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Baird highlights NSW port charge safeguards

Users to await details of contracts as Treasurer emphasises government oversight and Opposition warns of private monopoly issues

By Rob McKay | November 22, 2012

The New South Wales ports privatisation Bill has passed the state’s Upper House.

Its passage was marked by Opposition warnings of the dangers of private monopoly control but follows Treasurer Mike Baird’s assurance to a port-user consultancy of safeguards against gouging of customers, particularly through the port infrastructure charge.

In response to pricing queries from Freight and Trade Alliance (FTA) Director Paul Zalai, Baird notes that under the Ports Assets (Authorised Transactions) Bill 2012:

  • all NSW ports must give notice of any proposed change in its service charges, provide rationale for how a price change is calculated, an why it is needed
  • the port lessee must also provide annual reporting of charges to the relevant Minister, and the Minister can require information relating to port charges be supplied to the Government
  • if the pricing behaviour is deemed to be inappropriate, the Minister has the ability to refer the port pricing to the Independent Pricing and Regulatory Tribunal (IPART)
  • a port user can always apply to the National Competition Council to have the asset declared as a nationally significant infrastructure under Commonwealth legislation in the event of pricing disputes.

On the port infrastructure charge specifically, Baird says the charge will be subject to a price monitoring scheme.

“Ultimately the Government has final say over these projects and charges,” he adds.

“I can inform you that the Government intends to charge the new landlord an additional annual rental as a further contribution towards the costs of landside logistics improvement in the vicinity of the port.”

Zalai says his advocacy consultancy will
look forward to seeing
detail of the leases and, in particular, cost implications for industry.

“We are pleased to have received preliminary information from the Treasurer including a reassurance that if the Government deems pricing behaviour to be in appropriate, that they have the ability to refer matters to the Independent Pricing and Regulatory Tribunal,” he says

Other outstanding areas on concerns for FTA relates to the ongoing management of the Port Botany Landside Improvement Strategy (PBLIS) and the associated compliance management of this initiative.

“Sydney Ports have done a great job to date and we see an ongoing role for this level of regulation to co-exist in terms of the new lease arrangements to ensure that we do not lose momentum in these important reforms,” Zalai says.

During parliamentary debate, deputy Opposition leader Adam Searle criticised the loss of revenue to the Government due to the move and described the position of the successful port operator as “unregulated” and being in democratic deficit.

“The Government is allowing one private company to bid for Port Botany, Port Kembla, the Enfield intermodal terminal and the Cooks River rail yard,” Searle says.

“The operator will have the unprecedented monopoly power over key trade infrastructure with the ability to dictate prices to truck operators, shipping lines, importers and exporters.”

He also points to the scope of port infrastructure charge, quoting Clause 66A as including “persons who operate road or rail cargo transport services as part of the port-related supply chain”.

“Trucking companies and operators of rail cargo transport services – wherever or not they are in the chain of production and whether or not those services operate as part of the port-related supply chain
– can be levied with a port infrastructure charge,” Searle says.

“This will not involve the Independent Pricing and Regulatory Tribunal.

“The Australian Competition and Consumer Commission will handle competition issues and there is talk of price monitoring as part of the Council of Australian Governments process.

“There will be no democratic oversight of what those port infrastructure charges might be, nor will there be any constraint upon what those port infrastructure charges may be used for.

“I am informed that there is a $12 per full container load levied on shipping companies for cargo that comes off a ship in Port Botany – that nets about $10 million per year – to pay for things such as construction of the truck marshalling yard.

“Even though the Government will not disclose that levy, we understand that charge and revenue stream has now been included in the tender documents to auction off that revenue stream.

“That means that the cost that is passed on as a throughput to the port, and is ultimately levied on consumers to pay for the local infrastructure around the port, can now be levied as part of the revenue stream and then sold off to the new port operator.”

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