By industry contributors Port of Newcastle and NSW Ports.
On Tuesday 21 July the Federal Court published its judgement in the case of Australian Competition and Consumer Commission v NSW Ports. This is the case about the financial payments to the State of NSW and to NSW Ports that are triggered if a certain threshold of containers handled is exceeded at Newcastle.
Port of Newcastle comments:
“Clear commitment: CEO Craig Carmody maintains that a container terminal is entirely viable – and necessary – at the Port, for the future of the region, NSW suppliers, and the economy”
Port of Newcastle CEO Craig Carmody shares his response to the publication of the Federal court’s judgement and what it means for the Port of Newcastle.
Any suggestion that Port of Newcastle wouldn’t proceed to build the container terminal if the restrictions were lifted are baseless and misleading. Port of Newcastle maintains its real-world view that a container terminal is entirely viable – and necessary – at the Port.
The judgment clearly accepts that Port of Newcastle has the ability to compete in the same market as Port Botany. The only factor preventing the Port from building the container terminal is the unfair restrictions placed on container movement above a TEU cap at the Port of Newcastle.
If there’s any doubt we’d build the container terminal, simply lift the penalty. Enable Port of Newcastle to maximise our commercial potential freely, and watch us build it.
We know there is appetite and support for a container terminal in Newcastle from NSW and international suppliers. Development of another container terminal in NSW, even whilst Port Botany still has capacity, would provide viable alternative and more cost-effective export routes for regional NSW suppliers, increasing their competitiveness and enabling Port of Newcastle to contribute even more to the State’s economy.
This legal decision does not alter Port of Newcastle’s desire to build a container terminal, nor our confidence that a container terminal at the Port is a diversification opportunity the Port, Newcastle and the Hunter Region needs.
Port of Newcastle has the ability to compete in the same market as Port Botany, and that NSW State Government Policy is the major constraint to this.
We await with interest the decision by the ACCC whether to appeal the Court outcome, expected next week.
Port of Newcastle is Australia’s deepwater global gateway, the largest on the nation’s East Coast. Port of Newcastle currently handles 4,400 ship movements and 164 million tonnes of cargo annually, including dry bulk, bulk liquids, ro-ro, general and project cargoes and containers.
NSW Ports comments:
“Container terminal at Port of Newcastle a “mere mirage”; Court finds that the Port Commitment Deeds did not have the purpose or likely effect of substantially lessening competition; Judgment supports that the State’s container port strategy (Port Botany followed by Port Kembla), is in the public interest as it provides for the most effective use of investment and efficiency of the freight task in NSW; Outcome an “emphatic win” for the people of NSW and NSW Ports”.
NSW Ports welcomes the publication today of the reasons for judgment of the Federal Court of Australia dismissing all the claims brought against it by the Australian Competition and Consumer Commission (ACCC).
NSW Ports Chief Executive Marika Calfas said the outcome was “an emphatic win for the State of NSW and NSW Ports. NSW Ports will continue to focus on ensuring the key trade gateways of Port Botany and Port Kembla deliver efficiently and sustainably for the people and businesses of NSW.”
In her judgment, Justice Jayne Jagot noted that the prospect of Port of Newcastle developing a container terminal in the reasonably foreseeable future while Port Botany has capacity “is fanciful, far-fetched, infinitesimal or trivial”.
The judgment supports the principle of NSW’s container port strategy, that container terminal development should be conducted in sequence, with existing capacity at Port Botany utilised first, followed by Port Kembla and only then Port of Newcastle. This strategy delivers the most effective use of significant public infrastructure investment in support of the overall cost and efficiency of the NSW freight task.
Ms Calfas said Port Botany and Port Kembla underpin the State’s economy contributing $4.4 billion a year to NSW gross state product and creating 29,000 jobs.
“Since privatisation in 2013, $2.2 billion has been invested by NSW Ports and other private sector operators to grow port capacity and improve productivity.
“Premature development of another container terminal in NSW whilst Port Botany still has capacity would increase the overall cost of moving freight in NSW, to the detriment of the State’s economy,” Ms Calfas said.
Her Honour found that in the seven years since privatisation, Port of Newcastle has not formulated an investment grade business case suitable of being put to its own board and shareholders for the development of a container terminal, even without the provisions of the Port Commitment Deeds in place.
The Court also found that the provisions in the Port Commitment Deeds were used to provide investors with certainty about the State’s container port strategy to ensure that the State received maximum value for the asset sales.
On 29 June 2021, Justice Jagot dismissed in full the ACCC’s allegations that the provisions of the Port Commitment Deeds between the State of NSW and NSW Ports were anti-competitive.
NSW Ports is 80 percent owned by Australian superannuation funds investing on behalf of more than six million individual Australians. The NSW Ports consortium comprises IFM Investors, AustralianSuper, QSuper and Tawreed Investments.
NSW Ports operates Port Botany and Port Kembla under 99-year leases from the State of NSW, acquired in 2013 for $5.1 billion.
The proceedings by the ACCC in the Federal Court concerned agreements, known as Port Commitment Deeds (PCD), which were entered with the NSW Government as part of the privatisation of Port Botany and Port Kembla in May 2013, and the privatisation of Port of Newcastle in May 2014.
Editor’s note: the order of publication i.e. Newcastle first or NSW Ports, was determined using a random number generator. Both Port of Newcastle and NSW Ports are associate members of Shipping Australia.