Latest Correspondence

The Hon Scott Morrison MP
Treasurer of the Commonwealth of Australia

Dear Mr Morrison,

I refer to Treasury’s letter (ref: MC17-000292) dated January 27 2017, which stated that the conduct described in my correspondence concerning the Port of Newcastle “does not appear to disclose any relevant conduct for the purposes of the “Commonwealth Competition and Consumer Act 2010” [CCA]. There does not appear to have been a contract, arrangement or understanding in place which had the purpose, effect or likely effect of substantially lessening competition.”

The conduct in question took place between 2009 and November 2013, and involved Newcastle Port Corporation (NPC), a statutory state-owned corporation, implementing its strategic plan for expanding its commercial business operations. NPC was engaged in this conduct on a regular and systematic basis, as proven by Annual Reports and other statements of corporate intent. NPC’s conduct was for the purpose of trade and commerce and took place in a business context. These are characteristics a Court examines when determining whether a government entity is carrying on a business for the purposes of the CCA. A reasonable person would conclude that NPC’s conduct was of this character.

NPC received approval from the NSW government in 2009 to issue an “Invitation To Submit Detailed Proposal, Mayfield Site” (ITSDP). The ITSDP’s “stated objectives” were –

(a) have cargo handling terminal activity for containers and other cargo which may include bulk, break bulk, roll on roll off, etc., consistent with the characteristics, assets and capabilities of the Site;

(b) include a best practice container operation capable of handling in excess of 1 million TEU per annum;

(c) select a Proponent that is committed and has the capacity, resources and expertise to successfully deliver and grow their development proposal;

(d) increase the proportion of northern NSW trade for NSW ports;

(e) generate employment opportunities in the Hunter region;

(f) provide environmental, safety and community amenity benefits through reduced road traffic congestion in Sydney, thereby reducing greenhouse gas, vehicle emissions and noise;

(g) optimise public value for money by maximising land use intensity and engaging the private sector in the development of the State’s port and transport infrastructure for handling container and general cargo trades;

(h) ensure investment and development is delivered in a timely manner;

(i) recognise relationships between parties who may use the existing facilities and access points to and from the Site; and

(j) secure an appropriate commercial return to Newcastle Port Corporation.

A proposal received from Newcastle Stevedores Consortium (NSC) was chosen in 2010 and negotiations commenced. When agreement was reached in December 2010, NPC requested NSW government approval to enter into a contract with NSC, as the last step of the ITSDP process. For reasons later exposed by the NSW ICAC in their “Operation Spicer” Inquiry conducted in 2014, approval was not given before the NSW state election held in March 2011. Negotiations pursuant to the ITSDP contract continued after the election until they were terminated by NPC in November 2013.

Sometime after Port Botany and Port Kembla were leased to NSW Ports in April 2013, NPC amended the terms of the ITSDP contract by requiring NSC to make the NSW government whole for any cost the NSW government incurred for paying NSW Ports in respect of NSC developing and operating a container terminal at the Port of Newcastle. The amount of the government’s payment to NSW Ports was the average amount that NSW Ports charged in a calendar year for TEU containers shipped through Port Botany. The requirement on NSC to make the NSW government whole was contractual. The purpose, or likely effect, of this contractual requirement was to substantially lessen competition between the Port of Newcastle and Port Botany, by making it commercially unviable for NSC to develop and operate a container terminal.

A container terminal developed and operated according to NPC’s “stated objective” (b) would require the NSW government to pay NSW Ports up to $100 million per annum for 50 years, or $5 billion. NPC required NSC to make the government whole for the explicit purpose of securing a source of funds for recovering the cost of paying NSW Ports. Under the terms of the ITSDP contract, NPC had the right to change the terms and conditions as it saw fit.

The NSW government was obliged to satisfy itself that the charge complied with the CCA. If the charge contravened the CCA, a contract between NPC and NSC could not be approved by the NSW government and, therefore, a contract between NPC and NSC could not be concluded. Presumably, the NSW government satisfied itself about the potential lawfulness of the charge.

A reasonable person would conclude that NPC’s reason for terminating the ITSDP contract in November 2013 was because the charge potentially contravened the CCA. If this charge did contravene the CCA, this means that the NSW government leased the Port of Newcastle to circumvent the CCA for securing a source of funds for meeting the cost of paying NSW Ports in respect of future container capacity development at the Port of Newcastle.

In 2009, NSW government policy supported “stated objective” (b) of the ITSDP. In 2012, when the NSW government informed bidders for the Port Botany and Port Kembla leases that the lessee would be compensated in respect of future container capacity development at the Port of Newcastle, presumably, the intention was that NSC would be the government’s source of funds, because the ITSDP contract was in force at that time.

Because NPC’s negotiations with NSC were confidential, it was not publicly disclosed that on two occasions – August 30 2012 and July 26 2013 – the NSW government instructed NSC that “stated objective” (b) was withdrawn from the ITSDP contract. Presumably, this contractual change was reversed when NSC was contractually required to pay the NSW government in respect of NSC operating a container terminal.

NSW government policy in 2009 supported the immediate development of a container terminal at the Port of Newcastle and this policy has not changed, as the government formally confirms. Claims by the ACCC that NSW government policy does not support immediate development of a container terminal at the Port of Newcastle must be supported with factual evidence, or withdrawn.

Will you please advise if the ACCC claims that NPC’s conduct pursuant to the ITSDP contract did not constitute carrying on a business for the purposes of the CCA in the period 2009 to November 2013?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: Mr Rod Sims, Chairman, ACCC; NSW Auditor-General; NSW MPs; Media

March 23 2017

Statement to Members of Parliament and Media March 19 2017 

Major claims by the ACCC about a container terminal at the Port of Newcastle are incorrect.

There was no decision by the NSW government in 2012 not to develop a container terminal at the Port of Newcastle. The decision the government took on August 30 2012 was to instruct Newcastle Stevedores Consortium (NSC) not to develop a container terminal at the Port of Newcastle pursuant to a contract under negotiation with Newcastle Port Corporation (NPC). However, this decision was reversed 12 months later when the government permitted NSC to develop a container terminal, providing it paid an additional charge. The government did not decide that Port Kembla is to be the only location for the state’s next container terminal. Government policy is that a container terminal may be developed immediately at the Port of Newcastle without regard to Port Botany and Port Kembla.

Plainly, the ACCC must use correct information when making decisions about the “Commonwealth Competition and Consumer Act 2010” (CCA).

In 2009, the NSW government approved NPC leasing portside land called the “Mayfield Site”. Two main conditions were attached. First, the lessee was to develop and operate a cargo terminal for containers and other cargo. Second, the container terminal was to have capacity of more than 1 million TEU per year.

In 2010, NSC was selected to become the Mayfield Site’s “Master Developer”.

On July 27 2012, or thereabouts, the government issued a media statement about Port Kembla being the logical location for the state’s next container terminal after Port Botany reached capacity. Because negotiations between NPC and NSC were confidential, NPC did not publicly disclose the government’s instruction to NSC one month later not to develop a container terminal.

In 2012, the government was negotiating to lease Port Botany and Port Kembla. Potential lease bidders knew that the government could reverse its instruction to NSC not to develop a container terminal. As an inducement to the bidders, the government promised it would pay the future lessee in respect of future container capacity development at the Port of Newcastle. For every ship carrying 10,000 containers (5,000 import/5,000 export) at the Port of Newcastle, the government promised to pay $1 million.

If 1 million containers per year were shipped through the Port of Newcastle, the Botany/Kembla lessee would be paid $100 million per year. Bidders competed vigorously.

After NSW Ports emerged as the successful bidder in April 2013, it was critical for the government that it should have a source of funds other than consolidated revenue for paying NSW Ports. This problem was solved by requiring NSC to be the government’s source of funds by amending the terms of the confidential negotiations.

The government could scarcely justify charging NSC – and implicitly NSC’s customers – for paying NSW Ports, simply because NSC developed a container terminal.

The government may have contravened the CCA by charging NSC.

If so, the charge would not be enforceable. NPC concluded negotiations with NSC in November 2013, after a scoping study had convinced the government that the port could be leased with a condition that the lessee make the government whole for any cost the government incurred in paying NSW Ports.

Leasing the Port of Newcastle allowed the government to act outside the operation of the CCA: charging the leaseholder would not contravene the CCA when the CCA did not apply.

The question is whether the government leased the Port of Newcastle to circumvent the CCA in order to be able to demonstrate having a source of funds for paying NSW Ports.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

March 19 2017

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Sims,

I refer to NSW government policy in respect of the Port of Newcastle.

In 2009, the NSW government permitted Newcastle Port Corporation (NPC), a statutory state-owned corporation, to lease land designated as the “Mayfield Site” at the Port of Newcastle. The government required NPC to comply with NSW government guidelines for “Public Private Partnerships”.

In 2010, NPC commenced a “request for proposals process” for a “Master Developer” and issued an “Invitation To Submit Detailed Proposal, Mayfield Site” (ITSDP), which listed the following objectives –

(a) have cargo handling terminal activity for containers and other cargo which may include bulk, break bulk, roll on roll off, etc., consistent with the characteristics, assets and capabilities of the Site;

(b) include a best practice container operation capable of handling in excess of 1 million TEU per annum;

(c) select a Proponent that is committed and has the capacity, resources and expertise to successfully deliver and grow their development proposal;

(d) increase the proportion of northern NSW trade for NSW ports;

(e) generate employment opportunities in the Hunter region;

(f) provide environmental, safety and community amenity benefits through reduced road traffic congestion in Sydney, thereby reducing greenhouse gas, vehicle emissions and noise;

(g) optimise public value for money by maximising land use intensity and engaging the private sector in the development of the State’s port and transport infrastructure for handling container and general cargo trades;

(h) ensure investment and development is delivered in a timely manner;

(i) recognise relationships between parties who may use the existing facilities and access points to and from the Site; and

(j) secure an appropriate commercial return to Newcastle Port Corporation.

Question 1: Does the ACCC claim that NPC was not carrying on a business for the purpose of the “Commonwealth Competition and Consumer Act 2010” (CCA) by conducting the ITSDP process?

The ITSDP set out the terms and conditions by which the Mayfield Site was being offered for lease. One respondent to the ITSDP was selected to become the “Master Developer” – Newcastle Stevedores Consortium (NSC).

Question 2: Does the ACCC accept that the ITSDP was a contract between NPC and NSC?

When negotiations between NPC and NSC were completed in December 2010, NPC was ready to conclude a contract with NSC and requested approval from the NSW government, in accordance with the guidelines for “Public Private Partnerships”. Approval was not given before the March 2011 NSW state election. After the election, the NSW government continued to conduct negotiations with NSC pursuant to the ITSDP process. On July 27 2012, or thereabouts, the NSW government issued a media statement in relation to Port Botany and Port Kembla. On August 30 2012, the NSW government, acting in accordance with ITSDP procedure, formally amended the ITSDP by removing the requirement for “a best practice container operation capable of handling in excess of 1 million TEU per annum”.

Question 3: Does the ACCC claim that the NSW government was not carrying on a business for the purpose of the CCA by amending the ITSDP on August 30 2012?

In April 2013, the NSW government made a contractual commitment to NSW Ports to make certain payment to NSW Ports in respect of future container capacity development at the Port of Newcastle. The term “container” meant “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.”

Question 4: Does the ACCC accept that the NSW government made a contractual commitment to NSW Ports to make certain payment to NSW Ports in respect of future container capacity development at the Port of Newcastle?

The Hon Duncan Gay MLC, in his (former) capacity of Minister for Roads, Maritime and Freight, said on August 10 2016: “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.” The Hon Gladys Berejiklian MP, in her (former) capacity of Treasurer, said on September 29 2015: “I am advised the [Port of Newcastle] lessee could develop a container terminal at the Port of Newcastle if it wished to do so.”

Question 5: Does the ACCC claim that NSW government policy does not support the development of a container terminal at the Port of Newcastle, at any time?

At some point after April 2013, NPC amended the ITSDP by requiring NSC to make the NSW government whole for any cost incurred by the NSW government for making payment to NSW Ports in respect of future container capacity development at the Port of Newcastle.

Question 6: Does the ACCC claim that NPC was not carrying on a business for the purpose of the CCA when it amended the ITSDP by requiring NSC to make the NSW government whole for any cost incurred by the NSW government for making payment to NSW Ports in respect of future container capacity development at the Port of Newcastle?

The ACCC examined the privatisation of Ports Botany, Kembla and Newcastle via long-term leases. The NSW government was not leasing the Mayfield Site to any party other than NSC while NPC was negotiating with NSC pursuant to the ITSDP.

Question 7: Does the ACCC claim that the Port of Newcastle was being privatised via a long-term lease while NPC was negotiating with NSC for development of the Mayfield Site pursuant to the ITSDP?

The ACCC had access to “relevant information” in relation to the negotiations between NPC and NSC.

Question 8: Did the ACCC have access to the ITSDP and all of the amendments to it?

NPC concluded its negotiations with NSC in November 2013 when it was unable to reach a suitable outcome.

Question 9: Did the ACCC examine all amendments to the ITSDP for compliance with the CCA?

NPC was legally required to comply with the CCA in respect of any outcome pursuant to the ITSDP, subject to carrying on a business for the purpose of the CCA.

Question 10: Does the ACCC claim that all amendments to the ITSDP complied with the CCA?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: NSW MPs; Media

March 17 2017

The Hon Scott Morrison MP
Treasurer of the Commonwealth of Australia

Dear Treasurer,

I refer to your letter dated January 27 2017. Did the ACCC express a view to you that Newcastle Port Corporation (NPC) was not carrying on a business for the purpose of the “Commonwealth Competition and Consumer Act 2010” (CCA) by negotiating with Newcastle Stevedores Consortium Pty Ltd (NSC) for developing the “Mayfield Site” at the Port of Newcastle, between 2010 and November 2013?

I ask this question because the reason the NSW government leased the Port of Newcastle was to circumvent the operation of the CCA. This was not a proper purpose.

As you know, in April 2013, the NSW government made a contractual commitment to NSW Ports Pty Ltd to make certain payment to NSW Ports in respect of future container capacity development at the Port of Newcastle. 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:

  1. overseas import containers;
  2. overseas export containers; and,
  3. local containers (coastal inwards or outwards); and
  4. empty containers and transhipped containers.”

The NSW government required a source of funds, other than consolidated revenue, to meet its contractual commitment to pay NSW Ports. The government decided that NSC would provide these funds.

NPC was negotiating under contract with NSC. This contract was titled “Invitation To Submit Detailed Proposal, Mayfield Site” (ITSDP). In accordance with the ITSDP, in 2010, NSC had been selected as “Preferred Proponent” and “Master Developer” of the Mayfield Site. The ITSDP permitted NPC to change the terms and conditions. Consequently, NPC required NSC to make the NSW government whole for any cost the government incurred in paying NSW Ports. This requirement was implemented by amending legally binding Term Sheets created in 2010. In State Parliament on October 17 2013, The Hon Adam Searle MLC asked The Hon Duncan Gay MLC: “How much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port?” NPC had potentially contravened Section 45 of the CCA.

Any action by the ACCC which led to the matter being determined by a Court would have exposed the NSW government’s commercial arrangements to public scrutiny, which the government sought to avoid, as comprehensively demonstrated by the government’s answers to questions in the State Parliament for another three years.

The NSW government was not leasing the Port of Newcastle while NPC was negotiating with NSC. The ITSDP prevented the government from leasing the Mayfield Site to any party other than NSC. A development contract could not be signed between NPC and NSC if it contained a clause that contravened the CCA.

The government chose to lease the port in order to secure a source of funds for recovering any cost incurred in paying NSW Ports. The ITSDP was terminated, after which the government commenced the process of leasing the port, outside the operation of the CCA. Therefore, the port was leased for the purpose of circumventing the CCA.

The ACCC took no enforcement action. The ACCC is obliged to disclose whether it took a view that NPC was not carrying on a business for the purpose of the CCA by negotiating with NSC for developing the Mayfield Site. The ACCC could not uphold the CCA without holding a view.

Leasing the port with a requirement that the leaseholder make the NSW government whole for any cost the government incurred in any payment to NSW Ports, had the poison pill effect of making it commercially unviable for anyone to develop and operate a container terminal.

I have also raised this matter directly with Mr Rod Sims, Chairman, ACCC, and the correspondence, below, refers.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: Mr Rod Sims; Hon Chris Bowen MP, Shadow Treasurer; Media

March 14 2017

Attachment

 Letter to Mr Rod Sims March 10 2017

Was the Port of Newcastle lawfully leased?

March 12 2017

The NSW government had to find a way of preventing a container terminal at the Port of Newcastle. In 2012, the government had taken a decision to pay a future leaseholder of Port Botany for future container capacity development at the Port of Newcastle. The leaseholder would be paid for lost business, amounting to $100 per container.

The problem was that since 2010, the government-owned Newcastle Port Corporation (NPC) had been negotiating under contract for developing a new cargo terminal for containers and other cargo at Newcastle’s port. A requirement placed on the selected “Master Developer”, Newcastle Stevedores Consortium (NSC), was for the container component to have annual capacity for at least 1 million TEUs. Paying a Port Botany leaseholder was set to cost the government $100 million a year if the new Newcastle terminal was operated at capacity. Over the 50-year term of the commitment, the government’s risk was paying compensation up to $5 billion.

NPC’s negotiations with NSC were confidential and NPC could change its contractual terms at any time. In August 2012, NPC withdrew the requirement for TEU capacity of at least 1 million per year. After the government leased Port Botany and Port Kembla to NSW Ports Pty Ltd in April 2013, NPC added a new term to its contract with NSC. This time, NSC was required to make the NSW government whole for any cost incurred by the NSW government in paying NSW Ports in respect of “containers” handled by NSC.

The government had to establish a source of funds other than consolidated revenue for paying NSW Ports.

NPC 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”. When the number of “containers” handled at the Port of Newcastle exceeded 30,000 per year, the NSW government had to pay NSW Ports for the TEU component. The threshold limit is probably being exceeded every year, even without developing a new cargo terminal.

No-one counts the number of “containers” handled at the Port of Newcastle.

NPC had the legal right to change the terms of the contract with NSC on condition that all relevant laws were observed. Changing the contract potentially contravened the “Commonwealth Competition and Consumer Act 2010” (CCA). It was unlawful for NPC to substantially lessen competition in the NSW “container” port market.

However, NPC had to be “carrying on a business” for the purpose of the CCA in order to contravene the CCA. Only a Court could determine whether NPC contravened the CCA. There was no Court determination before NPC terminated the contract and the government started the process of leasing the Port of Newcastle.

Leasing the Port of Newcastle did not constitute the government “carrying on a business” for the purpose of the CCA. In other words, the government could not contravene the CCA if it didn’t apply.

The ACCC is yet to disclose whether it claims NPC was “carrying on a business” for the purpose of the CCA by negotiating with NSC until November 2013. This is the ACCC’s justification for taking no enforcement action.

If NPC contravened the CCA, and the port was leased for the purpose of circumventing the CCA, the issue is whether the port was leased for a lawful purpose.

The government denies there are any agreements that create a disincentive or obstacle to developing a container terminal at the Port of Newcastle. It says the Port of Newcastle lessee could develop a container terminal if it wished to do so.

For its part, the ACCC says that NPC did not proceed to enter into a contract with NSC for developing a cargo terminal.

Plainly, a contract could not be made with a condition that contravened the CCA.

The government maintained secrecy until its conduct was exposed by the “Newcastle Herald”. On July 28 2016, the newspaper published a document called “Port Commitment – Port Botany and Port Kembla” which contained the deal with NSW Ports and NSC.

But the first question about the government’s activities was asked in the NSW parliament on October 17 2013: “How much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port?” Another 150 questions were asked before the facts were exposed by the “Newcastle Herald”.

As Treasurer in 2015, The Hon Gladys Berejiklian denied that there were any agreements that created a disincentive or obstacle to developing a container terminal at the Port of Newcastle.

At a parliamentary Budget Estimates Committee hearing on September 1 2016, the NSW Opposition accused Ms Berejiklian of dissembling.

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?

Greg Cameron

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Sims,

Does the ACCC claim that Newcastle Port Corporation (NPC) was not carrying on a business for the purpose of the “Commonwealth Competition and Consumer Act 2010” (CCA) by negotiating with Newcastle Stevedores Consortium (NSC) for developing the “Mayfield Site” at the Port of Newcastle, between 2010 and November 2013?

Facts surrounding these negotiations are as follows –

  1. NPC was negotiating with NSC between 2010 and November 2013 for developing land at the Port of Newcastle described by NPC as the “Mayfield Site”.
  2. Contractual terms and conditions for negotiations between NPC and NSC were contained in the NPC document “Invitation To Submit Detailed Proposal, Mayfield Site” (ITSDP).
  3. The NSW government was not offering to lease the “Mayfield Site” to any other party while NPC was negotiating with NSC.
  4. The NSW government was not leasing the Port of Newcastle while NPC was negotiating with NSC.
  5. The NSW government made a contractual commitment to pay NSW Ports when the number of “containers” handled at the Port of Newcastle exceeded 30,000 per year as from July 1 2013, increasing at the rate of six per cent per year, until 2063, and “container” means 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.
  6. The number of “containers” carried on all ships in the Port of Newcastle every year probably exceeds the threshold limit for the NSW government being required to make payment to NSW Ports.
  7. The amount of payment to NSW Ports is calculated by multiplying the TEU component of containers handled at the Port of Newcastle by NSW Ports’ average charge for TEU containers handled at Port Botany.
  8. NPC required NSC to make the NSW government whole for any cost the NSW government incurred in paying NSW Ports for TEU containers handled by NSC at the “Mayfield Site”.
  9. Requiring NSC to pay the NSW government as per (8) above, had the purpose, or likely effect, of substantially lessening competition in the NSW container port market.
  10. A contract to develop the “Mayfield Site” was not concluded between NPC and NSC and the ITSDP was terminated in November 2013.
  11. A contract could not have been concluded between NPC and NSC if it contained a condition that contravened the CCA.
  12. The ACCC took no enforcement action to determine whether NPC had contravened the CCA in respect of (8) above.

If the action described in (8) contravened the CCA, this means that the only way for the NSW government to achieve the outcome described in (9) in respect of a future port leaseholder, was to lease the Port of Newcastle and claim that leasing the port was outside the operation of the CCA. In this event, the purpose of leasing the Port of Newcastle was to circumvent the CCA.

The question at the start of this correspondence replaces previous questions.

Yours faithfully,

Greg Cameron

0456819602

www.containerterminalpolicyinnsw.com.au

Copy: NSW MPs; NSW Auditor-General; Media

March 10 2017

The Hon Angus Taylor MP
Assistant Minister for Cities and Digital Transformation

Dear Mr Taylor,

I refer to the Moorebank Intermodal Terminal. The “Detailed Business Case” shows that the claimed economic benefits derive from replacing trucks with trains for transporting containers. The economic benefits are claimed despite the NSW government warning in its “NSW Freight and Ports Strategy, November 2013” that-

  • Travel demand on the section of the M5 Motorway between the Hume Highway at Casula and Moorebank Ave is expected to exceed capacity as early as 2016.
  • The absence of west facing ramps from the M5 to the Hume Highway results in a significant number of vehicles using Moorebank Avenue to access the Liverpool CBD.
  • By 2026 growth in background traffic will result in peak spreading and traffic conditions similar to the existing peak period in the Liverpool area and on the M5, persisting for most of the day.
  • Key intersections providing access to the Moorebank intermodal precinct will exceed capacity with volumes, especially of turning vehicles, resulting in extensive delays, with queuing sufficient to disrupt through movement.

Considerably more economic benefit is possible by using rail for transporting 100 per cent of containers for the Sydney market.

  1. A container terminal at the Port of Newcastle would provide the base-load cargo for building a rail freight bypass of Sydney, between Newcastle, Eastern Creek and Glenfield.
  2. A rail freight bypass of Sydney is NSW government policy.
  3. Containers would be railed between Newcastle and intermodal terminals in outer western Sydney. There, containers would be unpacked and the goods transported to their end destinations.
  4. Export goods manufactured in Sydney would be packed into containers at intermodal terminals and the containers then railed to Newcastle for export.
  5. Empty containers would be railed to all regional areas of NSW to be filled with export goods and the containers railed to Newcastle for export.
  6. Container trucks would be removed from Sydney’s roads.
  7. There would be no need to build stages 2 and 3 of the Northern Sydney Freight Corridor to provide the equivalent of a dedicated rail freight line between Newcastle and Strathfield. The cost saving is $5 billion.
  8. There would  be no need to build the Western Sydney Freight Line, between Chullora and Eastern Creek, to enable containers to be railed between Port Botany and outer western Sydney. The cost saving is $1 billion.
  9. All of Sydney’s rail capacity would be used for passengers to provide a higher economic return than freighting containers.
  10. The Southern Sydney Freight Line would be used for express passenger services from southwestern Sydney growth areas, including Badgery’s Creek Airport.
  11. All of the current rail capacity between Newcastle and Sydney would be used for passengers.
  12. A second rail bridge would be built over the Hawkesbury River as part of the rail freight bypass.
  13. Ports leaseholders, NSW Ports and Port of Newcastle Investments, are able to increase their net returns by participating in the rail freight bypass to achieve an orderly transfer of container operations from Port Botany to Newcastle.
  14. The rail freight bypass line would be privately funded.
  15. The section of the bypass line between Eastern Creek, Badgery’s Creek and Glenfield would be built first. This would enable containers to be railed between Port Botany and Eastern Creek using existing rail freight capacity.
  16. Nominal container capacity would be retained at Port Botany to provide an alternative port to Newcastle when high seas required the Port of Newcastle to be closed.
  17. A rail freight bypass would enable firms to relocate to regional areas from Sydney. In western Sydney, 5,000 hectares of land are used for industrial purposes. Many of these firms could profitably relocate to regional areas if they were able to use rail to freight goods to Sydney and ship containers through the Port of Newcastle.
  18. The short parallel runway at Sydney airport could be extended from 2600 metres to 4000 metres by reducing container operations at Port Botany.

Eighty-five per cent of containers shipped into Port Botany have destinations within 50 km. This is because there is no other container port in NSW. Developing a container terminal at the Port of Newcastle is uneconomic, because the port leaseholder is required to make the NSW government whole for any cost incurred by the NSW government in paying NSW Ports for containers handled at the Port of Newcastle. This impediment has been drawn to the attention of the ACCC, as below.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: Senator The Hon Mathias Cormann; Mr Craig Kelly MP; Ms Melanie Gibbons MP; The Hon Anthony Albanese MP; Mr Greg Warren MP; Mr Anoulack Chanthivong MP; Mr Tim Crakanthorp MP; Liverpool City Council; Newcastle City Council

March 8 2017

Attachment

Ms Rayne de Gruchy
Chief Operating Officer
Australian Competition and Consumer Commission

Dear Ms de Gruchy,

I refer to your letter dated February 23 2017. Between 2009 and November 2013, Newcastle Port Corporation (NPC) was conducting its “Invitation To Submit Detailed Proposal, Mayfield Site” (ITSDP) process. Presumably, the ACCC is in possession of the ITSDP document. If not, the ACCC is not in a position to evaluate whether NPC was carrying on a business for the purpose of the “Commonwealth Competition and Consumer Act 2010” (CCA) by conducting its ITSDP process.

The NSW government required the ITSDP process to comply with the “NSW Public Private Partnership Guidelines”. NPC was required to obtain approval from the “Expenditure Review Committee” (ERC) of Cabinet for all aspects of its ITSDP process, including for terms and conditions.

ERC approval would not be given for NPC entering into a contract with the preferred proponent if that contract contained a provision that contravened the CCA. Only a Court may determine whether NPC contravened the CCA by requiring the preferred proponent to make the NSW government whole for any cost incurred by the NSW government in paying NSW Ports in respect of TEU containers handled at the Port of Newcastle.

Concluding the ITSDP process and leasing the Port of Newcastle enabled the NSW government to impose lease conditions outside the operation of the CCA.

Does the ACCC claim that conducting the ITSDP process did not constitute NPC carrying on a business for the purpose of the CCA? If so, would the ACCC please provide supporting evidence?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: Hon Scott Morrison MP; Hon Chris Bowen MP; Hon Darren Chester MP; Hon Anthony Albanese MP; Hon Paul Fletcher MP; Senator The Hon Fiona Nash MP; Hon Joel Fitzgibbon MP; NSW Auditor-General; Mr Tim Crakanthorp MP; Media

Attach.

March 7 2017

Ms Rayne de Gruchy
Chief Operating Officer
Australian Competition and Consumer Commission

Dear Ms de Gruchy,

I refer to your letter dated February 23 2017. Between 2009 and November 2013, Newcastle Port Corporation (NPC) was conducting its “Invitation To Submit Detailed Proposal, Mayfield Site” (ITSDP) process. Presumably, the ACCC is in possession of the ITSDP document. If not, the ACCC is not in a position to evaluate whether NPC was carrying on a business for the purpose of the “Commonwealth Competition and Consumer Act 2010” (CCA) by conducting its ITSDP process.

The NSW government required the ITSDP process to comply with the “NSW Public Private Partnership Guidelines”. NPC was required to obtain approval from the “Expenditure Review Committee” (ERC) of Cabinet for all aspects of its ITSDP process, including for terms and conditions.

ERC approval would not be given for NPC entering into a contract with the preferred proponent if that contract contained a provision that contravened the CCA. Only a Court may determine whether NPC contravened the CCA by requiring the preferred proponent to make the NSW government whole for any cost incurred by the NSW government in paying NSW Ports in respect of TEU containers handled at the Port of Newcastle.

Concluding the ITSDP process and leasing the Port of Newcastle enabled the NSW government to impose lease conditions outside the operation of the CCA.

Does the ACCC claim that conducting the ITSDP process did not constitute NPC carrying on a business for the purpose of the CCA? If so, would the ACCC please provide supporting evidence?

Yours faithfully,

Greg Cameron

0456819602

www.containerterminalpolicyinnsw.com.au

Copy: Hon Scott Morrison MP; Hon Chris Bowen MP; Hon Darren Chester MP; Hon Anthony Albanese MP; Hon Paul Fletcher MP; Senator The Hon Fiona Nash; Hon Joel Fitzgibbon MP; NSW Auditor-General; Mr Tim Crakanthorp MP; Media

Attach.

March 7 2017

 

The Hon Malcolm Turnbull MP
Prime Minister

The Hon Bill Shorten MP
Leader of the Opposition

Dear Mr Turnbull and Mr Shorten,

Time for the ACCC to come clean

In 2009, the NSW government approved a request from Newcastle Port Corporation (NPC) to develop a cargo handling terminal for containers and other cargo at the Port of Newcastle. The container component was to be in excess of 1 million TEUs capacity.

Approval was given and a number of parties received NPC’s “Invitation To Submit Detailed Proposal, Mayfield Site” (ITSDP). Proponents were contractually bound to comply with the ITSDP’s terms and conditions. The NSW government required NPC to comply with government guidelines for “Public Private Partnerships”.

In 2010, NPC selected Newcastle Stevedores Consortium (NSC) as sole preferred proponent. By December 2010, NPC had reached agreement with NSC. Term Sheets had been prepared, a contract had been drafted, and, approval was requested from the NSW government to enter into this contract. Approval was withheld for reasons uncovered by the “NSW Independent Commission Against Corruption” in 2014.

NPC was carrying on a business for the purpose of the “Commonwealth Competition and Consumer Act 2010” (CCA) in the act of conducting its ITSDP process.

In April 2013, the NSW government leased Port Botany and Port Kembla to NSW Ports Pty Ltd. The NSW government gave a confidential contractual commitment to NSW Ports to make certain payment in respect of future container capacity development at the Port of Newcastle.

NSW Ports was to be paid for the number of TEUs handled at the Port of Newcastle in excess of an annual container threshold, where “container” meant 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.

The threshold was 30,000 containers per year as at July 1 2013, compounding at the rate of 6 per cent per year, for 50 years. This threshold will have been exceeded every year. The amount of payment to NSW Ports per TEU was the average price charged by NSW Ports for a TEU at Port Botany.

Under the ITSDP, NPC had the legal right to amend the Term Sheets. NPC amended the Term Sheets to require NSC to make the NSW government whole for any cost the NSW government incurred by paying NSW Ports for NSC’s activities at the Port of Newcastle.

When NPC terminated the ITSDP in November 2013, it had potentially breached the CCA, however, by leasing the Port of Newcastle, the NSW government was able to avoid the CCA with its requirement that the leaseholder made the NSW government whole for any cost the NSW government incurred by paying NSW Ports for TEU containers handled at the Port of Newcastle. Only a Court can determine a contravention of the CCA.

The NSW government’s purpose for leasing the Port of Newcastle was to avoid the CCA and was unconcerned with policy. The Hon Gladys Berejiklian MP, as NSW Treasurer, has confirmed that the Port of Newcastle leaseholder may develop a container terminal if it wished to do so, regardless of the number of TEU containers handled at Port Botany.

But it is uneconomic to develop a container terminal because of the NSW government’s charge.

Will you request the ACCC to answer this question: Does the ACCC claim that NPC was not carrying on a business for the purpose of the CCA in the act of amending the Term Sheets?

The Hon Scott Morrison MP, Treasurer, has been unable to assist me with this request.

Yours faithfully,

Greg Cameron

0456819602

www.containerterminalpolicyinnsw.com.au

Copy: The Hon Scott Morrison MP; The Hon Gladys Berejiklian MP; NSW Auditor-General; ACCC; NSW MPs; Media

March 4 2017

The Hon Scott Morrison MP
Treasurer of the Commonwealth of Australia

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Morrison and Mr Sims,

Yesterday’s email, below, included this statement: “The NSW government secretly committed to paying NSW Ports $100 for every TEU (twenty-foot equivalent unit) container shipped through the Port of Newcastle.”

The NSW government pays NSW Ports when containers handled at the Port of Newcastle exceed 30,000 per year as at July 1 2013, increasing at six per cent per year and container means 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.

Assuming the numbers of containers, as defined, will exceed the threshold level every year, the government is required to pay NSW Ports for every TEU container.

Yours faithfully,

Greg Cameron

0456819602
www.containerterminalpolicyinnsw.com.au

Copy: NSW MPs; NSW Auditor-General; Media

March 3 2017

—–

The Hon Scott Morrison MP
Treasurer of the Commonwealth of Australia

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Morrison and Mr Sims,

In April 2013, Port Botany and Port Kembla were leased to NSW Ports for $5.1 billion and a year later, the Port of Newcastle was leased to Port of Newcastle Investments for $1.75 billion.

The NSW government secretly committed to paying NSW Ports $100 for every TEU (twenty-foot equivalent unit) container shipped through the Port of Newcastle. A container terminal at the Port of Newcastle handling 1 million TEUs per year will require the NSW government to pay NSW Ports $100 million per year, until 2063. This arrangement makes the NSW government’s financial exposure to NSW Ports more than the sum raised from leasing the Port of Newcastle.

The Port Botany and Port Kembla leasing arrangements were secret because consolidated revenue was the government’s source of funds for paying NSW Ports. Using consolidated revenue defeated the purpose of leasing the ports, which was to raise capital for investment in state infrastructure.

In April 2013, Newcastle Port Corporation (NPC) was the government-owned operator of the Port of Newcastle. NPC was carrying on a business within the operation of the “Commonwealth Competition and Consumer Act 2010” (CCA). NPC did not have the legal right to charge users of the Port of Newcastle to make the NSW government whole for any cost incurred by the NSW government in paying NSW Ports for containers handled at the Port of Newcastle. The right would not have existed if a charge contravened the CCA. A charge would contravene the CCA if it had the purpose, or likely effect, of substantially lessening competition in the NSW container port market.

Only a Court can determine a breach of the CCA. Any Court action would have involved the NSW government justifying the purpose of the charge. To date, no justification has been offered by the NSW government.

The NSW government formally denies entering into any agreements that create a disincentive or obstacle to developing a container terminal at the Port of Newcastle. When The Hon Gladys Berejiklian MP was asked on September 3 2015 – “Has the NSW Government entered into any agreements that create a disincentive or obstacle to develop a container terminal at the Port of Newcastle?” – she answered on September 29 2015 – “I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.”

NSW government policy is that a container terminal may be developed at the Port of Newcastle at any time.

The NSW government went to considerable effort to conceal the ports’ leasing arrangements. More than 150 questions on notice were asked in the NSW parliament. Details published by the “Newcastle Herald” on July 28 2016 were confirmed by the NSW government to be correct.

The NSW government found a way in 2013 to secretly apply a charge at the Port of Newcastle.

NPC had been negotiating with Newcastle Stevedores Consortium (NSC) under contract since 2010 for developing a terminal for containers and other cargo. NPC’s “Invitation to Submit Detailed Proposal, Mayfield Site” (ITSDP) required the container operation to be capable of handling in excess of 1 million TEUs per year.

Confidentiality provisions of the ITSDP contract allowed the NSW government to secretly require NPC to require NSC to make the NSW government whole for any cost incurred by the NSW government for paying NSW Ports in respect of containers handled at the Port of Newcastle.

Term Sheets had been agreed in December 2010 between NPC and NSC. NPC had requested government approval to proceed to contract in respect of these Term Sheets. As revealed in 2014 by the “NSW Independent Commission Against Corruption”, government approval was not given before the March 2011 NSW state election. The ICAC investigation also revealed why government approval was withheld.

Under the terms of the ITSDP contract, NPC had the right to amend the Term Sheets to include the extra charge. In accordance with the “NSW Public Private Partnerships Guidelines”, NPC’s amended Term Sheets required approval from the “Expenditure Review Committee” of State Cabinet.

State Cabinet would have been aware that public opinion would not support the government charging NSC to recover the government’s costs in paying NSW Ports for containers handled by NSC. Colloquially, this is referred to as failure of the pub test. State Cabinet would have been advised by NSW Treasury of the potential for there to be a legal challenge of the lawfulness of requiring Port of Newcastle users to pay extra charges.

Conveniently for the NSW government, the ACCC took no enforcement action, claiming that the NSW government was acting outside the operation of the CCA when leasing the Port of Newcastle. The NSW government announced its decision to lease the Port of Newcastle on November 5 2013, well after the Term Sheets with NSC had been amended. Contractual negotiations between NPC and NSC were terminated by NPC in November 2013 but remained confidential.

The ACCC says that it was provided with confidential information by the NSW government. Consequently, the merit of the ACCC’s decision not to take any enforcement action cannot be examined. The purpose of leasing the Port of Newcastle was to maintain the secrecy of the leasing arrangements and to apply a charge outside the operation of the CCA so as to avoid public scrutiny. Leasing the Port of Newcastle placed the NSW government outside the operation of the CCA.

