The Federal Court has ruled that the NSW government is immune from the Competition Act over its 2012 decision not to develop a container terminal at the Port of Newcastle. This comes as no surprise because the government did what it was permitted to do by the Act.
However, the Court ruling does not necessarily mean that the government acted legally. In 2012, the government concealed its decision to be penalised if it breached its policy not to develop a container terminal at the Port of Newcastle. The terms of the penalty were included in confidential contracts between the government and the lessee of Port Botany and Port Kembla, NSW Ports, in 2103. The penalty is payable to NSW Ports in the form of so-called “compensation payments”.
The penalty is illegal because the government cannot be penalised for breaching a policy. The government can only be penalised for breaking the law. Parliament did not make a law of the government’s policy not to develop a container terminal. It was impossible for Parliament to authorise the secret penalty without passing a law.
Parliament is accountable to the people of NSW for the government’s claim that a penalty that was concealed from Parliament was legislated by Parliament.
Parliament has authority to disallow the penalty. The government has an obligation to present Parliament with a bill to pass the penalty into law.
The penalty is significant for another reason. The government does not incur the penalty if NSW Ports develops a container terminal at the Port of Newcastle. An agreement to this effect was made when the lease contracts were signed with NSW Ports. At that time, the government was the owner of the Port of Newcastle. The government agreed to abandon its policy not to develop a container terminal if NSW Ports became the developer of a container terminal at the Port of Newcastle. Neither did the government incur the penalty if NSW Ports leased the Port of Newcastle, or any material part of it.
The government concealed its deal with NSW Ports from the public and Parliament because it revealed the government’s policy to be a marketing device for influencing the value of the NSW container terminal monopoly. If John Barilaro and the Nationals want a container terminal, they can vote to disallow the penalty, so that the Parliament gets to decide, as it must.