It has been NSW government policy since 2012 not to develop a container terminal at the Port of Newcastle. It has also been government policy since 2012 that the developer of a container terminal at the Port of Newcastle will reimburse the government for any cost the government incurs in paying a lessee of Port Botany and Port Kembla for container volumes exceeding a threshold level at the Port of Newcastle. Three container ship visits a year will exceed the threshold level.
The policy not to develop a container terminal was announced on July 27, 2012. The policy to require payment from the developer of a container terminal was concealed from the public, parliament and ACCC. It was exposed by in the media in July 2016. The policy was an instruction the government gave Morgan Stanley in 2012 for conducting a scoping study into leasing Port Botany and Port Kembla.
The government’s intended developer of a container terminal until November 2013 was Mayfield Development Corporation Pty Ltd. Mayfield is owned 61% by AP Moller-Maersk and 39% by Anglo Ports Pty Ltd.
The government terminated its negotiation with Mayfield because the payment requirement was likely to contravene the “Competition and Consumer Act 2010” (CCA). In May 2019, Mayfield commenced an action against NSW Ports in the Federal Court alleging that the requirement to reimburse the government was an illegal consequence of NSW Ports’ lease agreements.
The “Ports Assets (Authorised Transactions) Act 2012” did not authorise the government to lease Port Botany and Port Kembla in May 2013 with an unfunded contractual obligation to pay NSW Ports for container volumes exceeding a threshold level at the Port of Newcastle. At current estimated Port Botany wharfage of $150 per container, one container ship a week visiting the Port of Newcastle will cost the government $3 billion in payments to NSW Ports by 2063, increasing to $6 billion for two ships a week.
The ACCC is alleging in the Federal Court that NSW Ports contravened the CCA when Port of Newcastle Investments Pty Ltd agreed in May 2014 to reimburse the government for paying NSW Ports.
Clearly, the issue is that the government cannot have a policy not to develop a container terminal while it requires payment from the developer of a container terminal.