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Port Botany: getting trains of thought on track – Australian Financial Review

PUBLISHED: 15 MAR 2012 00:10:00 | UPDATED: 02 APR 2012 15:45:17

This morning, two of Australia’s top infrastructure advisers could do what no government has done: broker an agreement to help unclog Sydney’s roads and clear cargo from one of the biggest ports in the country.

Sydneysiders know the cost of being stuck in traffic behind trucks carrying everything from iPads to imported beer on roads around Port Botany, in the city’s south-east. But unless something is done within three years to move freight more efficiently from our second most valuable container port, every Australian will pay for the city’s transport woes through higher prices at the checkout and constrained national productivity.

The answer is to transport more freight passing through the port by rail.

Federal Labor’s chief infrastructure adviser, Rod Eddington, and his NSW counterpart, former premier Nick Greiner, face the formidable task of making it happen.

They will convene a meeting in Sydney today with federal and state bureaucrats and the private sector to fast-track construction of a port shuttle, or train, to take cargo to or from the port on the 31-kilometre Southern Sydney Freight Line.

Depending on whether it’s imported or exported, the cargo will arrive at or depart from a freight hub in Moorebank, in Sydney’s south-west, on land now owned or leased to the Defence Department.

There’s nothing novel about the idea. The freight hub, known as an intermodal terminal, was first proposed by the Howard government in 2004 and there are other such facilities in Sydney. But insiders say the project is bogged down in a bureaucratic quagmire and the political risk of building the facility in marginal seats is slowing action.

“A better case study in poor infrastructure planning and intergovernmental relations would be hard to find,” one source says.

Eddington and Greiner, the chairmen of Infrastructure Australia and Infrastructure NSW, respectively, say the shuttle needs to be up and running by early 2014 at the latest.

This includes the part of the terminal for freight moving within the state. A facility for interstate freight would be added later.

“This is a critical piece of infrastructure to make the whole of Sydney work better, and Sydney working better is in the Australian national interest,” says Tim Williams, the strategic adviser of the Committee for Sydney. “It’s needed as soon as possible because problems are building up now.”

The committee’s members are drawn from the business community, including chairman Chris Jordan, the chairman of the Board of Taxation and KPMG NSW, and deputy chairman and former Sydney lord mayor Lucy Turnbull, who sits on COAG’s expert advisory panel on cities.

Williams says the Moorebank terminal is “a test case for whether big projects of this kind can be delivered in Sydney”.

If governments can’t deliver, the harbour city will be stuck in the economic slow lane and will take the country with it.

The path to construction of the terminal has been strewn with obstacles, from the opposition of local residents, who are worried about noise and emissions, to the expense and timing of the relocation of the site’s existing occupants.

The Liberal member for the state seat of Menai, Melanie Gibbons, is one of NSW Premier Barry O’Farrell’s first-term MPs and is a vocal critic of the project. Gibbons won her seat at the March election last year and joins the federal Liberal MP for the corresponding seat of Hughes, Craig Kelly, and Liverpool City Council in opposing the terminal.

She says there are other options for the site, such as a technology park, which would “bring in more jobs for the area . . . and have far less impact on traffic and movements in the surrounding areas”.

“There is a good fight going on down here,” she says of residents in Moorebank, Casula and Wattle Grove. “On a map, if you didn’t live in this area, it looks good. But you only have to come to the area and look around to see that it’s being built . . . a couple of hundred metres away from people’s backyards.”

Depending on where exactly the terminal is built, a row of houses in Casula would look out at a giant freight terminal – and the Southern Sydney Freight Line, which is still under construction – rather than relatively picturesque defence land.

“It looks like it will actually take a lot of trucks off the road between Port Botany and Moorebank,” Gibbons says. “But it will obviously add a lot more coming into Moorebank.”

Others argue the trucks would be there regardless, and the terminal will cut the distance they travel by using rail to move containers between Moorebank and the port.

Environmental and planning laws should in theory address residents’ concerns, and Eddington and Greiner are pushing for the two layers of regulation at the commonwealth and state level to be aligned to avoid problems.

But another major obstacle to negotiate is that the commonwealth and the private sector are proceeding with competing proposals for freight terminals on adjacent pieces of land at Moorebank.

The commonwealth’s terminal would be built on a larger piece of land to the west of Moorebank Avenue, which is owned and occupied by the Defence Department’s School of Military Engineering and other Defence units.

The private terminal, proposed by a consortium known as the Sydney Intermodal Terminal Alliance (SIMTA) and comprising Qube Logistics and QR National, would be built on a smaller site to the east of the avenue.

Until yesterday, Stockland had a 55 per cent stake in the project. But it has announced Qube will buy it for $123 million by June 30, subject to QR National’s pre-emptive right to buy a proportionate share of Stockland’s stake.

The land on which SIMTA’s terminal would be built was bought by Stockland in 2007 and is leased to Defence for its National Storage and Distribution Centre.

The infrastructure bodies are urging the parties to take a “whole of precinct” approach to planning across both sites to accelerate the process and cut duplication.

