JOHN MENADUE. Gladys Berejiklian and NSW Ports

As a former Minister for Transport, Gladys Berejiklian leaves a very dubious record in port privatization. The Chair of ACCC, Rod Sims has said ‘Privatisation (of NSW ports) is costing consumers and damaging economic reform’.  

The Baird and Berejiklian governments privatized major NSW ports. In order to improve the sale price of the privatized assets, they deliberately reduced competition.

The NSW government sold Port Botany and Port Kembla to the same buyer. Competition between the two ports became impossible. John Mullen of Asciano commented that Sydney port rentals had increased as a result by 400%. Maersk Lines, the world’s largest shipping container company warned Victoria and Queensland not to make the same mistakes as NSW where there had been major increases in port charges.

In 2014, the Baird/Berejiklian government sold a 99 year lease on the port of Newcastle. The new owners, Hastings Fund Management and China Merchants Group then increased port charges on coal exports by 40% to 60%. The National Competition Council ruled against these increases, but the new private owners of the port appealed. That appeal is still pending.

Rod Sims, the Chair of the ACCC, spoke very strongly last year about the consequences of the privatization of natural monopolies like ports. He said ‘Privatisation is costing consumers and damaging economic reform’.

But it is even worse in Newcastle with the Baird government’s curtailment of the Newcastle Port’s container business. As I pointed out in an earlier post ‘Privatisation and the hobbling of Newcastle Port’.

  • The NSW government will compensate Port Botany for competition from Newcastle Port. These compensation funds will be paid by Newcastle Port.
  • Newcastle Port will pay around $100 to the NSW government for each container in excess of an annual cap of 30,000 containers.
  • This cap will increase moderately each year. The $100 per container payment could also increase.
  • The NSW government will pay this income from Newcastle Port to the new owners of Port Botany for 47 years.
  • The efficient scale of operation for Newcastle would be well in excess of 30,000 containers. This means that Newcastle Port will have to pay Port Botany millions of dollars per annum.
  • Port Botany is effectively shielded from competition from Newcastle Port.

See also John Austen’s post ‘How port privatisation will hobble Newcastle.’

I recall at the time of the BA privatisation that BA senior officials told me that privatisation was a ‘once in a lifetime opportunity ‘ to skew the market in their favour. And that is what Maggie Thatcher did. She helped get rid of BA’s major domestic competitor and shored up BA with more routes on the Atlantic and many more gates at Heathrow. It helped ensure the financial and political success of privatisation but at the expense of consumers in a more competitive market.

Mike Baird and Gladys Berejiklian have left a similar unfortunate legacy in the privatisation of NSW ports. The mess is even greater in roads and rail. There will be further posts on that subject.

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7 Responses to JOHN MENADUE. Gladys Berejiklian and NSW Ports

  1. Henry Haszler says:

    Quite aside from the very significant issues to do with competition raised in this article there is also the question of effectively or actually selling off public assets.

    As I have noted in P&I before, I am totally opposed to selling public assets just as I am opposed to outsourcing things like the management of prisons, parking regulation etc. I would like to see good analytical evidence that public provision is necessarily or often less efficient than private provision especially when the need to pay dividends is taken into account.

    It seems to me governments like selling off stuff because it is a cheap way of improving their budget bottom lines while still letting them pay for things the public like. The politicians of both stripes get away with it because the electorate are too busy with work, family and the BBQs to think. Our politicians should be working harder to convince us that worthwhile things are wort paying for with taxes and not hiding the fact that sales of public assets make the community worse off.

    • Greg Cameron says:

      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

      144. 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.

      42. 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.

      44. 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.

      46. 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.

      47. 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.

      50. 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.

      152. 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”.

      154. 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.]

      155. 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.

      157. 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”.

      158. 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.

      159. 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

      http://www.containerterminalpolicyinnsw.com.au

      January 22 2017

      • Greg Cameron says:

        Copy of letter to ACCC Chairman

        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

        29 Eddy Crescent
        Florey ACT 2615
        0262598145

        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”)

  2. OldG says:

    More to her discredit Berejiklian obfuscated and prevaricated about the deal to hobble Newcastle in favour of Botany for about a year before the long suspected facts were unearthed by journalists.

  3. Lynda Newnam says:

    It was the Minister for Ports not Transport, Duncan Gay. And before the sale there was enabling legislation in late 2012 that abolished the cap of 3.2million TEU at Port Botany. Under the 2005 Conditions of Consent an environmental assessment was required before raising or abolishing the cap. That did not occur. WestConnex is required for the Port and Airport – infrastructure being paid for by the State, disruption and destruction of communities. The problem goes back to October 13, 2005 when the NSW Government led by Morris Iemma with Michael Costa as Treasurer and Frank Sartor as Planning Minister ignored the recommendations of a Commission of Inquiry and approved the construction of the third terminal at Port Botany/Banksmeadow. Under the 2003 Ports Growth Plan announced by Bob Carr, then premier, the next major container port in NSW was to be Newcastle. Treasury opposed this in a late submission to the Commission of Inquiry that was tabled at the Inquiry in October 2004.

