is that the freight comes onto the roads.

The Hon. Dr PETER PHELPS: Unless the Maldon to Dombarton railway is built.

The Hon. PAUL GREEN: That is right. I will have a problem if it gets bigger and the railway is not built.

The Hon. DUNCAN GAY: It is in our interest to grow all of them but not to unnecessarily use one to take freight that could have gone to another and been carried by road or rail. We need to be sensible. The ports need to specialise and grow. New South Wales ports are doing well compared to interstate ports.

CHAIR: The Minister said earlier that there are no caps, legislative or otherwise, on the Port of Newcastle.

The Hon. DUNCAN GAY: That is correct. That is for Newcastle.

The Hon. PAUL GREEN: So Port Kembla could grow to any size, as long as the containers keep coming in.

The Hon. DUNCAN GAY: It can grow within the constraints of its infrastructure.

The Hon. PAUL GREEN: There would have to be a cap, according to the capacity of that infrastructure?

The Hon. DUNCAN GAY: The infrastructure is the cap. Mr Reardon would like to clarify an earlier answer on Infrastructure NSW.

———-

GENERAL PURPOSE STANDING COMMITTEE NO. 1 Thursday 3 September 2015

The Hon. ADAM SEARLE: When you sold the Port of Newcastle was a cap put on the number of containers that can be moved through the Port of Newcastle?

Ms GLADYS BEREJIKLIAN: I understand there is no legislated container cap.

The Hon. ADAM SEARLE: So there is no cap on container movements there?

Ms GLADYS BEREJIKLIAN: There is no legislated container cap.

The Hon. ADAM SEARLE: Is there any other restriction in the sale of the lease documents?

Ms GLADYS BEREJIKLIAN: I am not aware of that.

The Hon. ADAM SEARLE: What about in the contracts?

Ms GLADYS BEREJIKLIAN: I am not aware.

The Hon. ADAM SEARLE: Will you take that on notice?

Ms GLADYS BEREJIKLIAN: I am happy to take that on notice.

The Hon. ADAM SEARLE: You are aware of the $20 20-foot equivalent container charge at the Port Botany on throughput that was in place for a number of years?

Ms GLADYS BEREJIKLIAN: I will ask Mr Spencer to answer your questions in this regard.

The Hon. ADAM SEARLE: Mr Spencer, are you aware of that container tax, if I can put it that way?

Mr SPENCER: For clarification, was it what was called a port container charge?

The Hon. ADAM SEARLE: I think it was a $20 charge on every 20-foot equivalent unit. It was originally to build a truck marshalling yard but when the marshalling was constructed it remained in place. At the moment, the value, I think, over the life of the lease would be in excess of the price that was achieved for the lease of Port Botany. The Government did not talk about that when the sale of the lease went through. Will the Minister confirm her understanding that that is still in place and is still being charged?

Mr SPENCER: To provide an accurate answer, I will take that question on notice.

(TIMOTHY JOHN SPENCER, Deputy Secretary, Commercial Group, NSW Treasury)

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LEGISLATIVE ASSEMBLY 10 September 2015

1337—PRIVATE OPERATOR OF PORT BOTANY

Mr Tim Crakanthorp to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council—

Is compensation payable to the private operator of Port Botany for container throughput at Newcastle port in excess of a cap?

15 October 2015

Answer-

This is a matter for the Treasurer.

———-

BUDGET ESTIMATES 2015-2016

Supplementary Questions

General Purpose Standing Committee No. 2 Roads, Maritime and Freight

Monday 31 August 2015

Answers due by: Thursday 24 September 2015

Questions from The Hon Shaoquett Moselmane MLC [on behalf of the NSW Labor Opposition]

Newcastle Port

31. I refer to the comments you made in the Legislative Council on 17 October 2013 about the movement of containers through the Port of Newcastle that, “part of the lease and the rationalisation was a cap on numbers there.” What are the arrangements that cap, inhibit or restrict the number of containers that pass through the Port of Newcastle?

Answer 31:

I am advised:

There is no legislated container cap at Port of Newcastle. The Government fully expects that organic growth of containers at Newcastle will continue.

32. 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 32:

I am advised:

The port leases do not seek to constrain trade, but aim to incentivise trade and port development in a manner that is consistent with the Freight and Ports Strategy.

33. Has the NSW Government entered into any agreements that create a disincentive or obstacle to increase the number of containers that pass through Newcastle?

Answer 33:

I am advised:

The port leases do not seek to constrain trade, but aim to incentivise trade and port development in a manner that is consistent with the Freight and Ports Strategy.

34. I refer to your comments in the Legislative Council on 17 October 2013 about containers and the Port of Newcastle, that “the only time an extension is allowed is when a specific number is reached and tripped in Port Botany and Port Kembla.”

(a) What is the number for Port Kembla?

(b) What is the number for Port Botany?

Answer 34:

I am advised:

The transaction arrangements that the State entered into with the successful bidders for Port Botany and Kembla and the Port of Newcastle reflect the Freight and Ports Strategy.