The ACCC seems to be claiming that Newcastle Port Corporation was acting outside the operation of the “Commonwealth Competition and Consumer Act 2010” by requiring Newcastle Stevedores Consortium to make the NSW government whole for any cost incurred by the NSW government in paying NSW Ports in respect of any cargo handling terminal developed and operated by Newcastle Stevedores Consortium at the Port of Newcastle.

Is this correct?

Greg Cameron

0456819602
www.containerterminalpolicyinnsw.com.au

Copy: NSW MPs; NSW Auditor-General; Media

March 2 2017

 

 

 

MEDIA STATEMENT

 Secret deal forced Newcastle port lease

Leasing Port Botany forced the NSW government into leasing the Port of Newcastle as protection against major financial risk.

In April 2013, Port Botany was leased to NSW Ports with a secret compensation arrangement, and one year later the Port of Newcastle was leased, for $1.75 billion.

But the NSW government secretly committed to paying NSW Ports $100 for every TEU (twenty-foot equivalent unit) container shipped through the Port of Newcastle. If a container terminal is built at the Port of Newcastle and handles 1 million TEUs per year, the NSW government must pay NSW Ports $100 million per year, until 2063.

This makes the NSW government’s financial exposure more than the sum raised from leasing the Port of Newcastle.

Unless the NSW government leased the Port of Newcastle to a private operator, the government did not have a legal right to charge port users for recovering its costs incurred in paying NSW Ports.

Newcastle Port Corporation (NPC) was the government-owned operator of the Port of Newcastle in 2013. NPC imposing a charge on port users would have contravened the “Commonwealth Competition and Consumer Act 2010” (CCA) because the purpose, or likely effect, was to substantially lessen competition in the NSW container port market. These are the conditions for contravening the CCA’s competition provisions.

But NPC did impose this charge. In 2013, NPC required Newcastle Stevedores Consortium (NSC) to pay the NSW government for any cost incurred by the NSW government in paying NSW Ports in respect of any cargo handling terminal developed and operated by NSC at the Port of Newcastle.

NPC had been negotiating with NSC under contract since 2010 for developing a terminal for containers and other cargo. The contract required the container operation to be capable of handling in excess of 1 million TEUs per year. Term Sheets were agreed in December 2010 and a final contract was ready for government approval, as revealed in 2014 by the “NSW Independent Commission Against Corruption”. The ICAC investigation also revealed why government approval was withheld. These Term Sheets were amended by NPC in 2013 to include the additional charge.

The contract gave NPC total discretion to amend terms and conditions. But only a Court can determine a contravention of the CCA. NPC terminated the contract with NSC in November 2013.

For political, commercial and legal reasons, the NSW government could ill afford any public examination of NPC’s secret contractual requirements. Despite the government’s best efforts at keeping the ports’ leasing arrangements secret, details were revealed by the “Newcastle Herald”, in July 2016.

Conveniently for the NSW government, the ACCC took no enforcement action, claiming that the NSW government was acting outside the operation of the CCA when leasing the Port of Newcastle.

The NSW government announced its decision to lease the port on November 5 2013.

The ACCC says that it was provided with information in confidence by the NSW government. The question is, does the ACCC claim that Newcastle Port Corporation was acting outside the operation of the “Commonwealth Competition and Consumer Act 2010” by requiring Newcastle Stevedores Consortium to make the NSW government whole for any cost incurred by the NSW government in paying NSW Ports in respect of any cargo handling terminal developed and operated by Newcastle Stevedores Consortium at the Port of Newcastle?

The course of action ultimately chosen by the NSW government was to lease the Port of Newcastle – outside the operation of the CCA. This decision had nothing to do with ports, freight and transport planning, nor with regional economic development and job creation, or with the City of Newcastle.

It was to pull the NSW government out of a financial and legal bind of its own making.

Greg Cameron

0456819602

www.containerterminalppolicyinnsw.com.au

March 1 2017

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Sims,

Does the ACCC claim that Newcastle Port Corporation (NPC) was acting outside the operation of the “Commonwealth Competition and Consumer Act 2010” (CCA) in conducting its “Invitation To Submit Detailed Proposal, Mayfield Site” (ITSDP) process, between 2009 and November 2013?

The ITSDP was a contract setting out the terms and conditions NPC required of respondents.

NPC was obliged to comply with the NSW government’s guidelines for conducting “Public Private Partnerships”. These guidelines required NPC to obtain formal government approval at each stage of the ITSDP process. NPC received NSW government approval to commence its ITSDP process in 2009.

The ITSDP was issued to a number of parties and in 2010, Newcastle Stevedores Consortium (NSC) was selected as the only preferred proponent. A legally binding contract existed between NPC and NSC, and bound the parties to comply with all relevant laws, including the CCA.

All respondents to the ITSDP were required to demonstrate how they proposed to realise NPC’s objectives for the site. NPC’s primary objective was to have a cargo handling terminal for containers and other cargo. The container operation was to be capable of handling in excess of 1 million TEU containers per year. Proposals which did not include a container terminal were not considered.

In April 2013, the NSW government made contractual commitments to NSW Ports to make certain payments to NSW Ports in respect of future container capacity development at the Port of Newcastle. After April 2013, and before November 2013, NPC amended Term Sheets that had been agreed with NSC in December 2010, under the ITSDP process. NPC added a requirement for NSC to make the NSW government whole for any cost the government incurred to NSW Ports in respect of container capacity development at the Port of Newcastle. Therefore, there was a contract between NPC and NSC whereby NSC was required to make the government whole. In accordance with the “NSW Public Private Partnerships Guidelines”, Cabinet approval was required for this addition to the Term Sheets.

When the member for Newcastle, Mr Tim Crakanthorp, asked the Minister for Transport and Infrastructure representing the Minister for Roads, Maritime and Freight, and Vice-President of the Executive Council, on September 15 2016-

“Did the Government claim immunity from the Commonwealth Competition and Consumer Act 2010 in respect of the Term Sheets with Newcastle Stevedores Consortium?”

the Minister answered on October 20 2016-

“No.”

The government did not claim immunity from the CCA in respect of these Term Sheets because there were no grounds for doing so. The NSW government announced its decision to lease the Port of Newcastle on November 5 2013. Prior to that announcement, the NSW government was not leasing the Port of Newcastle. The ACCC claims that the NSW government was not acting within the operation of the CCA by leasing the Port of Newcastle. This claim is not disputed.

Formal NSW government policy in respect of the next container terminal in NSW was confirmed by the “NSW Freight and Ports Strategy, November 2013”, which stated at page 117: “Port Kembla has been identified as the location for the development of a future container terminal to augment the capacity of Port Botany when required.” This government policy was consistent with the ITSDP objective of developing a container terminal with capacity in excess of 1 million TEUs per year at the Port of Newcastle. Government policy was, and remains, that a container terminal may be developed at the Port of Newcastle without reference to the number of containers shipped through Port Botany.

When The Hon Gladys Berejiklian MP was asked this question on September 3 2015-

“Has the NSW Government entered into any agreements that create a disincentive or obstacle to develop a container terminal at the Port of Newcastle?”

she answered on September 29 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 answer is consistent with the ITSDP primary objective being to develop a container terminal with capacity in excess of 1 million TEUs per year. Her answer confirms the NSW government’s position that the government’s requirement to be made whole for any cost the government incurs to NSW Ports in respect of a container terminal at the Port of Newcastle, does not “create a disincentive or obstacle to develop a container terminal”.

The ITSDP process was concluded in November 2013. In a media statement dated March 4 2015, NSW Treasury said: “Newcastle Port Corporation concluded its negotiations with Anglo Ports [lead partner in NSC] in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.”

In a statement published on the NSW Parliament web site dated February 10 2015, Anglo Ports said NSC had not withdrawn its proposal under the ITSDP process.

The NSW government had committed to make certain payments to NSW Ports after container movements at the Port of Newcastle exceeded 30,000 per year as at July 1 2013, compounding at the rate of 6 per cent per year, until 2063. The amount of payment was calculated on the average price charged by NSW Ports for a TEU container shipped through Port Botany. The quantum of payment was by multiplying the average price for a TEU at Port Botany by the number of TEUs shipped through the Port of Newcastle.

For purposes of calculating the number of containers shipped through the Port of Newcastle, the NSW 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.”

It is probable that the number of containers, as defined, shipped through the Port of Newcastle every year since 2013, exceeded the threshold level for payment to NSW Ports.

NPC’s purpose, or likely effect, of amending the Term Sheets with NSC was to substantially lessen competition in the NSW container port market, potentially contravening the CCA. If this requirement contravened the CCA, obviously, a “suitable outcome” from the ITSDP process was impossible to achieve, whereby NPC had no option but to “conclude” the ITSDP process.

The question, therefore, is: Does the ACCC claim that Newcastle Port Corporation was acting outside the operation of the “Commonwealth Competition and Consumer Act 2010” in conducting its “Invitation To Submit Detailed Proposal, Mayfield Site” process, between 2009 and November 2013?

Yours faithfully,

Greg Cameron

0456819602
www.containerterminalpolicyinnsw.com.au

Copy: The Hon Scott Morrison MP; NSW Auditor-General; NSW MPs; Media

February 26 2017

MEDIA STATEMENT February 24 2017

A letter received by email today (February 24) from the ACCC (dated February 23) was in response to my letter dated January 31 . Information it contains is relevant to my further questions asked yesterday (February 23, see below).

Question: Why did the ACCC claim on June 7 2013 that the NSW government had “decided not to develop a container terminal at the Port of Newcastle”? ACCC: This statement was based on information supplied to the ACCC.

On June 7 2013, Newcastle Port Corporation (NPC) was conducting negotiations with Newcastle Stevedores Consortium (NSC), which had commenced in 2010, for developing a terminal, including a container terminal, at the Port of Newcastle. A contract between NPC and NSC was in the form of an “Invitation To Submit Detailed Proposal, Mayfield Site” (ITSDP), which required NSC’s proposal to be fairly assessed in compliance with all relevant laws, including the “Commonwealth Competition and Consumer Act 2010”. A condition of this ITSDP was for the container terminal to have capacity of at least 1 million TEU per year.

The NSW government had decided that a container terminal could be developed at the Port of Newcastle at any time and without reference to container throughput at Port Botany, as confirmed by The Hon Gladys Berejiklian MP when answering this question on notice on September 29 2015 from a NSW Budget Estimates Committee:

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

Question (February 23): Was the ACCC aware on June 7 2013 that Newcastle Port Corporation was negotiating with Newcastle Stevedores Consortium for developing and operating a terminal, including a container terminal with capacity not less than 1 million TEU per year, at the Port of Newcastle? Answer: In the period to November 2013 the ACCC understands that NPC (a NSW government owned entity) and NSC were engaged in negotiations in relation to the Port of Newcastle.

Question (February 23): Does the ACCC accept that a container terminal may be developed immediately at the Port of Newcastle? Answer: (awaited)

Ms Berejiklian’s answer on September 29 2015, is inconsistent with the ACCC’s claim that NSW government policy from July 27 2012 to the present is that Port Kembla is the location for developing the second major container port. The “NSW Freight and Ports Strategy, November 2013 states (page 117): “Port Kembla has been identified as the location for the development of a future container terminal to augment the capacity of Port Botany when required.”

Question (February 23): When did the ACCC become aware that Newcastle Port Corporation required Newcastle Stevedores Consortium to make the NSW government whole for any payment the NSW government made to NSW Ports in respect of Newcastle Stevedores Consortium developing and operating a container terminal at the Port of Newcastle? Answer: In reaching its decision the ACCC had access to relevant information about the prior negotiations between NPC and NSC.

This answer suggests that as at June 7 2013, the ACCC was aware that NPC required NSC to make the NSW government whole for any payment the NSW government made to NSW Ports in respect of NSC developing and operating a container terminal at the Port of Newcastle.

Question (February 23): Does the ACCC claim that Newcastle Port Corporation was acting outside the operation of the “Commonwealth Competition and Consumer Act 2010” by requiring Newcastle Stevedores Consortium to make the NSW government whole for any payment the NSW government made to NSW Ports in respect of Newcastle Stevedores Consortium developing and operating a container terminal at the Port of Newcastle? Answer: (Awaited)

It is relevant that the ACCC should answer this specific question. NSW Treasury said on March 4 2015: “Newcastle Port Corporation concluded its negotiations with Anglo Ports in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.”

No suitable outcome was possible if it involved a potential contravention of the “Commonwealth Competition and Consumer Act 2010”.

Greg Cameron

0456819602
www.containerterminalpolicyinnsw.com.au

—-

February 23 2017

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Sims,

Why did the ACCC claim on June 7 2013 that the NSW government had “decided not to develop a container terminal at the Port of Newcastle”?

Was the ACCC aware on June 7 2013 that Newcastle Port Corporation was negotiating with Newcastle Stevedores Consortium for developing and operating a terminal, including a container terminal with capacity not less than 1 million TEU per year, at the Port of Newcastle?

Does the ACCC accept that a container terminal may be developed immediately at the Port of Newcastle?

When did the ACCC become aware that Newcastle Port Corporation required Newcastle Stevedores Consortium to make the NSW government whole for any payment the NSW government made to NSW Ports in respect of Newcastle Stevedores Consortium developing and operating a container terminal at the Port of Newcastle?

Does the ACCC claim that Newcastle Port Corporation was acting outside the operation of the “Commonwealth Competition and Consumer Act 2010” by requiring Newcastle Stevedores Consortium to make the NSW government whole for any payment the NSW government made to NSW Ports in respect of Newcastle Stevedores Consortium developing and operating a container terminal at the Port of Newcastle?

When the NSW government announced its decision to lease the Port of Newcastle on November 5 2013, Newcastle Port Corporation (NPC), a statutory state-owned corporation, was the port’s operator.

In 2010, NPC had entered into a contract with Newcastle Stevedores Consortium (NSC) to negotiate terms for developing a terminal, including a container terminal, at the Port of Newcastle. NPC’s requirements were contained in its “Invitation to Submit Detailed Proposal, Mayfield Site” (ITSDP). NSC was required to comply with various NSW government requirements for tendering, while NPC was obliged to comply with the “NSW Public Private Partnerships Guidelines”. Both were required to comply with all relevant laws, including the “Commonwealth Competition and Consumer Act 2010” (CCA).

In April 2013, the NSW government contractually committed to pay NSW Ports an amount equal to NSW Ports’ average charge for a TEU container shipped through Port Botany multiplied by the number of TEU containers shipped through the Port of Newcastle. The average fee charged by NSW Ports is $100 per TEU. By NSC operating a container terminal with throughput of 1 million TEU per year, the NSW government was liable for paying NSW Ports $100 million per year until 2064.

NPC’s contractual requirement to charge NSC had the purpose, and was likely to have the effect, of substantially lessening competition in the NSW container port market by making it commercially unviable for NSC to develop and operate a container terminal. As such, NPC potentially contravened the CCA.

Any Court determination that NPC had contravened the CCA would have left the NSW government without a source of funds for paying NSW Ports. By the act of NPC terminating the ITSDP, the NSW government was able charge the future port leaseholder outside the operation of the CCA.

NSW Treasury said: “Newcastle Port Corporation concluded its negotiations with Anglo Ports [lead partner, NSC] in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.” However, no outcome was possible that provided the NSW government with a source of funds with which to pay NSW Ports, if NPC’s requirement of NSC contravened the CCA.

Your answers to the above questions are respectfully requested.

Yours faithfully,

Greg Cameron

0456816602

www.containerterminalpolicyinnsw.com.au

Copy: The Hon Scott Morrison MP; The Hon Chris Bowen MP; Senator Peter Whish-Wilson; Senator Brian Burston; NSW MPs; Media

February 23 2017

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Sims,

Why did the ACCC claim on June 7 2013 that the NSW government had “decided not to develop a container terminal at the Port of Newcastle”?

Was the ACCC aware on June 7 2013 that Newcastle Port Corporation was negotiating with Newcastle Stevedores Consortium for developing and operating a terminal, including a container terminal with capacity not less than 1 million TEU per year, at the Port of Newcastle?

Does the ACCC accept that a container terminal may be developed immediately at the Port of Newcastle?

When did the ACCC become aware that Newcastle Port Corporation required Newcastle Stevedores Consortium to make the NSW government whole for any payment the NSW government made to NSW Ports in respect of Newcastle Stevedores Consortium developing and operating a container terminal at the Port of Newcastle?

Does the ACCC claim that Newcastle Port Corporation was acting outside the operation of the “Commonwealth Competition and Consumer Act 2010” by requiring Newcastle Stevedores Consortium to make the NSW government whole for any payment the NSW government made to NSW Ports in respect of Newcastle Stevedores Consortium developing and operating a container terminal at the Port of Newcastle?

When the NSW government announced its decision to lease the Port of Newcastle on November 5 2013, Newcastle Port Corporation (NPC), a statutory state-owned corporation, was the port’s operator.

In 2010, NPC had entered into a contract with Newcastle Stevedores Consortium (NSC) to negotiate terms for developing a terminal, including a container terminal, at the Port of Newcastle. NPC’s requirements were contained in its “Invitation to Submit Detailed Proposal, Mayfield Site” (ITSDP). NSC was required to comply with various NSW government requirements for tendering, while NPC was obliged to comply with the “NSW Public Private Partnerships Guidelines”. Both were required to comply with all relevant laws, including the “Commonwealth Competition and Consumer Act 2010” (CCA).

In April 2013, the NSW government contractually committed to pay NSW Ports an amount equal to NSW Ports’ average charge for a TEU container shipped through Port Botany multiplied by the number of TEU containers shipped through the Port of Newcastle. The average fee charged by NSW Ports is $100 per TEU. By NSC operating a container terminal with throughput of 1 million TEU per year, the NSW government was liable for paying NSW Ports $100 million per year until 2064.

NPC’s contractual requirement to charge NSC had the purpose, and was likely to have the effect, of substantially lessening competition in the NSW container port market by making it commercially unviable for NSC to develop and operate a container terminal. As such, NPC potentially contravened the CCA.

Any Court determination that NPC had contravened the CCA would have left the NSW government without a source of funds for paying NSW Ports. By the act of NPC terminating the ITSDP, the NSW government was able charge the future port leaseholder outside the operation of the CCA.

NSW Treasury said: “Newcastle Port Corporation concluded its negotiations with Anglo Ports [lead partner, NSC] in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.” However, no outcome was possible that provided the NSW government with a source of funds with which to pay NSW Ports, if NPC’s requirement of NSC contravened the CCA.

Your answers to the above questions are respectfully requested.

Yours faithfully,

Greg Cameron

0456819602

www.containerterminalpolicyinnsw.com.au

Copy: The Hon Scott Morrison MP; The Hon Chris Bowen MP; Senator Peter Whish-Wilson; Senator Brian Burston; NSW MPs; Media

February 23 2017

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Sims,

I refer to a letter provided by the ACCC to the (former) member for Lyne, Mr Rob Oakeshott MP, dated June 7 2013, concerning the Port of Newcastle. This letter contains some incorrect information.

The letter states: “However, when the NSW government announced in 2012 its plans to privatise Port Botany and Port Kembla (which subsequently occurred earlier this year), it identified Port Kembla as the location for developing the second major container port.”

In a statement dated July 27 2012, The Hon Mike Baird MP, said: “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.”

Mr Baird’s statement was clarified by the “NSW Freight and Ports Strategy, November 2013” (the Strategy), which states, at page 117: “Port Kembla has been identified as the location for the development of a future container terminal to augment the capacity of Port Botany when required.”

The ACCC’s statement is contradicted by the Strategy because the Strategy nominates “a” future container terminal. Under the Strategy, a major container terminal may be developed at the Port of Newcastle at any time, including before Port Kembla.

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

The ACCC is obliged to provide evidence to support its claim that the NSW government had “decided not to develop a container terminal at the Port of Newcastle”. Between 2010 and November 2013, Newcastle Port Corporation (NPC) was conducting commercial negotiations with Newcastle Stevedores Consortium (NSC) to develop and operate a terminal, including a container terminal, on the Mayfield site in the Port of Newcastle.

NPC was obliged to comply with the NSW government’s guidelines for “Public Private Partnerships”. Under these guidelines, approval by the NSW “Cabinet Standing Committee on Expenditure Review” was required in order for NPC to negotiate commercial terms with NSC in respect of developing a container terminal. These negotiations were conducted until November 2013. Therefore, as of November 2013, it was incorrect for the ACCC to claim that the government had “decided not to develop a container terminal at the Port of Newcastle”.

The government announced its decision to lease the Port of Newcastle on November 5 2013. Under the terms of the lease, the lessee could develop a container terminal if it wished to do so. On September 29 2015, The Hon Gladys Berejiklian MP, answered a supplementary question arising from the Budget Estimates hearing conducted on September 1:

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 answer is further proof that from 2010 to the present, the NSW government had taken no decision “not to develop a container terminal at the Port of Newcastle”.

On January 29 2017, I asked you: “Does the ACCC claim that Newcastle Port Corporation was carrying on a business outside the operation of the “Competition and Consumer Act 2010” by conducting “commercial negotiations” with Newcastle Stevedores Consortium to develop and operate a terminal on the Mayfield site in the Port of Newcastle?”

May I also ask you: On which date did the ACCC become aware that Newcastle Port Corporation was negotiating commercial terms with Newcastle Stevedores Consortium to develop and operate a container terminal at the Port of Newcastle?

Yours faithfully,

Greg Cameron

0456819602

www.containerterminalpolicyinnsw.com.au

Copy: The Hon Scott Morrison MP; NSW Auditor-General; NSW MPs; Media

Attach: ACCC letter dated June 7 2013

January 31 2017

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Sims,

Does the ACCC claim that Newcastle Port Corporation was carrying on a business outside the operation of the “Competition and Consumer Act 2010” by conducting “commercial negotiations” with Newcastle Stevedores Consortium to develop and operate a terminal on the Mayfield site in the Port of Newcastle?

Yours faithfully,

Greg Cameron

0456819602
www.containerterminalpolicyinnsw.com.au

Copy: The Hon Scott Morrison MP; NSW MPs; Media

January 29 2017

Attachments

 NSW Treasury Statement March 4 2015

“Newcastle Port Corporation concluded its negotiations with Anglo Ports [lead partner, Newcastle Stevedores Consortium] in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.”

Newcastle Port Corporation Annual Report 2010 – 2011, Page 59

Executing Newcastle Port Corporation’s Container* Strategy

Newcastle Port Corporation has a longstanding strategy to develop the next container terminal in New South Wales on the Mayfield site. This strategy is consistent with the NSW Ports Growth Plan (2003) which identified the Mayfield site in the Port of Newcastle as the location for the State’s next container terminal when Port Botany reaches capacity.

Newcastle Port Corporation’s strategy has identified the container task within the Hunter and surrounding regions as sufficient to establish a container terminal in the port. The Corporation has undertaken a range of activities in pursuance of this strategy including seeking planning approval for its Concept Plan for the Mayfield site which is currently under consideration by the Department of Planning. In addition, in 2010 the Corporation commenced a Request for Proposals process for a Master Developer to develop and operate a terminal on the Mayfield site that will include a container terminal. That process is ongoing.

Newcastle Port Corporation’s strategy for establishing the next container terminal in New South Wales on the Mayfield site is to seek to complete a contract with a Master Developer proponent to develop and operate a terminal on the Mayfield site that will include a container terminal and associated infrastructure as well as general cargo and dry bulk handling capacity.

Newcastle Port Corporation will in 2011 seek to negotiate appropriate commercial terms with the identified Master Developer for the development of the Mayfield site.

NSW ICAC, “Investigation into NSW Liberal Party electoral funding for the 2011 State election campaign and other matters”, August 30 2016, page 42

By late 2010, the NPC had progressed a long way with its proposal for a container terminal on the Mayfield site. The NPC had tested the market by asking for expressions of interest and studying responses. The NPC selected a consortium called the Newcastle Stevedoring Consortium [sic] (NSC). The NSC was comprised of Anglo Ports and Grup TCB, large and experienced international groups within the industry, and a local company, Newcastle Stevedores Pty Ltd.

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

*Meaning of “container” for the purpose of Newcastle Port Corporation’s commercial negotiations with Newcastle Stevedores Consortium

Container means 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 HON GLADYS BEREJIKLIAN RESPONDS TO NEWCASTLE PORT QUESTIONS

 Budget Estimates 2016-2017, Supplementary Questions, Answers, September 27 2016:

Source: https://www.parliament.nsw.gov.au/committees/DBAssets/InquiryOther/Transcript/10299/GPSC1%20ASQ%20-%20Treasury%2c%20Industrial%20Relations.pdf

  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.]

Note: The ACCC refuses to disclose whether it considers Newcastle Port Corporation (NPC) was “carrying on a business” within the scope of the Act when negotiating to lease land to Newcastle Stevedores Consortium (NSC), between 2009 and November 2013, on condition of developing a container terminal. However, NPC met the ACCC’s guidelines for “carrying on a business” while it was negotiating with NSC in accordance with the NSW government’s guidelines for “Public Private Partnerships”. The government’s decision to privatise the Port of Newcastle was announced on November 5 2013, after the negotiation with NSC had been terminated. The government was exempt from the Act when privatising the port. 

  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. 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.*

Note: Minister Gay confirmed the terms.

  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. 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.

Note: The government required payment of an additional fee of $1 million per visit for a typical container ship of 5,000 capacity. Without this impost, a container terminal will be developed and will compete with Port Botany to service the northern NSW container shipping market.

  1. Was Newcastle Port Corporation’s contract with Anglo Ports [lead partner, Newcastle Stevedores Consortium], 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.

Note: The ICAC, “Operation Spicer” report, August 30 2016, page 42, said: “By late 2010, the NPC had progressed a long way with its proposal for a container terminal on the Mayfield site. The NPC had tested the market by asking for expressions of interest and studying responses. The NPC selected a consortium called the Newcastle Stevedoring Consortium (NSC). The NSC was comprised of Anglo Ports and Grup TCB, large and experienced international groups within the industry, and a local company, Newcastle Stevedores Pty Ltd. As a statutory state-owned corporation, the NPC was obliged to comply with the NSW Government’s “Working with Government Guidelines”.” These guidelines were replaced by the “NSW Public Private Partnerships Guidelines, August 2012”.

  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.]

Note: Before terminating the lease negotiation in November 2013, NPC again required a container terminal as originally intended, but added a fee for containers, amounting to $1 million per visit for a typical container ship of 5,000 containers capacity.

  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.]

Note: The government is contractually committed to pay compensation to Port Botany in respect of container movements at the Port of Newcastle. Any payment made is recovered from the Port of Newcastle. In requiring this payment, the government’s objective is to prevent the Port of Newcastle from competing with Port Botany in the northern NSW container shipping market by making development of a container terminal an “uneconomic enterprise”.

  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.

Note: The “NSW Freight and Ports Strategy November 2013” identifies Port Kembla as the location of the state’s next container terminal after Port Botany reaches capacity. This objective is contrary to government policy. Meeting the container shipping requirements for northern NSW is best achieved by a container terminal at the Port of Newcastle. Shipping lines will respond to market demand. It is in the interests of the northern NSW economy to patronise a container terminal at the Port of Newcastle.

*Legislative Council Hansard – 10 August 2016 –

NEWCASTLE PORT 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.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

January 22 2017

 

MEDIA STATEMENT

Hon Gladys Berejiklian testimony re Port of Newcastle container charge

Did Newcastle Port Corporation (NPC) contravene the competition provisions of the “Competition and Consumer Act 2010” (CCA) while negotiating with Newcastle Stevedores Consortium (NSC) to develop a container terminal between 2009 and November 2013? In 2013, the NSW government ordered NPC to charge NSC an extra lease payment amounting to $1 million for a typical container ship of 5,000 containers capacity. The purpose of this charge was to make developing a container terminal commercially unviable in competition with Port Botany. A container terminal at Newcastle was intended to compete with Port Botany for the northern NSW market.

The Hon Gladys Berejiklian MP was questioned about the additional charge on September 1 2016, see transcript, attached.

Competition watchdog, the ACCC, refuses to disclose whether it considers NPC was “carrying on a business” within the scope of the CCA while negotiating with NSC. As the agency responsible for enforcing the CCA, the ACCC, obviously, has a position.

The ACCC advised on June 7 2013 that –

“The competition provisions of the Act apply to state government bodies only to the extent that they “carry on a business”. “Carrying on a business” is not defined by the Act. When determining that a government entity is carrying on a business, the Courts have held that regard is to be given whether:

  • the entity is engaged in the conduct on a systematic or regular basis;
  • the conduct contains an element of trade or commerce as a private citizen may undertake; and,
  • the activities take place in a business context or have a business character”

Before the Port of Newcastle was privatised in 2014, the systematic development of new shipping terminals was a core activity for NPC. A state-government body, NPC was in the business of leasing portside land to private companies, who built terminals. NPC was negotiating to lease portside land to NSC on condition that NSC built a multi-purpose terminal, including a container terminal with minimum capacity of 1 million TEUs per year, and paid a fee. There were other conditions.

NPC was obliged to comply with the “NSW Public Private Partnerships Guidelines”, which included Cabinet approval of the business case. Cabinet approval was also required for conducting the commercial negotiation with NSC. In conducting this lease negotiation, NPC was engaging in “trade or commerce as a private citizen may undertake”, the conduct was “in a business context” and it had “a business character”. It is entirely appropriate to ask the ACCC to disclose whether it considers NPC was “carrying on a business” within the scope of the CCA.

On June 7 2013, the ACCC advised that the government had decided not to develop a container terminal at the Port of Newcastle. As disclosed in state parliament by The Hon Duncan Gay MLC on October 17 2013, it was government policy to lease portside land for developing a container terminal. When Mr Gay made this statement, NPC was still conducting the lease negotiation with NSC.

Negotiations between NPC and NSC were confidential. Anglo Ports Pty Ltd, the lead partner in NSC, disclosed, on February 10 2015, that The Hon Mike Baird MP, by letters dated August 30 2012 and July 26 2013, “dictated that a container port not proceed at Newcastle”. After July 26 2013, and before November 2013, NPC required development of a container terminal but also required NSC to make an increased payment. That payment was predicated on “future container capacity development at the Port of Newcastle”. If the government provided the ACCC with confidential information to the contrary, it can be disclosed. NSC had not withdrawn its proposal when NPC terminated the negotiation in November 2013.

The “NSW Freight and Ports Strategy November 2013” identifies Port Kembla as the location of the state’s next container terminal after Port Botany reaches capacity. But this objective was negated by government policy that a container terminal may be developed at any time at the Port of Newcastle. Consequently, the “NSW Freight and Ports Strategy November 2013” does not reflect government policy.

Government policy was unchanged when the port was leased to Port of Newcastle Investments Pty Ltd, on April 30 2014. It is government policy that Port of Newcastle Investments can develop a container terminal any time it wishes to do so.

Greg Cameron

0456819602

www.containerteminalpolicyinnsw.com.au

January 21 2017

 

The Hon Malcolm Turnbull MP
Prime Minister

Dear Prime Minister,

Further to my request if you would establish whether the ACCC claims the NSW government became exempt from the “Commonwealth Competition and Consumer Act 2010” in respect of the Port of Newcastle before or after November 2013, the information, below, provides additional context.

Yours faithfully,

Greg Cameron

www.containerteminalpolicyinnsw.com.au

Copy: NSW MPs; ACCC; Media; Port of Newcastle Investments; NSW Ports

December 21 2016

Port of Newcastle

The Port of Newcastle is the NSW government’s source of funds for paying compensation to NSW Ports in respect of future container capacity development at the Port of Newcastle until 2063. This liability makes it commercially unviable to develop container capacity, which is the government’s intention.

The government’s contractual commitment to compensate NSW Ports was revealed on July 28 2016 when the “Newcastle Herald” published a document named Port Commitment – Port Botany and Port Kembla”. More than 100 “Questions On Notice had been asked in State Parliament.

NSW Ports leased Port Botany and Port Kembla from the NSW government on April 12 2013. When Port of Newcastle Investments Pty Ltd leased the Newcastle port on April 30 2014, it was required to pay the government for any cost the government incurs to NSW Ports in respect of future container capacity development at the Port of Newcastle. Until November 2013, the source of these funds was intended to be Newcastle Stevedores Consortium.

The government was conducting a “Public Private Partnership” (PPP) with Newcastle Stevedores Consortium, between 2009 and November 2013, for developing a container terminal and a multi-purpose terminal, at the Port of Newcastle. Term Sheets were agreed in December 2010, as reported by the NSW “Independent Commission Against Corruption” on August 30 2016. The government amended these Term Sheets in 2013 by requiring Newcastle Stevedores Consortium to pay the government for any cost incurred to NSW Ports.

NSW PPP guidelines require the government to obey all laws. However, the government met the conditions for contravening the “Commonwealth Competition and Consumer Act 2010” (CCA) with the PPP. The government was carrying on a business for the purposes of the CCA when it required a contract that had the purpose, or was likely to have the effect, of substantially lessening competition in the NSW container shipping market.

The government does not claim it was exempt from the CCA in respect of the PPP with Newcastle Stevedores Consortium. It did not enact legislation to take advantage of section 51(1) of the CCA, whereby conduct that would normally contravene the law may be permitted if it is specifically authorised under other legislation.

But in a report in “The Australian Financial Review” on August 1 2016, the “Australian Competition and Consumer Commission” said the government was exempt from the CCA in respect of privatising the Port of Newcastle. The report did not disclose whether the government became exempt before or after November 2013. The government terminated the PPP in November 2013 and announced its decision to privatise the Port of Newcastle on November 5 2013.

The competition provisions of the CCA apply to government bodies only to the extent that they “carry on a business”. “Carrying on a business” is not defined by the CCA. When determining that a government entity is carrying on a business, the Courts have held that regard is to be given whether:

  • the entity is engaged in the conduct on a systematic or regular basis;
  • the conduct contains an element of trade or commerce as a private citizen may undertake; and,
  • the activities take place in a business context or have a business character

The PPP was conducted by “Newcastle Port Corporation”, a statutory state-owned corporation, while it was “carrying on a business” for the purposes of the CCA.

The Port of Newcastle was identified in the NSW government’s “Ports Growth Plan 2003” as the state’s next major container port when Port Botany reached capacity. In 2009, the government committed to developing a container terminal with minimum capacity of one-million TEU per year at the Port of Newcastle, which would enable container ships to use the port for the first time. The government also committed to developing a new multi-purpose terminal for general cargo ships at the port to increase the number of non-TEU containers shipped, and roll-on/roll-off cargo.

A tender was conducted and Newcastle Stevedores Consortium was selected as the government’s “Preferred Proponent” in accordance with the government’s guidelines for conducting PPPs. The Term Sheets the government agreed with Newcastle Stevedores Consortium did not proceed to contract before the March 2011 state election, for reasons later revealed by the ICAC.

But when the government announced its plans on July 27 2012 to privatise Port Botany and Port Kembla, it also identified Port Kembla as the location for developing the state’s second major container port, and the Port of Newcastle as the location for developing the state’s third major container port.

On August 30 2012, the government amended the PPP by removing the requirement for a container terminal, as it had the right to do. On July 26 2013, the government re-confirmed this decision. Shortly after, another change was made to the PPP. The government required a container terminal whereby the Port of Newcastle could become the state’s second major container port. The government also amended the Term Sheets requiring payment for any costs the government incurred to NSW Ports.

Negotiations pursuant to the PPP were confidential. When asked on October 17 2013 “how much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port”, the government said “we do not envisage that any compensation will need to be put in place”. This statement was made before the government terminated the PPP.

Market research had satisfied the government that the Port of Newcastle could be leased with a requirement for paying the government for any cost it incurred to NSW Ports. In a statement to the “Newcastle Herald” on March 4 2015, the government said: “Newcastle Port Corporation concluded its negotiations with Anglo Ports [lead partner in the Newcastle Stevedores Consortium] in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.”

In a statement published on the NSW Parliament web site dated February 10 2015, Anglo Ports said Newcastle Stevedores Consortium had not withdrawn from the PPP.

The government had contractually committed to paying NSW Ports compensation when container movements at the Port of Newcastle exceeded a threshold number. This number was 30,000 containers per year as at July 1 2013, increasing by six per cent per year, for 50 years. “Container” was defined to mean-

Any moveable device, designed for continuous use in loading and unloading cargoes on and from Ships, including boxes, crates, cylinders, tanks, TEUs, other stackable units and any similar cargo-carrying device which is designated as a container by international stevedoring standards from time to time 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.

The “suitable outcome” the government required included agreement on the threshold number of “container” shipments. However, it is likely that annual “container” shipments, as defined, already exceeded the threshold.

The amount of compensation is calculated by multiplying the annual number of TEU containers shipped through the Port of Newcastle by NSW Ports’ average charge for TEU containers shipped through Port Botany in any given year. The current average is $100 per TEU container. This amounts to $1 million for a TEU container ship transporting 5,000 import containers and 5,000 export containers through the Port of Newcastle.

General cargo ships carry TEU containers as incidental cargo to ports that do not have a TEU container terminal, such as the Port of Newcastle. In 2011, general cargo ships carried 18,000 TEU containers through the Port of Newcastle, but this declined to 9,000 TEU in 2016, presumably because of the threshold limit imposed by the government. Further evidence of the decline in competition is that neither a TEU container terminal, nor a new multi-purpose terminal, are in prospect of being built.

On August 22 2014, the government claimed that a container terminal at the Port of Newcastle was “an uneconomic enterprise contrary to market demand”. This claim is disproven by the government’s requirement to be paid for any cost incurred to NSW Ports in respect of future container capacity development at the Port of Newcastle.

In Newcastle on September 27 2016, The Hon Mike Baird MP, Premier, said there was a “massive” requirement for infrastructure to support a container terminal at the Port of Newcastle which would be a “huge burden” on taxpayers across the state.

In terms of rail freight, the estimated cost is $5 billion to build stages 2 and 3 of the Northern Sydney Freight Corridor for creating the equivalent of a dedicated rail freight line between the Port of Newcastle and Strathfield. Stage 1 was completed in 2016 at a cost of $1 billion. Stages 2 and 3 are required by 2028 when the additional capacity provided by stage 1 will be fully utilised. However, the government has no intention of building stages 2 and 3.

But stages 2 and 3 are not required to enable the Port of Newcastle to serve the northern NSW market.

A rail freight bypass of Sydney – between the Port of Newcastle, outer western Sydney and Glenfield in Sydney’s south-west – can be built by 2028. With this line, there is no requirement for stages 2 and 3 of the Northern Sydney Freight Corridor. The additional capacity created by stage 1 can be put to better use for improved passenger services. Similarly, the bypass line will allow the additional capacity created by the $1 billion Southern Sydney Freight Line to be used for passengers. All of Sydney’s metropolitan rail freight capacity can then be devoted to passenger services. The intermodal terminal proposed for Moorebank would be replaced by better situated facilities.

