NSW port privatisation inquiry finds key details kept secret from Parliament, calls for policy review

A coal ship entering Newcastle harbour on February 14. Picture: Marina Neil
A coal ship entering Newcastle harbour on February 14. Picture: Marina Neil

A NSW upper house inquiry into the state's port privatisations has confirmed key aspects of the deals were kept secret from Parliament and the public.

The Public Works Committee report, tabled on Monday, calls on the state government to review its ports policy and examine allowing Newcastle to establish a viable container terminal.

Its finding that contentious "commitment" deeds penalising Port of Newcastle for developing a freight terminal had been kept secret was unsurprising given the government repeatedly denied their existence until they were revealed by the Newcastle Herald in 2016.

NSW Ports, the consortium that paid the government $5.07 billion in 2013 for 99-year leases at Port Botany and Port Kembla, has since been fighting to protect its commercial interests.

The Australian Competition and Consumer Commission started Federal Court action against NSW Ports soon after the parliamentary inquiry began, arguing the secret deeds were "anti-competitive" and "illegal".

The Public Works Committee inquiry recommends the government review its ports policy, including its limits on a container terminal in Newcastle, after the Federal Court proceedings.

Committee chair Robert Brown said the inquiry "encouraged the government to analyse the potential economic impact of a Newcastle container terminal".

"We have also called for the government to investigate freight rail options between the Port of Newcastle, Port Botany and Port Kembla," he said.

A 2014 deal for the $1.75 billion lease of Newcastle port required the Port of Newcastle consortium to take on the government's contractual obligation to compensate NSW Ports if it developed a rival terminal.

A NSW Ports submission to the inquiry said an expanded Newcastle container terminal would create an “infrastructure white elephant”.

The government's submission said Port of Newcastle investors had "willingly agreed" to take over the state’s obligations to NSW Ports and "this arrangement was known to bidders and the ACCC​”, something Port of Newcastle chief executive Craig Carmody acknowledged in his evidence to the inquiry in January. 

"I would say that at the time they bought it coal was rampant, coal was an amazing future. They did buy a coal terminal port. There was no denying that is what they paid for," Mr Carmody told the inquiry

The port announced three weeks ago that it was setting up a design team to work on a proposed $1.8 billion container hub which could accommodate a new breed of “ultra-large vessels”. 

The government told the inquiry the commitment deeds supported its policy position that Port Kembla was the best location for a future container terminal to augment Port Botany.

It said the ports policy was designed to "maximise efficiency and minimise the total cost of container movements to the community". 

Port of Newcastle argued that a container terminal was an important step in diversifying the Hunter economy, would take trucks off Sydney roads and would cut costs for northern NSW producers.

The inquiry was ostensibly into the impact of the Newcastle sale arrangements on the state's public works expenditure, and on that score the committee's report concluded the limits on Newcastle freight operations had not significantly influenced spending required on transport projects in Sydney.

But it also recommended the upper house establish a second inquiry into the broader impact of the container limitations and "financial obligations" written into the commitment deeds.

A Port of Newcastle spokesman said on Monday that the company was nonplussed by the inquiry's outcome and described it as a missed opportunity to examine global shipping trends in more detail.

"NSW regional exporters and importers will be disappointed that the can has been kicked further down the road given they’re still left bearing the inflated costs of having to move goods through a Sydney-centric and congested supply chain that limits their competitiveness," he said.

"Regional NSW shouldn’t have to wait for lengthy court processes to tell everyone what we already know."

Labor's Shadow Minister for Industry and Resources, Adam Searle, said the government had concealed the port deal "because they knew it would sell the Hunter short". 

"They knew people in the Hunter wouldn’t like it, but they did it anyway because they wanted to maximise the sale price for the other ports which they privatised," he said.

This story Port inquiry finds key privatisation details kept secret from Parliament first appeared on Newcastle Herald.