Questions from Dr Mehreen Faruqi MLC

Freight

179. Two-thirds of the projects in the NSW Freight and Ports Strategy Infrastructure Program are road-freight projects, and only 1/3 are rail freight. Moreover, 73% of the fully-funded projects are road-freight. How does the government intend to reach the target of 28% rail share of containers moved through port? (a) Is this still the target? (b) Will the government reach the target in this term of government?

Answer 179:

I am advised:

The Government maintains its 28% rail share target and since November 2014, the highest volumes of rail freight have been handled at Port Botany in five years.

The Cargo Movement Coordination Centre, established in 2014 in accordance with the objectives in the NSW Freight and Ports Strategy, has been working to increase freight rail by addressing issues around reliability, available intermodal terminal capacity, transit time and cost.

The 2015-16 Budget provides $6 million for the Airport East Precinct project, which includes removal of the General Holmes Drive level crossing on the Port Botany freight rail line to allow freight trains to travel at increased speeds. The project will also involve building twin rail bridges over the Wentworth Avenue underpass, which will allow for future duplication of the rail line.

Customer education about the advantages of rail has led to the transition of major freight customers from road to rail. This includes Kmart, Bunnings and Officeworks, and the movement of Visy shipments from Melbourne to Sydney.

Capacity at intermodal terminals drives increased demand for rail over road. The NSW Government policy is to identify and protect land and freight corridors for future intermodal capacity.

180. What is the status of the Inland Rail project? What is the NSW Government doing to make sure this important freight connection is built?

(a) The Inland Rail website says an Implementation Group will provide the delivery plan and business case for Inland Rail to the federal government by mid-2015. Is this project on track?

(b) Given that most of this will be constructed in NSW, has the NSW government seen the plan and business case?

Answer 180:

I am advised:

(a) On 11 September 2015, the Inland Rail Implementation Group’s Chair, the Hon John Anderson AO delivered the Final Report on the proposed Melbourne to Brisbane Inland Rail and the Australian Rail Track Corporation’s 2015 Inland Rail Programme Business Case to the Hon. Warren Truss, MP, Deputy Prime Minister and Minister for Infrastructure and Regional Development.

Transport for NSW’s Secretary is a member of the Australian Government’s Inland Rail Implementation Group and Transport for NSW has been represented at meetings to date.

Transport for NSW has now established a NSW Interagency Steering Committee to provide a whole-of-government position to facilitate advancing the Inland Rail.

(b) Yes.

198. What is the purpose of the container throughput cap at Newcastle port?

199. What is the purpose of paying compensation to the Port Botany leaseholder if the container throughput cap at Newcastle port is exceeded during the term of the Port Botany lease?

200. How much compensation is payable to the Port Botany leaseholder per container if the container throughput cap is exceeded at Newcastle port?

201. What is the source of funds for paying compensation to the Port Botany leaseholder if the container throughput cap at Newcastle port is exceeded?

202. Are stevedore tenants of Newcastle port charged a fee for each container that exceeds the container throughput cap?

(a) If so, what is the amount?

203. Did the government decide not to put any funds in place to pay compensation to the Port Botany leaseholder if the container throughput cap is exceeded at Newcastle port because no extension will be allowed in the container throughput cap until an unspecified container throughput is reached at Port Botany and Port Kembla?

Is Minister Gay responsible for enforcing the container throughput cap at Newcastle port?

(a) If not, which Minister is responsible?

205. Has the government claimed an exemption from complying with the ”Competition and Consumer Act 2010” in respect of Port Commitment Deeds?

206. How many Port Commitment Deeds are there?

207. Did the government provide the ACCC with all Port Commitment Deeds?

208. If not, did the government supply the ACCC with extracts of Port Commitment Deeds?

209. Do the ports lease arrangements prohibit the development of a container terminal at the Port of Newcastle and enable the growth of container volumes through Newcastle servicing that region?

210. Did the government decide not to put any funds in place to pay compensation to the Port Botany leaseholder because no extension will be allowed in the container throughput cap at Newcastle port until an unspecified container throughput is reached at Port Botany and Port Kembla?

211. Has the government been clear that while general cargo will be allowed at Newcastle, there will be no extension until a specific number of containers is reached and exceeded in Port Botany and Port Kembla?

a. If so, to whom has the government communicated this information?

Answer: 198-211

I am advised:

This transaction was led by Treasury and should be referred to the Treasurer.

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BUDGET ESTIMATES 2015-2016

Supplementary Questions
General Purpose Standing Committee No. 1 Treasury, Industrial Relations
Thursday 3 September 2015
Answers 29 September 2015
Questions from The Hon. Shaoquett Moselmane MLC

PORTS ISSUES

24. Has the NSW Government imposed any restrictions on the movement of containers through the Port of Newcastle?

25. Is there a cap on container movements at the Port of Newcastle

a. If so, what is it? Is it a charge per container?
b. If the cap is breached, is a fee, fine or charge imposed? Who pays it? Who do they pay the money to?
c. If the cap is breached, are any monies paid to the operators of Port Botany and/or Port Kembla? If so, how much is paid? Who pays it?
d. When were these arrangements agreed?