The bypass line is government policy. It is achievable by relocating some or all container terminal operations from Port Botany to Newcastle and using container freight to pay for the bypass line’s construction and operation. Container trucks would be removed from Sydney’s roads. Otherwise, Port Botany TEU containers moved by truck are estimated to increase from 2 million in 2015 to 5.4 million in 2045, assuming an intermodal terminal at Moorebank, and requires completion of “WestConnex”.

There would be no need to build the Western Sydney Freight Line, costing $1 billion. The Southern Sydney Freight Line would be available to service Badgery’s Creek Airport passenger rail requirements. Sydney Airport could even be expanded by increasing the length of the shorter parallel runway and relocating displaced facilities to the container terminal site.

A container terminal at the Port of Newcastle is required to service northern NSW because 90 per cent of world trade in non-bulk commodities is conducted using containers and Port Botany is functionally inaccessible

The reason why 85 per cent of containers are trucked within 50 kilometres of Port Botany is access. Sydney’s inadequate rail infrastructure requires more than 80 per cent of containers to be trucked, which is the most costly method of container transportation. The reason why containers for the northern NSW market are sent to Port Botany is because there is no container terminal at the Port of Newcastle.

The Newcastle Herald reported on August 17 2012:

Newcastle Port Corporation chief executive Gary Webb said this week Ports Minister Duncan Gay had explained the government’s decision to privatise Port Botany and Port Kembla, and the impact this would have on the container component of the Newcastle plan.

The concept plan predicted 600,00 containers a year by 2024 and 1 million a year by 2034, but these targets would not be met and the corporation would look for other, short-term uses for the container land.

He said the next step for the corporation was to resolve the future of a ‘‘proposed contract’’ to develop 72 hectares of the site that was agreed in principle by the corporation with a consortium involving Hunter waterfront company Newcastle Stevedores.

The reason why the Newcastle Herald reported Mr Webb to say that the targets would not be met was because there would be no container terminal.

Should the Port of Newcastle also serve the Sydney container shipping market, by building a rail freight bypass line, this would enable industry to relocate from Sydney to all regional areas of NSW, since there would be improved access to a container port, compared with the truck-dependent Port Botany facility. The benefits to all regional areas of NSW, north and south, would be extreme.

The first step in the investigation is to establish whether the ACCC claims the government became exempt from the CCA in respect of the Port of Newcastle before or after November 2013.

December 21 2016

The Hon Scott Morrison MP
Treasurer of the Commonwealth of Australia

Dear Mr Morrison,

Does the Australian government claim that the NSW government was exempt from the competition provisions of the “Commonwealth Competition and Consumer Act 2010” (CCA) in respect of “Newcastle Port Corporation” (NPC) conducting a “Public Private Partnership” (PPP) for developing the Port of Newcastle between 2009 and November 2013?

In 2009, the NSW government took a decision to undertake a PPP for developing a multi-purpose terminal, including a container terminal with minimum capacity if 1 million TEUs per year, at the Port of Newcastle. NPC, a statutory state-owned corporation, conducted the government’s PPP. When the government took another decision, in November 2013, to discontinue this PPP for developing the port, NPC concluded the PPP.

The issue is whether the Australian government claims that the NSW government became exempt from the competition provisions of the CCA by taking a decision in 2009 to undertake a PPP for developing the Port of Newcastle.

In accordance with the “NSW PPP Guidelines”, in 2009, the NPC selected a consortium called the “Newcastle Stevedores Consortium” (NSC) for conducting “direct negotiations”. By the end of 2010, these “direct negotiations” had been completed and the process had moved to the point where the NSC had been identified as the “Preferred Proponent”. From this point, the NPC could enter “commercial negotiations” with the NSC with a view to concluding a final contract. This required approval from the NSW Treasurer, however, approval was not given before the March 2011 state election, for reasons revealed by the “NSW Independent Commission Against Corruption” in its “Operation Spicer” report, dated August 30 2016.

When the NSW government leased Port Botany and Port Kembla to NSW Ports on April 12 2013, it contractually committed to paying NSW Ports compensation “in respect of future container capacity development at the Port of Newcastle”. NPC then required NSC to “make the government whole for any cost the state incurs to NSW Ports”.

After the PPP had been concluded, the NSW government announced, on November 5 2013, its decision to privatise the Port of Newcastle. Also in November 2013, the government released its “NSW Freight and Ports Strategy” (the Strategy). Under this Strategy, Port Kembla is to be the location for the state’s next container port after Port Botany reaches capacity, but a container port can be developed at any time at the Port of Newcastle, providing payment is made to the NSW government to “make the government whole for any cost the state incurs to NSW Ports”.

Requiring the NSC to “make the government whole” had the purpose of substantially lessening competition in the NSW container shipping market. The impost meant a typical container ship with 5,000 TEU carrying capacity would pay $1 million more per visit to visit the Port of Newcastle than Port Botany. Consequently, for commercial reasons, a container terminal would not be developed at the Port of Newcastle, even though permitted.

In the latest development, port leaseholder “Port of Newcastle Investments Pty Ltd”, is proposing to use the prime deep-water Newcastle port frontage as a 12 ha. storage yard for large industrial goods. It demonstrates complete failure of national infrastructure policy.

I have also written to The Hon Malcolm Turnbull MP, Prime Minister, in his capacity of Chairman of COAG, in relation to this matter. It is clear that the NSW government used the confidentiality provisions of the PPP process to conceal the information about requiring the NSC to make the government whole for any cost incurred to NSW Ports in respect of future container capacity development at the Port of Newcastle. Withholding this information fatally compromised the Strategy. As the Hansard record shows, the government declined to reveal this information for several years, until it was disclosed by the “Newcastle Herald” last July.

If a government is made exempt from the CCA by taking a decision to conduct a PPP, COAG’s national PPP guidelines should be revised, otherwise, a PPP represents unacceptable commercial risk, as demonstrated.

Yours faithfully,

Greg Cameron

0456819602

www.containerterminalpolicyinnsw.com.au

January 9 2017

Copy:

NSW MPs; COAG; Ms Margaret Crawford, NSW Auditor-General; Mr Grant Hehir, Auditor-General; Mr Rod Sims, Chairman, Australian Competition and Consumer Commission; Mr Peter Harris AO, Chairman, Productivity Commission; Mr Mark Birrell, Chairman, Infrastructure Australia; Ms Heather Ridout AO, Chair, Australian Super; Mr Bob Lette, Chairman, Gardior Pty Ltd; Media

The Hon Malcolm Turnbull MP
Prime Minister

Dear Prime Minister,

I refer to national “Public Private Partnership” (PPP) policy, which is adopted by COAG and applies to all state and territory governments as well as the Commonwealth government in relation to the procurement of infrastructure via PPPs.

May I ask you, in your capacity as Chair of COAG, if it is COAG’s understanding that a government, after commencing a PPP, may become exempt from the “Commonwealth Competition and Consumer Act 2010” (CCA) in respect of that PPP?

In 2009, it was NSW government policy to develop a container terminal and a new multi-purpose terminal at the Port of Newcastle, as a PPP. The government conducted a tender and commenced negotiations with a preferred proponent in 2010. In 2013 the government changed the conditions of the PPP by requiring the preferred proponent to pay a fee for containers shipped through the port. The issue is whether the government was exempt from the CCA when it required the preferred proponent to pay the fee. The government terminated the PPP in November 2013.

The ACCC does not disclose the date when it claims the government became exempt from the CCA in respect of charging a fee for containers shipped through the Port of Newcastle.

Further details are below.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: Mr Rod Sims; Mr Peter Harris; Mr Mark Birrell; NSW MPs; COAG; Media

December 9 2016

Statement to Media and NSW MPs
December 8 2016

The Hon Gladys Berejiklian MP was asked on May 5 2015:

(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)?

 Ms Berejiklian answered on June 9 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 (b).

The position is that the “NSW Freight and Ports Strategy” (the Strategy) relied on the government secretly charging a fee for containers shipped through the Port of Newcastle to prevent development of a container terminal there. The government did not disclose charging a fee before it was revealed on July 28 2016 by the “Newcastle Herald” publishing the “Port Commitment – Port Botany and Port Kembla”. The fee was not disclosed in the Strategy, which states: “Port Kembla has been identified as the location for the development of a future container terminal to augment the capacity of Port Botany when required”. The government knew that disclosing the fee would invalidate the Strategy because, without the fee, a container terminal and new multi-purpose terminal would be built at the Port of Newcastle.

The government also knew that the fee met the two conditions for contravening the “Competition and Consumer Act 2010” (CCA). First, that the government was carrying on a business within the scope of the CCA. Second, that charging a fee substantially lessened competition in the NSW container shipping market, where 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, [and] other stackable units”.

The fee doubles the cost of shipping TEU containers through the Port of Newcastle. NSW Ports, the leaseholder of Port Botany and Port Kembla, is paid compensation for loss of business when the number of containers shipped through the Port of Newcastle exceeds 30,000 per year as from July 1 2013, increasing by six per cent per year, until 2063. The fee charged at the Port of Newcastle re-imburses the government for its payment to NSW Ports. The amount of compensation is calculated by multiplying the number of TEU containers shipped through the Port of Newcastle by the average fee charged by NSW Ports for TEU containers shipped through Port Botany. This fee is currently around $100 per container. A typical container ship carries 10,000 import and export TEU containers, making the fee $1 million per ship.

Port of Newcastle Investments became the port’s leaseholder in April 2014. It does not report all containers shipped through the port, only TEUs. On November 17 2016, Member for Newcastle, Mr Tim Crakanthorp, asked this Question On Notice: “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”? The answer is due on December 22.

Between 2009 and November 2013, the government was conducting a tender for leasing 71 ha of portside land at the Port of Newcastle on condition of building a container terminal with capacity of 1-million TEU per year, and a multi-purpose terminal. The government conducted this tender as a “Public Private Partnership” (PPP). When the government announced its decision to privatise the Port of Newcastle on November 5 2013, it terminated the tender and released the Strategy.

The ACCC is taking no enforcement action because it claims that the government was exempt from the CCA in respect of the fee because it was privatising the Port of Newcastle. The ACCC offers no reason for refusing to disclose whether it claims the government became exempt before or after November 5 2013. If this date was before, it would mean the government was exempt from the CCA while negotiating under PPP Guidelines with Newcastle Stevedores Consortium, the tenderer for the container terminal/multi-purpose terminal.

It would create a significant national precedent were the NSW government, while conducting a PPP, able to exempt itself from the CCA by changing government policy. This would put the government above the law. However, only a court can determine whether the government contravened the CCA.

The ACCC’s claim was disclosed exclusively to the “Australian Financial Review” on August 1 2016. In providing that newspaper with information that excluded the date upon which the ACCC claims the NSW government became exempt from the CCA in respect of the Port of Newcastle, the ACCC avoided being held accountable for its actions.

Presuming the newspaper correctly reported Mr Rod Sims, ACCC Chairman, he is obliged to disclose the date, or withdraw his claim. A statement published on the ACCC’s web site is required.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

December 8 2016

Copy: Mr Rod Sims

Statement to Media and NSW MPs
December 8 2016

The Hon Gladys Berejiklian MP was asked on May 5 2015:

(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)?

 Ms Berejiklian answered on June 9 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 (b).

The position is that the “NSW Freight and Ports Strategy” (the Strategy) relied on the government secretly charging a fee for containers shipped through the Port of Newcastle to prevent development of a container terminal there. The government did not disclose charging a fee before it was revealed on July 28 2016 by the “Newcastle Herald” publishing the “Port Commitment – Port Botany and Port Kembla”. The fee was not disclosed in the Strategy, which states: “Port Kembla has been identified as the location for the development of a future container terminal to augment the capacity of Port Botany when required”. The government knew that disclosing the fee would invalidate the Strategy because, without the fee, a container terminal and new multi-purpose terminal would be built at the Port of Newcastle.

The government also knew that the fee met the two conditions for contravening the “Competition and Consumer Act 2010” (CCA). First, that the government was carrying on a business within the scope of the CCA. Second, that charging a fee substantially lessened competition in the NSW container shipping market, where 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, [and] other stackable units”.

The fee doubles the cost of shipping TEU containers through the Port of Newcastle. NSW Ports, the leaseholder of Port Botany and Port Kembla, is paid compensation for loss of business when the number of containers shipped through the Port of Newcastle exceeds 30,000 per year as from July 1 2013, increasing by six per cent per year, until 2063. The fee charged at the Port of Newcastle re-imburses the government for its payment to NSW Ports. The amount of compensation is calculated by multiplying the number of TEU containers shipped through the Port of Newcastle by the average fee charged by NSW Ports for TEU containers shipped through Port Botany. This fee is currently around $100 per container. A typical container ship carries 10,000 import and export TEU containers, making the fee $1 million per ship.

Port of Newcastle Investments became the port’s leaseholder in April 2014. It does not report all containers shipped through the port, only TEUs. On November 17 2016, Member for Newcastle, Mr Tim Crakanthorp, asked this Question On Notice: “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”? The answer is due on December 22.

Between 2009 and November 2013, the government was conducting a tender for leasing 71 ha of portside land at the Port of Newcastle on condition of building a container terminal with capacity of 1-million TEU per year, and a multi-purpose terminal. The government conducted this tender as a “Public Private Partnership” (PPP). When the government announced its decision to privatise the Port of Newcastle on November 5 2013, it terminated the tender and released the Strategy.

The ACCC is taking no enforcement action because it claims that the government was exempt from the CCA in respect of the fee because it was privatising the Port of Newcastle. The ACCC offers no reason for refusing to disclose whether it claims the government became exempt before or after November 5 2013. If this date was before, it would mean the government was exempt from the CCA while negotiating under PPP Guidelines with Newcastle Stevedores Consortium, the tenderer for the container terminal/multi-purpose terminal.

It would create a significant national precedent were the NSW government, while conducting a PPP, able to exempt itself from the CCA by changing government policy. This would put the government above the law. However, only a court can determine whether the government contravened the CCA.

The ACCC’s claim was disclosed exclusively to the “Australian Financial Review” on August 1 2016. In providing that newspaper with information that excluded the date upon which the ACCC claims the NSW government became exempt from the CCA in respect of the Port of Newcastle, the ACCC avoided being held accountable for its actions.

Presuming the newspaper correctly reported Mr Rod Sims, ACCC Chairman, he is obliged to disclose the date, or withdraw his claim. A statement published on the ACCC’s web site is required.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

December 8 2016

Copy: Mr Rod Sims

 

 

Statement to MPs and Media
December 7 2016

The Hon Gladys Berejiklian MP was asked on September 3 2015: “Has the NSW Government imposed any restrictions on the movement of containers through the Port of Newcastle?”

 Ms Berejiklian answered on September 29 2015: “There is no legislated cap on the number of containers that can travel through the Port of Newcastle.”

The position is that the NSW government could not legislate a cap on the number of containers that can travel through the Port of Newcastle. The government met the conditions for contravening the “Competition and Consumer Act 2010” (CCA) in 2013 when it required container terminal tenderer, Newcastle Stevedores Consortium, to pay a fee for containers shipped through the port. Legislating a cap would have required the government to disclose charging the fee, which was not disclosed until the “Newcastle Herald” published the “Port Commitment – Port Botany and Port Kembla” on July 28 2016.

The ACCC failed to enforce the CCA but now claims in the media (Australian Financial Review, August 1 2016) that the government became exempt from the CCA because of its decision to privatise ports, including the Port of Newcastle. The ACCC refuses to disclose the date upon which it claims the government became exempt. This date is essential to support the ACCC’s claim, because the government was not exempt from the CCA when it conducted a tender in 2009 and negotiated with Newcastle Stevedores Consortium pursuant to this tender until November 2013. The government was not exempt from the CCA when it was negotiating with Newcastle Stevedores Consortium. On November 5 2013, the government announced the long term lease of the Port of Newcastle.

The only way for the ACCC to justify its claim the government became exempt from the CCA is to claim that the exemption applied as from November 5 2013. The fact that the ACCC refuses to disclose the date means that its claim is unsubstantiated and therefore is invalid.

The government had no option but to require Newcastle Stevedores Consortium to pay a fee. The government had contractually committed in April 2013 to pay compensation to NSW Ports, the leaseholder of Port Botany and Port Kembla, in respect of future container capacity development at the Port of Newcastle. However, the government had no source of funds for paying this compensation. By requiring Newcastle Stevedores Consortium to pay a fee, the government not only secured a source of funds but also maintained secrecy, because the negotiations were confidential.

In November 2013, the government released the NSW Freight and Ports Strategy, which relied on preventing a container terminal at the Port of Newcastle. The government had no further need of Newcastle Stevedores Consortium after the Strategy was released and terminated the tender.

The government met the conditions for contravening the CCA because it was carrying on a business within the scope of the CCA and charging a fee substantially lessened competition in the container shipping market. NSW Ports is paid compensation when the number of containers shipped through the Port of Newcastle exceeds 30,000 per year as from July 1 2013, increasing by six per cent per year until 2063 and container means-

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.

The government’s payment to NSW Ports comprises the average charge made by NSW Ports for a TEU container shipped through Port Botany multiplied by the number of TEU containers shipped through the Port of Newcastle. The number of containers that are shipped through the Port of Newcastle is not available.

A container terminal and a new multi-purpose terminal will be built at the Port of Newcastle if the government removes its fee.

The question asked of Ms Berejiklian was relevant but the answer was not.

Greg Cameron

containerterminalpolicyinnsw.com.au

December 7 2016

Statement to MPs and Media
December 5 2016

The Hon Gladys Berejiklian MP was asked on September 3 2015: “Has the NSW Government entered into any agreements that create a disincentive or obstacle to develop a container terminal at the Port of Newcastle?”

Ms Berejiklian answered on September 29 2015: “I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.”

The position is that the NSW government charges a fee that doubles the cost of container ships using the Port of Newcastle compared with Port Botany and this fee has the purpose and effect of making it commercially unviable to develop a container terminal at the Port of Newcastle.

In April 2013, the NSW government contractually committed to paying compensation to NSW Ports, the leaseholder of Port Botany and Port Kembla, when the number of containers shipped through the Port of Newcastle exceeds 30,000 per year as from July 1 2013, increasing by six per cent per year until 2063 and container means-

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.

The government’s payment to NSW Ports comprises the average charge made by NSW Ports for a TEU container shipped through Port Botany multiplied by the number of TEU containers shipped through the Port of Newcastle.

A container terminal and a new multi-purpose terminal will be built at the Port of Newcastle if the government removes its fee.

The agreements Ms Berejiklian was asked about were secret and were only revealed when the “Newcastle Herald” published a document on July 28 2016. The government confirmed the authenticity of “Port Commitment – Port Botany and Port Kembla” on August 10 2016.

The question asked of Ms Berejiklian was relevant but the answer was not.

Greg Cameron

containerterminalpolicyinnsw.com.au

December 5 2016

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

Dear Premier,

Why does the NSW government charge a fee for containers shipped through the Port of Newcastle? This fee doubles the cost of container ships using the port and a container terminal is not being built. If this fee is not charged, a container terminal will be built, and container ships will use the port.

Northern NSW is being denied the extreme economic benefits of a container terminal and a new multi-purpose terminal at the Port of Newcastle because NSW government policy is for the state’s next container terminal to be located at Port Kembla. Charging a fee at the Port of Newcastle is how this policy is being achieved.

The government’s fee applies when the number of “devices” that fit the government’s definition of “container” exceed 30,000 per year, increasing annually by six per cent.

“Container” is defined by the government to mean “any moveable device, 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”. TEU, or “twenty-foot equivalent unit”, describes the ubiquitous steel boxes used for 90 per cent of world trade in non-bulk commodities. TEU containers require specialist terminal facilities. All other forms of “containers” are carried on general cargo ships that require multi-purpose terminal facilities.

The government’s tiny limit on “containers” is easily exceeded. The government is contractually committed to paying compensation to NSW Ports, the leaseholder of Port Botany and Port Kembla, for losing TEU container shipping business when Newcastle’s “container” limit is exceeded.

The “NSW Freight and Ports Strategy” fails to disclose that the government charges a fee for containers shipped through the Port of Newcastle. In fact, the government’s conduct was only exposed on July 28 2016 when “The Newcastle Herald” published details.

The government maintained total secrecy by coordinating three events in November 2013.

First, the government released its “NSW Freight and Ports Strategy”, which confirmed Port Kembla as the location for the state’s next container terminal. Second, the government terminated a tender it conducted in 2009 to develop container capacity at the Port of Newcastle. Negotiations with the “Preferred Proponent” were confidential, including when the government required payment of a fee. Third, the government announced its decision to privatise the Port of Newcastle. This decision enabled the government to claim exemption from the “Competition and Consumer Act 2010” (CCA) in respect of charging the future leaseholder a fee for containers shipped through the port.

The government had to terminate the tender because requiring the tenderer to pay a fee met the conditions for contravening the CCA. The government knew that its “NSW Freight and Ports Strategy” was invalid because it relied on artificially preventing container capacity development at the Port of Newcastle. Secrecy was paramount because the government was unable to justify charging a fee as the means for achieving government policy.

The government did not enact any legislation granting it exemption from contravening the CCA. By admitting that its conduct met the conditions for contravening the CCA, the government knew this proved its “NSW Freight and Ports Strategy” was invalid. In any event, the government did not have the legal right to contravene the CCA in respect of a pre-existing government tender. For these reasons, the government does not claim it was exempt from the CCA in respect of requiring payment of a fee pursuant to the tender.

Enforcing the CCA is the Australian Competition and Consumer Commission’s responsibility. The ACCC claims the government was exempt from the CCA in respect of the Port of Newcastle. However, the ACCC refuses to disclose when the government became exempt. Unless the ACCC discloses this date its claim is unsubstantiated and must be withdrawn.

So why does the government charge a fee for containers shipped through the Port of Newcastle?

Sincerely,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

December 1 2016

Copy: MPs; Media; ACCC; Gardior; Australian Super; Productivity Commission; Infrastructure Australia

 

 

Mr Rod Sims
Chairman
ACCC
by email

Dear Mr Sims,

I refer to the ACCC’s claim reported by “The Australian Financial Review” on August 1 2016 that the NSW government was exempt from the “Competition and Consumer Act 2010” (CCA) in respect of certain decisions taken when the government was privatising state-owned ports in NSW.

Will the ACCC disclose the date it claims the government became exempt from the CCA in respect of the Port of Newcastle?

This request relates to whether the government was exempt from the CCA in respect of requiring Newcastle Stevedores Consortium to pay a fee for containers shipped through the Port of Newcastle, as disclosed by the “Newcastle Herald”, on July 28 2016.

Newcastle Stevedores Consortium had been selected as “Preferred Proponent” by Newcastle Port Corporation in 2009 when it conducted a tender for leasing 71 ha of portside land on condition of building the port’s first terminal for dedicated TEU container ships, and a new multi-purpose terminal, for general cargo ships. The government has now confirmed that it did not claim exemption from the CCA in respect of this tender (November 17 2016, QON 4271).

Newcastle Port Corporation conducted its tender in accordance with government policy of container capacity development at the Port of Newcastle. The government’s objective was to enable dedicated TEU container ships to use the port to meet demand from northern NSW, and to provide a competitive alternative to using Port Botany. The government also intended to expand multi-purpose terminal facilities for general cargo ships to meet demand for all other forms of shipping, including containers other than TEUs. By December 2010, negotiations with Newcastle Stevedores Consortium had reached the stage of agreed Term Sheets.

Government policy changed after the March 2011 state election. Government policy became no container capacity development at the Port of Newcastle. Development of the government’s “NSW Freight and Ports Strategy” started in 2012 and identified Port Kembla as the location for the development of a future container terminal to augment the capacity of Port Botany when required.

In April 2013, the NSW government leased Port Botany and Port Kembla to NSW Ports for 99 years. The “Newcastle Herald” revealed that the government had made a secret contractual commitment to NSW Ports to pay NSW Ports compensation should future container capacity development at the Port of Newcastle result in NSW Ports losing business over the next 50 years. The government secretly required Newcastle Stevedores Consortium to pay the government a fee to cover its compensation payment to NSW Ports. For the purposes of these arrangements, the government defined “container” to mean “any moveable device, 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”.

The government amended the Term Sheets with Newcastle Stevedores Consortium to require payment of the fee. The government has now confirmed it did not claim exemption from the CCA in respect of the Term Sheets (October 20 2016,QON 4008).

The government did not enact legislation that would have permitted the government to contravene the CCA because the government met the conditions for contravening the CCA by requiring Newcastle Stevedores Consortium to pay the fee. The government was carrying on a business within the scope of the CCA when it required Newcastle Stevedores Consortium to pay the fee, and, the purpose or effect of the fee was to substantially lessen competition in the NSW “container” shipping market by preventing container capacity development at the Port of Newcastle.

Section 51(1) of the CCA provides that conduct that would normally contravene the law may be permitted if it is specifically authorised under other legislation.

While the government was developing the “NSW Freight and Ports Strategy”, it did not disclose requiring Newcastle Stevedores Consortium to pay a fee for containers shipped through the Port of Newcastle, or paying this fee to NSW Ports, because this conduct invalidated the Strategy. The Strategy was completed in November 2013 and the tender was terminated in November 2013.

The tender was conducted as a “Public Private Partnership” (PPP). National PPP policy agreed by COAG will have to change if a government is able to alter the terms and conditions of a PPP simply by changing government policy.

The government did not terminate the tender before the “NSW Freight and Ports Strategy” was released because the negotiations with Newcastle Stevedores Consortium were confidential. This enabled the government to keep the fee and its purpose a secret.

Under the PPP guidelines, it was permissible for the government to re-imburse Newcastle Stevedores Consortium for its bidding costs and maintain confidentiality.

Please note this email is not a request for legal advice, opinion, or any other form of disclosure from the ACCC. It is for the date. However, if the date is confidential, the ACCC’s claim is of no relevance and should be withdrawn.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: NSW MPs, Media, Productivity Commission, Infrastructure Australia, Gardior, Australian Super

November 27 2016

The Hon Mark Dreyfus QC MP
Shadow Attorney-General

Dear Mr Dreyfus,

May I draw your attention to the Australian government’s refusal to determine whether the NSW government contravened the “Commonwealth Competition and Consumer Act 2010” (CCA) in respect of charging a fee for container movements at the Port of Newcastle? As the responsible government agency, the ACCC is taking no enforcement action on grounds that the NSW government was exempt from the CCA when the fee was charged. However, neither the Australian government nor the ACCC will disclose the date upon which the ACCC claims the government became exempt from the CCA in respect of the Port of Newcastle. It is impossible that the NSW government was exempt from the CCA when the fee was charged, at a time between April 2013 and November 2013.

Your parliamentary colleague, The Hon Anthony Albanese MP, issued a statement on July 29 2016 in relation to this matter, copy attached. It has been pursued at considerable length by Labor in the NSW parliament – see my web site www.containerterminalpolicyinnsw.com.au for all details.

In April 2013, the NSW government entered a secret contractual commitment with NSW Ports, the leaseholder of Port Botany and Port Kembla, to pay NSW Ports compensation should it lose container shipping business to the Port of Newcastle. The government defined container as meaning anything within the definition of “container” provided by international stevedoring standards i.e. not just TEUs. The government’s source of funds for paying this compensation was to secretly charge a fee for containers at the Port of Newcastle. This fee doubled the cost of using the Port of Newcastle compared with Port Botany. Its purpose was to prevent development of a container terminal whereby container ships would be unable to use the port and general cargo ships would not increase their use of the port for carrying containers, including TEU containers.

Charging the fee was for the purpose of not meeting the conditions for paying compensation to NSW Ports. The government did not disclose these arrangements because they were economically unjustified, as Mr Albanese, Mr Luke Foley, Mr Tim Crakanthorp, The Hon Adam Searle and others have pointed out, and, potentially contravened the CCA.

My understanding is that the conditions to be met in order for a government to contravene the CCA are that the government must be carrying on a business within the scope of the CCA and its conduct must be for the purpose or effect of substantially lessening competition.

The NSW government, trading as Newcastle Port Corporation, met these conditions in 2013 when it required Newcastle Stevedores Consortium to pay a fee for “container” movements at the Port of Newcastle.

Newcastle Stevedores Consortium was the “Preferred Proponent” selected by the state-owned Newcastle Port Corporation when it conducted a tender in 2009 to lease 71 ha of portside land on condition of building a container terminal and a multi-purpose terminal. This tender was terminated in November 2013.

The ACCC claims that the government became exempt from the CCA when it started making decisions pursuant to the government’s policy to privatise NSW ports, including the Port of Newcastle. The ACCC appears to be claiming that the government became exempt from the CCA in respect of the tender, however, the government confirms it does not make this claim.

The ACCC points out that the government could have enacted legislation permitting a fee to be charged for container movements at the Port of Newcastle to take advantage of Section 51(1) of the CCA, which provides that conduct that would normally contravene the law may be permitted if it is specifically authorised under other legislation. This claim is incorrect because the government did not have the right to enact legislation giving it the right to contravene the CCA in respect of a pre-existing government tender. For this reason, the government did not enact legislation in respect of charging a fee for containers at the Port of Newcastle.

I asked the Prime Minister, see below, if the Australian government knows why the ACCC refuses to disclose the date upon which the ACCC claims the NSW government became exempt from the CCA in respect of the Port of Newcastle.  The reason is quite clear: the Australian government is permitting behaviour by the NSW government that is contrary to the interests of the people of northern NSW and in a manner that meets the conditions for breaching the CCA.

Might you ask the Attorney-General if the government agrees with the interpretation of the CCA by the ACCC and, if so, what is the date of the claimed exemption?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

The Hon Malcolm Turnbull MP
Prime Minister

Dear Prime Minister,

The “NSW Freight and Ports Strategy” (the Strategy) is invalid because it relies on the NSW government charging a fee for containers shipped through the Port of Newcastle. This fee is charged to prevent development of a container terminal. The Strategy says, “Port Kembla has been identified as the location for the development of a future container terminal to augment the capacity of Port Botany when required”. Without the NSW government charging a fee, a container terminal will be developed at the Port of Newcastle. Until then, northern NSW will continue to be penalised by the forced use of Port Botany. For the NSW economy, productivity is impaired and infrastructure investment is misdirected.

The NSW government had concealed charging its fee for containers while the Strategy was being developed for release in November 2013. The NSW government only admitted to charging the fee after a leaked document was published by “The Newcastle Herald”, on July 28 2016. Presumably, the Australian government had no prior knowledge. Had the fee been exposed as the means of preventing development of a container terminal, the NSW government would have been unable to proceed with the Strategy.

Now that the Australian government is aware a fee is charged with the purpose of preventing development of a container terminal, the government has a responsibility to evaluate the adverse implications for national productivity and infrastructure policy. As advised in previous correspondence, these implications are immense. The Australian government also has a responsibility to establish whether the NSW government contravened the “Competition and Consumer Act 2010” (CCA) in respect of its fee.

In 2009, “Newcastle Port Corporation” (NPC) was carrying on a business within the scope of the CCA when it conducted a tender for a 30-year lease of 71 ha of portside land on condition that a container terminal and a multi-purpose terminal were built. “Newcastle Stevedores Consortium” (NSC) was the selected tenderer and by December 2010 the negotiations had reached the final stage under the NSW government’s guidelines for “Public Private Partnerships”. In April 2013, the NSW government agreed to pay compensation to NSW Ports, the leaseholder of Port Botany and Port Kembla, for losing container shipping business to the Port of Newcastle. The NSW government intended to avoid having to actually pay this compensation by preventing competition from the Port of Newcastle. Sometime after April 2013, NPC amended the Term Sheets with NSC to require payment of a fee.

Negotiations between NPC and NSC were confidential, in compliance with the “NSW Public Private Partnerships Guidelines”. This enabled the NSW government to maintain the secrecy of its fee while developing the Strategy, and explains why the tender was not terminated before November 2013. Under the PPP Guidelines, the NSW government was able to pay NSC for its bidding costs to maintain the confidentiality of negotiations after the tender was terminated.

The NSW government’s policy decision to privatise NSW ports occurred after the 2011 state election. However, this policy decision did not change the legal status of the tender. It was impossible for the NSW government to claim exemption from the CCA in respect of the tender by the expedient of changing government policy. The NSW government confirms that exemption was not claimed from the CCA in respect of the tender. However, no enforcement action was taken by the Australian Competition and Consumer Commission to determine whether NPC’s conduct contravened the law.

It was impossible for the NSW government to enact legislation conferring exemption from the CCA in respect of NPC’s tender. Section 51(1) of the CCA provides that conduct that would normally contravene the law may be permitted if it is specifically authorised under other legislation. But the NSW government could not enact legislation because the conditions of the tender did not permit NPC to contravene the law. The lawfulness of NPC requiring NSC to pay a fee could only be determined by a court and a court determination was not sought.

In requiring NSC to pay a fee, NPC met the conditions for contravening the anti-competition provisions of Section 45 of the CCA. NPC was carrying on a business within the scope of the CCA, and the purpose and effect of the fee was to substantially lessen competition in the NSW container shipping market.

NPC defined “container” to mean anything designated as “container” by international stevedoring standards. NPC 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”)”

In 2015, 9,000 TEU containers were shipped through the Port of Newcastle. It is probable that at least another 25,000 “containers” were shipped to reach the government’s 2015 limit of 34,000 “containers” before the fee kicked-in.

The ACCC claims the NSW government was exempt from the CCA in respect of charging a fee for containers shipped through the Port of Newcastle, but refuses to disclose the date upon which this exemption occurred. The ACCC became aware that NPC required NSC to pay a fee for containers, but again, refuses to disclose the date upon which it became aware.

Does the Australian government know why these particular dates are confidential?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: The Hon Bill Shorten MP, Leader of the Opposition; ACCC; NSW MPs; Media

November 19 2016

Mr Peter Harris AO
Chairman
Productivity Commission

Mr Mark Birrell
Chairman
Infrastructure Australia

Dear Mr Harris and Mr Birrell,

May I point out that “Newcastle Port Corporation” (NPC) met the conditions for contravening the “Competition and Consumer Act 2010” (CCA) in 2013 by requiring “Newcastle Stevedores Consortium” (NSC) to pay a fee for container movements at the Port of Newcastle? As you are aware, only a court can ultimately determine a contravention of the CCA.

Notwithstanding the potential unlawfulness of this fee, the “NSW Freight and Ports Strategy” is invalid because it relies on the Port of Newcastle not competing with Port Botany in the NSW container shipping market whereby this intrusion in the market by the government is accomplished by charging a fee. It is contrary to the national interest for the “NSW Freight and Ports Strategy” to be invalid.

Should this fee be withdrawn, for example, by it proving to be unlawful, or by an action to declare the shipping access channel service, there will be competition. Since the NSW government is contractually committed to financially compensate NSW Ports, the leaseholder of Port Botany and Port Kembla, until June 30 2063 for loss of container shipping business to the Port of Newcastle, future governments will be left with no source of funds, other than consolidated revenue, for paying this compensation.

NPC was carrying on a business within the scope of the CCA when it required NSC to pay a fee for the purpose of substantially lessening competition in the container shipping market in NSW.

The Australian Competition and Consumer Commission enforces the CCA but claims the NSW government became exempt from the CCA in respect of the Port of Newcastle. The ACCC declines to disclose the date. The ACCC also declines to disclose the date it became aware that NPC required NSC to pay a fee. It would assist an examination of the state’s infrastructure strategy were the ACCC to disclose these dates. Perhaps you might request the ACCC to publicly disclose those dates, or explain why they should be confidential?

In 2009, NPC was carrying on a business within the scope of the CCA when it conducted a tender for a 30-year lease of 71 ha of portside land on condition that a container terminal and multi-purpose terminal were built. NSC was the selected tenderer and by December 2010 the negotiations had reached the final stage under the government’s guidelines for “Public Private Partnerships”. Sometime after April 2013, NPC amended the Term Sheets by requiring NSC to pay a fee for containers. NPC terminated the tender in November 2013 when the government released its “NSW Freight and Ports Strategy”.

It was impossible for the government to enact legislation conferring exemption from the CCA in respect of NPC’s tender. Section 51(1) of the CCA provides that conduct that would normally contravene the law may be permitted if it is specifically authorised under other legislation. But it was impossible for the government to enact any legislation because the conditions of the tender did not permit NPC to contravene the law. The lawfulness of NPC requiring NSC to pay a fee could only be determined by a court. NPC terminated the tender without a court determining whether NPC’s conduct contravened the law.

The NSW government’s policy decision to privatise NSW ports occurred after the 2011 state election. However, this policy decision to privatise ports did not change the legal status of the tender. It was impossible for the government to claim exemption from the CCA in respect of the tender simply because the government changed its policy.

NPC’s requirement for NSC to pay a fee had the purpose of substantially lessening competition in the NSW container shipping market. In April 2013, the government had agreed to pay compensation to NSW Ports for losing container shipping business to the Port of Newcastle. But the government intended to avoid having to pay by substantially lessening competition from the Port of Newcastle.

NPC defined “container” to mean anything designated as “container” by international stevedoring standards. In 2015, 9,000 TEU containers passed through the Port of Newcastle. It defies reality that another 25,000 “containers” did not pass through the port to reach the government’s limit (in 2015) of 34,000 “containers” before the fee kicked-in. NPC 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 “NSW Freight and Ports Strategy” is invalid if NPC contravened the law by requiring NSC to pay a fee. This is because the Strategy assumed there would be no competition from the Port of Newcastle as a result of NPC requiring NSC to pay a fee.

After NPC terminated the tender in November 2013, no enforcement action was taken by the ACCC to determine whether NPC had contravened the law. The ACCC declines to advise why no enforcement action was taken.

The government confirms exemption was not claimed from the CCA in respect of the tender and the Term Sheets as amended in 2013. It is only the ACCC that claims the government was exempt from the CCA.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: Mr Tim Crakanthorp MP; The Hon Anthony Albanese MP

November 18 2016

STATEMENT TO NSW MPS

The NSW government concealed charging a fee for containers at the Port of Newcastle for over three years because conditions for potentially breaching the anti-competition provisions of the “Commonwealth Competition and Consumer Act 2010” (CCA) had been met. There were two conditions.

The first condition was that the government had to be carrying on a business within the scope of the CCA. This condition was met when the government-owned “Newcastle Port Corporation” (NPC) conducted a tender in 2009 to lease 71 ha of portside land, on condition the leaseholder built and operated a container terminal and a multi-purpose terminal.

NPC selected “Newcastle Stevedores Consortium” (NSC) as its “Preferred Proponent” and commenced direct negotiations. By December 2010, Term Sheets had been agreed and NPC requested government approval to proceed to the final stage, which involved converting the Term Sheets into a contract for signature.