  4. Kezza says:

    Not only that, but Ms Berejiklian and Mike Baird presided over the removal of heavy rail from the Newcastle CBD, leaving no clear alternative, although admittedly there have been some mutterings from above high about light rail replacing it and thereby magically fixing everything. As light rail is wont to do nowadays of course if you listen to the Greens et al.

    Now, load up with some popcorn – time to sit back and watch the unfolding of some bizarre ACT light rail adventurism. Should be quite a show, when in the ACT electric buses (Australian built in QLD by the way) with traffic light priority and dedicated road lanes would have done just as good a job at a minuscule fraction of the cost of light rail. But I digress.

    Ms B is also reported as commenting some time back – I paraphrase here, but words to this effect – “that if I have to use an interchange on my way to work, then so should Novocastrians.” Great. A great reason for the ripping up of railway tracks and the subsequent subjecting of commuters to a shuttle bus alternative that takes them several times as long to get to their CBD destination than did the train, with the line now terminated at Hamilton, several kilometres outside the CBD. Meanwhile, the iconic Newcastle Railway Station awaits its fate; likely to moulder quietly away I guess; just like the beautiful and similarly iconic Newcastle Post Office building, now abandoned and near derelict. Vale Newcastle.

  5. john austen says:

    After reading the above comments I thought it worthwhile to add a few. Apologies in advance for the length.

    Port Botany
    Port Botany is in a good location, is well run and is there to stay. Like most ports and airports, many local residents would prefer it was somewhere else and their concerns are often legitimate. Keeping ports on their toes about these matters is no bad thing!
    The dominant issue for Australia’s city ports is access from the land side; encroachment towards the port and the road (truck) and rail routes that lead to it. Urban ‘densification’ and ‘gentrification’ are gradually moving industrial areas further from the existing ports; meaning their international ‘supply chains’ are both longer and increasingly traverse suburbia.
    As people don’t like trucks this issue has economic and amenity dimensions; hence freight policies/strategies, which in Australia must have sea ports at their centre, need to aim to align least financial cost pathways (along which freight will flow) to least total economic (financial, external and amenity) cost pathways. Virtually none of very many government freight policies in Australia recognise or adopt this stance, hence the continuing tensions between freight and the community.
    To illustrate the importance of pathway-land access, road transport accounts for around half of port interface costs for Australian container ports, roughly equalling all port, ship call, customs, brokerage and stevedoring charges (combined). Moreover there are apparently large inefficiencies evidenced for example by chronic underutilisation of truck capacity; on average trucks carry 1.4 containers (teu) per move at the port; probably less than 50% utilisation. This is despite great efforts by ports and stevedores; causes probably include a failure of the road charging system and unwarranted vehicle restrictions.
    Trade through city ports continues to grow rapidly. Port expansion in most cases is necessary, the alternative is a substantial drag on the national economy and less Australian jobs. At the rare extreme relocation of existing port activities to a new site can offer the least total economic cost pathway; this is not the case for Botany, but may have been for parts of Sydney Harbour.
    The key issue for city port expansion is the adequacy and amenity of road and (increasingly) rail access, the latter of which depends on rail terminals in urban industrial areas. This is certainly true for Botany.
    The terminal expansion at Botany makes eminent sense if a series of rail terminals are set up in western Sydney. There are several suitable sites and the one at Minto seems to work very well even if it is on the wrong side of the tracks. The need for terminals is one of the reasons governments are interested in the Moorebank sites. While not having the figures I suspect Moorebank will be necessary but not sufficient for freight in Sydney.
    Comments on the post mentioned Westconnex. Again, the details are not at hand but the issue is whether Westconnex will be adequate – ‘big enough’ – assuming it does actually connect to the Port Botany precinct; a connection which was omitted from some earlier iterations of the M5 expansion (which forms part of Westconnex).
    The question of Westconnex adequacy arises from the fact that cars dominate traffic on Sydney’s roads. What capacity is available for trucks?
    Some previous iterations of the M5 expansion were done when the Port Botany was limited to around 3 million teu rather than its present capacity which is probably over 8 million. Also at present ‘dangerous goods’, some of which come from the port, are not permitted in road tunnels.
    One could ask: why not a road dedicated to trucks between Botany and at least part the way towards Sydney’s industrial areas? Don’t expect a sensible answer.
    At some point in the future it is likely that some Sydney containers will be put through Port Kembla. For this reason, I think the NSW government’s approach to sell both Botany and Kembla to the same party was right.
    Land side issues also are relevant to Port Kembla. The most efficient and amenable method of transporting many containers from Kembla to industrial land in south west Sydney, maybe even Moorebank, is probably rail. At present the Illawarra line (Tempe-Hurstville-Sutherland etc) is used for much Port Kembla freight including coal. The state government’s ‘plan’ for a metro railway poses a risk to this; one version of the plan had part of this line converted to metro. If so the only reasonable solution might be completion of the line from Maldon (near Picton) and Dombarton (near Wollongong). This would have the advantage of taking freight away from the more crowded parts of the Sydney basin thus improving overall amenity.
    Most of these matters (and others, including issues for Australia’s bulk and regional ports) were dealt with in background to the Council of Australian Governments 2011 national ports strategy. While there was to be an annual public statement of progress on the strategy, I am unaware of any to date, except for South Australia.

