End to a secret deal that locked in coal exports and Sydney truck traffic
By Caitlin Fitzsimmons
Just over a decade ago, when the NSW Coalition government decided to privatise the ports, it included a secret non-compete clause that gave Port Botany a monopoly on container shipping.
This boosted the price for the privatisation of Port Botany and Port Kembla, but it created two new problems: it delivered ever-increasing truck traffic to Sydney, and it locked the Port of Newcastle into coal.
Members of School Strike 4 Climate and Rising Tide blockading the Port of Newcastle last year.Credit: AAP
Now the Port of Newcastle has revealed that it paid a $13 million invoice from the NSW Treasury to extinguish its non-compete commitment, so it can expand its container capacity.
The Port of Newcastle is the biggest coal port in the world and coal is 92 per cent of its business, but chief executive Craig Carmody said it was essential to diversify.
“I don’t know when coal will stop, I don’t know if it’ll fall off a cliff or be a gradual decline, but we all know that, at some point, it will happen for countries to hit the Paris targets,” Carmody said. “My job is for the business to be ready.”
Under the deal made when Barry O’Farrell was NSW premier and Mike Baird was treasurer, the Port of Newcastle could not build a container terminal until Port Kembla built a facility or 2065, whichever came first, and it had to pay a penalty for every container it shipped.
Protests over coal exports at the Port of Newcastle in 2023.Credit: AAP
Port Botany and Port Kembla were sold to NSW Ports in 2013 with the sweetener in place. A year later, in 2014, the Port of Newcastle was privatised. While the new owners knew about it, it was a take-it-or-leave-it situation. It did not become public knowledge until 2016.
Rod Sims, the former chairman of the Australian Competition and Consumer Commission, described the original non-compete restriction as “appalling ... blatantly anti-competitive and to the detriment of the NSW economy”. The ACCC tried to get it overturned in the Federal Court but lost in 2021.
In 2022, then-treasurer Matt Kean set things in motion to undo the deal struck by his predecessors, passing legislation in November of that year and asking the Independent Pricing and Regulatory Tribunal to determine a fair price. He said on Tuesday he welcomed the move by the Port of Newcastle.
A spokesperson for NSW Transport Minister Jo Haylen said the payment meant the Port of Newcastle was free to expand its container capacity and the government was considering its position on a large-scale container terminal at Newcastle as part of its freight reform plan.
Carmody said that, when the port was privatised in 2014, the Abbott government had repealed the emissions trading scheme and other clean energy policies, and “coal was king”. But the day he started as chief executive in 2018 was the same day the coal companies told the port they did not want to build a fourth coal terminal after all.
Carmody said major export customers such as Japan, Korea and China were rapidly phasing out coal and the market could die within about a decade. Instead, Port of Newcastle could be a natural hub for grain and cotton exports from the northern half of the state, and to develop and sell clean energy such as green hydrogen. He said the company would aggressively compete on price to win import customers.
For several years, the Port of Newcastle has been targeted by regular climate protests blockading the port. In November, activist groups Rising Tide and School Strike 4 Climate organised 3000 people on a flotilla of kayaks and pontoons to blockade the port for 36 hours.
Law student Zack Schofield, who was one of 109 protesters arrested but had no conviction recorded, said Rising Tide celebrated the milestone in the port’s transition from coal, but it remained a symbolic target.
“Until the government takes on the fossil fuel corporations and stops approving new coal and gas, we’ll continue to disrupt coal exports from Newcastle,” Schofield said.
A Deloitte analysis commissioned by the Port of Newcastle in 2018 found a new container terminal in Newcastle could shift hundreds of thousands of trucks off Sydney roads.
Carmody said the analysis was before his time, but he lives in Rozelle, so he was well aware of the gridlock on Sydney roads and the fact that WestConnex had not solved the problem. Transurban declined to comment.
Sims said it was “blindingly obvious” that a container terminal in Newcastle would improve traffic congestion in Sydney by diverting trucks from Port Botany.
However, a NSW Ports spokesperson disputed this, pointing out that 90 per cent of its imports were destined to within 50 kilometres of Port Botany and would need to be trucked from Newcastle back to Sydney, while more than 90 per cent of regional exports arrived by rail.
The spokesperson said additional container capacity in NSW would not be required for several decades and it was important that government policy for infrastructure investment remained consistent.
“Government investment should not be distracted to supporting a container terminal at the Port of Newcastle, which has been demonstrated to make no sense and any investment of taxpayer dollars would be unjustified,” the spokesperson said.
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