Approval was not given before the NSW state election intervened in March 2011. Direct negotiations continued after the election until NPC terminated the tender in November 2013. After the government leased Port Botany and Port Kembla to “NSW Ports” in April 2013, NPC amended the Term Sheets, by adding a fee for containers. NPC was required to remit this fee to the government. The government had agreed to pay compensation to NSW Ports should it lose business to the Port of Newcastle over the next 50 years. The government intended using the payment from NPC as its source of funds for paying NSW Ports.

When NPC amended the Term Sheets it was still carrying on a business within the scope of the CCA.

The second condition for breaching the CCA was that an action must have the purpose or effect of substantially lessening competition. NPC met this condition by defining “container” in the broadest possible sense to mean anything designated as “container” by international stevedoring standards. A fee was charged when “container” shipping exceeded a nominal 30,000 per year increasing annually by 6 per cent. This fee had the purpose or effect of substantially lessening competition in the NSW “container” shipping market by penalising users of the Port of Newcastle.

Last month, the government confirmed it did not claim exemption from the CCA in respect of the Term Sheets. In 2013, the government did not enact legislation to take advantage of Section 51(1) of the CCA, which provides that conduct that would normally contravene the law may be permitted if it is specifically authorised under other legislation. Legislating for the purpose of gaining exemption from the CCA in respect of a tender conducted in 2009 was highly improbable.

Despite many requests in the Parliament, and by the media, the government refused to disclose that a fee had been charged until it was finally exposed by “The Newcastle Herald” on July 28 2016.

A new ports policy was announced on July 27 2012 – the state’s next container terminal would be at Port Kembla, after Port Botany had reached capacity. It was the backbone of the government’s “NSW Freight and Ports Strategy”, released in November 2013.

The “NSW Freight and Ports Strategy” is invalid if NPC unlawfully required NSC to pay a fee for containers.

No enforcement action has been taken by the Australian Competition and Consumer Commission in respect of the Port of Newcastle container fee. The ACCC claims that the government was exempt from the CCA, by virtue of its ports privatisation policy, but does not disclose the date upon which it claims this exemption applied.

NPC was not exempt from the CCA simply because the government changed its policy. If the ACCC refuses to disclose the date upon which it claims the government became exempt from the CCA, it is obliged to withdraw its claim.

Greg Cameron

0456819602

www.containerterminalpolicyinnsw.com.au

Premier happy with disclosure of Newcastle Port’s $100 container fee

The NSW government was happy to release details of a fee charged for shipping container movements at the Port of Newcastle, Premier Mike Baird said on September 27 in Newcastle.

“I strongly understand that the Minister [Mr Duncan Gay] in relation to those specific completion principles was happy to release them – I mean those sort of arrangements can be commercial in confidence but I understand the desire to put that out publicly because there is nothing to hide in relation to it,” said Mr Baird.

At $100 per container, the fee adds $1 million to the cost of a typical container ship visiting the Newcastle Port, in the event a container terminal is built. Its purpose is to repay the government when the government pays compensation to NSW Ports, the Port Botany leaseholder, for losing container shipping business to the Port of Newcastle.

The fee prevents development of a container terminal at the Port of Newcastle, on purely commercial grounds. No reason has been given for the government’s contractual commitment to pay NSW Ports compensation.

Mr Baird was State Treasurer when the fee was secretly charged in 2013. Details were published by the “Newcastle Herald” on July 28 2016. The government kept the fee secret despite more than 100 “Questions On Notice” being asked in State Parliament from October 2014 to July 2016.

Mr Gay confirmed details when he was asked this “Question Without Notice” in Parliament on August 10:

The Hon. ADAM SEARLE: 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?

Mr Baird said the fee was part of the state’s overall ports strategy. Released in December 2013, the strategy maintains Port Botany’s monopoly status as the only container terminal port in NSW.

Charging the fee is recognition by the government that a container terminal at Newcastle’s port would likely attract container shipping business away from Port Botany. When the state’s freight and ports strategies were prepared in 2012-2013, they failed to assess the potential contribution of a Newcastle port container terminal to the northern NSW economy.

In August 2014, a “Budget Estimates” Committee hearing of Parliament was told by the former Treasurer, Mr Andrew Constance, that a container terminal at Newcastle was “an uneconomic enterprise contrary to market demand”.

When current Treasurer, Ms Gladys Berejiklian, was asked at this year’s “Budget Estimates” hearing to explain the claim, she said only that: “The Government’s comprehensive NSW Freight and Ports Strategy noted that the Port would continue to be NSW’s primary coal export [port] and will continue to service bulk grain and other commodities.”

Mr Baird said “there is a massive requirement for infrastructure to support those additional containers [at the Port of Newcastle]”.

“There’s rail and roads which is a huge burden on taxpayers across the state so it makes a lot of sense to be strategic in the allocation of capital. That was a consideration that we took as we put together the ports strategy.”

A container terminal at the Port of Newcastle is able to service the northern NSW economy regardless of the transport infrastructure investment indicated by Mr Baird.

The state’s north is already significantly disadvantaged by the Port Botany monopoly. This requires containers to be trucked between the port and western Sydney, where they are unpacked and the goods loaded onto other trucks for transportation to northern NSW via Newcastle. But a container terminal at the Port of Newcastle would eliminate the severe cost and logistics penalties of using Port Botany.

A $1 billion upgrade of the Northern Sydney Freight Corridor – the shared passenger/freight rail line between Newcastle and Sydney – was completed this year to provide much needed additional freight capacity. However, to keep pace with demand, a further $5 billion must be invested before 2028 to create the equivalent of a dedicated rail freight line using the shared corridor.

Neither the state nor Australian governments are prepared to fund the upgrade. Consequently, both governments are working against the interests of the northern NSW economy. A container terminal at the Port of Newcastle does not require the $5 billion upgrade in order to serve the northern NSW market.

Premier Baird said the government provided a “generous capacity” for container movements before the container fee was charged.

“We have put a very generous capacity into the agreements they can continue here at the Newcastle and they can grow at 6 per cent a year,” he said.

“The economy grows at about 3 per cent if it’s at trend [so] there’s double economic growth that can come here in terms of containers.

“In the not too distant future you’ll have a huge capacity for a container terminal here in addition to an economically sensible approach to investing in the infrastructure required to support containers full stop.”

The government’s fee of $100 per container applies after container movements exceed 30,000 per year, increasing at the rate of 6 per cent per year.

Newcastle’s current annual throughput of 7,000 containers is carried on general cargo ships. Just one container ship with capacity for 5,000 containers would carry 10,000 import/export containers. Just four container ship visits per year would exceed the capacity limit as it is today. By 2043, when the capacity limit grows to 172,000, it will be exceeded with 17 container ship visits per year.

Mr Baird’s claim of a “generous capacity” before the fee is charged, obviously, does not apply to container ships.

The government’s ports strategy is flawed because it fails to recognise the difference between a general cargo ship and a container ship. Ninety per cent of world trade in non-bulk commodities is transported with container ships. General cargo ships are only used to carry containers to ports without container terminals.

The need for a container terminal was recognised by Newcastle Port Corporation (NPC) in 2008. In 2010, NPC went to tender for a multi-purpose terminal, including a container terminal with minimum capacity of 1-million TEU per year. But NPC’s negotiations with its “preferred proponent” were interrupted under suspicious circumstances in December 2010. These circumstances came to light only in 2014 when the “Independent Commission Against Corruption” investigated political donations for the 2011 state election. The ICAC’s “Operation Spicer” report was released on August 30 2016, and said:

“There was a question as to whether there was sufficient market demand to drive the need for a container terminal at Newcastle. The NPC had tested this and found that private industry was willing to take on the risk of the development of a container terminal. The NPC plan for a container terminal was designed to minimise the financial risk to the NSW Government. The plan was to let private industry take the site under a long-term lease and to meet construction and administration costs. By these means, 90% of any financial risk was passed to private industry.

“By late 2010, the NPC had progressed a long way with its proposal for a container terminal on the Mayfield site. The NPC had tested the market by asking for expressions of interest and studying responses. The NPC selected a consortium called the Newcastle Stevedoring Consortium (NSC). The NSC was comprised of Anglo Ports and Grup TCB, large and experienced international groups within the industry, and a local company, Newcastle Stevedores Pty Ltd.”

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

“The Commission is satisfied that Mr Tripodi used his position as a member of Parliament to influence Mr Roozendaal to prevent the deal between the NPC and the NSC for construction of a container terminal from progressing by stopping the NPC from entering into commercial negotiations with the NSC.”

The government’s “Working With Government Guidelines” controlled the government’s negotiations pursuant to NPC’s tender. NSC was contractually required to adhere to the conditions of the tender. In 2010, the government was not exempt from the “Commonwealth Competition and Consumer Act 2010” (the Act) in respect of NPC’s tender. However, in 2013, the government claimed it was exempt from the Act in respect of NPC’s tender.

What changed was government policy. In 2011 the government decided to privatise Port Botany and in 2013 to privatise the Port of Newcastle. The government claimed it was exempt from the Act in respect of NPC’s 2010 tender because of these policy decisions.

Competition watchdog, the “Australian Competition and Consumer Commission” was aware of the government’s claim.

In 2012, the “Working With Government Guidelines” were replaced by the “NSW Public Private Partnerships Guidelines“. Under these Guidelines, Cabinet approval was still required for entering into negotiations with NSC pursuant to the 2010 tender.

The question is whether the Guidelines allowed the government in 2013 to claim immunity from the Act in respect of a tender conducted in 2010.

Charging a fee for container movements potentially breached the Act. However, the government’s ability to claim exemption from the Act with respect to its negotiations with NSC was never tested because it terminated the tender in November 2013. In a statement issued by Anglo Ports, NSC said it did not withdraw its proposal.

The government insists there is nothing in the ports’ lease arrangements preventing development of a container terminal at the Port of Newcastle. It considers charging a fee does not prevent port leaseholder, Port of Newcastle Investments Pty Ltd, from developing a container terminal if it wishes to do so.

Port of Newcastle Investments is 50 per cent owned by industry superannuation funds, represented by Gardior Pty Ltd. At Port Botany, NSW Ports is 80 per cent owned by industry superannuation funds.

There is an opportunity for these superannuation funds to work in collaboration to benefit not only their members but also the state’s economy. Under current leasing arrangements, the funds are working against the interests of the northern NSW community.

By relocating container terminal operations from Port Botany to Newcastle, containers can be the base-load freight for a rail freight bypass line of Sydney. This line would link the Port of Newcastle with the main northern line at Hexham, west of Newcastle, and from there extend through outer western Sydney to Glenfield in Sydney’s southwest, where it would connect with the main southern line. This line would not only provide Sydney with a rail-based container transportation service but also southern NSW. The superannuation funds stand to earn a better return than at present by capturing the market for the land-side transportation of containers.

A privately-funded rail freight bypass line would enable container trucks to be removed from Sydney’s roads; save $5 billion to complete the Northern Sydney freight Corridor; save $1 billion to build the Western Sydney Freight Line between Chullora and Eastern Creek; allow 100 per cent of Sydney’s existing rail capacity to be used for much-needed additional passenger services; and, remove freight from the Newcastle-Sydney passenger rail line.

The question for the NSW government, and future governments, is whether payment of the fee will be enforced if Port of Newcastle Investments, or a stevedore tenant, builds a container terminal and NSW Ports demands to be paid compensation for lost business.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

October 1 2016

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

Dear Mr Baird,

I refer to your remarks today about container shipping at the Port of Newcastle.

May I respectfully point out that the NSW government is preventing a container terminal at the Port of Newcastle by taxing containers at the rate of $100 per container?

Fifty container ship visits per year to the Port of Newcastle will average 500,000 containers, making the government’s tax $50 million. The government will pay this $50 million to NSW Ports, the Port Botany leaseholder, as compensation for lost business. Just one container ship per week visiting the Port of Newcastle will cause Port Botany to lose 20 per cent of its business.

A container terminal at Newcastle is commercially viable by serving the northern NSW economy. For this reason, “Newcastle Port Corporation” went to tender in 2010 for a private company to fund, build and operate a container terminal with minimum annual capacity of 1-million containers per year. The government terminated this tender in November 2013.

A Newcastle container terminal cannot service Sydney because of inadequate rail and road infrastructure. However, Port Botany services northern NSW using the same infrastructure. Preventing a container terminal at the Port of Newcastle is a deliberate decision by the government to maintain an unacceptable cost penalty on northern NSW.

General cargo ships, as used at the Port of Newcastle, are not how containers are shipped. One container ship visiting the Port of Newcastle will account for more than the number of containers presently carried on general cargo ships for an entire year. Three container ships will exceed the government’s annual cap.

The government kept its Newcastle container tax a secret.

Although the tax was imposed in 2013, its existence was not disclosed until July 28 2016 when the “Newcastle Herald” publishing the confidential “Port Commitment – Port Botany and Port Kembla”. But the authenticity of the “Port Commitment” was not confirmed by the government until August 10 2016 and then only after a “Question Without Notice” was asked in Parliament.

Without providing evidence, the government declared a container terminal “an uneconomic enterprise contrary to market demand”. The fact that a tax is required to prevent a container terminal indicates the government’s position is unjustified.

A container terminal at the Port of Newcastle would enable building a rail freight bypass of Sydney, connecting with the main southern line at Glenfield. This new line would be paid for by railing containers to western Sydney as compared with trucking them between Port Botany and western Sydney.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: Hunter Region MPs; The Newcastle Herald; The Australian Financial Review

27 September 2016

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

Dear Mr Baird,

Many more questions about the ports’ leasing arrangements were asked at this year’s Budget Estimates hearings. The Hon Duncan Gay MLC, Minister for Roads Maritime and Freight, indicated that all Supplementary Questions to him are matters for The Hon Gladys Berejiklian MP, the Treasurer. However, Ms Berejiklian was not the Treasurer when the leasing arrangements were made. During your term as Treasurer, you were the Minister responsible for the ports’ leasing arrangements.

Under the “NSW Public Private Partnerships Guidelines (2012)”, you were required to obtain Cabinet approval for entering into negotiations with “Newcastle Stevedores Consortium” (NSC) in 2013, pursuant to a tender conducted by Newcastle Port Corporation in 2010. NSC was the “preferred proponent” selected in 2010 for funding, building and operating a multi-purpose terminal, including a container terminal with minimum capacity of 1-million TEU per year, at the Port of Newcastle.

Did Cabinet approve entering into negotiations with NSC in 2013?

In 2010, the government was not exempt from the “Commonwealth Competition and Consumer Act 2010” (the Act) in respect of its dealings with NSC. However, in 2013, the government claimed it was exempt from the Act in respect of its dealings with NSC.

The change that occurred was a decision by the government in 2013 to privatise the Port of Newcastle. The government claimed it was exempt from the Act in respect of its dealings with NSC because of this decision.

Did the “NSW Public Private Partnerships Guidelines (2012)” permit the government to claim retrospective exemption from the Act in respect of its dealings with NSC?

If the answer is no, do you agree the government breached its own guidelines for the procurement of infrastructure and associated services through “Public Private Partnerships”?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: MPs; ACCC; Media; NSW Ports; Port of Newcastle Investments

23 September 2016

 

To: Members of Parliament

Re: Newcastle container terminal a possibility without the fee  

A decision by the NSW government to withdraw its container fee at the Port of Newcastle is one way of getting a container terminal built. For a typical container ship, the fee adds $1 million to the cost of using the port and is the only remaining impediment to building a terminal.

“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,” said Mr Duncan Gay, Minister for Roads Maritime and Freight, in Parliament on September 13.

Mr Gay’s statement again raises the possibility that the government may drop its crippling fee.

Under current arrangements, container throughput may reach 30,000 per year, increasing by six per cent per year, before the fee kicks-in. At $100 per container, it doubles the cost of container ships using the Port of Newcastle instead of Port Botany. One container ship typically carries 10,000 containers – 5,000 as imports and 5,000 as exports.

Although the fee was charged in 2013, it was not revealed until July 2016 when confidential details were published by “The Newcastle Herald”. Mr Gay later confirmed details in Parliament.

In 2013, the government required the “Newcastle Stevedores Consortium” (NSC) – comprising Grup TCB, a Spanish firm, Newcastle Stevedores Pty Ltd and Anglo Ports Pty Ltd – to pay the fee.

Three years previously, in 2010, the state-owned “Newcastle Port Corporation” (NPC) conducted a tender for building a multi-purpose terminal, including a container terminal with minimum capacity of 1-million TEU per year, at the Port of Newcastle. NSC was the preferred proponent.

Under NSW government guidelines for privately funded development, NPC completed direct negotiations with NSC and by December 2010 was ready to enter into contract negotiations with a view to concluding a final contract. Approval from State Cabinet was required for entering into contract negotiations but this approval was not provided before the March 2011 general election, lost by Labor.

The elected Coalition government revised the state’s ports policy and on two occasions – August 2012 and July 2013 – instructed NSC that the government did not want a container terminal to be developed at the Port of Newcastle.

Cabinet approval was still required for NPC entering into contract negotiations with NSC in 2013 and Term Sheets were created.

The Term Sheets with NSC required the government to be paid for container movements. Charging the fee was the government’s way of recovering its costs incurred under an agreement called the “Port Commitment”. The “Port Commitment” was a contractual commitment between the government and the private leaseholder of Port Botany and Port Kembla, NSW Ports, to make certain payments to NSW Ports in respect of future container capacity development at the Port of Newcastle.

Negotiations between NPC and NSC were terminated in November 2013.

On 5 November 2013, the government announced it had received the results of a scoping study into privatising the port and was proceeding.

The government says it is immune from the “Commonwealth Competition and Consumer Act 2010”(the Act) in respect of charging a fee for container movements at the Port of Newcastle because of leasing the port. But the fee potentially breached the Act because the government was not privatising the port when the tender was conducted in 2010.

Developing a container terminal still requires the government to pay NSW Ports compensation for loss of business to the Port of Newcastle, at $1 million per ship. If the source of funds is not a fee charged for containers at the Port of Newcastle, the government is obliged to disclose the source.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

15 September 2016

The Hon Gladys Berejiklian MP
Treasurer, and Minister for Industrial Relations

Dear Ms Berejiklian,

I refer to the requirement for Cabinet1 approval for Newcastle Port Corporation to conduct contract negotiations with “Newcastle Stevedores Consortium2” (NSC) in 2013 in respect of building a container terminal at the Port of Newcastle. Contract negotiations were conducted and Term Sheets were produced.

The Term Sheets with NSC required the government to be paid for container movements. Charging the fee was the government’s way of recovering its costs incurred under an agreement called the “Port Commitment”. The “Port Commitment” was a contractual commitment between the government and the private leaseholder of Port Botany and Port Kembla, NSW Ports, to make certain payments to NSW Ports in respect of future container capacity development at the Port of Newcastle.

Contract negotiations with NSC were terminated in November 2013. The government announced its decision to proceed with privatising the Port of Newcastle on 5 November 2013. According to the Australian Competition and Consumer Commission, the government enjoyed immunity from the “Commonwealth Competition and Consumer Act 2010” when it was privatising the port.

Did the government claim immunity from the “Commonwealth Competition and Consumer Act 2010” in respect of the Term Sheets with Newcastle Stevedores Consortium?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: MPs; Media; ACCC; NSW Ports; Port of Newcastle Investments

1 Newcastle Port Corporation was obliged to comply with the government’s “Working With Government Guidelines (2006)” which became the “NSW Public Private Partnerships Guidelines (2012)”. See PPP table 3.2; Section 4 – Project Phases – NSW Requirements.

2 Newcastle Port Corporation conducted a tender in 2010 for building a multi-purpose terminal, including a container terminal with minimum capacity of 1-million TEU per year, at the Port of Newcastle. Newcastle Stevedores Consortium (NSC) was the preferred proponent. NSC comprised Spanish firm Grup TCB, and Australian firms Anglo Ports Pty Ltd and Newcastle Stevedores Pty Ltd.

14 September 2016

From: Infocentre Public Mailbox [mailto:info.centre@accc.gov.au]
Sent: Tuesday, 27 September 2016 3:02 PM
To: REF1929180 Greg Cameron
Subject: ACCC Response (Reference : REF1929180) [SEC=UNCLASSIFIED]

Dear Mr Cameron

I refer to your letters to the Chairman of the ACCC received between 21 August and 14 September. I apologise for the delay in responding. Your reference number is REF1929180.

As per our response on 22 August 2016, we direct you to the ACCC’s previous correspondence to you from Marcus Bezzi in relation to this matter. As Mr Bezzi has previously advised, the ACCC is not in a position to provide you with further information about container charges at the Port of Newcastle.

The ACCC does not provide legal advice so we cannot tell you if the NSW government would be considered to be carrying on a business for the purposes of the Competition and Consumer Act 2010 (CCA). As previously advised, the question of whether any Australian government is carrying on business for the purposes of the CCA is ultimately a matter to be determined by a court.

In addition to Mr Bezzi’s advice, please accept this as confirmation that we will not respond to your future correspondence on this matter unless we have new information that might assist you.

Please see our website for more information about the ACCC.

Yours sincerely

Kellie

Public Information Officer | Infocentre
Australian Competition and Consumer Commission

 

TO:     MEMBERS OF PARLIAMENT

RE:     STATE CABINET APPROVAL FOR NEWCASTLE CONTAINER TERMINAL NEGOTIATIONS

State Cabinet approval in 2013 was required for Newcastle Port Corporation to commence commercial negotiations with container terminal proponent, “Newcastle Stevedores Consortium” (NSC). Under the “NSW Public Private Partnerships Guidelines 2012”, Newcastle Port Corporation had to complete a range of rigorous requirements, including a business case with economic and financial appraisals, a public interest evaluation and a probity plan.

Negotiations with NSC were conducted even though (former) Treasurer, The Hon Mike Baird, had directed NSC on two occasions – 30 August 2012 and 26 July 2013 – not to build a container terminal.

The NSW government needed a source of funds for paying compensation to NSW Ports, the purchaser in April 2013 of the leases for Port Botany and Port Kembla. Under the deal, the government guaranteed payment of compensation in the event of future container capacity development at the Port of Newcastle. Charging a fee for container movements at the Port of Newcastle was the government’s source of funds for paying this compensation.

Cabinet approval to proceed was required before negotiations with NSC could commence in respect of the “Port Commitment – Port Botany and Port Kembla”. The “Port Commitment” contained the government’s contractual commitments to pay compensation to NSW Ports and to charge NSC a fee. Marked “strictly confidential, the “Port Commitment” was published by “The Newcastle Herald” on 28 July 2016.

NSC had been selected by Newcastle Port Corporation in 2010 as preferred proponent for building a multi-purpose terminal, including a container terminal with minimum capacity of 1-million TEU per year, at the Port of Newcastle. NSC comprised Spanish firm Grup TCB, and Australian firms Anglo Ports Pty Ltd and Newcastle Stevedores Pty Ltd.

Last month, the Independent Commission Against Corruption said in its “Operation Spicer” report that Newcastle Port Corporation had sought government approval in late 2010 to enter into commercial negotiations with NSC. Approval had not been granted before the March 2011 state election. Consequently, Cabinet approval for conducting commercial negotiations with NSC was required in 2013.

Charging the fee doubled the cost of shipping containers through the Port of Newcastle compared with Port Botany, making it commercially unviable to build a container terminal. It is unlawful under the “Commonwealth Competition and Consumer Act 2010” (the Act) for a corporation to substantially lessen competition in a relevant market.

Under the Act, the government was subject to the Act when it was carrying on a business at the Port of Newcastle, but not when it was privatising the port.

The government announced its decision to privatise the port on 5 November 2013. NSC said it did not withdraw its proposal when negotiations were terminated by the government in November 2013.

The government had been intensively questioned about the ports’ leasing arrangements since the matter was first raised in Parliament on 17 October 2013, with this question:

How much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port?

In answer to a question about the container terminal negotiations at a “Budget Estimates” hearing on 22 August 2014, former Treasurer, The Hon Andrew Constance, said:

Attempts by Government to dictate uneconomic enterprises contrary to market demand are examples of the kind of rent seeking activity likely to encourage influence peddling or corruption. As the container port did not proceed, there is no decision to review.

Approval to conduct commercial negotiations could not have been given by Cabinet based on Mr Constance’s characterisation. Mr Constance omitted to inform the hearing about the government charging a fee for container movements. The government confirmed the “Port Commitment” leasing arrangements on 10 August 2016.

Incredibly, the government considers its fee is neither a disincentive nor obstacle for building a container terminal, as revealed by the Treasurer, The Hon Gladys Berejiklian, at the Budget Estimates hearing on 29 September 2015:

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.

No details of the business case presented to Cabinet in 2013 have been disclosed.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

12 September 2016

TO: NSW MEMBERS OF PARLIAMENT

RE: JOB-CREATING INVESTMENT

Job-creating investment in manufacturing depends on the ability to transport goods in containers to a container port for participation in world trade.

The shipping container is used for 90 per cent of world trade in non-bulk goods.

Trading reality is that no access to a container port means exclusion from world markets and, therefore, no investment in manufacturing.

Northern NSW does not have access to the state’s only container port at Port Botany because of Sydney’s inadequate freight transport infrastructure.

A container terminal at the Port of Newcastle will solve this problem.

Newcastle’s current throughput of containers, 9,000 per year, is carried on general cargo ships which do not require a container terminal.

In comparison, a typical container ship carries 10,000 containers for a single visit.

The NSW government’s claim that a general cargo ship performs the same function as a container ship is misleading.

Government policy is to actively prevent a container terminal being built at the Port of Newcastle.

To achieve its policy, the government charges a fee for container movements, to double the cost of using the Port of Newcastle compared with Port Botany.

Without the government’s fee, a container terminal is financially viable and would attract container ship visits away from Port Botany.

Recognising the potential loss of business at Port Botany, the government pays port operator, NSW Ports, compensation.

The government’s source of funds is to charge a fee for containers at the Port of Newcastle.

According to the government, “major freight operators do not want multiple ports of stops when they are bringing their goods to New South Wales”.

In fact, market demand is the reason why container ships will use the Port of Newcastle.

On 17 October 2013, the government was asked in Parliament: How much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port?

Nearly three years later, on 10 August 2016, the answer came.

The government confirmed the authenticity of a “strictly confidential” document published by “The Newcastle Herald” on 28 July 2016.

Port Commitment – Port Botany and Port Kembla” sets out the government’s container fee and compensation arrangements with NSW Ports and a group called “Newcastle Stevedores Consortium” (NSC).

In 2010, Newcastle Port Corporation had conducted a tender for developing a multi-purpose terminal, including a container terminal with minimum capacity of 1-million TEU per year, at the Port of Newcastle, and selected NSC’s tender.

NSC comprised Spanish firm Grup TCB and Australian firms Anglo Ports Pty Ltd and Newcastle Stevedores Pty Ltd.

After three years of negotiations, the government terminated the tender in November 2013 just before announcing privatisation of the Port of Newcastle.

Privatising the port gave the government immunity from the Commonwealth “Competition and Consumer Act 2010″ (the Act) in respect of charging a fee for container movements.

When the government required NSC to pay the container fee, it was subject to the Act.

Charging the fee potentially breached Section 45 of the Act, which makes it unlawful for a corporation to substantially lessen competition in a relevant market.

“Port of Newcastle Investments” agreed to the terms and conditions contained in the “Port Commitment” when it leased the port from the government in April 2014.

The government potentially breached its own “Working With Government Guidelines” for privately funded development by terminating negotiations with NSC.

The government is unable to provide a reason for preventing a container terminal at the Port of Newcastle by charging a fee for container movements.

It is unwilling to acknowledge the adverse impact its policy is having on the NSW economy in terms of freight strategy and job-creating regional economic development.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

10 September 2016

TO: NSW MEMBERS OF PARLIAMENT

RE: PREVENTING REGIONAL ECONOMIC DEVELOPMENT IN NSW

Lack of access to a container port is an insurmountable economic development barrier for regional New South Wales. Around 90 per cent of world trade in non-bulk commodities is conducted in containers shipped between countries. Direct access to a container port is essential for economic development. There is no effective access to Port Botany, the only container port in NSW, from areas outside of Sydney because of inadequate rail and road infrastructure within Sydney.

Building a container terminal at the Port of Newcastle will transform regional NSW by providing the means for paying for a rail freight bypass of Sydney, linking the northern rail line at Newcastle with the southern rail line at Glenfield.

This bypass line will link the Port of Newcastle with intermodal terminals in western Sydney and southern NSW. Intermodal terminals in northern NSW will be supplied on the existing northern line.

A rail freight bypass will allow for removing high-cost container trucks from Sydney’s roads.

There will be no need for building stages 2 and 3 of the “Northern Sydney Freight Corridor” for the equivalent of a dedicated rail freight line between Newcastle and Strathfield, saving $5 billion in construction costs.

There will be no need for building the “Western Sydney Freight Line” connecting Chullora and Eastern Creek, so that containers can be railed directly from Port Botany, saving $1 billion in construction costs.

Goods currently transported into Sydney by truck from Melbourne and Brisbane will be railed to western Sydney intermodals.

All of Sydney’s rail capacity will be utilised for passengers by removing freight and significantly expanding passenger services, at no cost.

Manufacturing firms are located in western Sydney for access to the container port. They will be enabled to shift to regional areas by having a direct rail connection to the Port of Newcastle and intermodal terminals in western Sydney. These firms currently occupy 5,000 hectares of land. Re-developing this land will fund relocation to regional areas, with cash to spare. Significant economic benefits will arise from more productive use of established regional infrastructure and reduced demand for Sydney’s stretched infrastructure.

But by charging an anti-competitive fee for container movements at the Port of Newcastle, the government is deliberately preventing regional economic development.

The government refused to acknowledge charging a fee until forced to do so in the Parliament on 10 August 2016. A fee is unjustified and may prove to be unlawful. It was kept secret since 2013.

Once annual movements at the Port of Newcastle exceed 30,000 containers – and the meaning of “container” extends beyond TEUs to include any container carried on any ship – the government fee is equal to the fee charged by NSW Ports, the private operator of Port Botany, for TEU movements.

A typical container ship of 5,000 TEU capacity will pay the NSW government $1 million per visit to the Port of Newcastle. Consequently, a container terminal has not been built. As a condition of the Port Botany lease, the government pays NSW Ports compensation for losing container shipping business if there is future “container” capacity development at the Port of Newcastle.

At first blush, the Newcastle fee may not be subject to Australia’s “Competition and Consumer Act 2010” (the Act). As reported by “The Australian Financial Review” on 1 August, Australian Competition and Consumer Commission Chairman, Mr Rod Sims, “said his hands were tied in the case of the Port of Newcastle because governments were subject to scrutiny under competition laws only when they were carrying on a business, not when selling assets”.

Australian governments are immune from the Act in respect of an asset from the date on which the asset is being privatised. However, they are not immune from the Act in respect of an asset that is not being privatised.

In 2010, the NSW government was not privatising any port asset when the statutory state-owned Newcastle Port Corporation conducted a tender for developing a multi-purpose terminal, including a container terminal with minimum capacity of 1-million TEU per year, at the Port of Newcastle. Negotiations with the selected tenderer, a consortium comprising Grup TCB, Anglo Ports Pty Ltd and a local firm, Newcastle Stevedores Pty Ltd, were conducted over three years, until November 2013.

The NSW government was not immune from the Act in respect of its negotiations with this consortium. Charging it a fee was subject to the Act because the government was carrying on a business for the purposes of the Act and potentially breached Section 45, whereby it is unlawful for a corporation to substantially lessen competition in a relevant market. After negotiations were terminated, the government announced, on 5 November 2013, it was privatising the Port of Newcastle.

Newcastle Port Corporation was obliged to comply with the NSW Government’s “Working with Government Guidelines” for privately financed projects for its negotiations with the Anglo Ports consortium. These Guidelines allowed the government to terminate negotiations for reasons other than value for money, commercial or technical considerations. They provided for reimbursing reasonable bidding costs.

But privatising the Port of Newcastle did not grant the government retrospective immunity from the Act. Because of a confidentiality agreement with the government, the ACCC has not disclosed whether it examined the fee charged the Anglo Ports consortium for compliance with the Act.

Failure to examine this fee for lawfulness does not mean it was lawful. Only a court can determine whether charging the fee was lawful. The “Working With Government Guidelines”, obviously, would not permit the government to terminate a contract because of the possibility the government had breached a law.

The ACCC is able to examine whether the government charging the Anglo Ports consortium a fee was a potential breach of the Act. The NSW Parliament is able to examine whether the government complied with its own “Working With Government Guidelines”.

One of the key issues is, what is the government’s justification for charging a fee for container movements at the Port of Newcastle?

Greg Cameron

www.containerterminalpolicyinnsw.com.au

7 September 2016

The Hon Duncan Gay MLC
Minister for Roads, Maritime and Freight

Dear Mr Gay,

I refer to The Hon Gladys Berejiklian’s statement to the Budget Estimates hearing on 1 September that “major freight operators do not want multiple ports of stops when they are bringing their goods to New South Wales”. Ms Berejiklian was explaining the government’s opposition to a container terminal for the Port of Newcastle.

In contrast, the “Independent Commission Against Corruption” (ICAC) said in its “Operation Spicer” report dated 30 August:

There was a question as to whether there was sufficient market demand to drive the need for a container terminal at Newcastle. The NPC [Newcastle Port Corporation] had tested this and found that private industry was willing to take on the risk of the development of a container terminal. The NPC plan for a container terminal was designed to minimise the financial risk to the NSW Government. The plan was to let private industry take the site under a long-term lease and to meet construction and administration costs. By these means, 90% of any financial risk was passed to private industry. (Page 42)

Despite users of container shipping services wanting to be served through the Port of Newcastle, and operators of container terminals wanting to serve them, the government acted on advice from “major freight operators” that a container terminal was not needed. It is understandable how beneficiaries of the Port Botany monopoly might regard competition.

A container terminal at the Port of Newcastle is a commercially viable enterprise as demonstrated by the government charging a fee for containers in order to pay compensation to the Port Botany leaseholder for loss of business due to competition from Newcastle. However, the Treasurer’s statement to the Budget Estimates hearing on 22 August 2014 was that a container terminal at the Port of Newcastle was “an uneconomic enterprise contrary to market demand”. The Treasurer omitted to tell the Committee that the government charged a fee for container movements. In fact, the government kept this fee a secret until your disclosure to Parliament on 10 August. Port Botany may be commercially unviable without a compensation payment because of the high lease price paid by NSW Ports.

Container ships are unable to use the Port of Newcastle because there is no container terminal. When you informed the Parliament on 10 August that there can be “a massive 230 per cent increase in container trade volume” you were referring to containers carried on general cargo ships. General cargo ships do not require container terminals. They are a high cost, low volume method of carrying containers for ports that do not have container terminals.

You told Parliament:

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.

In respect of the container fee payment threshold, the government’s ”Port Commitment – Port Botany and Port Kembla” 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.

Does the meaning of “container” as defined by the “Port Commitment – Port Botany and Port Kembla” apply in respect of the fee the government charges the Port of Newcastle leaseholder for container movements?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: NSW MPs; ACCC; Media; Port of Newcastle Investments; NSW Ports

4 September 2016

Mr Rod Sims
Chairman
ACCC

Dear Mr Sims,

The NSW “Independent Commission Against Corruption” (ICAC) released its report into “Operation Spicer” on 30 August 2016 and devoted Part 2 to its examination of a proposed container terminal for the Port of Newcastle. Your attention is drawn to “Chapter 6: The Newcastle Port Corporation plan for Mayfield”, which describes the activities undertaken by Newcastle Port Corporation (NPC) to develop a container terminal.

The ICAC said:

By late 2010, the NPC had progressed a long way with its proposal for a container terminal on the Mayfield site. The NPC had tested the market by asking for expressions of interest and studying responses. The NPC selected a consortium called the Newcastle Stevedoring Consortium (NSC). The NSC was comprised of Anglo Ports and Grup TCB, large and experienced international groups within the industry, and a local company, Newcastle Stevedores Pty Ltd. (Page 42)

Please note that NPC had conducted a public tender in 2010 and subsequently negotiated with the consortium led by Anglo Ports Pty Ltd for three years, until November 2013, as revealed by this statement by NSW Treasury to “The Newcastle Herald” dated 4 March 2015:

Newcastle Port Corporation concluded its negotiations with Anglo Ports in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.

The ICAC said:

As a statutory state-owned corporation, the NPC was obliged to comply with the NSW Government’s “Working with Government Guidelines”. Mr Webb explained that, in accordance with the guidelines, the NPC had conducted “direct negotiations” with the NSC. By 2010, the direct negotiations had been completed and the process had moved to the point where the NSC had been identified as the preferred proponent. From this point, the NPC could enter “commercial negotiations” with the NSC with a view to concluding a final contract. This required ministerial approval and the NPC was seeking that permission from Mr Roozendaal. (Page 43)

The “Working With Government Guidelines” state:

3.7.5 Reimbursement of reasonable bidding costs

The Government may decide to terminate the ‘call for detailed proposals’ process for reasons other than value for money, commercial or technical considerations.

Under these circumstances, consideration may be given to reimbursing bidders’ reasonable bidding costs. Any reimbursement will be based on the quality and quantity of information supplied by the proponent(s). Where reimbursement is paid, the agency will retain the proprietary rights to the bidding material. Any reimbursement will be at the sole discretion of the NSW Government. (Page 38)

A document published by “The Newcastle Herald” on 28 July 2016 is entitled “Port Commitment – Port Botany and Port Kembla”. This document refers to “Mayfield Development Corporation Pty Ltd”, which was a company operated by the consortium led by Anglo Ports to develop a multi-purpose terminal, including container terminal, pursuant to the NPC tender. The opening paragraphs of this document state:

The State of New South Wales (State) has made contractual commitments to the private Port Lessee of Port Botany and Port Kembla (NSW Ports) to make certain payments to NSW Ports in respect of future container capacity development at Port of Newcastle (Port Commitment). Virtually identical arrangements are in place between the State and NSW Ports in relation to Port Botany and Port Kembla.

The Term Sheets with NSC require Mayfield Development Corporation Pty Ltd (MDC) to make the State whole for any cost the State incurs to NSW Ports under the Port Commitment or under the corresponding commitment in respect of Port Kembla, due to the activities of MDC in the Port of Newcastle.

A summary of the Port Commitment has previously been provided to MDC. This document sets out the detailed terms of the payment commitment in respect of which the State requires recourse to MDC. This document deals with the Port Botany commitment, but the State also requires MDC to keep it whole in respect of the commitment given to NSW Ports in relation to Port Kembla.

At the Budget Estimates hearing conducted on 1 September 2016, The Hon Gladys Berejiklian MP said the ACCC was consulted about arrangements:

Ms GLADYS BEREJIKLIAN: ….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.

“The Australian Financial Review” reported on 1 August 2016:

Mr Sims said his hands were tied in the case of the Port of Newcastle because governments were subject to scrutiny under competition laws only when they were carrying on a business, not when selling assets.

