There's a certain irony in the Port of Newcastle's recent legal setback in its attempt to build an automated container terminal.
The port claims to be held back by "anti-competitive" conditions of its lease with the NSW Government that it says give another port operator a container monopoly. The port's claim is supported by the ACCC who took the NSW Government to court, but lost.
Meanwhile, the Port of Newcastle has no such qualms about its status as an unregulated monopoly in relation to Hunter coal exports.
While seeking ACCC intervention in relation to its container terminal proposal, the port vehemently resists calls from the ACCC and its own users for itself to be covered by any competition regulation.
Unlike similar monopolies, there is no ACCC oversight of the Port of Newcastle. The ACCC oversees monopoly infrastructure such as pipelines, railways, and airports, but not the world's largest coal export port.
For years, ACCC chair Rod Sims has expressed concerns that the port acts as a monopoly for coal exports, and called for legislative change. He recently described competition regulation at the monopoly port as "non-existent".
Hunter coal exporters are the port's major users, and fees on coal exports deliver the bulk of port revenue. The port charges fees on shippers, not coal producers, but the producers ultimately pay the price when the port's fees are recovered by our customers through lower coal prices.
Since 2014, these fees have risen by over 120 per cent.
Back in 2016 the size of these fee increases and the refusal of the port to engage in a reasonable commercial settlement prompted the port's biggest coal export user to seek ACCC intervention.
For a brief period, the ACCC had such a role, and made a determination.
The ACCC determined the port was unfairly overcharging higher fees than justified. This related to the port's attempt to recover costs for dredging works already paid for by the coal exporter port users before the current port operators took over. This determination was upheld by the full Federal Court. The Port has appealed to the High Court, with an outcome pending.
The port has also undertaken an intense, well-connected political lobbying campaign, with legislation now proposed to retrospectively eliminate the ACCC determination and further wind back port user rights.
The federal Treasurer Josh Frydenberg seems intent on delivering this favour to the port, but many others, including at least 15 government MPs and senators, have expressed concerns.
Hunter coal exporters are not opposed to the container terminal proposal. We stand ready to support any project that will strengthen and diversify the Hunter economy.
However, the Treasurer's proposed changes will entrench the port as an unregulated monopoly that can increase its fees at will, and for whatever reason, including to recover capital costs.
This means the container terminal could be subsidised by increased port fees on coal exports - effectively a private tax on coal through the port.
This would make Hunter coal less competitive on global markets, threatening Hunter coal jobs and mining supplier businesses, including in the federal electorates of Paterson and Hunter.
Those spruiking the economic and political appeal of the proposed automated container terminal may wish to consider that.
There is a way to resolve this issue and provide a win-win outcome.
The fears of Hunter coal exporters could be allayed through a voluntary commercial agreement with the port. Since April last year, coal exporters have repeatedly sought this through a collective bargaining authorisation.
Coal exporter port users want to see the port generate a reasonable return for its owners, with reasonable commercial terms that provide all parties with certainty.
The port has simply refused to participate in any negotiation, leaving no alternative but to seek regulatory reform to restore the ACCC's arbitration role when such negotiations fail.
Until this deadlock is broken the port will continue to be seen by its major users as an unrestrained monopoly using its own anti-competitive powers while claiming competitive unfairness elsewhere.
It's a shame because the port and its major users should be working as partners in the future development of the Hunter economy, rather than locked in dispute.
.png?w=600)