Answer 24-25:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

26. In the interest of transparency, will you release the Port Commitment Deeds that set out details of arrangements for containers?

Answer 26:

The Port Commitment Deeds are commercial in confidence documents.

27. Now that the port transactions are concluded, will you release the scoping study that was undertaken ahead of the transaction for the three ports?

Answer 27:

The Scoping Study documents remain Cabinet-in-confidence. The Government, and previous Governments, have not released Scoping Studies for previous transactions.

28. Minister Gay has said: “The only time an extension is allowed is when a specific number is reached and tripped in Port Botany and Port Kembla.” What is the number? For Port Kembla? For Port Botany? Answer

28: See http://freight.transport.nsw.gov.au/strategy/

a. How much money was raised by the sale/lease of Newcastle port?
b. What was money spent on? 6
c. How much has gone into consolidated revenue?
d. How much has been allocated to, or spent in, the Newcastle electorate?

Answer 28 (a) – (d): For publicly available information, see http://www.transport.nsw.gov.au/media-releases/transforming-newcastle-port-lease-securesfunds-revitalisation

29. 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 29: I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.

30. Has the NSW Government entered into any agreements that create a disincentive or obstacle to increase the number of containers that pass through Newcastle?

Answer 30: Please refer to answer 24 – 25. [There is no legislated cap on the number of containers that can travel through the Port of Newcastle.]

31. Has the NSW Government entered into any arrangement that create a financial penalty if the number of containers moved through the Port of Newcastle exceeds a set threshold?

a. If so, what is the threshold?

Answer 31:  Please refer to answer 24 – 25. [There is no legislated cap on the number of containers that can travel through the Port of Newcastle.]

32. Is the leaseholder of Port Botany entitled to receive a payment should the number of containers moved through the Port of Newcastle exceed a set figure?

33. If so, what is the payment and who pays it?

Answer 32 – 33:

Please refer to answer 24 – 25. [There is no legislated cap on the number of containers that can travel through the Port of Newcastle.]

34. Do the Port Commitment Deeds establish any limitations or restrictions on the operation of Port Kembla or the Port of Newcastle?

Answer 34:

Please refer to answer 24 – 25. [There is no legislated cap on the number of containers that can travel through the Port of Newcastle.]

35. Will you release the Port Commitment Deeds for the port transactions?

Answer 35:

Please refer to answer 24 – 25. [There is no legislated cap on the number of containers that can travel through the Port of Newcastle.]

36. Will you release the scoping study for the port transactions?

Answer 36:

Please refer to answer 27. [The Scoping Study documents remain Cabinet-in-confidence. The Government, and previous Governments, have not released Scoping Studies for previous transactions.]

———-

LEGISLATIVE ASSEMBLY 15 October 2015

1612—PRIVATE OPERATOR OF PORT BOTANY

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

Is compensation payable to the private operator of Port Botany for container throughput at Newcastle port in excess of a cap?

Answer: 16 November 2015

Please refer to my response to questions 24 & 25 at Budget Estimates 2015 Answers to Supplementary Questions, General Purpose Standing Committee 1, 9 am, Thursday 3 September 2015.

PORTS ISSUES

24. Has the NSW Government imposed any restrictions on the movement of containers through the Port of Newcastle?

25. Is there a cap on container movements at the Port of Newcastle?

a. If so, what is it? Is it a charge per container?
b. If the cap is breached, is a fee, fine or charge imposed? Who pays it? Who do they pay the money to?
c. If the cap is breached, are any monies paid to the operators of Port Botany and/or Port Kembla? If so, how much is paid? Who pays it?
d. When were these arrangements agreed?

Answer 24-25:

There is no legislated cap on the number of containers that can travel through the Port of Newcastle.

———-

LEGISLATIVE ASSEMBLY 22 October 2015

1719—PRIVATE OPERATOR OF PORT BOTANY

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

Is compensation payable to the private operator of Port Botany for container throughput at Newcastle Port in excess of a cap?

Answer: 26 November 2015

Please refer to my response to questions 24 & 25 at Budget Estimates 2015 Answers to Supplementary Questions, General Purpose Standing Committee 1, 9am, Thursday 3 September 2015.

———-

LEGISLATIVE ASSEMBLY 29 October 2015

1848—NEWCASTLE PORT

Mr Tim Crakanthorp to the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council—

1. When did the Competition and Consumer Act 2010 stop applying to the Government in respect to the operation of the Port of Newcastle?

2. Do the Port Commitment Deeds include a fee on container throughput at Newcastle Port under certain specified conditions?

Answer 4 December 2015:

I am advised :

This is a matter for the Treasurer.

———-

LEGISLATIVE ASSEMBLY 19 November 2015

2107—AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Mr Tim Crakanthorp to the Treasurer, and Minister for Industrial Relations—

1. 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?

2. 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?

18 December 2015

Answer—

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.