The NSW government has given no indication it claimed immunity from the “Competition and Consumer Act 2010” in respect of its negotiations with the Anglo Ports consortium between 2010 and November 2013.

May I ask:

Does the ACCC consider the NSW government was

(a) carrying on a business

or,

(b) selling an asset

for the purposes of the “Competition and Consumer Act 2010” in respect of its negotiations with the Anglo Ports consortium between 2010 and November 2013?

On what date did the ACCC become aware of the arrangements contained in the “Port Commitment – Port Botany and Port Kembla” document?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: The Hon Gladys Berejiklian MP; Mr Tim Crakanthorp MP; GPSC#1; GPSC#2; Media

3 September 2016

From: Infocentre Public Mailbox [mailto:info.centre@accc.gov.au]
Sent: Tuesday, 27 September 2016 3:02 PM
To: REF1929180 Greg Cameron
Subject: ACCC Response (Reference : REF1929180) [SEC=UNCLASSIFIED]

Dear Mr Cameron

I refer to your letters to the Chairman of the ACCC received between 21 August and 14 September. I apologise for the delay in responding. Your reference number is REF1929180.

As per our response on 22 August 2016, we direct you to the ACCC’s previous correspondence to you from Marcus Bezzi in relation to this matter. As Mr Bezzi has previously advised, the ACCC is not in a position to provide you with further information about container charges at the Port of Newcastle.

The ACCC does not provide legal advice so we cannot tell you if the NSW government would be considered to be carrying on a business for the purposes of the Competition and Consumer Act 2010 (CCA). As previously advised, the question of whether any Australian government is carrying on business for the purposes of the CCA is ultimately a matter to be determined by a court.

In addition to Mr Bezzi’s advice, please accept this as confirmation that we will not respond to your future correspondence on this matter unless we have new information that might assist you.

Please see our website for more information about the ACCC.

Yours sincerely

Kellie

Public Information Officer | Infocentre
Australian Competition and Consumer Commission

 

Ms Heather Ridout
Chair
Australian Super

Dear Ms Ridout,

Further to my letter dated 27 June 2016, the NSW government has now confirmed that its source of funds for paying compensation to NSW Ports for loss of container shipping business to the Port of Newcastle is to charge a fee for container movements at the Port of Newcastle. The government kept this fee and its purpose a secret until 10 August 2016, when the Parliament was informed by The Hon Duncan Gay MLC, Minister for Roads, Maritime and Freight.

The government has never provided reasons for charging the fee and paying the compensation to NSW Ports.

However, a previous NSW Treasurer, The Hon Andrew Constance MP, informed the Legislative Council’s “General Purpose Standing Committee No.1” on 22 August 2014 that a container terminal at the Port of Newcastle would be “an uneconomic enterprise contrary to market demand”. Mr Constance omitted to inform the Committee about the government charging a fee for container movements and paying this fee to NSW Ports. Had Mr Constance informed the Committee about the fee and compensation payment, he may have divulged their purpose.

Mr Constance had been asked by Committee Member, the late Hon Dr John Kaye MLC: “Given that there has been significant allegations of at least influence peddling and political interference under Labor surrounding proposals to develop a container facility in Newcastle, will Treasury be reviewing that decision?”

The “significant allegations” to which Dr Kaye referred were the subject of the “Independent Commission Against Corruption’s” examination – “Operation Spicer” – of “whether certain members of Parliament used, or attempted to use, their power and influence to improperly benefit Buildev Pty Ltd in respect of a proposed development of a coal terminal at the Port of Newcastle.”

Following Mr Constance’s answer to Dr Kaye’s question, a statement by Anglo Ports Pty Ltd was published on the NSW Parliament web site, dated 10 February 2015. It said: “Anglo Ports was the lead consortium partner in Newcastle Stevedores Consortium which proposed a container terminal at the Port of Newcastle in the period 2009 to 2012, pursuant to a tender conducted by Newcastle Port Corporation.”

In 2009, it was NSW government policy to develop a multi-purpose terminal, including a container terminal with a minimum capacity of 1-million TEU per year, at the Port of Newcastle. Newcastle Port Corporation issued a public tender in 2010 for this development and selected the proposal from the Anglo Ports consortium.

Anglo Ports disclosed an instruction from then Treasurer, The Hon Mike Baird MP, on 30 August 2012, not to develop the container terminal component of the multi-purpose terminal development.

The government also amended the terms of the tender by requiring Anglo Ports to pay a fee for container movements. The Australian Competition and Consumer Commission has been asked to confirm that the government was not immune from the “Commonwealth Competition and Consumer Act 2010” (CCA) when Anglo Ports was charged this fee. The CCA replaced the “Trade Practices Act 1974” (TPA) on 1 January 2011.

In 2009, the government did not indicate it was immune from the TPA in respect of its policy of developing a multi-purpose terminal, including a container terminal. Although negotiations between Newcastle Port Corporation and Anglo Ports were “concluded” in November 2013, the company said in its statement its proposal had not been withdrawn. However, terminating the negotiation did not confer retrospective immunity from the CCA.

Charging Anglo Ports a fee potentially breached Section 45 of the CCA. Due to confidentiality, the ACCC does not disclose whether the government claimed immunity from the CCA in respect of charging Anglo Ports a fee.

As a shareholder in NSW Ports, does Australian Super consider its NSW members benefit from the NSW government charging a fee for container movements at the Port of Newcastle?

If so, why is compensation payable to NSW Ports?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: GPSC No.1; GPSC No.2; Mr Tim Crakanthorp MP; Media; The Hon Duncan Gay MLC; The Hon Andrew Constance MP; The Hon Mike Baird MP

29 August 2016

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Sims,

“General Purpose Standing Committee No.1” of the NSW Parliament was told by the (former) NSW Treasurer, The Hon Andrew Constance MP, on 22 August 2014, that a container terminal at the Port of Newcastle was an example of “an uneconomic enterprise contrary to market demand”. What the Treasurer failed to inform the Committee was that the government had charged a fee for container movements and this fee was used for paying compensation to NSW Ports, the Port Botany leaseholder, for loss of container shipping business to the Port of Newcastle, if a container terminal was built.

The Parliament was told of these arrangements only two weeks ago by The Hon Duncan Gay MLC, Minister for Roads, Maritime and Freight, in answer to a question from the Opposition.

Keeping the fee a secret served two purposes for the government. First, the government knew that charging a fee was unjustified on economic grounds. Second, the government knew that charging a fee potentially breached Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA).

The government was not immune from the CCA in respect of negotiations between Newcastle Port Corporation and a private consortium led by Anglo Ports Pty Ltd for developing port facilities at the Port of Newcastle. NSW government policy in 2009 was to develop a multi-purpose terminal, including a 1-million per year minimum capacity container terminal, at the Port of Newcastle. Newcastle Port Corporation conducted a public tender in 2010 for this development and selected the Anglo Ports consortium.

Newcastle Port Corporation was subject to the CCA when it changed the conditions of its tender by requiring Anglo Ports to pay a fee for container movements at the Port of Newcastle. These negotiations were concluded by Newcastle Port Corporation in November 2013.

The ACCC received information from the government about ports’ leasing arrangements on a confidential basis. The ACCC has not disclosed whether the government informed the ACCC about charging Anglo Ports a fee for container movements at the Port of Newcastle.

Does the ACCC consider the government was immune from the CCA in respect of charging Anglo Ports a fee for container movements at the Port of Newcastle?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: GPSC#1; GPSC#2; Mr Tim Crakanthorp MP; The Hon Duncan Gay MLC; The Hon Andrew Constance MP; The Newcastle Herald

26 August 2016

Ms Margaret Crawford
NSW Auditor-General
by email

Dear Ms Crawford,

In my letter to you dated June 20 2016, your attention was drawn to the government’s “cap on numbers” at the Port of Newcastle. As you may now be aware, The Hon Duncan Gay MLC informed the Parliament on August 10 2016 about the government’s arrangements for charging a fee for container movements at the Port of Newcastle to fund payment of compensation to NSW Ports, the Port Botany leaseholder. The financial risk the government has taken is that charging a fee for container movements may be unlawful and could be unenforceable, leaving the government without a source of funds for paying compensation.

It is now confirmed that the “cap on numbers” disclosed by Mr Gay on October 17 2013, means the number of container movements at the Port of Newcastle that must be exceeded before NSW Ports may claim compensation, for loss of container shipping business to the Port of Newcastle. The term “cap” applies to the number of container movements for which no compensation is payable. Compensation is payable when the number of “container” movements exceeds 30,000 per year as from July 1 2013, increasing by six per cent per year. The government defines the term “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”, page 2)

My letter drew your attention to a decision by the “Australian Competition Tribunal” on May 31 2016 to declare the Port of Newcastle shipping channel service. The government’s fee for container movements at the Port of Newcastle could be unenforceable if the ACCC was asked to arbitrate the reasonableness of the port operator’s fee for container movements, and found this fee to be unreasonable.

As you are aware, it was government policy in 2009 to develop a multi-purpose terminal, including a container terminal with minimum capacity of 1-million TEUs per year, at the Port of Newcastle. Newcastle Port Corporation conducted a tender in 2010 to proceed with this development. The successful tenderer was an international consortium led by Anglo Ports Pty Ltd.

The Government was subject to the “Competition and Consumer Act 2010” (CCA) in respect of this tender. Terminating this tender in November 2013 did not give the government retrospective immunity from the CCA. Newcastle Port Corporation amended the tender by charging Anglo Ports a fee for container movements and instructing Anglo Ports not to develop a container terminal as part of the multi-purpose development. The fee the government charged Anglo Ports is now charged of Port of Newcastle Investments, the port’s leaseholder.

The government did not inform the Parliament about charging a fee for container movements at the Port of Newcastle until August 10 2016. You may wish to confirm with the “Australian Competition and Consumer Commission” that the government informed the ACCC about charging a fee for container movements at the Port of Newcastle in the second half of 2014. The ACCC discloses no information because it signed a confidentiality agreement with the government. You might also ask the ACCC to confirm that the government was not immune from the CCA while Newcastle Port Corporation conducted its tender for a multi-purpose terminal. Although the government has not disclosed the date on which it charged a fee for container movements, the “Port Commitment” document confirms this fee was charged when Anglo Ports was trading as “Newcastle Stevedores Consortium” (NSC) and “Mayfield Development Corporation Pty Ltd (MDC).

The Government informed “General Purpose Standing Committee No. 1”, on August 22 2014, that a container terminal at the Port of Newcastle was “an uneconomic enterprise contrary to market demand”. The Government did not inform GPSC#1 about charging a fee for container movements and the purpose of charging this fee. Charging this fee makes a container terminal an uneconomic enterprise.

GPSC#1 was informed by the government that “as the container port did not proceed, there is no decision to review”. However, the government omitted to inform GPSC#1 that Anglo Ports had been instructed not to proceed with a container terminal as part of the multi-purpose terminal development pursuant to the tender.

During Budget Estimates hearings in 2015, the government again failed to inform GPS#1 and GPSC#2 about charging a fee for container movements, despite much questioning. It is relevant to consider why this information was not disclosed.

On August 1 2016, the ACCC informed the media that the government was immune from the “Commonwealth Competition and Consumer Act 2010” in respect of charging a fee for container movements at the Port of Newcastle. The ACCC has not commented on the government being subject to the CCA when Newcastle Port Corporation charged Anglo Ports a fee for container movements.

Your attention is further drawn to the statement by Mr Gay that “it would take a massive 230 per cent increase in container trade volume [at the Port of Newcastle] just to reach the 30,000 TEU threshold”. Mr Gay failed to say that current “container” throughput at the Port of Newcastle is carried on general cargo ships and that container ships do not visit this port because it has no container terminal.

Please note that the reason why 100 per cent of container ships visiting NSW use Port Botany is because it is the only port with facilities for container ships. The reason why 85 per cent of containers are trucked within 45 kilometres of Port Botany is for access.

Intermediate goods comprise 50 per cent of imported containers into Port Botany. This is primarily why manufacturing firms are located as close as possible to Port Botany. Manufacturing firms are not locating in regional areas of NSW because they need access to a container port.

A container terminal at the Port of Newcastle would justify building a rail freight bypass of Sydney and paying for it by railing containers for the Sydney market, as opposed to trucking containers from Port Botany.

You may want to satisfy yourself that the government was subject to the CCA when it charged a fee for container movements at the Port of Newcastle and this fee may by unlawful by breaching Section 45, or, could be unenforceable if found by the ACCC to be unreasonable.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: The Hon Duncan Gay MLC; GPSC#1; GPSC#2; Mr Tim Crakanthorp MP

25 August 2016

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission
by email

Mr Sims,

I refer to the answer by The Hon Duncan Gay MLC, Minister for Roads, Maritime and Freight, to a “Question Without Notice” about “Newcastle Port Privatisation” in the NSW Parliament on 10 August 2016. Mr Gay confirmed the circumstances where the NSW government pays compensation to NSW Ports in respect of container movements at the Port of Newcastle. The NSW government charges a fee for container movements at the Port of Newcastle, which it pays to NSW Ports.

The arrangements confirmed by Mr Gay first applied in respect of two companies – Newcastle Stevedores Consortium (NSC) and Mayfield Development Corporation Pty Ltd (MDC). These were companies operated by Anglo Ports Pty Ltd. NSW government policy in 2010 was for the private sector to develop a multi-purpose terminal, including a container terminal with minimum annual capacity of 1 million TEU, at the Port of Newcastle. The government implemented its policy by having Newcastle Port Corporation conduct a tender for the development, which it did, selecting a proposal from Anglo Ports. Negotiations between Anglo Ports and the government were conducted between 2010 and November 2013.

The date from which the NSW government claimed immunity from the CCA in respect of charging a fee for container movements at the Port of Newcastle is directly relevant to the lawfulness of this fee. To be immune from the CCA in respect of charging Anglo Ports a fee, immunity was required from 2010.

After the NSW government terminated the tender in November 2013, it claimed, on 22 August 2014, that the container terminal component was “an uneconomic enterprise contrary to market demand”. When the government made that statement to “General Purpose Standing Committee No. 1” during a “Budget Estimates” hearing, its fee charged for container movements had not been disclosed. Nor was this fee disclosed in the following year’s hearing. It was this fee which made a container terminal “an uneconomic enterprise”.

Will the ACCC disclose the date from which the NSW government claimed immunity from the CCA in respect of charging a fee for container movements at the Port of Newcastle? Will the ACCC disclose when it first knew of this fee’s existence?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: “General Purpose Standing Committee No. 1”; Mr Tim Crakanthorp MP; The Hon Dr Mehreen Faruqi MLC; The Hon Duncan Gay MLC; The Hon Gladys Berejiklian MP; “The Newcastle Herald”

21 August 2016

Attach.

From: Infocentre Public Mailbox [mailto:info.centre@accc.gov.au]
Sent: Tuesday, 27 September 2016 3:02 PM
To: REF1929180 Greg Cameron
Subject: ACCC Response (Reference : REF1929180) [SEC=UNCLASSIFIED]

Dear Mr Cameron

I refer to your letters to the Chairman of the ACCC received between 21 August and 14 September. I apologise for the delay in responding. Your reference number is REF1929180.

As per our response on 22 August 2016, we direct you to the ACCC’s previous correspondence to you from Marcus Bezzi in relation to this matter. As Mr Bezzi has previously advised, the ACCC is not in a position to provide you with further information about container charges at the Port of Newcastle.

The ACCC does not provide legal advice so we cannot tell you if the NSW government would be considered to be carrying on a business for the purposes of the Competition and Consumer Act 2010 (CCA). As previously advised, the question of whether any Australian government is carrying on business for the purposes of the CCA is ultimately a matter to be determined by a court.

In addition to Mr Bezzi’s advice, please accept this as confirmation that we will not respond to your future correspondence on this matter unless we have new information that might assist you.

Please see our website for more information about the ACCC.

Yours sincerely

Kellie

Public Information Officer | Infocentre
Australian Competition and Consumer Commission

 

To: Members of Parliament

Re: Date claimed for Competition Act immunity

The NSW government refuses to disclose the date from which it claimed immunity from the “Commonwealth Competition and Consumer Act 2010” in respect of charging a fee for container movements at the Port of Newcastle.

If this fee was charged before the government was immune, a breach of the CCA may have occurred. Under Section 45, it is unlawful for a corporation to substantially lessen competition in a relevant market.

The fee’s existence was secret until revealed last month by “The Newcastle Herald”. The Hon Duncan Gay, Minister for Roads, Maritime and Freight, confirmed the fee to State Parliament on August 10.

The government was not immune from the CCA in 2010, when it was government policy for the private sector to develop a multi-purpose terminal, including a container terminal with minimum annual capacity of 1 million TEU, at the Port of Newcastle.

The government implemented its policy by having Newcastle Port Corporation conduct a tender for the multi-purpose terminal development, which it did, selecting a proposal from Anglo Ports Pty Ltd. The government changed its requirements pursuant to the tender by charging Anglo Ports a fee for container movements; and, directing Anglo Ports not to develop a container terminal.

Negotiations with Anglo Ports “concluded” in November 2013. In a statement to “The Newcastle Herald” on March 4 2015, the government said: “Newcastle Port Corporation concluded its negotiations with Anglo Ports in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.”

The government claimed immunity from the CCA in respect of charging a fee for container movements at the Port of Newcastle, either before, or after, “concluding” negotiations with Anglo Ports in November 2013.

The ACCC refuses to disclose the date from which this immunity was claimed.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: ACCC; Media

20 August 2016

To: Members of Parliament

Re: Alleged immunity from Competition and Consumer Act 2010

The Australian Competition and Consumer Commission has not revealed the date from which the NSW government allegedly became immune from the “Commonwealth Competition and Consumer Act 2010” (CCA), for government policy decisions involving Port Botany, Port Kembla and the Port of Newcastle. The ACCC’s role is to enforce the CCA, which, obviously, requires knowing when it applies.

The ACCC signed a confidentiality agreement with the NSW government which prevents it from acknowledging that a fee is charged for container movements at the Port of Newcastle. This secret fee was revealed only late last month as part of a long-term investigation by “The Newcastle Herald“.

Keeping this fee secret for more than three years enabled the NSW government to avoid public scrutiny.

Revealing the date of the alleged immunity will reveal when there was no immunity.

The conditions for claiming immunity were not present in 2010, when Newcastle Port Corporation (NPC) conducted a public tender for developing a multi-purpose terminal, which included a container terminal with minimum capacity of 1 million TEU per year, at the Port of Newcastle. NPC selected the tender from a consortium led by Anglo Ports Pty Ltd.

The government changed the conditions of its tender when it prohibited a container terminal and charged a fee for container movements.

When the government commenced a scoping study into privatising the Port of Newcastle on 18 June 2013, a fee for container movements applied but a container terminal was not prohibited.

In a statement to “The Newcastle Herald” on 4 March 2015, NSW Treasury said:

“Newcastle Port Corporation concluded its negotiations with Anglo Ports in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.”

Charging Anglo Ports a fee for container movements potentially breached Section 45 of the CCA because it involved changing the conditions of the tender when the tender pre-dated any immunity from the CCA.

This is the reason why the government and the ACCC do not reveal the date from which the government allegedly became immune from the CCA.

Terminating the tender did not overturn the potential breach of the CCA. Should a court determine that charging Anglo Ports a fee for container movements was unlawful, the reason for terminating the tender would then be brought into question.

The purpose of the government’s fee is to protect NSW Ports, the Port Botany leaseholder, from competition.

The government pays NSW Ports for container ships that visit the Port of Newcastle instead of Port Botany. The amount of payment is what NSW Ports loses. For a typical container ship, this is currently $1 million per visit.

There is no container terminal at the Port of Newcastle. A container terminal that is guaranteed to operate at a loss, obviously, will never be built.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: ACCC; Media

18 August 2016

The Hon Duncan Gay MLC
Minister for Roads, Maritime and Freight

Dear Minister,

I refer to your answer on Wednesday 10 August to the “Question Without Notice” from The Hon Adam Searle MLC concerning “Newcastle Port Privatisation”.

In regard to “cross-payments”, it is noted that the NSW government claimed immunity from the “Commonwealth Competition and Consumer Act 2010” in respect of its charge on containers at the Port of Newcastle. This charge is the government’s source of funds for paying compensation to the Port Botany leaseholder under a contractual arrangement announced on 12 April 2013.

A government that is privatising a government-owned business may claim immunity from the “Commonwealth Competition and Consumer Act 2010” in respect of that business. However, the NSW government was not privatising the Port of Newcastle on 12 April 2013. It announced a scoping study into privatising the Port of Newcastle on 18 June 2013 followed by an announcement on 5 November 2013 to proceed with the privatisation. The government, as Newcastle Port Corporation, continued to operate the port until 30 May 2014.

In regard to current container throughput at the Port of Newcastle, may I respectfully point out that container ships do not visit this port? This is because it has no container terminal. The government was negotiating with an international consortium, between 2010 and November 2013, in relation to building a multi-purpose terminal, including a container terminal with minimum capacity of 1 million TEU per year. The (former) Treasurer, The Hon Andrew Constance MP, criticised these negotiations on 22 August 2014, claiming that a container terminal was “an uneconomic enterprise contrary to market demand”. May I respectfully point out that it is the government’s charge on containers that makes a container terminal an “uneconomic enterprise”? This charge doubles the cost of a container ship using the Port of Newcastle compared with using Port Botany. It serves no purpose other than to render a container terminal an uneconomic enterprise, if built.

The general cargo ships that visit the Port of Newcastle do not require access to a container terminal. The low number of container movements – 9,000 per year – is because containers are incidental cargo for general cargo ships. World trade in containers is not conducted using general cargo ships. Without a container terminal, the northern NSW regional economy is severely constrained because about 90 per cent of world trade in non-bulk commodities is conducted using containers carried on container ships.

The reason why 100 per cent of container ships visiting NSW use Port Botany is because it is the only port with facilities for container ships. The reason why 85 per cent of containers are trucked within 45 kilometres is primarily for access to the state’s only container port.

Intermediate goods comprise 50 per cent of imported containers into Port Botany. This is primarily why manufacturing firms are located as close as possible to Port Botany. Manufacturing firms are not locating in regional areas of NSW because they need access to a container port.

The restriction on developing a container terminal at the Port of Newcastle is the NSW government’s charge on containers, which may be unlawful under Section 45 of the “Commonwealth Competition and Consumer Act 2010”.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: ACCC; NSW MPs; Media; Port of Newcastle Investments; NSW Ports

11 August 2016

The Hon Duncan Gay MLC
Minister for Roads, Maritime and Freight

Dear Minister,

On or before 12 April 2013 – the date Port Botany and Port Kembla were leased to NSW Ports – a secret charge on container movements at the Port of Newcastle was the NSW Government’s source of funds for paying compensation to NSW Ports in respect of container movements at the Port of Newcastle.

This charge would be unlawful if a Court found it substantially lessened competition in the NSW container port market, and it was imposed before the NSW Government was immune from the “Commonwealth Competition and Consumer Act 2010” in respect of privatising the Port of Newcastle.

What is the date the NSW Government claims it became immune from the “Commonwealth Competition and Consumer Act 2010” in respect of privatising the Port of Newcastle?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: Dr Kerry Schott; ACCC; MPs; Media; Port of Newcastle Investments; NSW Ports

7 August 2016

 

 

To: Members of Parliament

Re: When was the Port of Newcastle being privatised?

Has the Parliament seen evidence proving the Port of Newcastle was being privatised when the State Government imposed its secret container charge on Newcastle Port Corporation?

A contract condition of the lease for Port Botany is that compensation will be paid for loss of business “in respect of future container capacity development at the Port of Newcastle”. The State’s charge on Newcastle Port Corporation was its source of funds to pay this compensation when Port Botany was leased on 12 April 2013.

The Port of Newcastle was not being privatised on 12 April 2013. On that date, the State was carrying on a business for the purposes of the “Commonwealth Competition and Consumer Act 2010” at the Port of Newcastle, because Newcastle Port Corporation was the port’s operator.

Between 2010 and November 2013, Newcastle Port Corporation was negotiating with Anglo Ports Pty Ltd to develop a one million per year capacity container terminal at the port. Newcastle Port Corporation amended the terms of its tender by requiring Anglo Ports (trading as Mayfield Development Corporation Pty Ltd) to pay the State’s charge.

Subsequently, the State required the future port operator to pay the charge. Port of Newcastle Investments Pty Ltd became the port operator  on 30 May 2014.

The State claims immunity from the “Commonwealth Competition and Consumer Act 2010” in respect of its charge, allegedly because it was privatising the port at the time the charge was imposed. Section 45 makes it is unlawful to substantially lessen competition in a relevant market.

 Greg Cameron

www.containerterminalpolicyinnsw.com.au

4 August 2016

Copy: ACCC; Media

To: Members of Parliament

Re: Application of Competition Act to the Port of Newcastle

This week, ACCC Chairman, Mr Rod Sims, finally revealed why the competition watchdog took no action to enforce the “Competition and Consumer Act 2010” over the secret charge on containers at the Port of Newcastle: the State Government had claimed immunity.

A government operating a business is immune from the Act when it is privatising that business. It is unlawful for a corporation to substantially lessen competition in a relevant market. By claiming immunity, the State was able to impose its anti-competitive charge on the Port of Newcastle and the ACCC’s hands were tied. But are they?

It seems the State made a mistake. The top secret “Port Commitment” document uncovered last week by “The Newcastle Herald”, shows the State entered into a contract with NSW Ports, the Port Botany leaseholder, to pay compensation, on 12 April 2013. The State’s source of funds was a charge imposed on the Port of Newcastle.

The Port of Newcastle was not being privatised  on 12 April 2013: the State could not have claimed immunity at that time.

The State refuses to disclose the date from which it claimed immunity. Now we know why.

Opposition leader, Mr Luke Foley, called on the State to explain its actions. In “The Newcastle Herald’s” week-end readers’ poll, asking whether they supported the opposition’s call for a parliamentary inquiry, 95 per cent voted “yes”.

In a letter to “The Australian Financial Review”, Mr Foley said: “The secret deal to obstruct Newcastle’s economic development is a disgrace that will hold back investment and regional employment.”

“In an open trading economy like ours, ports hold a highly strategic position. Mr Baird’s ports rorts fail the public interest, raise costs and hurt the wider economy. They will be a blight on NSW for a century.”

The charge’s direct impact is to double the cost of using the Port of Newcastle.

Removing the charge to allow a container terminal to be built, will bring cost savings to northern NSW residents because containerised goods will no longer have to travel through Port Botany via western Sydney.

It will stimulate regional economic development by providing direct access to a container port. Ninety per cent of world trade in non-bulk commodities involves using ships to transport containerised goods between countries. Having no container port prevents economic development.

A container terminal can provide the base-load cargo – containers – to make building a rail freight bypass of Sydney, between the Port of Newcastle and Glenfield, a commercially viable investment by the private sector.

Freight will be removed from the Newcastle-Sydney rail line, creating a better passenger service.

Railing containers to western Sydney from Newcastle replaces container trucks on Sydney’s clogged roads.

$5 billion is saved because there will be no need to build Stages 2 and 3 of the Northern Sydney Freight Corridor, to provide the equivalent of a dedicated freight line between Newcastle and Strathfield.

Similarly, there will be no need to build the $1 billion Western Sydney Freight Line connecting Chullora and Eastern Creek only to service Port Botany.

A rail freight bypass removes the need to build an intermodal terminal at Moorebank using roads already severely congested.

Manufacturing, which is concentrated in Sydney because of the container port at Botany, can profitably relocate into regional areas because of direct access to a container port at Newcastle.

Sydney passenger rail services can be improved by using 100 per cent of capacity for passengers by eliminating freight.

There is a strong financial incentive for the ports’ leaseholders, and their customers, to profitably relocate the majority of Port Botany container port operations to Newcastle, if they are willing.

These are initiatives worth exploring.

Greg Cameron

www.containerterminalpolicyinnsw.com.au

2 August 2016

To: Members of State Parliament

Re: Shippers charged $1 million extra to visit Newcastle port

A State Government charge on container ships using the Port of Newcastle adds $1 million to the cost of a visit. Paying the State’s charge doubles the cost of using the Newcastle port compared with Port Botany. There are no plans to develop a container terminal because shippers and stevedores will not use the port and pay the charge.

Nearly 20 years have passed since BHP proposed developing a container terminal on its former Newcastle steelworks land. Without access to a container terminal, the entire northern NSW economy is disadvantaged, because world trade relies on container ships for transporting goods between countries. The past and future cost burden on the northern NSW economy is incalculable.

There is no stated State Government policy requiring the use of Port Botany for container ships visiting NSW. State policy is that the Port of Newcastle operator is free to develop a container terminal if it wishes to do so.

The purpose of the State’s charge is to recover its compensation payment to NSW Ports, the Port Botany operator. NSW Ports is compensated for losing business to the Port of Newcastle. Compensation is payable when container movements at the Port of Newcastle exceed a yearly cap. This cap is 30,000 containers as at 1 July 2013, increasing at the rate of six per cent per year.

A typical container ship at Port Botany arrives with 5,000 import containers and departs with 5,000 export containers, half of which are empty. Currently, the weighted average of charges at Port Botany is $100 per container. NSW Ports will lose $1 million each time a typical container ship visits Newcastle instead of Botany.

Paying compensating to the Port Botany operator, and charging the Port of Newcastle operator, does not appear in any State Government policy document, planning instrument, freight plan, transport strategy or budget. Committing to pay compensation was a once-off bargaining ploy in a commercial negotiation for leasing Ports Botany and Kembla. But charging the Port of Newcastle operator is a permanent commercial reality and must comply with the law.

In 2010, the State-owned Newcastle Port Corporation called public tenders for financing, building and operating a multi-purpose terminal, including a container terminal with minimum capacity of one million per year. The proposal from an international consortium led by Anglo Ports Pty Ltd, was selected.

The State announced its decision to lease Port Botany on 27 July 2012. Lease bidders were promised the leaseholder would be compensated for any loss of business in the event of a container terminal at the Port of Newcastle. On 30 August 2012, the State advised Anglo Ports that the container terminal component of the tender would not proceed. But the State’s position was that a container terminal could proceed, providing the port operator paid its charge.

Port Botany was leased to NSW Ports on 12 April 2013, and Newcastle Port Corporation ceased being the port operator on 30 May 2014, when it handed-over to Port of Newcastle Investments Pty Ltd.

Under Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA) it is unlawful for a corporation to substantially lessen competition in a relevant market. The State’s charge on the Port of Newcastle operator may breach Section 45.

Although the ACCC enforces the CCA, it is taking no enforcement action, based on confidential information supplied by State Government officials. The ACCC does not acknowledge the State’s charge on the Port of Newcastle operator. This does not make the charge lawful. The charge is confidential because it may be unlawful.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: ACCC; Media; Port of Newcastle Investments; NSW Ports

26 July 2016

Mr Geoff Crowe
Chief Executive Officer
Port of Newcastle Investments Pty Ltd
by email

Dear Mr Crowe,

I refer to contractual commitments made by the State of New South Wales (State) to the private Port Lessee of Port Botany and Port Kembla (NSW Ports) to make certain payments in respect of container capacity development at the Port of Newcastle. The State charges the operator of the Port of Newcastle for the amount of payment made to NSW Ports. When these contractual commitments were made on 12 April 2013, the operator of the Port of Newcastle was Newcastle Port Corporation.

The State’s charge on the Port of Newcastle operator may breach Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA). The State, the ACCC and the Australian Government, have all been asked to disclose the date nominated by the State that it ceased carrying on a business for the purposes of the CCA at the Port of Newcastle. Should the State be claiming that it never carried on a business for the purposes of the CCA at the Port of Newcastle, this claim has not been disclosed. The ACCC has advised that whether and when any Australian government is carrying on a business for the purposes of the CCA is ultimately a matter that can only be determined by a Court. Although the ACCC is not taking any enforcement action because of confidential information supplied by the State, it can take no action without first establishing jurisdiction.

The State capped the number of imported and exported containers by the Port of Newcastle for which NSW Ports may not claim payment from the State. This cap is 30,000 containers per year as at 1 July 2013, increasing annually by six per cent.

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 approximately $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.

In State Parliament on 13 August 2015, the Leader of the Opposition, Mr Luke Foley, asked The Treasurer, The Hon Gladys Berejiklian: “Why has the Government imposed constraints on the growth of container movements through the Port of Newcastle?” Member for Newcastle, Mr Tim Crakanthorp, asked Ms Berejiklian: “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?”

In her responses, Ms Berejiklian rejected the proposition that constraints/restrictions have been imposed on the growth of container movements by the Port of Newcastle.

May I ask Port of Newcastle Investments, as the port’s current operator, does the State’s charge of $100 per container constitute a constraint/restriction on developing a container terminal?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: Mr Luke Foley MP; Mr Tim Crakanthorp MP; The Hon Gladys Berejiklian MP; Mr Rod Sims; The Hon Scott Morrison MP; Media; NSW Ports

22 July 2016

The Hon Scott Morrison MP
Treasurer
by email

Dear Mr Morrison,

The State Government of New South Wales (State) pays compensation to the Port Botany operator and charges the Port of Newcastle operator. Compensation is paid when the State is satisfied that the Port Botany operator lost business because of additional container capacity at the Port of Newcastle.

This charge makes it commercially unviable to develop additional container capacity at the Port of Newcastle and the Port Botany operator will not lose business when additional container capacity is not developed.

Charging the Port of Newcastle operator may breach Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA) whereby it is unlawful for a corporation to substantially lessen competition in a relevant market.

The State must conform to the law. The Australian Government does not know whether the State was carrying on a business for the purposes of the CCA at the Port of Newcastle when the State imposed its charge on the port operator. This is ultimately a matter that can only be determined by a Court.

Will the Australian Government find out whether and when the State was carrying on a business for the purposes of the CCA at the Port of Newcastle?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: The Hon Mike Baird MP; State MPs; Media; Port of Newcastle Investments; NSW Ports

19 July 2016

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission
by email

Dear Mr Sims,

Further to my email letter dated 14 July 2016, would the ACCC please satisfy itself about the meaning of the phrase “cap on numbers” employed by The Hon Duncan Gay MLC in the New South Wales Parliament on 17 October 2013? “Cap on numbers” was an instruction given by the State of NSW (State) to Morgan Stanley on 14 December 2011 for conducting a scoping study into leasing Port Botany.

Please note that “cap on numbers” does not mean a physical limitation on containers imported and exported by the Port of Newcastle. There is no physical limitation.

“Cap on numbers” applies to the State for its contractual commitments to the Private Lessee of Port Botany and Port Kembla (NSW Ports) to make certain payments to NSW Ports in respect of future container capacity development at the Port of Newcastle.

“Cap on numbers” means the annual number of import and export containers by the Port of Newcastle which must be exceeded before the State charges the port’s operator for any payment the State makes to NSW Ports.

Newcastle Port Corporation was the operator of the Port of Newcastle until 30 May 2014, when Port of Newcastle Investments became the operator. The State makes no provision of funds in the State Budget for paying NSW Ports because of the charge on the former and current operators of the Port of Newcastle.

The State may have breached Section 45 of the “Commonwealth Competition and Consumer Act 2010” by charging the former and current operators of the Port of Newcastle for any payment made to NSW Ports. The ACCC enforces this Act.

Does the ACCC understand “cap on numbers” to mean something other than the meaning given above?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: State MPs; Media; Port of Newcastle Investments; NSW Ports

16 July 2016

To: Members of State Parliament

Re: Potential breach of the “Competition Act” by the state government

The NSW state government will compensate NSW Ports in respect of future container capacity development at the Port of Newcastle. A condition is to satisfy the government that import and export containers by Port Botany and Port Kembla were less than they would have been. There is an annual cap on numbers of import and export containers by the Port of Newcastle. After it is exceeded, NSW Ports may claim compensation of approximately $100 per container, until 2063. Bidders for the Port Botany/Kembla leases were told that the cap on numbers at the Port of Newcastle would not be extended until full capacity was reached by Port Botany and Port Kembla.

The government charges the operator of the Port of Newcastle for the amount of money which it pays to NSW Ports. Newcastle Port Corporation was the operator of the Port of Newcastle when the government was privatising Port Botany/Kembla. As a government-owned business, Newcastle Port Corporation was instructed not to develop a container terminal.

Bidders for the Port of Newcastle lease were told they could develop a container terminal if they wished to do so.

Charging the Port of Newcastle operator may breach Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA). Section 45 makes it unlawful for a corporation to substantially lessen competition in a relevant market. Charging the Port of Newcastle operator $100 per container, but not NSW Ports, substantially lessens competition in the NSW container port market. Only a Court can determine a breach of the CCA. The CCA is enforced by the Australian Competition and Consumer Commission, which is taking no enforcement action.

Before it could breach the CCA, the government must be carrying on a business for the purposes of the CCA. Only a Court can determine whether and when any Australian government is carrying on a business for the purposes of the CCA. The ACCC is not seeking a Court determination concerning Newcastle Port Corporation. The government may claim it was not carrying on a business for the purposes of the CCA at the Port of Newcastle when:

  • it was privatising the port; or
  • it was privatising Port Botany; or
  • it was the port operator.

The NSW Parliament has not been informed about the charge on the Port of Newcastle operator. This charge is proof that the Port of Newcastle would compete with Port Botany for containers, with major implications for government policy in finance, transportation and regional economic development.

The Parliament may want to consider whether it is entitled to be informed about circumstances involving a potential breach of the law. Or, is the state government above the law?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: Media

15 July 2016

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission
by email

Dear Mr Sims,

The Commission may wish to satisfy itself that the State of New South Wales (State) has made contractual commitments to the private Port Lessee of Port Botany and Port Kembla (NSW Ports) to make certain payments in respect of future container capacity development at the Port of Newcastle, whereby:

  • the commitments were in place when the State reached agreement with NSW Ports on 12 April 2013;
  • payments to NSW Ports are in the amount of approximately $100 per container;
  • as from 12 April 2013, the State charges the operator of the Port of Newcastle for payments to NSW Ports; and,
  • Newcastle Port Corporation was the operator of the Port of Newcastle on 12 April 2013.

A charge of $100 per container makes it unviable for the operator of the Port of Newcastle to compete with NSW Ports in the container port market. Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA) makes it unlawful for a corporation to substantially lessen competition in a relevant market.

The State may claim it was not carrying on a business for the purposes of the CCA at the Port of Newcastle, when it was privatising the Port of Newcastle. On 18 June 2013, the State announced it would commence a scoping study for a possible lease of the Port of Newcastle. On 5 November 2013, the State announced it had received and considered the recommendations of the scoping study, and would proceed with the lease. On 30 April 2014 the State announced it had reached agreement with Port of Newcastle Investments to lease the Port of Newcastle.