    Newcastle
    Irrespective of Botany’s expansion, or containers at Port Kembla, there is no legitimate public policy reason to constrain a private owner of Newcastle port from developing a container terminal. It probably would not compete with Botany, and could handle the many thousands of containers from northern NSW which unnecessarily traverse the crowded M1 motorway, main north rail line and inner Sydney to Botany. The comments by NSW ports Minister, the Hon. Duncan Gay MLC on this issue are, to me, ridiculous.
    The secret container cap and penalty arrangement for Newcastle raises several types of additional concerns.
    i. Privatisation. Some have a concern about privatisation of the port. The default setting for a private port, by law, is for it to maximise profits. In Australia, publicly owned ports, such as Newcastle was, typically aim for an adequate income stream agreed with the government while seeking to also facilitate trade for regional development. Newcastle was, and is, excellently managed. In these circumstances privatisation is unlikely to improve efficiency or effectiveness. The Independent Commission Against Corruption’s Operation Spicer report indicated that the port’s attempts to develop a container terminal were being frustrated by members of the previous Labor state government; in theory privatisation should reduce such meddling.
    ii. Land transport and urban development. Those interested in efficient land transport and urban development, including reductions in congestion, should have concerns about the restrictions on Newcastle. It would seem better to have northern NSW containers go through Newcastle than Botany. This would boost the Newcastle and northern NSW economies and jobs, especially in rural areas. It would reduce congestion in Sydney, and perhaps most importantly assist diversification of Newcastle’s economic base which will be essential in the future. This does not mean that a container terminal at Newcastle must be established, but it does mean that establishment should not be penalised.
    iii. Competition. The potential for a container terminal at Newcastle would create contestability, a real threat of competition, in a significant market. This would exert pressure on costs faced by businesses that currently rely on Port Botany’s facilities. This is one of the matters the Chairman of the ACCC, Rod Sims, had in mind when recently throwing doubts on the practice of privatisation in Australia.
    iv. Democratic accountability. parliamentary scrutiny and therefore public assessment of the cap and penalty deal was avoided via a claim of ‘commercial in confidence’ of the relevant documents. In September 2015 in response to a question about whether there was a cap, both Minister Gay and (then) Treasurer the Hon. Gladys Berejiklian MP told parliament there was no legislated cap, a trite comment given parliamentarians are legislators. Later explanation of these answers was to the effect that the word ‘legislated’ was carefully chosen because the arrangements were commercial in confidence. Whether this was intentional or accidental is beside the point; in any event the state government initiated the transactions within which the cap was embedded ie. the sales processes.
    Whatever people think about the first three matters, and views do vary, in my view the last matter is utterly unacceptable. High Court Justice Gageler AC recently said in a different context:
    ‘The ever-present risk within the system of representative and responsible government …….. is that communication of information which is either unfavourable or uninteresting to those currently in a position to exercise legislative or executive power will, through design or oversight, be impeded by legislative or executive action to an extent which impairs the making of an informed electoral choice and therefore undermines the constitutive and constraining effect of electoral choice’
    Finally, one comment mentioned Newcastle light rail. The initiative took shape while Ms Berejiklian was Minister for Transport and Minister for the Hunter. The line is reportedly to be around 2.2km long, somewhat less than maximum train length in NSW, possibly around the same length as amusement park or toy trains rides. The peak frequency is said to be a tram every 10 minutes; off-peak it may well be faster to walk.
    Despite this as far as I know ‘the plan’ does not dispense with Hamilton Junction and thus does not improve, and may in fact degrade and delay the operation of urban, and all rural and (non coal) freight trains in northern NSW, including all interstate trains. The ‘plan’ retains, and considerably worsens (with more to come) the effect of, the Beaumont Street Hamilton level crossing notwithstanding that one purpose of the ‘plan’ was to reduce the inconvenience of level crossings. I would be happy if corrected on this.
    The light rail is reportedly funded by the proceeds of the sale of Newcastle port.
    Cynics might view this as reinforcing a recent post where I ask, in reference to Sydney infrastructure projects, whether ‘the legacy’ will be remembered as selling silverware to buy things of much lesser, if any, value.

    In conclusion
    I think Mr Menadue’s post was unduly charitable.

    The litany of problems noted above should be staggering; bad landside planning for Australia’s most important international container port; policy-makers ignorance of basic freight principles; the Sydney metro threatening Kembla; Newcastle port being nobbled; an (at best) pointless light rail line of toy train length; the Council of Australian Governments apparently being ignored by officials and informed democratic accountability being impaired. As they say ‘a very special effort’.

    No wonder some fear for Australia’s competitiveness and loss of respect for institutions.

    J Austen
    27 January 2017

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