Port Botany uncapped = Newcastle scrapped

Captain R Setchell Chairman On behalf of Anglo Ports Pty Ltd and Newcastle Stevedores Consortium, 10 February 2015  

The following question by the Hon Dr J Kaye MLC to the Budget Committee of the Legislative Council and the answer by the New South Wales Treasury of 22 August 2014 is about this proposed container terminal:

Question:
53. Given that there has been significant allegations of at least influence peddling and political interference under Labor surrounding proposals to the develop a container facility in
Newcastle, will Treasury be reviewing that decision?
(a) If so please provide details
(b) If not why not
Answer:
Attempts by Government to dictate uneconomic enterprises contrary to market demand are examples of the kind of rent seeking activity likely to encourage influence peddling or corruption. As the container port did not proceed, there is no decision to review.

The answer conflates the proposal of Anglo Ports or its consortium with government dictation, with uneconomic enterprises, with the absence of market demand, with influence peddling and with corruption. Anglo Ports on behalf of the consortium categorically denies that its proposal or the tender under which it was conducted had any of these characteristics.

Further the second sentence in the answer – “As the container port did not proceed, there is no decision to review” – is erroneous because the Hon M Baird MP, as Treasurer, by decisions of 30 August 2012 and 26 July 2013 dictated that a container port not proceed at Newcastle. There were other decisions on the container port proposal, including by Mr Bairdand by Mr E Roozendaal. There were thus several decisions about the container port proposal capable of being reviewed.
The second sentence is misleading in allowing the interpretation that the proposal for the container terminal did not proceed because of a supervening event or because the proposal was withdrawn. Anglo Ports did not withdraw the proposal and denies there was any such supervening event.

 

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2 Responses to Port Botany uncapped = Newcastle scrapped

  1. Greg Cameron says:

    Fairfax journalist, Ian Kirkwood’s article today exposes the Baird government’s track record of hiding behind bureaucratic jargon and Delphic riddles to keep port privatisation details secret – how would electricity privatisation be any different?

    But if a Newcastle container terminal is such a dud idea, why has the Baird government gone out of its way to ensure it never happens? It has done this by protecting the company leasing Botany and Kembla and penalising the Newcastle lessee with a series of secretive conditions that mean Newcastle must pay the Botany/Kembla lessee to run anything bigger than a boutique operation.

    In the months since Newcastle was privatised in May, 2014, the Newcastle Herald has asked every relevant Baird government minister, from the Premier down, a series of questions about this subject.

    At every turn, we have been stonewalled, or answered with an impenetrable mixture of bureaucratic jargon and Delphic riddle.

    We have published as much information as we can piece together by joining the dots, and not once has the government contradicted us, even when we accused it of potentially ‘‘illegal and unenforceable’’ behaviour.

    So I take it we are right.

    Fairfax editorialised:
    Consider too, the government’s secretive imposition of a contractual penalty clause on the Port of Newcastle, designed to prevent it competing with Sydney in container handling.

    Helping create extreme market advantages for would-be asset buyers is a risky business. It will certainly help maximise the upfront, one-off sale price, but the downside is loss of competition after the sale, almost in perpetuity. (5 February 2015 )

    The Coalition, far from undoing the wrong perpetrated on Newcastle by its political opponents, has simply set the inequity in stone by inserting terms into its port sale agreements that effectively shut Newcastle out of competing for a serious slice of the container trade.

    The ACCC suggests this anti-competitive action by the government might be illegal and unenforceable. If that’s true it should be good news for Newcastle. (October 31 2014)

  2. laperouse says:

    Newcastle Herald 19 March 2015

    Revel in the details

    IAN KIRKWOOD

    STATEWIDE, the impending NSW election is effectively a moratorium on the Baird government’s proposed ‘‘poles and wires’’ privatisation.

    Personally, I don’t have a strong opinion either way, because I doubt it will make too much difference, in the long run, to power prices.

    But if governments are going to the voters, seeking mandates on big-picture policy changes, they are impelled, more than ever, in my opinion, to be upfront and honest about all aspects of their proposals.

    And if you ask if I am worried the government might be less than transparent over the poles and wires, my answer is yes, for two reasons.

    The first is the description of the sell-off as 49 per cent of the system, implying that the state will retain a controlling 51 per cent.

    As I noted in this space on December 22, the 49 per cent sell-off is achieved by including the inland NSW power company Essential Energy (formerly Country Energy), which is staying in government ownership.

    As it did when it privatised the three major ports – Newcastle, Botany Bay and Port Kembla – the government is offering the power assets on long-term lease.

    The government is offering 100 per cent of Transgrid, which operates the state’s main high-voltage networks, and 50.4 per cent each of Ausgrid and Endeavour Energy, the local poles and wires operators left behind when the retail ends of EnergyAustralia and Integral were privatised in 2011.

    Somehow, selling all of the high-voltage network and all of the coastal distribution system equates to keeping 51 per cent of our poles and wires in public hands. It might do so on paper, but I am struggling to see how.

    My other concern lies with any confidential assurances that the government may give the new owners of the system – assurances that might make it harder for any new players to enter the market, or protect the new owners from a major drop in power demand, caused, for example, by the closure of an aluminium smelter.

    And why am I worried about such noncompetitive assurances?

    Because they were given in the privatisations of Botany, Kembla and Newcastle.

    In the late 1990s, BHP’s major parting gift to the region (beyond cleaning up after 84 years of steel-making) was a plan to convert the steelworks site into a multipurpose terminal that would compete with, and conceivably rival, Botany as the state’s premier container port.

    It never happened. Longstanding caps on the size of Botany were lifted, and then scrapped altogether, and Newcastle lost its place as the ‘‘next’’ container port to Kembla.