The State may claim it was not carrying on a business for the purposes of the CCA at the Port of Newcastle, when it was privatising Port Botany. On 14 December 2011, the State announced the appointment of Morgan Stanley to undertake a scoping study into a long term lease of Port Botany. On 27 July 2012, the State announced it would proceed with the long-term lease of Port Botany and Port Kembla. On 12 April 2013, the State announced it had reached agreement with NSW Ports to lease Port Botany and Port Kembla.

The State may claim it never carried on a business for the purposes of the CCA at the Port of Newcastle.

Only a Court can determine whether and when the State was carrying on a business for the purposes of the CCA at the Port of Newcastle.

The Commission may wish to establish jurisdiction for the purpose of applying the CCA to the actions of the State in charging the operator of the Port of Newcastle $100 per container.

Yours faithfully,

Greg Cameron
www.containerterminalpolicyinnsw.com.au

Copy: State MPs; Media; Port of Newcastle Investments; NSW Ports

14 July 2016

 

The Hon Duncan Gay MLC
Minister for Roads, Maritime and Freight

Dear Mr Gay,

As you are aware, only a Court can determine whether and when an Australian government is carrying on a business for the purposes of the “Commonwealth Competition and Consumer Act 2010”.

Would you mind answering the following questions, please?

Does the 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, when it was privatising this port?

Does the 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, when it was privatising Port Botany?

Does the government claim it never carried on a business for the purposes of the “Commonwealth Competition and Consumer Act 2010” at the Port of Newcastle?

Your assistance will be appreciated.

The background to this request is below.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au

Copy: MPs; Media; Port of Newcastle Investments; NSW Ports

13 July 2016

 

Background

 The NSW government’s anti-competitive ports behaviour may be unlawful.

 NSW Ports is paid by the NSW government for losing business to the Port of Newcastle under terms and conditions which are confidential.

It was never the government’s intention to fund payment to NSW Ports from consolidated revenue: the government always intended to charge the operator of the Port of Newcastle for the money it paid to NSW Ports.

Lease bidders offered high prices in return for the government’s promise to make payments in respect of future container capacity development at the Port of Newcastle. But they were not told about the government charging the operator of the Port of Newcastle. On 12 April 2013, the government accepted NSW Ports’ bid of $5.07 billion for 99-year leases to Port Botany and Port Kembla.

The government imposed a cap on numbers of containers imported and exported by the Port of Newcastle, as disclosed by The Hon Duncan Gay MLC to State parliament, on 17 October 2013. A cap on numbers was an instruction the government gave Morgan Stanley, which it appointed as its financial adviser, on 14 December 2011.

NSW Ports is not paid unless the government is satisfied that container movements exceeding the cap on numbers resulted in fewer containers being imported and exported by Port Botany. The cap on numbers base is 30,000 per year as at 2013, increasing annually by a margin which the government calls “organic growth”.

Mr Gay said the government would not be putting any funds in place to pay the private operator of Port Botany because the cap on numbers at the Port of Newcastle would not be extended until full capacity was reached at Port Botany and Port Kembla.

“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,” Mr Gay told parliament.

On 31 January 2012, “The Newcastle Herald” reported:

“A $600 million proposal to redevelop the BHP steelworks site for port uses, including a container terminal, will be considered as part of the case being mounted for plans to lease Sydney’s Port Botany.

“A spokesman for NSW Ports Minister Duncan Gay said yesterday that an announcement on a Newcastle container terminal would be made after the scoping study for the Port Botany transaction, due to the government early this year, is completed.”

The government-owned Newcastle Port Corporation (NPC) was the operator of the Port of Newcastle until 30 May 2014, when Port of Newcastle Investments Pty Ltd became the operator, paying $1.75 billion to lease the port.

In 2010, NPC conducted a public tender for a private consortium to develop a multi-purpose terminal, including a container terminal with minimum capacity of 1 million TEU per year. NPC chose a proposal from a consortium led by Anglo Ports Pty Ltd.

On 27 July 2012, the government “confirmed it would proceed with the long-term lease of State-owned assets Port Botany and Port Kembla to fund priority infrastructure projects across NSW”.

In a statement published on the NSW parliament web site dated 10 February 2015, Anglo Ports said, “The Hon M Baird MP, as Treasurer, by decisions of 30 August 2012 and 26 July 2013 dictated that a container port not proceed at Newcastle.”

The government had decided that the operator of the Port of Newcastle would pay the charge in respect of future container capacity development.

The government continued to negotiate with Anglo Ports until November 2013, as disclosed in a government media statement on 4 March 2015:

“Newcastle Port Corporation concluded its negotiations with Anglo Ports in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.”

Anglo Ports, in its 10 February 2015 statement, said it did not withdraw its proposal.

On 18 June 2013, the government announced it would commence a scoping study for a possible lease of the Port of Newcastle. On 5 November 2013, the government announced that it had received and considered the recommendations of the scoping study, and would proceed with the lease.

A lease condition was that the government would charge the leaseholder for the amount of money it paid to NSW Ports in respect of future container capacity development at the Port of Newcastle.

A charge on the Port of Newcastle operator may breach Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA). Section 45 makes it unlawful for a corporation to substantially lessen competition in a relevant market. Charging the operator of the Port of Newcastle serves to substantially lessen competition in the NSW port market because it is commercially unviable to pay this charge.

Only a Court can determine whether and when an Australian government is carrying on a business for the purposes of the CCA.

The government may claim it was not carrying on a business for the purposes of the CCA at the Port of Newcastle, when it was privatising the port.

Or, the government may claim it was not carrying on a business for the purposes of the CCA at the Port of Newcastle, when it was privatising Port Botany.

Or, the government may claim it never carried on a business for the purposes of the CCA at the Port of Newcastle.

While a charge may be unlawful, it could also be unenforceable.

The Australian Competition Tribunal’s decision to declare the shipping channel service at the Port of Newcastle will provide a right for parties using that service, or intending to use it, to request the Australian Competition and Consumer Commission to arbitrate any disputes regarding the terms and conditions of access to the service. A charge for containers would be relevant to any arbitration the ACCC may undertake.

More than 100 Questions On Notice in the NSW parliament about the cap on numbers have been asked since October 2014. These latest questions of the Treasurer are due for answer on 28 July 2016:

  1. What are the terms and conditions for the Government undertaking to pay compensation to NSW Ports?
  2. What is the date that the Government undertook to pay compensation to NSW Ports?
  3. What is the amount of compensation the Government undertook to pay NSW Ports?
  4. What is the Government’s source of funds for paying compensation to NSW Ports?
  5. 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?
  6. 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?
  7. 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?
  8. 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?
  9. 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?
  10. 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?

Competition between Ports

A charge proving unlawful, or unenforceable, would benefit the northern NSW economy by removing the impediment to developing a container terminal at the Port of Newcastle.

A container terminal would attract container ship visits for the northern NSW market but would also justify building a rail freight bypass of Sydney for the Sydney market. This bypass line would run from the Port of Newcastle to Glenfield, in south western Sydney, where it would connect with the main southern line. Paying for a bypass line by railing containers for the Sydney market would replace building stages 2 and 3 of the Northern Sydney Freight Corridor. The cost, $5 billion, is unfunded.

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.

It is more economical, obviously, to supply northern NSW by rail from Newcastle than it is by truck from Port Botany.

Presently, import containers are trucked between Port Botany and western Sydney and goods are trucked between western Sydney and Newcastle for distribution throughout northern NSW. Likewise, trucking export goods between regional areas and Port Botany is prohibitively costly and logistically challenging, and rail freight is inadequate.

Substantial costs incurred by northern NSW residents and businesses would be removed by developing a container terminal at the Port of Newcastle.

However, direct access to a container terminal is also essential for participating in international trade. Because of the Port Botany monopoly, there is little opportunity for decentralizing economic activity into regional areas of NSW. Regional areas are economically disadvantaged and needless pressure is placed on Sydney’s already stressed infrastructure.

Around 25 per cent of the NSW population lives north of Sydney. They would account for around 25 per cent of Port Botany container throughput when a proportionate number of Sydney-based manufacturing firms reliant on Port Botany relocated to northern NSW to take advantage of a container terminal at the Port of Newcastle. According to NSW Ports, intermediate goods (used in the eventual production of a finished product) make-up 50 per cent of the content of all containers imported through Port Botany.

The Port of Newcastle enjoys a natural competitive advantage over Port Botany because 100 per cent of containers for the Sydney market can be railed to new intermodal terminals in outer western Sydney, via a bypass line. This enables removing container trucks from Sydney’s roads.

However, government policy supports an increase in Port Botany 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 Port Botany 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.

The optimum use of Sydney’s existing rail network is people, not freight, as demonstrated in a report by Deloitte Access Economics, “The True Value of Rail”.

4 July 2016

To: Members of the NSW Parliament

Re: More questions about NSW ports leases

Leasing arrangements for Port Botany and the Port of Newcastle may be unlawful and could be unenforceable. Another 10 Questions On Notice were asked in state parliament seeking clarification.

A charge for containers at the Port of Newcastle is the government’s most likely source of funds for paying compensation to NSW Ports for losing business at Port Botany, if a container terminal is developed at Newcastle. However, there is no justification for a charge. A charge may breach Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA), which makes it unlawful for a corporation to substantially lessen competition in a relevant market.

A charge could also be unenforceable.

The Australian Competition Tribunal’s recent decision to declare the Port of Newcastle shipping channel service, will provide a right for parties intending to use the service to request the ACCC to arbitrate any disputes about charges for containers. A charge found to be “unreasonable” would be unenforceable.

Only a court can determine whether or when the NSW government was carrying on a business for the purposes of the CCA at the respective ports. Whether the NSW government was “carrying on a business” within the meaning of the CCA while implementing government policy to lease the ports, is also a matter that can only be determined by a court.

The ACCC has not attempted to establish before a court whether or when the NSW government was carrying on a business for the purposes of the CCA at either port.

The government made decisions about the Port of Newcastle before it leased Port Botany to NSW Ports. The government may have claimed these decisions did not have to comply with the CCA because of government policy to lease Port Botany. Agreement to lease Port Botany was announced on 12 April 2013.

On 14 December 2011, the government announced the appointment of Morgan Stanley to undertake a scoping study into leasing Port Botany. Certain instructions given to Morgan Stanley were disclosed by the government on 17 October 2013. One instruction was that the government would pay compensation to the Port Botany leaseholder for loss of business if a container terminal was developed at the Port of Newcastle. Another instruction was that a “cap on numbers” applied for containers at the Port of Newcastle if a container terminal was developed at this port. “Cap on numbers” is presumed to mean a cap on the number of container movements at the Port of Newcastle for which there is no government charge.

The government provides no evidence of having disclosed the “cap on numbers” at the Port of Newcastle, and the agreement to compensate NSW Ports, before 17 October 2013. The government may have claimed these arrangements did not have to conform to the CCA.

The government did not have a policy to lease the Port of Newcastle when the Port Botany lease was announced on 12 April 2013. Government policy was that a container terminal could be developed at the Port of Newcastle with Port Kembla being the government’s first container terminal priority.

The “cap on numbers” was in place before 18 June 2013, when the NSW government announced a scoping study into leasing the Port of Newcastle. On 5 November 2013, a decision was announced to lease the port. Agreement to lease the port to Port of Newcastle Investments was announced on 30 April 2014.

The government has been asked more than 100 Questions On Notice in the parliament since October 2014 and declines to provide details about the “cap on numbers”, a charge for containers (if there is one), and, compensation payable to NSW Ports.

The ACCC refuses to disclose what it understands the “cap on numbers” to mean.

The latest Questions On Notice to The Treasurer, are due for answer on 28 July:

  1. What are the terms and conditions for the Government undertaking to pay compensation to NSW Ports?
  2. What is the date that the Government undertook to pay compensation to NSW Ports?
  3. What is the amount of compensation the Government undertook to pay NSW Ports?
  4. What is the Government’s source of funds for paying compensation to NSW Ports?
  5. 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?
  6. 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?
  7. 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?
  8. 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?
  9. 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?
  10. 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?

Greg Cameron

0456819602
www.containerterminalpolicyinnsw.com.au

4 July 2016

The Hon Malcolm Turnbull MP
The Hon Bill Shorten MP
Senator Dr Richard Di Natale

Dear Mr Turnbull, Mr Shorten and Dr Di Natale,

Do you agree that refusing to disclose the source of funds for paying compensation to NSW Ports for lost business, is a cover-up by the NSW and Australian governments?

The NSW government agreed to compensate NSW Ports, the leaseholder of Port Botany, for lost business if a container terminal is developed at the Port of Newcastle. The NSW government’s likely source of funds is a charge for containers at the Port of Newcastle. But if a charge is not the source, compensation will be paid from consolidated revenue. This would contradict the government’s stated purpose for leasing three major ports, which was to raise revenue for infrastructure projects – $6.85 billion was raised.

A charge for containers may be unlawful under Section 45 of the Commonwealth Competition and Consumer Act 2010, which makes it unlawful to substantially lessen competition.

A charge could also be unenforceable. The Australian Competition Tribunal’s decision to declare the shipping channel service at the Port of Newcastle will provide a right for parties using that service, or intending to use it, to request the ACCC to arbitrate any disputes regarding the terms and conditions of access to such services. A charge for containers would be relevant to any arbitration the ACCC may undertake.

Consider the following statements.

“The lessee could develop a container terminal at the Port of Newcastle if it wished to do so.” (Hon G Berejiklian, 29 September 2015)

“There is no legislated cap on the number of containers that can travel through the Port of Newcastle.” (Hon G Berejiklian, 29 September 2015)

“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.” (Hon D Gay, 17 October 2013)

“There is no legislated container cap at the Port of Newcastle. The Government fully expects that organic growth of containers at Newcastle will continue.” (Hon D Gay, 24 September 2015)

“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.” (Hon D Gay, 17 October 2013)

“So the short answer to the question [How much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port?] is that we do not envisage that any compensation will need to be put in place.” (Hon D Gay, 17 October 2013)

A charge proving to be unlawful or unenforceable would remove the impediment to developing a container terminal at the Port of Newcastle. In that event, the NSW government would be required to compensate NSW Ports from consolidated revenue, unless other arrangements were made.

Abusing political process is failed economic management.

Yours faithfully,

Greg Cameron

0456819602
www.containerterminalpolicyinnsw.com.au

29 June 2016

The Hon Mike Baird MP
Premier and Minister for Western Sydney

The Hon Gladys Berejiklian MP
Treasurer, and Minister for Industrial Relations

The Hon Duncan Gay MLC
Minister for Roads, Maritime and Freight

Dear Mr Baird, Ms Berejiklian and Mr Gay,

Does the NSW government charge the private operator of the Port of Newcastle for containers, if a container terminal is developed at the Port of Newcastle?

In replying, would you please take into account the following statements:

“The lessee could develop a container terminal at the Port of Newcastle if it wished to do so.” (Hon G Berejiklian, 29 September 2015)

“There is no legislated cap on the number of containers that can travel through the Port of Newcastle.” (Hon G Berejiklian, 29 September 2015)

“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.” (Hon D Gay, 17 October 2013)

“There is no legislated container cap at the Port of Newcastle. The Government fully expects that organic growth of containers at Newcastle will continue.” (Hon D Gay, 24 September 2015)

“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.” (Hon D Gay, 17 October 2013)

“So the short answer to the question [How much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port?] is that we do not envisage that any compensation will need to be put in place.” (Hon D Gay, 17 October 2013)

What is the government’s source of funds for paying compensation to NSW Ports, if a container terminal is developed at the Port of Newcastle?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: NSW MPs; Australian Super; Gardior; ACCC; Productivity Commission; Infrastructure Australia; NSW Auditor-General; Port of Newcastle Investments; NSW Ports; Media

28 June 2016

Ms Heather Ridout AO
Chair
Australian Super
By email

Dear Ms Ridout,

Is Australian Super satisfied that the NSW government’s source of funds for paying compensation to NSW Ports, is lawful and enforceable? Compensation is payable to NSW Ports for losing business if a container terminal is developed at the Port of Newcastle.

Australian Super is a 20 per cent partner in the “NSW Ports consortium” which acquired a 99-year lease to operate Port Botany and Port Kembla from the NSW government in May 2013. Australian Super also has exposure to NSW Ports through its investment in another partner in the consortium, IFM Investors’ Australian Infrastructure Fund.

The NSW government refuses to deny its source of funds for compensating NSW Ports is to charge for containers at the Port of Newcastle. Presumably, the compensation arrangement is included in confidential “Port Commitment Deeds”.

A presumed NSW government charge for containers at the Port of Newcastle may by unlawful under Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA). It is unlawful under Section 45 for a corporation to substantially lessen competition. Only a Court can ultimately determine whether a government was carrying on a business for the purpose of the CCA, and whether an action may have breached the CCA. The Australian Competition and Consumer Commission is the agency responsible for enforcing the CCA. The ACCC does not disclose what it knows, if anything, about a presumed NSW government charge for containers at the Port of Newcastle. Neither does the ACCC disclose the date nominated by the NSW government that it ceased carrying on a business for the purpose of the CCA at the Port of Newcastle. The ACCC decided not to take any enforcement action after receiving information from the NSW government in confidence.

A government charge for containers at the Port of Newcastle could become unenforceable now that the port’s shipping channel service has been declared.

A charge would be economically unjustified by denying the northern NSW economy effective access to a container terminal at the Port of Newcastle. Additionally, a container terminal at the Port of Newcastle that was able to compete with NSW Ports would justify building a rail freight bypass of Sydney – between the Port of Newcastle in the north and Glenfield in the southwest. This line would be paid for by railing containers from Newcastle for the Sydney market instead of trucking them from Port Botany.

NSW Ports is a high margin business due to its low level of operation requirements and high capital base. Doubtless, the high margin depends on NSW Ports maintaining its monopoly position in the NSW container port market.

By copy, Coalition members of parliament for NSW are requested to ask the NSW and Australian governments respectively to disclose the source of funds for compensating NSW Ports and to demonstrate that this source is lawful and enforceable. Labor and Greens MPs have asked more than 100 Questions On Notice in the NSW parliament so far.

Yours faithfully,

Greg Cameron

0456819602
www.containerterminalpolicyinnsw.com.au

Copy: NSW MPs; Media

27 June 2016

The Hon Malcolm Turnbull MP
Leader of the Liberal Party

The Hon Bill Shorten MP
Leader of the ALP

Dr Richard Di Natale
Leader of the Australian Greens

Dear Mr Turnbull, Mr Shorten and Dr Di Natale,

Should the New South Wales government disclose information involving a potential breach of the Commonwealth Competition and Consumer Act 2010?

The information is whether the NSW government denies charging $100 for containers at the Port of Newcastle to fund payment of compensation to NSW Ports for losing business at Port Botany if a container terminal is developed at the Port of Newcastle. A charge may breach Section 45 of the above Act, which makes it unlawful for a corporation to substantially lessen competition.

For details, see www.containerterminalpolicyinnsw.com.au

Yours faithfully,

Greg Cameron

0456819602
containerterminalpolicyinnsw.com.au

Copy: NSW MPs; Media

26 June 2016

To: Members of Parliament for NSW
Subject: Secret container charge cover-up

The NSW government refuses to deny charging $100 for containers at the Port of Newcastle to fund payment of compensation to NSW Ports for losing business at Port Botany if a container terminal is developed at Newcastle. A charge would be unjustified, may be unlawful and could be unenforceable.

The Newcastle Herald editorial of 31 October 2014 reported-

“The Coalition, far from undoing the wrong perpetrated on Newcastle by its political opponents, has simply set the inequity in stone by inserting terms into its port sale agreements that effectively shut Newcastle out of competing for a serious slice of the container trade.

“The ACCC suggests this anti-competitive action by the government might be illegal and unenforceable. If that’s true it should be good news for Newcastle.”

After this editorial, more than 100 Questions On Notice were asked in the parliament by Labor and Greens, with the most recent being-

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 due on 28 July 2016

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

25 June 2016

Mr Peter Harris AO
Chairman
Productivity Commission

Dear Mr Harris,

Does the Productivity Commission support the NSW government’s “cap on numbers” at the Port of Newcastle?

On 17 October 2013, The Hon Duncan Gay MLC, disclosed to the NSW parliament that a “cap on numbers” was in place at the Port of Newcastle. Although more than 100 Questions On Notice about the “cap on numbers” have been asked in parliament since October 2014, Mr Gay and The Hon Gladys Berejiklian MP, have only advised that there is no legislated cap on container movements at the Port of Newcastle, a fact already known.

The NSW government refuses to deny that its unlegislated “cap on numbers” is a cap on the number of container movements through the Port of Newcastle for which the government does not apply a charge. The purpose of this “cap” and associated charge would be to deter development of a container terminal.

The NSW government pays compensation to NSW Ports, the Port Botany leaseholder, for losing business if a container terminal is developed at the Port of Newcastle. No provision is being made by the government to pay this compensation because the “cap on numbers” will not be extended. The government considers that the “cap on numbers” is adequate for compensating NSW Ports.

A minimum charge of $100 per container is needed in order to compensate NSW Ports, because this is NSW Ports’ average charge at Port Botany.

For a typical container ship carrying 10,000 containers – 5,000 as import and 5,000 as export – the cost of visiting the Port of Newcastle would be at least $1 million more than visiting Port Botany. However, a container terminal will not be developed at the Port of Newcastle on these terms because shipping lines and their customers will not pay an extra $1 million per ship’s visit. Should the “cap on numbers” and a charge on containers at the Port of Newcastle prove to be unlawful, or unenforceable, the commercial impediment to developing a container terminal will be removed.

Only a court can ultimately decide when the NSW government was carrying on a business, as Newcastle Port Corporation (NPC), for the purpose of the “Commonwealth Competition and Consumer Act 2010” (CCA); and, whether a government charge of $100 per container would be lawful under Section 45(2)(b)(ii), which says:

“A corporation shall not give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision has the purpose, or has or is likely to have the effect, of substantially lessening competition.”

The Australian Competition and Consumer Commission enforces the CCA. However, the ACCC advises that it is not taking any enforcement action in relation to confidential  ports’ leasing arrangements based on confidential information supplied by NSW government officials. Presumably, the NSW government informed the ACCC about the “cap on numbers”, a charge on containers, and the date nominated by the NSW government that NPC ceased carrying on a business for the purpose of the CCA.

Doubtless, NPC was carrying on a business for the purpose of the CCA in 2010 when it conducted a public tender for developing a multi-purpose terminal, including a container terminal with minimum capacity of 1 million containers per year, at the Port of Newcastle. For the duration of its negotiations with the successful tenderer, Anglo Ports Pty Ltd, which lasted until November 2013, NPC would have given notification of all changes in its requirements pursuant to the tender. It defies reality that a “cap on numbers” and an associated charge were not notifiable changes.

NPC was still carrying on a business for the purpose of the CCA on 14 December 2011 when the NSW government announced the appointment of Morgan Stanley to conduct a scoping study into leasing Port Botany. One of the instructions given to Morgan Stanley was for the payment of compensation to the future Port Botany leaseholder based on a “cap on numbers” at the Port of Newcastle.

NPC was still carrying on a business for the purpose of the CCA when the NSW government reached agreement with NSW Ports on the terms and conditions of a 99-year lease to Port Botany, on 12 April 2013. Two months later, on 18 June, the NSW government announced its intention to lease the Port of Newcastle, subject to a scoping study. The decision to lease the Port of Newcastle was announced on 5 November 2013.

Mr Gay confirmed that NPC was carrying on a business for the purpose of the CCA when the “cap on numbers” was “in place”:

“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.”

In a statement published on the NSW parliament web site dated 10 February 2015, Anglo Ports said that the NSW government advised of changed requirements pursuant to the tender, on several occasions:

“… the Hon M Baird MP, as Treasurer, by decisions of 30 August 2012 and 26 July 2013 dictated that a container port not proceed at Newcastle. There were other decisions on the container port proposal, including by Mr Baird and by Mr E Roozendaal. There were thus several decisions about the container port proposal capable of being reviewed.”

Anglo Ports did not disclose whether NPC amended the tender to include the “cap on numbers” and any associated fee. It was responding to serious allegations made by NSW Treasury at a Budget Estimates hearing on 22 August 2014.

In a media statement dated 4 March 2015, the NSW government said:

“Newcastle Port Corporation concluded its negotiations with Anglo Ports in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site”.

In response to a Budget Estimates Supplementary Question (no. 29) on 29 September 2015, Ms Berejiklian said:

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

Presumably, Ms Berejiklian meant that Port of Newcastle Investments could develop a container terminal subject to complying with the “cap on numbers”, and any associated charge.

On 31 May 2016, the Australian Competition Tribunal declared the Port of Newcastle shipping channel service. A charge on containers at the Port of Newcastle could be unenforceable should the ACCC arbitrate the port operator’s charge for container ships and deem it to be unreasonable.

The NSW and Australian governments are covering-up a potential breach of the CCA by refusing to disclose whether and when a charge was applied by the NSW government on container movements exceeding a “cap on numbers”; and, the date nominated by the NSW government that NPC ceased carrying on a business for the purpose of the CCA.

The implications for infrastructure development in NSW of this cover-up are extensive, as explained at www.containerterminalpolicyinnsw.com.au, which also contains the references included in this email.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

21 June 2016

Mr Mark Birrell
Chairman
Infrastructure Australia

Dear Mr Birrell,

Does Infrastructure Australia support the NSW government’s “cap on numbers” at the Port of Newcastle?

On 17 October 2013, The Hon Duncan Gay MLC, disclosed to the NSW parliament that a “cap on numbers” was in place at the Port of Newcastle. Although more than 100 Questions On Notice about the “cap on numbers” have been asked in parliament since October 2014, Mr Gay and The Hon Gladys Berejiklian MP, have only advised that there is no legislated cap on container movements at the Port of Newcastle, a fact already known.

The NSW government refuses to deny that its unlegislated “cap on numbers” is a cap on the number of container movements through the Port of Newcastle for which the government does not apply a charge. The purpose of this “cap” and associated charge would be to deter development of a container terminal.

The NSW government pays compensation to NSW Ports, the Port Botany leaseholder, for losing business if a container terminal is developed at the Port of Newcastle. No provision is being made by the government to pay this compensation because the “cap on numbers” will not be extended. The government considers that the “cap on numbers” is adequate for compensating NSW Ports.

A minimum charge of $100 per container is needed in order to compensate NSW Ports, because this is NSW Ports’ average charge at Port Botany.

For a typical container ship carrying 10,000 containers – 5,000 as import and 5,000 as export – the cost of visiting the Port of Newcastle would be at least $1 million more than visiting Port Botany. However, a container terminal will not be developed at the Port of Newcastle on these terms because shipping lines and their customers will not pay an extra $1 million per ship’s visit. Should the “cap on numbers” and a charge on containers at the Port of Newcastle prove to be unlawful, or unenforceable, the commercial impediment to developing a container terminal will be removed.

Only a court can ultimately decide when the NSW government was carrying on a business, as Newcastle Port Corporation (NPC), for the purpose of the “Commonwealth Competition and Consumer Act 2010” (CCA); and, whether a government charge of $100 per container would be lawful under Section 45(2)(b)(ii), which says:

“A corporation shall not give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision has the purpose, or has or is likely to have the effect, of substantially lessening competition.”

The Australian Competition and Consumer Commission enforces the CCA. However, the ACCC advises that it is not taking any enforcement action in relation to confidential  ports’ leasing arrangements based on confidential information supplied by NSW government officials. Presumably, the NSW government informed the ACCC about the “cap on numbers”, a charge on containers, and the date nominated by the NSW government that NPC ceased carrying on a business for the purpose of the CCA.

Doubtless, NPC was carrying on a business for the purpose of the CCA in 2010 when it conducted a public tender for developing a multi-purpose terminal, including a container terminal with minimum capacity of 1 million containers per year, at the Port of Newcastle. For the duration of its negotiations with the successful tenderer, Anglo Ports Pty Ltd, which lasted until November 2013, NPC would have given notification of all changes in its requirements pursuant to the tender. It defies reality that a “cap on numbers” and an associated charge were not notifiable changes.

NPC was still carrying on a business for the purpose of the CCA on 14 December 2011 when the NSW government announced the appointment of Morgan Stanley to conduct a scoping study into leasing Port Botany. One of the instructions given to Morgan Stanley was for the payment of compensation to the future Port Botany leaseholder based on a “cap on numbers” at the Port of Newcastle.

NPC was still carrying on a business for the purpose of the CCA when the NSW government reached agreement with NSW Ports on the terms and conditions of a 99-year lease to Port Botany, on 12 April 2013. Two months later, on 18 June, the NSW government announced its intention to lease the Port of Newcastle, subject to a scoping study. The decision to lease the Port of Newcastle was announced on 5 November 2013.

Mr Gay confirmed that NPC was carrying on a business for the purpose of the CCA when the “cap on numbers” was “in place”:

“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.”

In a statement published on the NSW parliament web site dated 10 February 2015, Anglo Ports said that the NSW government advised of changed requirements pursuant to the tender, on several occasions:

“… the Hon M Baird MP, as Treasurer, by decisions of 30 August 2012 and 26 July 2013 dictated that a container port not proceed at Newcastle. There were other decisions on the container port proposal, including by Mr Baird and by Mr E Roozendaal. There were thus several decisions about the container port proposal capable of being reviewed.”

Anglo Ports did not disclose whether NPC amended the tender to include the “cap on numbers” and any associated fee. It was responding to serious allegations made by NSW Treasury at a Budget Estimates hearing on 22 August 2014.

In a media statement dated 4 March 2015, the NSW government said:

“Newcastle Port Corporation concluded its negotiations with Anglo Ports in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site”.

In response to a Budget Estimates Supplementary Question (no. 29) on 29 September 2015, Ms Berejiklian said:

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

Presumably, Ms Berejiklian meant that Port of Newcastle Investments could develop a container terminal subject to complying with the “cap on numbers”, and any associated charge.

On 31 May 2016, the Australian Competition Tribunal declared the Port of Newcastle shipping channel service. A charge on containers at the Port of Newcastle could be unenforceable should the ACCC arbitrate the port operator’s charge for container ships and deem it to be unreasonable.

The NSW and Australian governments are covering-up a potential breach of the CCA by refusing to disclose whether and when a charge was applied by the NSW government on container movements exceeding a “cap on numbers”; and, the date nominated by the NSW government that NPC ceased carrying on a business for the purpose of the CCA.

The implications for infrastructure development in NSW of this cover-up are extensive, as explained at www.containerterminalpolicyinnsw.com.au, which also contains the references included in this email.

Yours faithfully,

Greg Cameron

0456819602
www.containerterminalpolicyinnsw.com.au

Copy: The Hon Gladys Berejiklian MP; The Hon Duncan Gay MLC; Mr Tim Crakanthorp MP; The Hon Dr Mehreen Faruqi MLC; Mr Rod Sims, ACCC; Port of Newcastle Investments; NSW Ports

21 June 2016

Ms Margaret Crawford
NSW Auditor-General
email: barry.underwood@audit.nsw.gov.au

Dear Ms Crawford,

On 17 October 2013, The Hon Duncan Gay MLC disclosed to parliament that a “cap on numbers” was in place at the Port of Newcastle.

Do you know what this “cap on numbers” is?

Despite more than 100 Questions On Notice in the parliament since October 2014, the government refuses to explain what the “cap on numbers” is. Mr Gay and The Hon Gladys Berejiklian MP state that there is no legislated cap on container movements at the Port of Newcastle. This disclosure about what the “cap on numbers” isn’t doesn’t explain what it is. Also, the parliament is well aware that it has passed no legislation capping container movements at the Port of Newcastle.

In the interest of ensuring that the parliament is properly informed, will you ask the government to explain what the “cap on numbers” is?

The government is not putting any funds in place for paying compensation to NSW Ports for loss of business to the Port of Newcastle. The reason given is that the “cap on numbers” will not be extended. The government, obviously, expects that the “cap on numbers” will not be exceeded. At the same time, the government must have a source of funds for paying compensation should the “cap on numbers” be exceeded.

The government refuses to deny applying a charge on container movements that exceed the “cap on numbers”. If the government does not apply a charge on container movements at the Port of Newcastle above the cap, there is no obvious source of funds for paying compensation to NSW Ports.

In order to compensate NSW Ports, a charge of $100 per container would need to be applied because this is NSW Ports’ average charge at Port Botany. For a typical container ship carrying 10,000 containers – 5,000 as import and 5,000 as export – the cost of visiting the Port of Newcastle would be at least $1 million more than visiting Port Botany.

There is no container terminal at the Port of Newcastle. A container terminal will not be built because container shipping lines, and their customers, will not pay $1 million more per visit compared with Port Botany. This indeed is the purpose of the government’s “cap on numbers”.

A charge on containers at the Port of Newcastle may breach Section 45(2)(b)(ii) of the “Commonwealth Competition and Consumer Act 2010” (CCA), which says: “A corporation shall not give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision has the purpose, or has or is likely to have the effect, of substantially lessening competition.”

Should the “cap on numbers” and a charge on containers at the Port of Newcastle prove to be unlawful under the CCA, the commercial impediment to developing a container terminal will be removed. Without a charge, the government has no source of funds for paying compensation to NSW Ports. If a container terminal is developed at the Port of Newcastle and NSW Ports loses business as a result, the cost to the state budget could be significant.

One anticipates that the office of the Auditor-General is responsible to the parliament for seeking out areas where the state is exposed to significant financial risk.

Only a court can ultimately decide if a government charge of $100 per container at the Port of Newcastle would be lawful under Section 45. In terms of jurisdiction, the CCA applies to the NSW government while the government carries on business for the purpose of the CCA. Only a court can ultimately decide when Newcastle Port Corporation (NPC) was carrying on a business for the purpose of the CCA.

The Australian Competition and Consumer Commission enforces the CCA. However, the ACCC advises that it is not taking any enforcement action in relation to the ports’ leasing arrangements based on confidential information supplied by NSW government officials. Presumably, the NSW government informed the ACCC in confidence about the “cap on numbers”, a charge on containers, and, the date nominated by the NSW government that NPC ceased carrying on a business for the purpose of the CCA.

Doubtless, NPC was carrying on a business for the purpose of the CCA in 2010 when it conducted a public tender for developing a multi-purpose terminal, including a container terminal with minimum capacity of 1 million containers per year, at the Port of Newcastle. NPC would have notified Anglo Ports Pty Ltd, as the successful tenderer, of any change in its requirements pursuant to this tender during negotiations.

Doubtless, NPC was still carrying on a business for the purpose of the CCA on 14 December 2011 when the NSW government announced the appointment of Morgan Stanley to conduct a scoping study into leasing Port Botany. One of the instructions given to Morgan Stanley was paying compensation to the future Port Botany leaseholder based on a “cap on numbers” at the Port of Newcastle.

Doubtless, NPC was still carrying on a business for the purpose of the CCA when the NSW government reached agreement with NSW Ports on the terms and conditions of a 99-year lease to Port Botany on 12 April 2013 . Two months later, on 18 June, the NSW government announced its intention to lease the Port of Newcastle, subject to a scoping study. The decision to lease the Port of Newcastle was announced on 5 November 2013.

In a statement published on the NSW parliament web site dated 10 February 2015, Anglo Ports said that the NSW government advised of changed requirements pursuant to the tender, on several occasions: “… the Hon M Baird MP, as Treasurer, by decisions of 30 August 2012 and 26 July 2013 dictated that a container port not proceed at Newcastle. There were other decisions on the container port proposal, including by Mr Baird and by Mr E Roozendaal. There were thus several decisions about the container port proposal capable of being reviewed.” Anglo Ports did not disclose whether NPC amended the tender to include the “cap on numbers”.

Anglo Ports was responding to serious allegations made by NSW Treasury at a Budget Estimates hearing on 22 August 2014.

In a media statement dated 4 March 2015, the NSW government said: “Newcastle Port Corporation concluded its negotiations with Anglo Ports in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site”. In response to a Budget Estimates Supplementary Question on 29 September 2015, Ms Berejiklian said: ”I am advised that the lessee could develop a container terminal at the Port of Newcastle if it wished to do so.”

Presumably, Ms Berejiklian meant that Port of Newcastle Investments could develop a container terminal subject to complying with the “cap on numbers”.

Mr Gay advised the parliament on 17 October 2013 that the “cap on numbers” at the Port of Newcastle was in place “before it [the government] indicated it would lease the port at the stage when Newcastle Port Corporation was in place”. It is unclear whether Mr Gay was referring to the leasing of the Port of Newcastle or of Port Botany. Either way, this was an admission by Mr Gay that NPC was still carrying on a business for the purpose of the CCA when the “cap on numbers” was “in place”.

In May 2016, the Australian Competition Tribunal declared the Port of Newcastle shipping channel service. A charge on containers at the Port of Newcastle could be unenforceable if the ACCC was asked to arbitrate the reasonableness of the port operator’s charge, especially if the charge included a government charge of $100 per container. Should a charge on containers prove to be both unlawful and unenforceable, the NSW government would be exposed to a significant unbudgeted cost.

This matter is able to be resolved if the government will explain what the “cap on numbers” is – and whether a charge is applied on containers for exceeding this cap; and, if the government will disclose the date that it nominated as being the date that NPC ceased carrying on a business for the purpose of the CCA.

Currently, the NSW and Australian governments are covering-up a potential breach of the CCA by the NSW government.

Yours faithfully,

Greg Cameron

www.containerteminalpolicyinnsw.com.au

Copy: The Hon Gladys Berejiklian MP; The Hon Duncan Gay MLC; GPSC No.1; GPSC No.2; Mr Tim Crakanthorp MP; The Hon Shaoquett Moselmane MLC; Mr Rod Sims, ACCC; Port of Newcastle Investments; NSW Ports

20 June 2016

The Hon Malcolm Turnbull MP
The Hon Bill Shorten MP
The Hon Mike Baird MP
Mr Luke Foley MP
Senator Dr Richard Di Natale
The Hon Dr Mehreen Faruqi MLC

Dear Lady and Gentlemen,

Australian and NSW governments cover-up potential breach of Competition Act

It is an abuse of the Australian political system that the NSW and Australian governments should withhold information that would allow a court to determine whether a Commonwealth Act was breached by a state government.

It is unlawful under the “Commonwealth Competition and Consumer Act 2010” (CCA) for a corporation to substantially lessen competition in a market. Only a court can ultimately determine if a NSW government charge on containers at the Port of Newcastle breached the CCA; and, if the NSW government was carrying on business for the purpose of the CCA.

NSW Ports reached agreement with the NSW government to lease Port Botany on 12 April 2013. On 17 October 2013, the government disclosed that the lease included a compensation agreement. NSW Ports is compensated for loss of business when container ships use the Port of Newcastle instead of Port Botany.

No amount of compensation is justified.

