By Greg Cameron
April 12, 2013, 10:30 p.m.
FRIDAY’S Port Botany sale announcement reflects agreement between the Coalition and the ALP that there will never be a container terminal at Newcastle. Consequently, the Hunter and northern regions of NSW will never have the economic benefits that flow from a local container terminal.
It is a sad reflection on the quality of the region’s political representation.
By selling a 99-year lease to Port Botany container terminal for $4 billion, the NSW government must upgrade the Sydney rail network to carry more freight by rail – at a cost of $4 billion.
This compares with building a container terminal at Newcastle and railing the containers to Eastern Creek, in Sydney’s outer west.
Containers to and from Newcastle would arrive at Eastern Creek faster and at similar cost compared with using Port Botany.
But removing freight from the Sydney rail network would enable 100 per cent of capacity to be used for passenger trains. Deloitte Access Economics reported, ‘‘If rail absorbed 30% of the forecast increase in Sydney urban travel then congestion, safety and carbon emission costs could be reduced by around $1 billion a year by 2025’’.
The NSW government has no funds to pay for the $4 billion upgrade of the Sydney rail network to increase freight capacity.
And although the Australian government is being asked for the funds, it says that ‘‘a decision has not yet been made as to when additional funding might be made available’’.
It makes no economic sense to use the Sydney rail network for freight.
In 1997, BHP proposed a container terminal on the company’s steelworks site as a commercially viable future use of the site after steelmaking.
In 2000, confidential negotiations took place between BHP and the state government to transfer the site into government ownership (as revealed in a Question On Notice from the former member for Myall Lakes, Mr John Turner, on 11 October 2000).
The NSW government took ownership of the container terminal site in 2001 to prevent BHP from competing with the government-owned Port Botany container terminal.
BHP’s motivation was economic development – jobs. BHP paid $100 million to the NSW government as part of the deal.
But then, as now, there was bi-partisan political opposition (except from the trade unions) for using the container terminal site for economic development and job creation.
A container terminal at Newcastle would serve the 25 per cent of the NSW population living north of the Hawkesbury River. It is faster, cheaper and more efficient for them to have their import/export needs handled through the Port of Newcastle than through Port Botany.
With growth in container demand averaging 7 per cent a year, a Newcastle terminal is the best economic stimulus.
It is reasonable to assess that 25 per cent of the people consume 25 per cent of container terminal services. In 2020, the number of containers movements associated with 25 per cent of the NSW population is 0.8 million TEU (twenty-foot equivalent unit) and in 2030 the estimate is 1.75 million TEU.
By any measure, these are commercially viable volumes.
Of course, the way to test commercial viability is for private enterprise to be invited to make the necessary investment.
Private enterprise, with their own funds at risk, is a better judge of commercial viability than the NSW government.
But there is a reason why the NSW government will not permit a container terminal at Newcastle.
A Newcastle terminal would win business from Port Botany Container Terminal, which in turn would justify a freight rail by-pass of Sydney.
Last year, 85 per cent of the containers moving through Port Botany were packed or unpacked within 40km of Port Botany.
Fifteen per cent of the containers were transported by rail and 85 per cent were transported by truck.
But when container movements through Port Botany reach 7 million TEU a year in 2030, between 4 million and 5 million will be sent by train and truck to intermodal terminals in outer western Sydney.
This is where Newcastle gains its competitive edge, because a terminal in Eastern Creek would be serviced better from Newcastle than from Port Botany.
A freight rail by-pass of outer western Sydney is supported by the Coalition and Labor. It would run between Glenfield, (where it connects with the southern Sydney freight line) and Newcastle.
The by-pass will stimulate urban renewal along the Newcastle rail corridor. It will stimulate economic development in northern regions of NSW by providing cost-effective access to a container terminal.
Likewise, it will create significant urban economic development opportunities in outer western Sydney.
A Newcastle container terminal is an economic catalyst that NSW should not ignore.
Greg Cameron is a former BHP executive interested in regional economic development.