Monday 19th Nov, 2018

INDUSTRY OPINION: Newcastle port – some progress in undoing a privatisation fiasco

Photo: Jim Wilson and Hema Maps
Photo: Jim Wilson and Hema Maps

Article by John Austen*

PRESSURE is mounting to overcome the ridiculous anti-competitive constraints on Newcastle port.

As set out in Pearls and Irritations over the last two years, the NSW Government port privatisations constrained Newcastle port from being able to establish an efficient container terminal.  The mechanism was a financial penalty on each container over a certain very small number, the proceeds of which would be used to pay a competitor in Port Botany!

This was privatisation gone mad.

To the State Government it didn’t matter that a Newcastle container terminal:

  • Had long been mooted;
  • Could significantly ease traffic problems in inner Sydney;
  • Would boost the competitiveness of northern NSW agriculture and industry;
  • Would help the diversification of the Hunter area so obviously necessary given coal’s uncertain future;
  • Would only proceed if commercially viable, so any artificial impediment to its development would damage NSW businesses, its economy and government revenues.

But after pretending there was no such ‘legislative’ restriction – until belatedly exposed in the press – the NSW government then had the hide to argue its anti-competitive arrangement was good for one and all.

Then it added further insult to Newcastle injury by putting privatisation proceeds towards an idiotically short light rail line that both degraded the public transport network and set a record for costs.

These events shattered declining faith in privatisation and no doubt had a hand in the chair of the Australian Competition and Consumer Commission recanting his support of government asset sales.

Reversal of the constraint on Newcastle port is undoubtedly at the top of any real infrastructure priority reform list.

However, the Commonwealth, Infrastructure Australia and worthies of the infrastructure club have been missing-in-action on this burning issue.

Nonetheless pressure is building on NSW to change its disgraceful mistreatment of Newcastle.

To cover its mistake the NSW Government is now seeking public comments on a ‘ports and freight plan’.

While the relevant discussion paper avoids the issue – as did the Commonwealth’s paper on logistics – no doubt some responses will condemn the Newcastle-restriction folly and recommend repair of the damage being inflicted on the Hunter and NSW.  Governments and advisers will be unable to ignore such comments.

Newcastle port itself has a new chairman, distinguished academic and business leader, Professor Roy Green.  He reportedly sees the container trade as an opportunity to assist the essential and increasingly urgent broadening of the Hunter’s economic and employment base and to reduce its dependence on coal.

He is absolutely right.

All power to his arm.

* John Austen was director of economic policy for Infrastructure Australia from its inception in 2008 until his retirement in 2014.

This article was originally published on the Pearls and Irritations blog.

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