But the amount is confidential. Most probably, it is $100 per container because NSW Ports charges an average $100 per container at Port Botany. The NSW government refuses to disclose its source of funds for paying compensation to NSW Ports. The government refuses to deny that a charge on containers at the Port of Newcastle is this source. A charge would exclude general cargo ships because containers are not carried on these ships at Port Botany.

On 14 December 2011, the government instructed Morgan Stanley to undertake a scoping study into leasing Port Botany. The government’s instructions included the compensation payment to NSW Ports. These instructions must have included the government’s source of funds for paying this compensation.

The NSW government stated that no funds are being set aside for paying compensation to NSW Ports because the government’s “cap on numbers” at the Port of Newcastle will not be extended. The government refuses to explain the meaning of “cap on numbers”. Almost certainly it means the number of containers for which the NSW government does not charge $100 per container. More than 100 Questions On Notice have been asked in the NSW parliament since October 2014 seeking details of this “cap on numbers”, but without success.

Container ships do not use the Port of Newcastle because there is no container terminal. A typical container ship carries 10,00 containers – 5,000 import and 5,000 export. It would cost a container ship $1 million more to visit the Port of Newcastle compared with Port Botany, making the Port of Newcastle commercially unviable for building a container terminal.

The NSW government was negotiating with Anglo Ports Pty Ltd between 2010 and November 2013 to develop a multi-purpose terminal at the Port of Newcastle pursuant to a tender conducted by the government-owned Newcastle Port Corporation (NPC). Included in this tender was a container terminal with minimum capacity of 1 million containers per year. NPC was required to amend this tender to include any charge on containers immediately upon being informed by the NSW government.

NPC was carrying on a business for the purpose of the CCA. NPC ceased carrying on this business on a particular date. To potentially breach the CCA, the NSW government, as NPC, had to be carrying on business for the purpose of the CCA when it applied a charge on containers.

The NSW and Australian governments are covering-up a potential breach of the CCA by refusing to confirm or deny that there is a charge on containers at the Port of Newcastle; and, by refusing to provide the date nominated by the NSW government as to when NPC ceased carrying on a business for the purpose of the CCA.

Is this abuse of the political system acceptable to Australia’s three major political parties?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: NSW MPs; Port of Newcastle Investments; NSW Ports; Media

13 June 2016

 

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Sims,

The NSW government agreed to lease Port Botany and Port Kembla to “NSW Ports” on 12 April 2013, and agreed to lease the Port of Newcastle to “Port of Newcastle Investments” on 30 April 2014.

Under its agreement, NSW Ports is paid financial compensation by the NSW government for loss of business arising from container ships using the Port of Newcastle. The NSW government is unable to fund this compensation without applying a charge on containers transported on container ships at the Port of Newcastle. It is not the government’s intention to fund compensation for NSW Ports from any other source because the government’s sole purpose in leasing the ports was to raise new capital.

On 12 April 2013, the operator of the Port of Newcastle was Newcastle Port Corporation. At that time, the NSW government had not decided to lease the Port of Newcastle. Consequently, the government’s decision to fund compensation payable to NSW Ports was within the scope of the ACCC’s jurisdiction. It defies reality that a charge on containers transported on container ships at the Port of Newcastle did not breach the “Competition and Consumer Act 2010” as at 12 April 2013.

On 12 April 2013, Newcastle Port Corporation was still negotiating with Anglo Ports Pty Ltd pursuant to a tender conducted in 2010 to fund, build and operate a multi-purpose terminal, including a 1 million TEU per year capacity container terminal, at the Port of Newcastle. Under the contract conditions of the tender, Newcastle Port Corporation would have been legally obliged to include any charge as an amendment to the terms and conditions. Thus any change was within the jurisdiction of the ACCC.

The NSW government refuses to confirm or deny applying a charge of approximately $100 per container for containers transported on container ships at the Port of Newcastle. Unless the port operator has agreed to pay this charge, the government has no source of funds for compensating NSW Ports. Unless the port operator passes on this charge to shipping lines, or stevedore tenants, it must pay the charge itself. Under all of these circumstances, a charge of $100 per container makes it commercially unviable to build and operate a container terminal because the cost of transporting containers through the port is uncompetitive compared with Port Botany.

The average charge by NSW Ports at Port Botany is $100 per container and there is no equivalent government charge.

In a media statement dated 4 March 2015 to The Newcastle Herald, NSW Treasury said the government was negotiating with Anglo Ports until November 2013:

“Newcastle Port Corporation concluded its negotiations with Anglo Ports in November 2013 after it was unable to reach a suitable outcome for the redevelopment of the Mayfield site.”

Anglo Ports publicly disclosed that it was negotiating with Newcastle Port Corporation in a statement published on the NSW parliament web site dated 10 February 2015. This statement was issued in response to an answer given by the NSW Treasurer to a question in Budget Estimates on 22 August 2014, which answer Anglo Ports said “conflates the proposal of Anglo Ports or its consortium with government dictation, with uneconomic enterprises, with the absence of market demand, with influence peddling and with corruption.” Anglo Ports “categorically denied” the accusations.

The government announced its intention to lease the Port of Newcastle, subject to a scoping study, on 18 June 2013. The Hon Mike Baird MP, then Treasurer, said in his budget speech to NSW parliament:

“Today I can announce the Government intends to proceed to a long-term lease of the Port of Newcastle, the largest coal port in the world, subject to a scoping study.”

Mr Baird announced the government’s decision on 5 November 2013:

“The NSW Government will proceed with the long-term lease of the Port of Newcastle to fund the revitalisation of central Newcastle and priority infrastructure across NSW, Treasurer Mike Baird and Ports Minister Duncan Gay announced today.”

On 6 August 2015, the ACCC issued the following media statement to Lloyd’s List Australia:

“As a general statement, the Competition and Consumer Act applies to the conduct of Commonwealth and State governments to the extent those governments are carrying on business. To the extent they are carrying on business, any restrictions imposed by them which have the purpose or effect of substantially lessening competition in a relevant market could give rise to a contravention of the CCA and could be subject of enforcement action taken by the ACCC.

“If a state government makes a decision to sell or lease assets subject to certain conditions this conduct is currently likely to be largely outside of the scope of the ACCC’s jurisdiction.

“The ACCC was provided with information by NSW Government officials relating to the NSW Ports transaction on the basis that we would keep that information confidential. The ACCC reviewed and assessed the relevant information that was available at that time and decided not to pursue the matter by way of any enforcement action.”

Would you answer the following questions, please:

On which date did the ACCC become aware that Newcastle Port Corporation was actively negotiating with Anglo Ports Pty Ltd, as at 12 April 2013?

Was the NSW government “carrying on business” as Newcastle Port Corporation for the purpose of the “Competition and Consumer Act 2010”, as at 12 April 2013?

Did the NSW government apply a charge on containers transported on container ships at the Port of Newcastle, as at 12 April 2013?

If not, what was the NSW government’s source of funds for paying compensation to NSW Ports in relation to containers transported on container ships at the Port of Newcastle, as at 12 April 2013?

On which date did the NSW government make a decision to lease the Port of Newcastle such that the government’s conduct thereafter was “outside the scope of the ACCC’s jurisdiction”?

On which date was the ACCC provided with information by NSW Government officials relating to the NSW Ports transaction on the basis that that information would be kept confidential?

Yours faithfully,

Greg Cameron

0456819602
www.containerterminalpolicyinnsw.com.au

Copy: Mr Tim Crakanthorp MP; The Hon Gladys Berejiklian MP; Lloyd’s List Australia; Newcastle Herald; Port of Newcastle Investments; NSW Ports

9 June 2016

 

From: Infocentre Public Mailbox [mailto:info.centre@accc.gov.au]
Sent: Monday, 22 August 2016 2:57 PM
To: REF1929180 Greg Cameron
Subject: ACCC Response (Reference : REF1929180) [SEC=UNCLASSIFIED]

Dear Mr Cameron

I refer to your letter to the Chairman of the ACCC dated 9 June 2016. I apologise for the delay in responding. Your reference number for this matter is REF1929180.

In response, we refer you to the ACCC’s previous correspondence to you from Marcus Bezzi in relation to this matter. As previously advised by Mr Bezzi on a number of occasions, the ACCC is not in a position to provide you with further information.

Please see our website for more information about the ACCC.

Yours sincerely

Kellie

Public Information Officer | Infocentre
Australian Competition and Consumer Commission
23 Marcus Clarke Street Canberra 2601 | www.accc.gov.au
T: 1300 302502
@acccgovau  ACCCConsumerrights

Mr Richard Home
Executive Director
Australian Competition Council
by email

Dear Mr Home,

Would the Australian Competition Council (ACC) please invite the NSW government, as the owner of the Port of Newcastle, to confirm or deny that the government charges Port of Newcastle Operations Pty Ltd (PNO), the port operator, approximately $100 per container for containers carried on container ships using the port’s shipping channel service? Will the ACC also request the date nominated by the NSW government as to when Newcastle Port Corporation ceased carrying on a business for the purpose of the “Competition and Consumer Act 2010” (CCA)?

A government charge on containers carried on container ships at the Port of Newcastle may be unlawful under Section 45(2)(b) of the CCA if Newcastle Port Corporation was carrying on a business for the purpose of the CCA when the charge, if it exists, was applied. A charge, if it exists, could be unenforceable if found to be unreasonable by the Australian Competition and Consumer Commission arbitrating charges as a result of the shipping channel service being declared.

Please note that unless the NSW government charges PNO, it has no source of funds, apart from consolidated revenue, for paying financial compensation to NSW Ports, the Port Botany leaseholder, for loss of business due to container ships using the Port of Newcastle.

While the Australian Competition Tribunal decided that the Port of Newcastle shipping channel service should be declared with reference to coal ships, it is noted that the Australian government has previously indicated its intention to adopt recommendation 8.1 contained in the “Productivity Commission National Access Regime Inquiry Report No. 66, 25 October 2013”, which states:

“The Australian Government should amend paragraphs 44G(2)(a) and 44H(4)(a) of the Competition and Consumer Act 2010 (Cwlth) such that criterion (a) becomes a comparison of competition with and without access on reasonable terms and conditions through declaration.”

It is possible that the Tribunal’s decision on 31 May 2016 that the service should be declared would be overturned by adoption of the proposed revision. If so, an application for a declaration of the shipping channel service with reference to container ships cannot be made until PNO sets a charge on container ships. However, no charge has been set by PNO because, without a container terminal, container ships do not visit the port. The purpose of a government charge of $100 per container, obviously, would be to make it uneconomical to build a container terminal because there would be no demand for the container terminal service. For a typical container ship of 5,000 containers capacity, the cost of a visit to the Port of Newcastle would be $1 million more than visiting Port Botany.

Your attention is drawn to the following statements by the ACCC:

25 June 2014:

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

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

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

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

30 October 2014:

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

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

26 November 2014:

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

  • Sydney airport – where the Commonwealth government leased Sydney Airport with the right of first refusal to operate a second Sydney airport at Badgery’s Creek.
  • Ports Botany and Kembla and the Port of Newcastle – where the NSW government leased the ports with clauses that may restrict Newcastle from competing against Botany and Kembla for container trade.”

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

It is clear that the ACCC’s concerns relate to a (potential) charge on containers at the Port of Newcastle and the application of the CCA to such a charge.

It is an abuse of the political system that the NSW government should refuse to confirm or deny a charge, and to refuse to disclose the date it nominated as to when Newcastle Port Corporation ceased carrying on a business for the purpose of the CCA.

One expects the Australian Competition Council is not party to such abuse.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: The Hon Gladys Berejiklian MP; Mr Rod Sims, ACCC; Mr Tim Crakanthorp MP; Port of Newcastle Operations; NSW Ports; media

8 June 2016

The Hon Scott Morrison MP
Treasurer
Email: http://www.treasury.gov.au/Forms/Ministerial-Correspondence

Dear Treasurer,

In order for you to apply the “Competition and Consumer Act 2010” (the Act) to the NSW government, you must establish that a business is being carried on for the purpose of the Act.

Did you establish that the NSW government was carrying on a business for the purpose of the Act at the Port of Newcastle?

If yes, did you establish when the NSW government ceased carrying on this business?

Do you have knowledge of the NSW government applying a charge on containers at the Port of Newcastle?

If yes, on what date was this charge applied?

Unless the NSW government applies a charge on containers at the Port of Newcastle, it has no source of funds, apart from consolidated revenue, for paying compensation to NSW Ports. A government charge creates a financial deterrent for container ships to use the Port of Newcastle because there is no government charge at Port Botany. It defies reality that a charge on containers at the Port of Newcastle would not breach Section 45 of the Act, which makes it unlawful for a corporation to lessen competition in a market.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: NSW MPs; Media; Port of Newcastle Investments; NSW Ports

26 May 2016

The Hon Malcolm Turnbull MP
Prime Minister

The Hon Scott Morrison MP
Treasurer of the Commonwealth of Australia

Dear Mr Turnbull and Mr Morrison,

Does the Australian government have knowledge of the NSW government applying a charge on containers at the Port of Newcastle?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: The Hon Barnaby Joyce MP; The Hon Bill Shorten MP; Mr Tony Windsor; Mr Luke Foley MP; NSW MPs; Media; ACCC; Port of Newcastle Investments; NSW Ports

18 May 2016

The Hon Mike Baird MP
Premier, and
Minister for Western Sydney

The Hon Gladys Berejiklian MP
Treasurer, and
Minister for Industrial Relations

The Hon Duncan Gay MLC
Minister for Roads, Maritime and Freight

Dear Mr Baird, Ms Berejiklian and Mr Gay,

Does the NSW government apply a charge on containers at the Port of Newcastle?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: The Hon Malcolm Turnbull MP; The Hon Barnaby Joyce MP; The Hon Bill Shorten MP; Mr Tony Windsor; Mr Luke Foley MP; NSW MPs; Media; ACCC; Port of Newcastle Investments; NSW Ports

18 May 2016

The Hon Barnaby Joyce MP
Member for New England
Deputy Prime Minister, and
Minister for Water Resources

Dear Mr Joyce,

Do you support a container terminal at the Port of Newcastle for the economic benefits it would bring to the New England electorate?

As you know, the Australian government is responsible for implementing its own legislation, which includes the “Competition and Consumer Act 2010” (CCA). The Australian government refuses to confirm or deny that the NSW government applies a charge on containers at the Port of Newcastle. Such a charge would probably breach Section 45 of the CCA, which makes it unlawful for a corporation to lessen competition in a market. The CCA applied to the NSW government while it was carrying on a business at the Port of Newcastle as “Newcastle Port Corporation”.

The Australian government is failing to implement the CCA by refusing to disclose if it has any knowledge about a charge on containers at the Port of Newcastle. Would you ask your National Party colleague, The Hon Duncan Gay MLC, Minister for Roads, Maritime and Freight, if the NSW government applies a charge on containers? However, should Mr Gay refuse to answer the question on grounds of confidentiality, this will be consistent with the NSW government’s refusal to confirm or deny there is a charge.

Without a charge, the NSW government will be required to pay compensation to NSW Ports from consolidated revenue. This compensation is payable when container ships use the Port of Newcastle instead of Port Botany and container movements exceed 30,000 per year, increased annually for a margin the government calls “organic growth”. Over the remaining 96 years of the Port Botany lease, the amount of compensation could easily exceed the amount raised from selling the lease. If the charge on containers is unlawful, or unenforceable, the government will be forced to pay compensation from consolidated revenue. However, the real purpose of a charge is to make it commercially unviable for Port of Newcastle Investments to build a container terminal in the first place.

A container terminal at the Port of Newcastle would provide the cargo for building a rail freight bypass of Sydney, between Newcastle and Glenfield. Containers would be handled by new intermodal terminals that would be built along this line. This new line would not take-in Moorebank and therefore the new intermodal terminals would compete with the intermodal terminal at Moorebank proposed by the Australian government and supported by the NSW government. This is one of the reasons why neither government will admit to a charge on containers at the Port of Newcastle.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.su
0456819602

Copy: The Hon Duncan Gay MLC; Mr Tony Windsor; Mr Tim Crakanthorp MP; Ms Charon Claydon MP; Mr Craig Kelly MP; Ms Melanie Gibbons MP; Port of Newcastle Investments; NSW Ports; ACCC; Media

16 May 2016

The Hon Bill Shorten MP
Leader of the Opposition

Dear Mr Shorten,

Will you ask The Hon Mike Baird MP to confirm or deny that the NSW government applies a charge on containers at the Port of Newcastle?

It is probable that a charge would breach Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA), which makes it unlawful for a corporation to lessen competition in a market. The CCA applies to a government while that government is carrying on a business for the purpose of the CCA. The NSW government was carrying on such a business as “Newcastle Port Corporation”.

Unless the NSW government applies a charge, compensation payable to NSW Ports when container ships use the Port of Newcastle instead of Port Botany, will be paid from consolidated revenue. Should a charge prove to be unlawful, or unenforceable, the NSW government will pay compensation that could easily exceed the amount raised from leasing Port Botany. However, the real purpose of a charge is to make it commercially unviable for Port of Newcastle Investments to develop a container terminal at all. The existence of a charge would be proof of irresponsible and reckless economic management by the NSW government.

Every Australian should be concerned when the Australian government refuses to apply its own legislation to the actions of the NSW government. Equally concerning is that the Australian government should condone the NSW government’s economic management.

Either there is a charge or there isn’t one. Will you find out?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: The Hon Malcolm Turnbull MP; The Hon Mike Baird MP; NSW MPs; ACCC; Media; Port of Newcastle Investments; NSW Ports

15 May 2016

The Hon Malcolm Turnbull MP
Prime Minister of Australia

Dear Prime Minister,

I allege that the NSW government applies a charge on containers at the Port of Newcastle and that the Australian government does not ask the NSW government to publicly confirm or deny there is a charge because a charge may breach Section 45 of the “Commonwealth Competition and Consumer Act 2010” (CCA). Section 45 makes it unlawful for a corporation to lessen competition in a market.

The CCA applies to a government while that government is carrying on a business for the purpose of the CCA. The NSW government was carrying on a business for the purpose of the CCA at the Port of Newcastle as “Newcastle Port Corporation”.

Port of Newcastle Investments can develop a container terminal at the Port of Newcastle if it wishes to do so and the NSW government will pay compensation to NSW Ports if container ships use the Port of Newcastle instead of Port Botany. Without a charge on containers at the Port of Newcastle, the NSW government’s source of funds for paying compensation to NSW Ports is consolidated revenue. Paying compensation to NSW Ports from consolidated revenue means that the NSW government should not have leased the ports in the first place. However, a charge on containers would make a container terminal unable to compete with Port Botany and a container terminal would not be built unless the charge was proven to be unlawful, or unenforceable.

The ACCC was alerted to the possibility of restrictions on containers at the Port of Newcastle only by reading an article in “The Newcastle Herald” dated 11 May 2014. The ACCC sought information from the NSW government and upon receiving that information decided to take no enforcement action. The ACCC refuses to disclose the nature of the information it received from the NSW government because of a confidentiality agreement.

Why do you allow a confidentiality agreement between the ACCC and the NSW government to stand in the way of the Australian government enforcing its own legislation?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

13 May 2016

Copy: NSW MPs; Media; ACCC; Port of Newcastle Investments; NSW Ports

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Sims,

I refer to the ACCC’s decision to take no enforcement action under the “Competition and Consumer Act 2010” (CCA) in relation to leasing arrangements for the Port of Newcastle. The implication of the ACCC’s decision is that the leasing arrangements conform to the CCA to the extent of information supplied by the NSW government confidentially.

At any time, the ACCC is able to ask the NSW government to publicly confirm or deny that the government pays compensation to NSW Ports and imposes a charge on container movements at the Port of Newcastle.

Compensation is payable to NSW Ports when container ships use the Port of Newcastle instead of Port Botany and container movements at the Port of Newcastle exceed 30,000 per year, increasing annually by a margin for what the government terms “organic” growth.

Compensation is not payable to NSW Ports without a container terminal being built at the Port of Newcastle. This is because container ships require a container terminal for loading and unloading containers, and, until a container terminal is built, container ships are unable to use the port.

The government refuses to deny that it’s source of funds for compensating NSW Ports is a charge on container movements at the Port of Newcastle. In order to fully compensate NSW Ports this charge is estimated to be $100 per container, which is the average charge applied by NSW Ports at Port Botany.

The government’s charge of approximately $100 per container involves a net charge of $1 million for a typical container ship carrying 5,000 import containers and 5,000 export containers. Container ships will not visit the Port of Newcastle, and therefore a container terminal will not be built, when a single visit costs $1 million more than Port Botany.

The government’s fee is unlawful if it breaches Section 45 of the CCA. Section 45 makes it unlawful for a corporation to lessen competition in a market. The CCA applies to a government when that government is carrying on a business for the purpose of the CCA. The NSW government was carrying on such a business as “Newcastle Port Corporation”. It defies reality that a charge on container movements at the Port of Newcastle conforms to the CCA.

There is no reference to compensation payable to NSW Ports or a container charge at the Port of Newcastle in the ACCC’s “Container Stevedoring Monitoring Report No. 16” dated October 2014, or in the following year’s report, No.17 dated October 2015.

Will this year’s report examine the Port of Newcastle container charge and its consequences?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: NSW MPs; Media; Port of Newcastle Investments; NSW Ports

9 May 2016

The Hon Bill Shorten MP
Leader of the Opposition

Dear Mr Shorten,

Does the Australian government have a responsibility to find out whether the NSW government charges a fee for container movements at the Port of Newcastle for the purpose of enforcing the Commonwealth “Competition and Consumer Act 2010” (CCA)?

A Question Without Notice by The Hon Adam Searle MLC on 17 October 2013 established that the NSW government pays compensation to NSW Ports for container movements at the Port of Newcastle. Without a fee on container movements at the Port of Newcastle, there must be another source of funds for compensating NSW Ports. The government refuses to disclose this source of funds. In the absence of such disclosure, it is presumed that the source of funds is a fee on container movements at the Port of Newcastle.

The average fee NSW Ports charges for container ships using Port Botany is $100 per container. It is presumed that compensation payable to NSW Ports is $100 per container. The government acknowledges that no compensation is payable to NSW Ports for container movements at the Port of Newcastle less than 30,000 per year.

Despite more than 100 Questions On Notice since October 2014, the NSW government refuses to deny that compensation is payable to NSW Ports when container ships use the Port of Newcastle instead of Port Botany and container movements exceed 30,000 per year, increasing annually for “organic” growth.

A typical container ship visiting Port Botany has cargo capacity of 5,000 containers. A visit involves 10,000 import/export container movements. Compensation of $1 million is payable to NSW Ports for a typical ship’s visit to the Port of Newcastle. Shipping lines and stevedores will not use the Port of Newcastle under these circumstances and it is irrational to build a container terminal without demand. However, the NSW government confirms that Port of Newcastle Investments (PONI) could develop a container terminal if it wished to do so.

The NSW government confirms that no funds are being set aside for paying compensation to NSW Ports because there will not be an extension of the number of container movements at the Port of Newcastle for which no fee is charged, until Port Botany and Port Kembla container terminals reach capacity. A container terminal is yet to be built at Port Kembla.

In Australia, it is unlawful for a corporation to lessen competition in a market under Section 45 of the CCA. The CCA applies to a government when that government is carrying on a business for the purpose of the CCA. Newcastle Port Corporation (NPC) was carrying on a business for the purpose of the CCA. NPC ceased carrying on a business for the purpose of the CCA on a specific date. A fee charged for container movements at the Port of Newcastle while NPC was carrying on a business for the purpose of the CCA must conform to the CCA. The NSW government refuses to disclose when the government ceased carrying on a business at the Port of Newcastle for the purpose of the CCA.

It defies reality that a fee charged on container movements at the Port of Newcastle conforms to the CCA.

The ACCC decided to take no enforcement action under the CCA based on its assessment of relevant information provided in confidence by the NSW government. The ACCC does not disclose its reasons for considering certain information to be relevant, or the nature of that information.

The Australian government has a commercial interest in there being no container terminal at the Port of Newcastle. A container terminal would provide a base load of cargo for building a rail freight line between the Port of Newcastle and Glenfield. This line would service new intermodal terminals located in outer western Sydney. These new terminals would compete with the Australian government’s proposed intermodal terminal at Moorebank.

The economic implications of a container terminal at the Port of Newcastle for northern NSW are great. World trade is conducted using containers, with the exception of bulk commodities. For Sydney, a rail freight bypass would enable removing freight from the rail network and facilitate decentralisation of industry. The reason why 85 per cent of containers are delivered within 40 km of Port Botany is because there is no other container port in NSW. It is faster and cheaper to rail containers to intermodal terminals in outer western Sydney for warehousing and distribution than it is to truck one or two containers at a time to a factory or warehouse in inner Sydney. A more beneficial use of Sydney’s rail capacity is 100 per cent for passenger services.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

1 May 2016

Copy: The Hon Malcolm Turnbull MP; NSW MPs; media; Port of Newcastle Investments; NSW Ports

The Hon Malcolm Turnbull MP
Prime Minister of Australia

Dear Prime Minister,

Will you ask The Hon Mike Baird MP, Premier of NSW, to publicly disclose information sufficient for your government to consider whether the NSW government may have breached the Commonwealth “Competition and Consumer Act 2010” (CCA) with respect to container shipping?

Specifically, will you ask Mr Baird to confirm that the NSW government charges Port of Newcastle Investments (PONI) a fee of approximately $100 per container when container ships visit the Port of Newcastle instead of Port Botany, and container movements exceed 30,000 per year, increased annually for “organic” growth? Will you ask the date upon which this fee was applied?

Will you also ask Mr Baird if the NSW government denies carrying on a business, as Newcastle Port Corporation, for the purpose of the CCA; and, the date upon which the government ceased carrying on this business for the purpose of the CCA?

Section 45 of the CCA makes it unlawful for a corporation to lessen competition in a market. A NSW government fee on container movements at the Port of Newcastle may breach Section 45.

Please take into account the fact that despite more than 100 Questions On Notice in the NSW parliament since October 2014, NSW government ministers refuse to deny the government charges a fee on container movements at the Port of Newcastle.

The ACCC has been provided with information by the NSW government in confidence. The ACCC will neither confirm nor deny that the NSW government charges a fee on container movements at the Port of Newcastle. The ACCC is also unable to advise if and when the NSW government was carrying on a business as Newcastle Port Corporation for the purpose of the CCA. It defies reality that the NSW government was not carrying on a business at the Port of Newcastle for the purpose of the CCA.

The NSW government will not extend the number of container movements at the Port of Newcastle for which no compensation is payable to NSW Ports. A fee on container movements may be unlawful, could be unenforceable, or may not exist. In each case, the NSW government does not have a source of funds for paying compensation to NSW Ports. It defeats the purpose of leasing the ports if there is no source of funds for compensating NSW Ports.

Presuming a fee exists, PONI must charge port users or carry the fee itself. The charge for a typical 5,000-capacity container ship is $1 million per visit when the ship is loaded with import and export containers. Shipping Lines or stevedores cannot be expected to use the Port of Newcastle when the cost for a typical ship visit is $1 million more than Port Botany. It is unreasonable to expect a container terminal to be built at the Port of Newcastle under these conditions.

It is not commercially feasible to build a rail freight line between the Port of Newcastle and Glenfield in southwest Sydney, without a container terminal at Newcastle’s port to supply a base load of cargo in the form of containers. Australian government ministers who urge me to provide a detailed business case for this rail freight bypass of Sydney fail to comprehend the relevance of a container terminal.

A container terminal at the Port of Newcastle supported by a rail freight line would require building intermodal terminals in outer western Sydney. These would compete with the Australian government’s proposed Moorebank intermodal terminal.

Therefore, the Australian government has a conflict of interest if the NSW government charges a fee on container movements at the Port of Newcastle. There is a worse conflict of interest if this fee is unlawful and no action is being taken by the Australian government to enforce its own Act.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

30 April 2016

Copy: The Hon Mike Baird MP; Mr Rod Sims, ACCC; NSW MPs; media; Port of Newcastle Investments; NSW Ports

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

Dear Mr Baird,

You are respectfully requested to confirm that the NSW government charges Port of Newcastle Investments (PONI) a fee of approximately $100 per container when container ships visit the Port of Newcastle instead of Port Botany, and container movements exceed 30,000 per year, increased annually for “organic” growth. The fee paid by PONI is used to pay loss of business compensation to NSW Ports. The Hon Gladys Berejiklian MP, Treasurer, and The Hon Duncan Gay MLC, Minister for Roads, Maritime and Freight, both refuse to deny these arrangements are in force.

PONI must charge container ships the amount of the fee or carry the cost itself. The charge for a typical 5,000-capacity container ship is $1 million per visit when the ship is loaded with import and export containers. Shipping Lines cannot be expected to visit the Port of Newcastle when the cost per visit is $1 million more than Port Botany. It is unreasonable to expect a container terminal to be built at the Port of Newcastle under these conditions.

The government’s fee must conform to the Commonwealth “Competition and Consumer Act 2010” (CCA) if applied when the government was carrying on a business for the purpose of the CCA. Under Section 45, it is unlawful for a corporation to lessen competition in a market.

Will you please disclose the date when Newcastle Port Corporation ceased carrying on a business for the purpose of the CCA?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: NSW MPs; Media; ACCC; PONI; NSW Ports

29 April 2016

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

The Hon Gladys Berejiklian MP
Treasurer, and Minister for Industrial Relations

The Hon Duncan Gay MLC
Minister for Roads, Maritime and Freight

Dear Mr Baird, Ms Berejiklian and Mr Gay,

Why does the NSW government compensate NSW Ports, the Port Botany lessee, for container ships using the Port of Newcastle? Compensation is paid by charging the port lessee Port of Newcastle Investments a fee of $100 for every container more than 30,000 per year.

A typical container ship carries 5,000 containers. They will never use the Port of Newcastle, and a container terminal will never be built, while the government charges $1 million per ship visit but nothing at Port Botany. Removing this fee means a rail freight line between the Port of Newcastle and Glenfield, in southwest Sydney, can be built and paid for by railing containers, thus removing container trucks from the roads. Such a line enables freight to be removed from the Sydney rail network so all capacity is for passenger trains. A Newcastle container terminal will boost the NSW economy by enabling regional economic development and encouraging industries to profitably relocate from congested Sydney because there is a low cost rail freight service connected to a container port.

Newcastle Port Corporation was carrying on a business for the purpose of the Commonwealth “Competition and Consumer Act 2010” (CCA) when the container fee was imposed. That is why the government refuses to deny charging a fee, evading more than 100 Questions On Notice in state parliament since October 2014. A court finding this fee unlawful will force the compensation to be paid from consolidated revenue, and remove the impediment to building a container terminal: an own goal.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: MPs; Media

27 April 2016

The Hon Malcolm Turnbull MP
Prime Minister of Australia

Dear Prime Minister,

I refer to the issue of caps and fees at the Port of Newcastle. These are matters for the Australian government, for two reasons.

Firstly, the Australian government’s proposed Moorebank intermodal terminal depends on NSW government market intervention to artificially maintain Port Botany’s monopoly status as the only container port in NSW. Building a container terminal at the Port of Newcastle would justify building a rail freight bypass of Sydney, between the port and Glenfield, and using container freight to pay for it. There would be no need to rail freight through Sydney and all rail capacity would be used for passenger services. An intermodal terminal at Moorebank could not operate without a rail freight service.

Secondly, a fee on container movements at the Port of Newcastle is likely to breach Section 45 of the Commonwealth “Competition and Consumer Act 2010” (CCA). Section 45 makes it unlawful for a corporation to lessen competition in a market.

The NSW government pays compensation to NSW Ports for loss of business and refuses to deny that its source of funds is a fee charged on container movements at the Port of Newcastle. This fee is presumed to be $100 per container, which is the average fee charged by NSW Ports at Port Botany. It applies when container movements exceed 30,000 per year from container ships using the Port of Newcastle instead of Port Botany. A typical container ship visiting Port Botany carries 5,000 containers. When a container ship, fully loaded inbound and outbound, visits the Port of Newcastle, the government fee charged is $1 million. Container shipping lines will not use the Port of Newcastle when a visit costs $1 million more than Port Botany. Consequently, a container terminal will not be built at the Port of Newcastle and Port Botany will retain its monopoly status.

Newcastle Port Corporation (NPC) was carrying on a business for the purpose of the CCA. However, the Australian Competition and Consumer Commission does not disclose the date upon which NPC ceased carrying on this business. In order to enforce the CCA, the ACCC must know when the CCA applied. The ACCC decided to take no enforcement action based on information provided by the NSW government in confidence. When the NSW government publicly discloses a fee and the date when NPC ceased carrying on a business for the purpose of the CCA, the ACCC’s decision can be examined. The ACCC is now aware that the NSW government was negotiating with Anglo Ports Pty Ltd until November 2013 pursuant to a tender conducted by NPC in 2010.

The NSW and Australian governments have a clear conflict of interest. Until this is resolved, one does not anticipate impartial treatment from either government for making a detailed submission proposing a rail freight bypass based on a container terminal at the Port of Newcastle.

Before proceeding further with the proposed Moorebank intermodal terminal, will you please acknowledge that the NSW government charges a fee on container movements at the Port of Newcastle, and will you please take the necessary steps to establish whether this fee is lawful and enforceable under Commonwealth legislation?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

25 April 2016

Copy: NSW MPs; media; Mr Rod Sims, ACCC

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

The Hon Gladys Berejiklian MP,
Treasurer, and Minister for Industrial Relations

The Hon Duncan Gay MLC
Minister for Roads, Maritime and Freight

Dear Mr Baird, Ms Berejiklian and Mr Gay,

I refer to my letter dated 18 April 2016 in relation to government compensation payable to NSW Ports and the significant risk this presents to future government finances when compensation is unfunded.

Compensation is payable to NSW Ports when container ships use the Port of Newcastle instead of Port Botany, and container movements at the Port of Newcastle exceed the number for which no compensation is payable.

In relation to “caps”, Mr Gay disclosed on 17 October 2013 that the government “capped” the number of container movements at the Port of Newcastle for which no compensation is payable, and, this “cap” was included in the Port Botany lease. To be perfectly clear, there is no “cap”, legislated or unlegislated, on the number of containers that can travel through the Port of Newcastle and the lessee, Port of Newcastle Investments (PONI), could develop a container terminal if it wished to do so.

NSW Ports paid the government $5.1 billion for 99 year leases to Port Botany and Port Kembla. All of these funds are being expended and consolidated revenue is not the government’s source of funds for compensating NSW Ports. The government does not deny charging a fee on container movements at the Port of Newcastle to fund compensation payable to NSW Ports.

The government’s fee on container movements at the Port of Newcastle was imposed while Newcastle Port Corporation (NPC) was carrying on a business for the purpose of the Commonwealth “Competition and Consumer Act 2010” (CCA). Section 45 of the CCA makes it unlawful for a corporation to lessen competition in a market. The government’s fee on container movements would almost certainly breach Section 45.

NSW Ports charges shipping lines an average fee of $100 per container to use Port Botany. The fee the government would need to charge PONI to compensate NSW Ports is $100 per container. Shipping lines will not use the Port of Newcastle if a container terminal is developed and it costs $200 per container to use the port. Consequently, the government’s fee on container movements at the Port of Newcastle is the impediment to developing a container terminal.

Shipping lines will use the Port of Newcastle if the cost is competitive with NSW Ports.

Presuming the government’s fee on container movements at the Port of Newcastle is unlawful, the government will be obliged to fund compensation for NSW Ports from consolidated revenue, thereby making the leasing of Port Botany a worthless exercise and imposing a significant financial burden on taxpayers when NSW Ports starts losing business, as it most surely will.

My questions are:

What is the number of container movements at the Port of Newcastle for which no compensation is payable to NSW Ports?

What is the government’s source of funds for compensating NSW Ports?

Did the government apply a fee on container movements at the Port of Newcastle?

If so, when?

When did Newcastle Port Corporation cease carrying on a business for the purpose of the Commonwealth Competition and Consumer Act 2010?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

20 April 2016

Copy: MPs; media; Mr Rod Sims, Chairman, ACCC; Port of Newcastle Investments; Mr Michael Hanna, IFM Investors; Mr Steve Bracks, Chairman, Cbus Super

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

Mr Rod Sims
Chairman
Australian Competition and Consumer Commission

Dear Mr Baird and Mr Sims,

Would you please advise the dates when the “Competition and Consumer Act 2010” (CCA) applied to the NSW government in respect of Newcastle Port Corporation (NPC)?

It is expected that the government and the ACCC agree that the CCA did apply and stopped applying on a specific date. However, if the government and the ACCC disagree as to whether, or when, the CCA applied, they are concealing this fact. This would be contrary to the public interest.

Unless the parties disagree, it is the case that the CCA applied as at November 2013 when negotiations terminated between the government and Anglo Ports Pty Ltd pursuant to a tender conducted by NPC in 2010. The CCA would have applied to any fee charged by the government for container movements at the Port of Newcastle at that time.

In 2010, NPC called for public tenders to develop a multi-purpose terminal, including a container terminal with minimum capacity of 1 million per year, on the former Newcastle steelworks site. Anglo Ports’ proposal was accepted. The government was legally obliged to inform the company of any change to its requirements pursuant to the tender. A fee on container movements would have been a major change to the government’s requirements and should have been advised.

Anglo Ports said it did not withdraw its proposal in a statement published on the NSW parliament web site dated 10 February 2015.

A government fee charged on any container movements at the Port of Newcastle would probably breach Section 45 of the CCA. Only a court can ultimately determine whether the CCA was breached.

The ACCC does not acknowledge that the NSW government pays compensation to NSW Ports for container movements at the Port of Newcastle. Consequently, the ACCC makes no comment on the possibility of a fee on container movements at the Port of Newcastle being the government’s source of funds for paying this compensation.

Should the ACCC acknowledge that compensation is payable, and that the source of funds is not consolidated revenue, the ACCC is obliged to satisfy itself whether the source of funds is a fee and whether this fee complies with the CCA.

NSW Ports paid the government $5.1 billion in April 2013 for 99-year leases to Port Botany and Port Kembla. These funds are for implementing government election promises. Consolidated revenue is not used for compensating NSW Ports because this would defeat the purpose of leasing the ports.

The government refuses to disclose its source of funds for compensating NSW Ports. This source of funds is presumed to be a fee on container movements at the Port of Newcastle. The government refuses to deny charging a fee.

NSW Ports is paid compensation for container movements at the Port of Newcastle. Details are confidential. However, payment is linked to a so-called “cap on numbers” at the Port of Newcastle. The Hon Duncan Gay MLC disclosed this “cap on numbers” to parliament on 17 October 2013. Despite more than 100 parliamentary Questions On Notice since October 2014, Mr Gay and The Treasurer, The Hon Gladys Berejiklian MP, refuse to disclose any details.

