ACCC probes NSW port privatisation with new vigour

By: Rob McKay


Renewal of regulatory interest in how competition might be affected by secret fee

ACCC probes NSW port privatisation with new vigour
Roy Green says Port of Newcastle is committed to having a container terminal

 

The Australian Competition and Consumer Commission (ACCC) is to revisit the cunning New South Wales port privatisation plan that it believes has helped skew infrastructure policy in the state and elsewhere.

The ACCC is said to be looking at compensation fee that might hinder Port of Newcastle engaging in container movements.

Local newspaper the Newcastle Herald has long questioned what had been agreed secretly by the state government with Port Botany and Port Kembla lease-buyers to protect their Sydney container operation and this week revealed the competition watchdog has sought industry responses after having been cool on such a move previously.

ACCC chairman Rod Sims has been a consistent critic of how such privatisation has mutated from an efficiency strategy to revenue-raising tool with unintended consequences such as the infrastructure surcharges imposts levied by stevedores and other facility owners.

Asked what had led to the change of approach, an ACCC spokesperson tells ATN: "The ACCC is making enquiries across the industry in order to gain a greater understanding of potential issues that have been raised.

"We are investigating concerns that contractual restrictions may prevent the expansion of container throughput at certain ports.

"Specifically, we’d like to understand whether these restrictions may limit competition in a way that means customers exporting commodities, such as cotton and grain producers, are faced with less competitive prices and fewer options for doing so."

The Newcastle Herald quotes Port of Newcastle chairman Roy Green as welcoming the move and restating his organisation’s intention to enter the container handling market.

According to the newspaper, the focus in on how NSW port arrangements stack up against Section 45 of the Competition and Consumer Act 2010, which deals with restrictive trade practices.

That section is quite broad and states, amongst other things, that a corporation must not "make a contract or arrangement, or arrive at an understanding, if a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition".

The privatisation of Port Botany and Port Kembla garnered $5 billion and came three years after Queensland gained $2.3 billion for the Port of Brisbane leases, while Newcastle itself went for $1.75 billion.

The Victorian government was unable to resist the promise of such huge riches and Victoria gained $9.7 billion for the Port of Melbourne lease.

While the cash is a result of the upside of "asset recycling" in freeing up cash for other infrastructure investment, the underplayed down-side has been a injection of cost into the freight transport chain as the cost in recouped down the line, and often brutally.

 

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