If SIMTA is to be believed, its port shuttle could be operational by late 2013 or early 2014, almost four years before the commonwealth’s project, and at no or minimal cost to government.

Sydney Ports Corporation agrees this is when it is needed and says freight terminals at Moorebank and Eastern Creek are required “within two to three years” to support the state government’s target to double the proportion of rail freight to and from Port Botany to 28 per cent by 2020.

Accordingly, SIMTA will be urging the parties at the meeting, including representatives from the federal departments of infrastructure and finance and the NSW departments of treasury, planning and transport, to back its proposal ahead of the commonwealth’s terminal.

A SIMTA spokesman says: “Subject to due planning process, SIMTA is ready to go and it won’t cost the taxpayer.”

SIMTA’s plans would allow Defence “to stay on the [School of Military Engineering] site till 2025 and save the taxpayer at least $800 million in relocation costs”, he adds.

It could be a win for Defence, which has, according to sources, shown a greater reluctance to move off the School of Military Engineering site than the Stockland site.

Plans are now advanced for the relocation of Defence from both sites, but one source says “crazy numbers” have been put on the cost of moving from the commonwealth site to the nearby Holsworthy Barracks and “it’s all bloody, bloody slow”.

In tender documents, Defence estimates the cost of relocation from the commonwealth site at up to $741 million. Relocation from the consortium’s site could cost up to $455 million.

Defence says it will not have vacated either site until the end of 2014 at the earliest, raising questions about whether SIMTA could complete its port shuttle – expected to take between 12 and 15 months to build – by the start of that year.

The Moorebank Project Office, which sits within the federal Department of Finance and Deregulation and is managing a $70 million feasibility study into the commonwealth terminal, says it is “not as simple as the government taking a decision and Defence relocating immediately” from either site as new facilities will need to be built.

The Liverpool Military Area where both terminals are proposed to be located “has long been a key site for Defence logistical and training activities that are relevant to national security”, a spokesman says.

Nevertheless, the spokesman says the challenges are “not insurmountable” and plans under way would enable Defence to move from the sites, subject to approval by the government.

Sources say that late 2015 for the completion of SIMTA’s shuttle might be more realistic in light of those considerations, but the consortium’s spokesman says Defence is progressing with a “staged relocation” off the SIMTA site.

If this occurs it could allow the consortium to complete construction of the shuttle, terminal and some warehousing on part of the site before the land is fully vacated.

The timely relocation of Defence from the site is one issue, but another sticking point is that SIMTA would need the commonwealth’s consent to use a strip of land to build a short rail line to connect its site to the Southern Sydney Freight Line. The line would run across about eight metres of the Royal Australian Engineers golf course at Moorebank, which is part of the site on which the commonwealth proposes to build its terminal.

A spokesman for the Moorebank Project Office says the commonwealth has not agreed to give its consent for SIMTA to use that land. But after cabinet considers the project – before the May budget – “there will be greater scope for the project team to discuss project details with interested industry parties”.

Some take the view that SIMTA’s terminal would make the commonwealth’s project unnecessary. The government’s land could instead be used for warehousing, attracting companies that would pay to store cargo from the port at the site. Others say the terminal would still be needed, but could be delayed and modified if SIMTA’s terminal was built first.

The main difference between the two projects is that the commonwealth’s facility could handle higher volumes of interstate freight, which would move to and from Moorebank by rail on the national freight network. SIMTA’s would focus on local freight for greater Sydney. This cargo accounts for about 90 per cent of containers handled by Port Botany, and would be dropped off or picked up from Moorebank on trucks.

SIMTA’s facility would be able to handle up to 200,000 to 300,000 20-foot-equivalent containers a year. Its capacity would increase over the 10 to 15 years to a million containers a year, and more if a separate terminal is not built in Eastern Creek by 2025.

The commonwealth facility could process around 1.5 million to 1.7 million containers a year. At its upper limit, this would include 1.2 million containers handled by its local freight facility – which could be operational by mid to late 2017 – and another 500,000 containers on its interstate facility. The latter would not be operational until 2030.

“It is estimated such a large-scale facility would take 30 million truck kilometres a year off the Sydney road network, with considerable economic and social benefits,” a spokesman for the Project Office says.

Eddington and Greiner will need to find a pragmatic solution, and soon. The Gillard government will make a call ahead of the May budget about the funding it will provide to support either or both projects.

Australian Logistics Council chief executive Michael Kilgariff says the governments should work with SIMTA to develop its site first because “they are in fact ready to go now”.

“Ultimately with the growing freight task it’s quite likely that both sites will be utilised,” he says. “We see one potentially as having more of an interstate freight task whereas one may have more of a domestic port focus task.”

A spokesman for federal Infrastructure and Transport Minister Anthony Albanese says a business case for the commonwealth project will be considered before the budget.

NSW Planning and Infrastructure Minister Brad Hazzard says the Moorebank terminal “is an extremely challenging issue for the state and federal governments”. “There is a strong view that the intermodal is critical to the growth of the NSW economy,” Hazzard says. “But if it is to move forward it requires federal and state government co-operation and working with the proponent of the SIMTA site.”

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