Port of Newcastle Investments (PONI) paid the government $1.75 billion in April 2014 for a 98-year lease to the port. Included in this lease is the site of the former BHP Newcastle steelworks, still vacant.

NSW Ports charges shipping lines an average fee of $100 per container to use Port Botany. NSW Ports would lose business at the rate of $100 per container when shipping lines diverted to the Port of Newcastle. Consequently, compensating NSW Ports would involve the government charging PONI $100 per container. Presumably, the “cap on numbers” at the Port of Newcastle is the number of container movements for which no fee is charged and no compensation is payable.

There will be no extension of the “cap on numbers” until Port Botany and Port Kembla container terminals reach capacity. A container terminal is yet to be built at Port Kembla.

There is no provision in the NSW state budget for paying compensation. Compensating NSW Ports, obviously, is self-funding by charging PONI $100 per container, providing the charge is lawful.

There is no container terminal at the Port of Newcastle. Should one be built, shipping lines are highly unlikely to use it and pay double the price charged at Port Botany.

Should a fee prove to be unlawful, the impediment to developing a container terminal, obviously, is removed. Planning conditions of approval for a 1-million per year capacity container terminal were given in 2012.

There is no cap, legislated or unlegislated, on the number of containers that can travel through the Port of Newcastle and PONI can develop a container terminal if it wished to do so.

It would be appreciated if the government and the ACCC, either jointly or separately, would provide the dates when the CCA applied to the government in respect of NPC.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

18 April 2016

Copy: NSW MPs; media

To: Members of the New South Wales Parliament

Dear Members,

What is the government’s source of funds for paying compensation to NSW Ports? If it is a fee on container movements at the Port of Newcastle, and this fee is unlawful, then the financial impediment to building a container terminal is removed and compensation is unfunded.

Negotiations lasting three years were conducted between the NSW government and Anglo Ports Pty Ltd over a 1 million per year capacity container terminal at the Port of Newcastle. In 2010, Anglo Ports was the successful bidder in a public tender conducted by Newcastle Port Corporation (NPC) to develop a multi-purpose terminal, which included the container terminal, on the site of the former Newcastle steelworks.

Negotiations were conducted until November 2013. In a statement dated 10 February 2015, Anglo Ports said it did not withdraw from these negotiations.

As NPC’s owner, the NSW government would have been legally obliged to inform Anglo Ports about any change to requirements under the tender. Any fee imposed on container movements would have been a fundamental change. The NSW government refuses to deny that a fee was imposed on container movements at the Port of Newcastle.

The government also refuses to disclose exactly when compensation is paid to NSW Ports, the leaseholder of Port Botany and Port Kembla, in respect of container movements at the Port of Newcastle. The NSW government pays compensation to NSW Ports when shipping lines divert container ships to the Port of Newcastle instead of using Port Botany, and Newcastle container movements exceed a set number each year, which the government labels a “cap on numbers”.

Consolidated revenue must be eliminated as the government’s source of funds for paying this compensation. The government would not have leased Port Botany and Port Kembla, obviously, if the funds were required for paying compensation.

A fee is the most likely source of funds. The amount of the fee would need to be around $100 per container, because this is the average fee charged per container at Port Botany. But charging a fee of $100 per container makes a container terminal at Newcastle financially unviable. Shipping lines would not be willing to spend $200 per container at the Port of Newcastle compared with $100 at Port Botany.

A government fee of $100 per container would effectively prevent development of a container terminal at the Port of Newcastle.

A fee would not conform to the anti-competition provisions of the Commonwealth “Competition and Consumer Act 2010” (CCA). The government’s negotiations with Anglo Ports are relevant because the CCA applied to the government at least while these negotiations were taking place.

The Australian Competition and Consumer Commission exists to enforce the CCA. Perhaps the ACCC was made aware of a fee by the government and was satisfied that this fee conformed to the CCA. On the other hand, the ACCC may be ignorant of the government’s negotiations with Anglo Ports, in which case the ACCC may be unaware if a fee had been applied while these negotiations were underway.

Without a fee, the impediment to developing a container terminal is removed and the state faces a massive compensation liability. Despite more than 100 Questions On Notice since October 2014, the source of funds for paying compensation remains secret. As Members of Parliament, you might ask yourselves why.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

15 April 2016

Copy: Media; ACCC; Port of Newcastle Investments; NSW Ports

General Purpose Standing Committees Nos. 1&2:
Reverend The Hon Fred Nile; The Hon Ben Franklin; The Hon Scott Farlow; Dr John Kaye; The Hon Trevor Khan; The Hon Peter Primrose; The Hon Adam Searle; The Hon Greg Donnelly; The Hon Paul Green; The Hon Sophie Cotsis; Dr Mehreen Faruqi; The Hon Matthew Mason-Cox; The Hon Bronnie Taylor

Dear Members,

It is outrageous for the NSW government to be paying compensation to the leaseholder of Port Botany and Port Kembla when the number of containers diverted to the Port of Newcastle exceeds the government’s secret annual limit. More worrying is that the source of funds is another secret.

If this source of funds is government consolidated revenue, the cost to NSW taxpayers can be more than the $5.1 billion raised from leasing the ports. When compensation is $100 per container and throughput at Newcastle is 1 million containers per year, the compensation amount is $5 billion over 50 years – and the ports were leased for 99 years.

If a fee on Newcastle container movements is the government’s funding source, it is probably unlawful, and unenforceable. A fee on container movements would prevent development of a container terminal in competition with NSW Ports. As such, a fee would not conform to the Section 45 anti-competition provisions of the Competition and Consumer Act 2010 – and the government would have to use consolidated revenue to pay compensation.

In 2010, Newcastle Port Corporation conducted a tender for building a container terminal with minimum capacity of 1 million per year. A consortium led by Anglo Ports Pty Ltd was the successful tenderer. A container terminal would be operating today had the NSW government not prevented it.

On 22 August 2014, the former Treasurer, The Hon Andrew Constance MP, informed GPSC No1 that the negotiations for a container terminal at the Port of Newcastle were an example of “the kind of rent seeking activity likely to encourage influence peddling or corruption”. What evidence did Mr Constance provide to the ICAC in support of this allegation? As you know, Anglo Ports responded to these accusations in a statement published on the NSW parliament web site dated 10 February 2015.

If there is a secret, unlawful, fee on container movements at the Port of Newcastle, will you continue to accept the advice you were given by The Hon Gladys Berejiklian MP and The Hon Duncan Gay MLC at last year’s budget estimates hearings?

Why do you accept irrelevant information from Ministers when the relevant information remains secret, with such severe implications for the state’s finances? And, to what end?

Yours faithfully,

Greg Cameron

14 April 2016

0456819602
www.containerterminalpolicyinnsw.com.au

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

Dear Mr Baird,

I refer to compensation payable to NSW Ports for container movements at the Port of Newcastle, as disclosed to parliament by The Hon Duncan Gay MLC on 17 October 2013.

It is acknowledged that the Port of Newcastle lessee can develop a container terminal if it wishes to do so and there is no cap, legislated or unlegislated, on the number of containers that can travel through the port.

Compensation is payable on the number of containers diverted from Port Botany/Port Kembla to the Port of Newcastle over the next 96 years and container movements exceed the “cap on numbers” disclosed by Mr Gay. The government does not disclose its source of funds to pay this compensation, which is believed to be a fee on container movements at the Port of Newcastle.

A fee on container movements at the Port of Newcastle would be for the purpose of preventing development of a container terminal whereby containers would not be diverted to this port and compensation would not become payable.

A logical reason for the government refusing to disclose details of the “cap on numbers” is because a fee on container movements probably would not conform to the “Competition and Consumer Act 2010”. This means a fee on container movements would be unlawful and unenforceable, thus requiring the use of consolidated revenue for paying compensation to NSW Ports.

Existing planning conditions of approval are for a container terminal at the Port of Newcastle with capacity of 1 million per year. When Newcastle Port Corporation went to market in 2010 seeking tenders to build and operate a multi-purpose terminal, one of the requirements included a container terminal with minimum capacity of 1 million per year. Anglo Ports Pty Ltd was the selected tenderer and negotiations were conducted until November 2013.

If a container terminal was developed and throughput reached 1 million per year, a fee of $100 per container would cost the government around $100 million a year. In other words, future governments are subject to a massive financial risk if the source of funds for compensating NSW Ports is consolidated revenue.

Should the government elect to disclose details of the “cap on numbers”, all previous answers to Questions on Notice since October 2014 by The Hon Gladys Berejiklian MP and Mr Gay would be subject to revision.

Ms Berejiklian is due to answer these Questions On Notice by 21 April:

  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?

It would be appreciated if Ms Berejiklian, Mr Gay or yourself would disclose details of the “cap on numbers”.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

Copy: MPs; media; Port of Newcastle Investments; NSW Ports

13 April 2016

Ms Margaret Crawford
NSW Auditor-General

Dear Ms Crawford,

Do the NSW government’s financial statements disclose the source of funds for paying compensation to NSW Ports in respect of container movements at the Port of Newcastle?

If not, should they?

The government’s liability to pay compensation is for another 96 years. It is only proper that the parliament is aware of a potentially massive impost on the budget so that the risk is quantifiable. This risk includes the government not having a lawful source of funds to pay, other than consolidated revenue.

On October 17 2013, The Hon Duncan Gay MLC informed the parliament that compensation is payable to NSW Ports when container movements at the Port of Newcastle exceed a “cap on numbers”. The government refuses to provide information about this “cap on numbers”, despite more than 100 Questions On Notice since October 2014.

The government confirms there is no cap, legislated or unlegislated, on the number of containers that can travel through the Port of Newcastle, and the Port of Newcastle lessee could develop a container terminal if it wished to do so.

Charging a fee on container movements at the Port of Newcastle may not conform to the anti-competition provisions of Section 45 of the Commonwealth “Competition and Consumer Act 2010” (CCA). The CCA applied to the NSW government while it was carrying on a business as “Newcastle Port Corporation” (NPC), a fact which neither the government nor the ACCC dispute. Both decline to advise when the CCA stopped applying but, presumably, this occurred when NPC stopped carrying on a business for the purpose of the CCA.

The government was negotiating with Anglo Ports Pty Ltd until November 2013 pursuant to a tender conducted by NPC in 2010. These negotiations were for building and operating a multi-purpose terminal, including a container terminal with minimum capacity of 1 million per year, at the Port of Newcastle.

The “cap on numbers” at the Port of Newcastle was imposed while NPC was carrying on a business at the Port of Newcastle. Presuming the government had the right to vary the terms of the tender, a fee would have been imposed while the CCA applied to the government, because Port Botany was leased six months before the government terminated its negotiations with Anglo Ports.

Presumably, under the terms of the tender, the government would have been obliged to inform Anglo Ports of any change to its requirements, especially when a fee made a container terminal an uneconomic enterprise.

Former Treasurer, The Hon Andrew Constance MP, informed parliament on August 22 2014 that negotiations with Anglo Ports were an attempt by the government to dictate an uneconomic enterprise contrary to market demand and were an example of “the kind of rent seeking activity likely to encourage influence peddling or corruption”. Anglo Ports responded to these accusations in a statement published on the NSW parliament web site dated February 10 2015.

The government is yet to provide evidence in support of its allegations of influence peddling, rent seeking and corruption. Moreover, the need to levy a fee on container movements would be evidence that a container terminal is an economic enterprise.

The Audit Office helps parliament to hold government accountable for its use of public resources. In this, the Office reports directly to the parliament.

At any time, the government is able to inform the parliament about its source of funds for compensating NSW Ports. Until that occurs, the source of such funds is unknown and it is prudent to presume a secret fee is unlawful.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

April 7 2016

Copy: MPs; media; ACCC; NSW Ports; Port of Newcastle Investments

The Hon Duncan Gay MLC
Minister for Roads, Maritime and Freight

Dear Mr Gay,

What is the cap on numbers at the Port of Newcastle you disclosed to parliament on 17 October 2013?

It is not necessary for you to re-confirm that there is no legislated, or unlegislated, cap on the number of containers that can travel through the Port of Newcastle; or that the lessee could develop a container terminal if it wished to do so. The cap on numbers is concerned with compensation payable to NSW Ports, the lessee of Port Botany and Port Kembla, in respect of Port of Newcastle container movements.

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

5 April 2016

Copy: The Hon Mike Baird MP; The Hon Gladys Berejiklian MP; NSW parliament; Media; ACCC; ICAC; Auditor-General; NSW Ports; Port of Newcastle Investments

The Hon Duncan Gay MLC
Minister for Roads, Maritime and Freight

Dear Mr Gay,

I refer to the NSW government’s liability to pay compensation to NSW Ports, the lessee of Port Botany and Port Kembla, for loss of business when container movements at the Port of Newcastle exceed an unlegislated cap. There is no legislated cap on the number of containers that can travel through the Port of Newcastle and the lessee could develop a container terminal if it wished to do so.

What is the government’s source of funds for compensating NSW Ports?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

4 April 2016

Copy: MPs; media; NSW Ports; Port of Newcastle Investments; ACCC; ICAC; NSW Auditor-General

NSW taxpayers threatened with compensation liability over ports leases

NSW taxpayers are facing a massive compensation payout liability should a secret fee charged on container movements at the Port of Newcastle prove to be unlawful.

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

But when container movements exceed an unlegislated cap, the Port Botany and Port Kembla lessee, NSW Ports, is legally entitled to claim compensation for loss of business from the NSW government.

The government’s source of funds for paying this compensation would be to charge Port of Newcastle Investments, the port lessee, a fee per container above the cap.

Without a fee, compensation is unfunded and government consolidated revenue is the only option.

The government is not setting aside any funds to pay NSW Ports.

This is because the cap on numbers will not be extended until Port Botany and Port Kembla both reach capacity for container movements.

Government policy is that a container terminal will be developed at Port Kembla after Port Botany’s three container terminals reach capacity. Only then will a container terminal be developed at the Port of Newcastle.

But it is also government policy that Port of Newcastle Investments may develop a container terminal “if it wished to do so”.

Port of Newcastle Investments has a strong commercial incentive for a fee to be proven unlawful. This removes the obstacle to developing a profitable container terminal in competition with NSW Ports.

Charging a fee on container movements at the Port of Newcastle is unlikely to conform to the anti-competition provisions of Section 45 of the Commonwealth “Competition and Consumer Act 2010” (CCA).

This would have been known to the government, its advisers, and all bidders for the ports leases, not just the successful ones.

The CCA applied to the NSW government while it was carrying-on a business as “Newcastle Port Corporation” (NPC) at the Port of Newcastle.

In 2010, NPC invited competitive tenders for developing a multi-purpose terminal at the port, including a container terminal with minimum capacity of 1 million per year. One proposal was accepted and negotiations with the proponent continued until November 2013.

These negotiations were at an advanced stage in late 2010 when the government was asked by a third party to consider an alternative use for the container terminal site, as revealed by the ICAC’s “Operation Spicer” investigation in 2014.

The CCA applied to any change by the government to its requirements pursuant to the 2010 tender.

A container terminal with minimum capacity of 1 million per year would be operating today at the Port of Newcastle were it not for the actions of the NSW government. A compensation fee of $100 per container would cost the government $100 million per year.

The NSW parliament has a responsibility to identify the government’s source of funds for paying compensation to NSW Ports.

Central to that responsibility is to investigate whether the government imposed an unlawful fee, how it was imposed, and why.

After more than 100 parliamentary Questions On Notice since October 2014, the government refuses to deny a fee – see www.containerterminalpolicyinnsw.com.au

There is no more important economic development initiative for the people of northern NSW than a container terminal at the Port of Newcastle.

Equally, lingering doubt about the lawfulness of a critical infrastructure decision threatens the credibility of Australian business practice.

All financial arrangements for the proposed leasing of the Port of Melbourne were approved by the Victorian parliament for this reason, with the ACCC’s support.

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456 819 602

3 April 2016

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

Dear Mr Baird,

Will you advise the status of the cap on numbers at the Port of Newcastle?

A cap on numbers at the Port of Newcastle was disclosed to parliament by The Hon Duncan Gay MLC on 17 October 2013. When asked about this cap on numbers, Mr Gay and The Hon Gladys Berejiklian MP advise there is no cap on container movements, either legislated or unlegislated, at the Port of Newcastle.

As Mr Gay disclosed, the cap on numbers concerns the government’s agreement to pay compensation to NSW Ports. Compensation is payable when container movements exceed the cap on numbers at the Port of Newcastle.

The government’s source of funds is a fee on container movements at the Port of Newcastle, otherwise, compensation is unfunded.

For convenience, all Questions On Notice asked since October 2014 are contained at www.containerterminalpolicyinnsw.com.au

Here is Mr Gay’s disclosure:

LEGISLATIVE COUNCIL 17 OCTOBER 2013

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

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

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

1 April 2016

Copy: MPs; ACCC; NSW Ports; Port of Newcastle Investments; media

Mr Rod Sims
ACCC Commissioner
By email

Dear Mr Sims,

I refer to the former Newcastle Port Corporation (NPC).

Will you please confirm that the “Competition and Consumer Act 2010” (CCA) applied to the NSW government in respect of the business activities of NPC?

On what date did the CCA cease applying to the NSW government in respect of NPC?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456819602

1 April 2016

The Hon Scott Morrison MP
Treasurer

Dear Mr Morrison,

Are you satisfied that the NSW government complied with Section 45(2)(b) of the Commonwealth “Competition and Consumer Act 2010” (CCA) when it leased Port Botany to NSW Ports on 12 April 2013? I allege that a fee on container movements at the Port of Newcastle is included in confidential leasing arrangements, and this fee may be unlawful and could be unenforceable under S45(2)(b), because it was imposed pursuant to a tender conducted by the NSW government while trading as “Newcastle Port Corporation” (NPC).

As you may be aware, more than 100 “Questions On Notice” have been asked in the NSW parliament since October 2014 on this matter, and have not received a meaningful response. These are contained at www.containerterminalpolicyinnsw.com.au

One expects that the “Foreign Investment Review Board” would not knowingly sanction a foreign investment under questionable legal arrangements. You would be aware that the current owner of 50 per cent of the Port of Newcastle, “Hastings Funds Management”, is being sold. Media reports indicate that a number of foreign investors are bidding. Will FIRB consider this transaction in the context of the purchaser acquiring 50 per cent ownership of the Port of Newcastle?

The NSW government will pay compensation to NSW Ports should a container terminal be developed at the Port of Newcastle and container movements exceed a specified number each year, which the government calls a “cap on numbers”. The purpose of charging port leaseholder, “Port of Newcastle Investments”, a fee would be to fund compensation payable to NSW Ports. Without this fee, payment must be sourced from consolidated revenue and therefore represents a massive unfunded potential liability for NSW taxpayers. NSW Treasurer, The Hon Gladys Berejiklian MP, disclosed on 29 September 2015 that Port of Newcastle Investments could develop a container terminal “if it wished to do so”.

The CCA applied to the NSW government because NPC was carrying on a business at the Port of Newcastle for the purposes of the CCA. The Port of Newcastle was leased on 30 April 2014. The CCA stopped applying to the government in respect of the Port of Newcastle when NPC ceased carrying on a business for the purposes of the CCA, presumably, when the lease was sold.

The NSW government was negotiating with a private consortium, led by Anglo Ports Pty Ltd, to develop a multi-purpose terminal at the port, which included a container terminal with minimum capacity of one million TEU per year. These negotiations were being undertaken by the government pursuant to a tender conducted by NPC in 2010 and were terminated by the government in November 2013.

The government changed the conditions of the tender in 2012 and 2013 by removing the requirement for a container terminal until Port Botany reached capacity and a new container terminal was built at Port Kembla and it, too, reached capacity. The government informed Anglo Ports of its changed requirements pursuant to the tender, as disclosed by Anglo Ports in a statement published on the NSW Parliament web site dated 10 February 2015. It is presumed that the fee on container movements was imposed pursuant to the conditions of the tender.

Will FIRB satisfy itself about the lawfulness of the ports leasing arrangements?

Yours faithfully,

Greg Cameron

www.containerterminalpolicyinnsw.com.au
0456 819 602

20 March 2016

Copy: Hastings Funds Management; Port of Newcastle Investments; The Hon Chris Bowen MP; The Hon Mike Baird MP; The Hon Gladys Berejiklian MP; Mr Luke Foley MP; Mr Tim Crakanthorp MP; Senator The Hon Arthur Sinodinos AO; Mr Rod Sims

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

Dear Mr Baird,

More than 100 parliamentary “Questions On Notice” have been asked since October 2014 about a fee the government charges Port of Newcastle Investments when container movements at the Port of Newcastle exceed a specified number each year. Since the government does not deny charging this fee, it is presumed to exist.

The government pays compensation to NSW Ports when container movements at the Port of Newcastle exceed the annually specified number, which the government calls a “cap on numbers”. No funds are being set aside to pay this compensation because the source of these funds is the fee.

The government’s fee would not conform to Section 45(2)(b) of the “Competition and Consumer Act 2010” (CCA). This section makes it unlawful to “give effect to a provision of a contract, arrangement or understanding … if that provision has the purpose, or has or is likely to have the effect, of substantially lessening competition”.

The CCA applied to the government while it was carrying on a business as “Newcastle Port Corporation” (NPC) at the Port of Newcastle. The government’s fee on container movements at the Port of Newcastle was not legislated. It is noted that Section 51(1) of the CCA provides that conduct that would normally contravene the law may be permitted if it is specifically authorised under other legislation.

This fee was applied when the government was negotiating with Anglo Ports Pty Ltd for building a multi-purpose terminal at the Port of Newcastle, including a container terminal with minimum capacity of one million containers per year, pursuant to a tender conducted by NPC in 2010. NPC had the right to change and update its requirements. The government instructed NPC to dispense with a container terminal but to add a fee on container movements. However, the CCA applied to the government in respect of this tender.

After these negotiations were terminated by the government in November 2013, the government reversed its decision that the next container terminal to be built in NSW would be at Port Kembla. The Hon Gladys Berejiklian MP, The Treasurer, disclosed on 29 September 2015 that the Port of Newcastle leaseholder could develop a container terminal “if it wished to do so”.

Should the government’s fee be proven to be unlawful, the compensation payable to NSW Ports will be unfunded, but may also be unenforceable.

The government’s leasing arrangements will be exposed next week should Ms Berejiklian give fair answers to these “Questions On Notice”:

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

Yours faithfully,

Greg Cameron

17 March 2016

Mr Steve Bracks
Chair – Cbus

Ms Heather Ridout AO
Chair – Australian Super

Ms Angela Emslie
Chair – HESTA

Dear Mr Bracks, Ms Ridout and Ms Emslie,

Your respective funds are part-owners of NSW Ports, the Port Botany leaseholder. A leasing arrangement for Port Botany may be unlawful. The NSW government does not deny that a leasing arrangement involves the government charging a fee on container movements at the Port of Newcastle and paying this fee as compensation to NSW Ports for loss of business. The Hon Duncan Gay MLC disclosed to the NSW parliament on 17 October 2013 that the state government did not envisage that any compensation will need to be put in place to pay the private operator of Port Botany because there will not be an extension in the government’s cap on numbers at the Port of Newcastle.

More than 100 Questions On Notice in the NSW Parliament have been asked since October 2014 seeking details of Mr Gay’s disclosure – see my web site. No details were disclosed. A government fee on container throughput at the Port of Newcastle may not conform to Section 45(2)(b) of the “Competition and Consumer Act 2010” (CCA). The ACCC is taking no enforcement action based on information available to the ACCC. The ACCC does not disclose the nature of such information because of a confidentiality agreement.

Due to the government’s refusal to provide details of Mr Gay’s disclosure, The Hon Mike Baird MP, Premier, has been asked: “Will the government pay money to the Port Botany lessee for container movements at the Port of Newcastle above a specified number each year?” You will appreciate the answer to the question is either yes or no, however, a reply from Mr Baird is not expected. Answers to three more Questions on Notice are due on 22 and 24 March, but the questioner, Mr Tim Crakanthorp MP, is expected to be referred to previous answers, thus perpetuating the government’s refusal to clarify Mr Gay’s disclosure.

Will you please advise if the NSW government will pay money to NSW Ports for container movements at the Port of Newcastle above a specified number each year? If the source of funds for paying this compensation is not a fee charged on container movements at the Port of Newcastle, an alternative source of funds will be required.

In other words, the liability for compensating NSW Ports will fall to the NSW taxpayer, which includes all of your members who live in NSW. Your members have a right to know if their investment in NSW Ports is at risk and your Boards have a duty to find out.

Yours faithfully,

Greg Cameron

greg@containerterminalpolicyinnsw.com.au

0456 819 602

4 March 2016

The Hon. Malcolm Turnbull MP
Prime Minister of Australia

Dear Prime Minister,

Sydney’s passenger rail service can be boosted at no cost by removing freight. A rail freight bypass of Sydney – between the Port of Newcastle and Glenfield – can be built and paid for by railing containers. There is no greater opportunity to decentralise the NSW economy. Regional economic development can be founded on direct rail freight access to a container terminal at the Port of Newcastle. However, this opportunity is being impeded by flawed Australian and NSW government policy.

The leaseholders of Port Botany and the Port of Newcastle will benefit if they take the opportunity to participate in a rail freight bypass line, because replacing trucks with trains will profitably remove container trucks from Sydney’s roads.

The Australian government’s Moorebank Intermodal Terminal proposal would be abandoned, which would benefit the local community because the road network is already hyper-congested, while rail freight infrastructure between Port Botany and Moorebank is inadequate.

Current NSW government freight policy is founded on the lawfulness of charging a $100 per container fee at the Port of Newcastle. It would defy reality for this fee to conform to Section 45 of the “Competition and Consumer Act 2010”. The NSW government pays compensation to NSW Ports of $100 per container for loss of container business to the Port of Newcastle.

Should this $100 fee at the Port of Newcastle prove to be unlawful or unenforceable – it can’t be examined because it is secret – NSW Ports will be placed in a difficult commercial position. NSW Ports paid a premium lease price in return for being compensated for Port Botany ever losing its monopoly container port status in NSW.

Since Australian superannuation funds own 80 per cent of NSW Ports, ordinary Australians may suffer losses if the investment fails to perform. However, replacing truck transportation of containers at Port Botany with rail transportation of containers at the Port of Newcastle, is the way for all investors to gain.

A container terminal would be operating today at the Port of Newcastle were it not for the NSW government’s actions. As revealed in 2014 in evidence before the ICAC’s “Operation Spicer”, the NSW government acted “questionably” in 2010 in preventing Newcastle Port Corporation developing a container terminal with minimum capacity of 1 million per year. The O’Farrell government conducted a review of NSW transport policy. This included a secret “cap on numbers” of containers at the Port of Newcastle for which a fee of $100 per container is charged after the cap is exceeded.

Failure to disclose this “cap on numbers” makes NSW transport policy fatally flawed. In August 2014, the NSW government declared a container terminal at the Port Newcastle an “uneconomic enterprise” without acknowledging the restrictions. But with no restrictions, a container terminal is a viable enterprise of immense economic significance.

While the bypass line is being built, a container terminal at Newcastle will service northern NSW. After the bypass line is built, the Newcastle container terminal will not only service Sydney but also southern NSW and Victoria. (It will be faster and cheaper to service Victoria by rail from Newcastle than by truck from Melbourne.)

The NSW government’s transport strategy calls for spending $5 billion to build stages 2 and 3 of the Northern Sydney Freight Corridor for the equivalent of a dedicated rail freight line between Newcastle and Strathfield. There are no funds available but a rail freight bypass line makes this project redundant.

Without increased rail freight capacity, the NSW government will reduce passenger services between Newcastle and Sydney. Freight demand is estimated to increase by 50 per cent by 2028.

The NSW government’s transport strategy calls for a $1 billion rail freight line to be built between Chullora and Eastern Creek. The “Western Sydney Freight Line” is an extension of the Metropolitan Freight Line from Port Botany. There are no funds available but a rail freight bypass makes this project redundant.

There are no funds available to increase capacity of the Southern Sydney Freight Line, or to build a new rail freight line between Port Botany and Mascot. These improvements are necessary to service Port Botany container terminal and the Moorebank Intermodal Terminal proposal. Again these projects are made redundant by a rail freight bypass line.

Container truck movements between Port Botany and western Sydney are estimated by NSW Ports to increase from 2700 per day to 6900 – 9990 per day in 2045. The Australian government’s primary justification for proposing an intermodal terminal at Moorebank is to reduce the number of container trucks using the roads. This objective, obviously, can never be achieved.

I am writing to you because I believe the opportunity for NSW and Australia warrants the Prime Minister’s attention. For details, see www.containerterminalpolicyinnsw.com.au

Yours faithfully,

Greg Cameron

24 February 2016

(Letter received by email from the ACCC on 18 February 2016)

Dear Mr Cameron,

Correspondence regarding NSW Ports

I refer to your email to the Chairman of the ACCC dated 10 February 2016, in which you asked whether the ACCC considers that any cap on container numbers for the Port of Newcastle would conform to the Competition and Consumer Act 2010.

As previously stated in correspondence to you, the ACCC was provided with information by NSW Government officials on the basis that we would keep that information confidential. The ACCC reviewed and assessed the relevant information that was available at that time and decided not to pursue the matter by way of any enforcement action.

As a general statement, the CCA applies to the conduct of Commonwealth and State governments to the extent those governments are carrying on business. To the extent they are carrying on business, any restrictions imposed by them which have the purpose or effect of substantially lessening competition in a relevant market are likely to give rise to a contravention of the CCA and could be subject of enforcement action taken by the ACCC. The ACCC has communicated this position to the NSW Government.

Yours sincerely,

(ACCC)

18 February 2016

 

Mr Rod Sims
Chairman
ACCC

Dear Mr Sims,

I refer to the Port of Newcastle’s cap on container numbers.

Does the ACCC consider this “cap on numbers” conforms to the “Competition and Consumer Act 2010” (CCA)?

If you do not answer this question because you do not know what the “cap on numbers” is, the NSW parliament is in the same position. However, the parliament has been trying to find out, albeit without success – see www.containerterminalpolicyinnsw.com.au

Isn’t it your job to satisfy yourself about anti-competitive restrictions conforming to the CCA?

Yours faithfully,

Greg Cameron

10 February 2016

The Hon Gladys Berejiklian MP
Treasurer, and Minister for Industrial Relations

Dear Ms Berejiklian,

Would you have the parliament – and the people of NSW – believe that the government does not charge a fee when container movements at the Port of Newcastle exceed a “cap on numbers”?

The Hon Duncan Gay MLC disclosed a “cap on numbers” on 17 October 2013.

This “cap on numbers” is the number of containers for which there is no fee.

When this “cap on numbers” is reached, the government charges a fee for every additional container moved through the port.

The government charges this fee to fund compensation payable to NSW Ports.

The impact of this fee is to make a container terminal commercially unviable whereupon one will not be built.

This fee is anti-competitive and cannot be examined for lawfulness because it is secret.

For details of what you have advised parliament, see www.containerterminalpolicyinnsw.com.au

Yours faithfully,

Greg Cameron

17 February 2016

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

Dear Mr Baird,

I refer to a fee the NSW government charges for every container moved through the Port of Newcastle in excess of a cap.

After what number of container movements is this fee payable?

How much is this fee?

Last year, at Budget Estimates, The Hon Gladys Berejiklian MP and The Hon Duncan Gay MLC said there is no legislated or unlegislated cap on the number of containers that can travel through the Port of Newcastle see www.containerterminalpolicyinnsw.com.au

What they failed to mention is that the government charges a fee for every container moved through the port in excess of a cap.

The government charges this fee to compensate NSW Ports for loss of container throughput at Port Botany. Compensation would need to be at least $100 per container because this is the average fee charged by NSW Ports at Port Botany.

A container terminal at the Port of Newcastle is commercially unviable when the government charges a fee of $100 per container.

Mr Gay disclosed a “cap on numbers” to the parliament on 17 October 2013.

Yours faithfully,

Greg Cameron

15 February 2016

Mr Rod Sims
Chairman
ACCC

Dear Mr Sims,

I refer to the Port of Newcastle’s cap on container numbers.

Does the ACCC consider this “cap on numbers” conforms to the “Competition and Consumer Act 2010” (CCA)?

If you do not answer this question because you do not know what the “cap on numbers” is, the NSW parliament is in the same position. However, the parliament has been trying to find out, albeit without success – see www.containerterminalpolicyinnsw.com.au

Isn’t it your job to satisfy yourself about anti-competitive restrictions conforming to the CCA?

Yours faithfully,

Greg Cameron

10 February 2016

The Hon Mike Baird MP
Premier, and Minister for Western Sydney

Dear Mr Baird,

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

The Hon Duncan Gay MLC disclosed a cap on numbers at the Port of Newcastle on 17 October 2013. This cap on numbers applies to container movements. Many parliamentary “Questions On Notice” have been asked, and many questions were asked in last year’s Budget Estimates hearings, aimed at uncovering details. No details were provided, including by The Hon Gladys Berejiklian MP – see www.containerterminalpolicyinnsw.com.au

Ms Berejiklian and Mr Gay indicated there is no legislated cap on container movements at the Port of Newcastle. As you know, the cap on numbers at the Port of Newcastle is unlegislated.

No information has ever been disclosed about this cap on numbers apart from the fact it exists. Mr Gay said: “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.”

There appears to be no Hansard record relating to a cap on numbers at the Port of Newcastle except on 17 October 2013.

Without details, it is impossible to examine this cap on numbers to see if it conforms to the “Competition and Consumer Act 2010”.

You are asked to disclose details of this cap on numbers to enable it to be examined for lawfulness and enforceability, and whether it is detrimental to the NSW economy.

Yours faithfully,

Greg Cameron

6 February 2016

From: McGregor, Zita (R. Oakeshott, MP)
Sent: Friday, 26 April 2013 9:03 AM
To: Greg Cameron
Subject: RE: Time for ACCC to examine anti-competitive Port Botany container terminal monopoly

Dear Mr Cameron,

Thank you for contacting Rob with your concerns regarding the Port of Newcastle.

Rob has made representations on your behalf to the ACCC and will contact to you as soon as he receives a response.

Kind regards,

Zita McGregor
Advisor
Office of Robert Oakeshott MP
Federal Member for Lyne

From: Greg Cameron
Sent: Monday, 22 April 2013 2:09 PM
To: Oakeshott, Robert (MP)
Subject: Time for ACCC to examine anti-competitive Port Botany container terminal monopoly

The New South Wales government’s decision that there will be no container terminal at the Port of Newcastle is anti-competitive and warrants examination by the Australian Competition and Consumer Commission.

A container terminal at Newcastle would serve the northern NSW economy – home to 25% of people living in NSW.

For every container moved through Newcastle there would be one less through Port Botany.

In denying Newcastle its container terminal, the NSW government is maintaining Port Botany’s monopoly over container movements: the monopoly enhances the value of a 99-year lease to the Port Botany facility.

But competition will allow the market to decide whether Newcastle is capable of providing a better service for northern NSW than Port Botany.

According to the ACCC web site, ”Competitive markets increase the prosperity and welfare of Australian consumers. Our role is to protect, strengthen and supplement the way competition works in Australian markets and industries to improve the efficiency of the economy and to increase the welfare of Australians”.

”This means we will take action where this improves consumer welfare, protects competition or stops conduct that is anti-competitive or harmful to consumers, and promotes the proper functioning of Australian markets.”

The superannuation funds purchasing the lease to Port Botany container terminal are answerable to their northern NSW members for the economic implications of maintaining the monopoly.

The global move to containerisation means container ports drive new supply chains, markets and infrastructure.

These core attributes are denied the state’s northern regions by the NSW government’s decision in relation to Newcastle.

Northern NSW has potential to become a major food exporter through the Port of Newcastle to Asia.

Manufacturing industry has great potential to import and export goods directly through Newcastle.

But firms and agricultural industries alike will not invest in such production capability because direct access to a container terminal is a necessity.

Northern NSW is being left isolated in the world economy.

A container terminal on the former Newcastle steelworks site remains the most important infrastructure opportunity for northern NSW in 20 years.

Any other use of the site would be a misuse of eastern Australia’s best deep-water port.

In 2001, the NSW government took ownership of the site, from BHP.

The NSW government’s policy objective was revealed in its ”NSW Ports Growth Plan” dated 5 October 2003: ”The former BHP steelworks site at Newcastle Port will be secured for port use. When Port Botany reaches capacity Newcastle will be the state’s next major container facility.”

On 20 August 2012, the Newcastle Herald reported that the NSW government had ”dropped the promise” (”Future of Port site”).

The site is unlikely ever to return to private ownership because of its contamination by 84 years of steelmaking.

On 1 September 2012, the Newcastle Herald reported on the NSW government’s acceptance of liability for the site’s contamination (”BHP steelworks site: pollution time bomb”).

There was no justification for the state accepting contamination liability, including bringing BHP’s container terminal plans to a halt.

According to the NSW government, a container terminal at Newcastle is not relevant to Sydney’s needs because 85% of containers moving through Port Botany have destinations within 50km of the Port.

This has no bearing on the ability to serve northern NSW from Newcastle.

In 1997, BHP considered there to be sufficient demand from northern NSW to justify a container terminal.

However, competition will allow the Sydney market to determine whether Newcastle can provide a better container terminal service for Sydney than Port Botany.

There are significant beneficial implications for state transport.

A Newcastle container terminal would justify an outer western freight rail by-pass of Sydney, between Glenfield and Newcastle.

$4 billion of taxpayers’ money would be saved by not upgrading Sydney’s rail network for more freight.

A single intermodal terminal at Eastern Creek would be justified, instead of two, small and inadequate intermodal terminals planned for Moorebank.

The Moorebank sites would become available for business parks, to service the economic growth flowing from the rail freight service.

Removing freight from the Sydney metropolitan rail network would save $1 billion a year by 2025, by enabling passenger capacity to be increased to accept 30% or more of the forecast increase in Sydney urban travel.

Using rail for transporting containers between Eastern Creek and Newcastle would change the way trucks use the M5. Trucks servicing the Eastern Creek intermodal terminal would travel from west to east. This compares with trucks servicing Port Botany container terminal, which travel from east to west, with adverse implications for inner Sydney traffic flows.

Finally, the requirement to transport import/export goods by truck on the F3 between Sydney and Newcastle would be significantly reduced, if not eliminated.

Investing in a new container terminal at Newcastle, freight rail line to Glenfield, new intermodal terminal at Eastern Creek and upgrade of the Sydney rail system to increase passenger transportation, is investment in viable businesses that create permanent jobs.

Every independent economist in Australia knows that now is the time for us to borrow for long term infrastructure projects.

Selling a 99-year lease to Port Botany container terminal is merely a financing exercise that is damaging to the economy because it is anti-competitive.

Greg Cameron