    The Newcastle plan had its critics from the start, and they might be right.

    But if a Newcastle container terminal is such a dud idea, why has the Baird government gone out of its way to ensure it never happens? It has done this by protecting the company leasing Botany and Kembla and penalising the Newcastle lessee with a series of secretive conditions that mean Newcastle must pay the Botany/Kembla lessee to run anything bigger than a boutique operation.

    In the months since Newcastle was privatised in May, 2014, the Newcastle Herald has asked every relevant Baird government minister, from the Premier down, a series of questions about this subject.

    At every turn, we have been stonewalled, or answered with an impenetrable mixture of bureaucratic jargon and Delphic riddle.

    We have published as much information as we can piece together by joining the dots, and not once has the government contradicted us, even when we accused it of potentially ‘‘illegal and unenforceable’’ behaviour.

    So I take it we are right.

    In a perfect world, the government would put all of the details of these multi-billion dollar transactions squarely on the table for all to see.

    But we don’t live in a perfect world. We live in one where the businesses buying state-owned assets are privy to confidential information that we voters never see.

    And the government wonders why it is having trouble convincing people that the power privatisation is a good deal.

    Newcastle Herald 5 February 2015

    EDITORIAL: Baird’s sell-off program

    NSW Liberal Premier Mike Baird says he won’t be frightened by the Queensland election result into backing away from his own government’s asset sales program.

    That seems a reasonable stance, given the differences in the political climate in the two states.

    In Queensland, Campbell Newman put the Coalition on the nose as much with his style and his broken promises as with his privatisation program.

    By contrast, Mr Baird inherited the premiership from moderate Barry O’Farrell who created a climate of calm government, not overtly driven by the kind of rash ideological brain-snaps so characteristic of the Coalition at the federal level.

    Mr Baird hasn’t yet rocked the boat that Mr O’Farrell set on such a stable course, and voters appear inclined to regard him as generally benign.

    Even the scandal uncovered by the Independent Commission Against Corruption – that engulfed so many senior Liberals – doesn’t seem to have marred Mr Baird’s personal standing.

    The worst his critics can say is that his government appears beholden to the coal industry.

    And that his approach to maximising the sale price of public assets may ultimately result in pain for consumers in the form of price-gouging by newly minted private oligopolies.

    Indeed, Mr Baird does seem disturbingly one-eyed when it comes to perceiving competition issues.

    Perhaps it’s his banker background that makes the Premier appear highly sensitive to the importance of having multiple bidders to drive up the sale price of assets. He seems, however, far less sensitive to the importance of having multiple suppliers to hold down the price of products sold into a marketplace.

    Consider the government’s approval, against the advice and warnings of the Australian Competition and Consumer Commission, of AGL’s purchase of Macquarie Generation.

    Consider too, the government’s secretive imposition of a contractual penalty clause on the Port of Newcastle, designed to prevent it competing with Sydney in container handling.

    Helping create extreme market advantages for would-be asset buyers is a risky business. It will certainly help maximise the upfront, one-off sale price, but the downside is loss of competition after the sale, almost in perpetuity.

    Mr Baird’s next planned sale is part of the state’s electricity distribution network. Knowledge that this privatisation is looming is hardly creating waves among voters who, for the most part, seem cautiously willing to accept it.

    But if, in his eager pursuit of the best possible price, the Premier keeps creating preconditions for future price gouging by the new owners of formerly public assets, he must realise that a political reckoning will inevitably come.

    EDITORIAL: Container terminal policy

    Oct. 31, 2014, 9 a.m./ November 1 2014

    THE Australian Competition and Consumer Commission is right to be concerned about the NSW government’s ports and stevedoring policy.

    When governments privatise assets, they naturally want the highest price they can get. That’s understandable, given that – in the case of the state’s ports – the new owners control the assets for 98 years. The leases can only be sold once, so it’s important to get a good price.

    A problem arises, however, when the anxiety to maximise the sale price leads to poor decisions that force adverse consequences onto third parties with no say in the matter.

    The ACCC warned the NSW government about this concern with the sale of Macquarie Generation, pointing out that the sale to AGL would concentrate ownership of power assets in very few hands, a situation very likely to result in higher electricity prices for consumers.

    Similar concerns have also been expressed in relation to the power industry over the clampdown on support for renewable energy and the alleged encouragement of ‘‘gold-plating’’ in the distribution network. It has been argued that the government has a conflict of interest and may be tempted to make these policy decisions as a way of making their assets more valuable to potential buyers.

    Now the ACCC is saying that a similar conflict of interest may have motivated the government to impose a cap on container movements at the Port of Newcastle. By suppressing Newcastle’s ability to compete with Sydney, the government improved the value of Port Botany to buyers.

    The loser in the story is Newcastle, which – without market interference of the sort now being criticised – should have been a natural location for a major container terminal.

    When the BHP steelworks closed, solicitous governments piously promised help to create a ‘‘multi-purpose terminal’’, a concept that was welcomed in Newcastle since it would have helped the city diversify away from its dangerously narrow dependence on the cyclical coal trade.

    The reality has been shockingly different, with Labor governments actively diverting a car import terminal that the industry wanted to put in Newcastle and more recently allegedly torpedoing a strong bid by Anglo Ports to build a container terminal here.

    The Coalition, far from undoing the wrong perpetrated on Newcastle by its political opponents, has simply set the inequity in stone by inserting terms into its port sale agreements that effectively shut Newcastle out of competing for a serious slice of the container trade.

    The ACCC suggests this anti-competitive action by the government might be illegal and unenforceable. If that’s true it should be good news for Newcastle.

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