The detailed commentary included in our member notice on 21 March 2024 foreshadowed an Independent Pricing and Regulatory Tribunal (IPART) determination of a one-off payment to be made under the Port of Newcastle Extinguishment of Liability Act 2022 (NSW). The intent of this legislation is to remove the Port of Newcastle's liability to reimburse the State for compensation payments owed to NSW Ports (the operator of Port Botany and Port Kembla), if the Port of Newcastle handles container trade above the prescribed cap (30,000 TEU per annum).

On Friday 5 April 2024, IPART announced the current value of compensation payment that can be made by the Port of Newcastle to the State of NSW is $13 million.

IPART MEDIA RELEASE AVAILABLE HERE

The IPART conclusion has received a positive response from both NSW Ports and the Port of Newcastle with both now focussed the state's broader freight strategy.

NSW PORTS

NSW Ports have referred to the 'extraordinarily low' compensation value as confirmation of the merit of the state's decade old NSW Container Port Policy that set out to fully utilise capacity at Port Botany, before building additional capacity at another port (once Port Botany nears capacity, the next container terminal to be developed would be Port Kembla).

NSW PORTS MEDIA RELEASE AVAILABLE HERE

PORT OF NEWCASTLE

The IPART valuation has understandably been welcomed by the Port of Newcastle (PoN) with a focus now turning to the NSW Freight Reform Review to remove any 'regulatory roadblock' to facilitate meaningful progression for a large-scale container terminal.

PORT OF NEWCATLE MEDIA RELEASE AVAILABLE HERE

Right - Craig Carmody (CEO PoN) addressing media on Friday 5 April 2024. Below - concept of PoN container port development

COMMENTARY

While the IPART decision is seen as 'unshackling' the Port of Newcastle, it is important to note that the determination does not affect the Port Commitment Deeds with NSW Ports. This means that NSW Ports will potentially benefit with a financial windfall as any handling of import or export containers at the Port of Newcastle above the prescribed cap will attract a per TEU fee that the state must make to NSW Ports.

In a report commissioned by NSW Treasury, preliminary estimates by Deloitte Access Economics suggest that liability to the state could range between $600 million and $4.3 billion in today's dollars out to the end of the contract in 2063.

Freight & Trade Alliance (FTA), Australian Peak Shippers Association (APSA) and Container Transport Alliance Australia (CTAA) representatives met with Transport for NSW executives on 28 March 2024 referencing the potential of competing container ports and the need to address uncertainty in terms of planning for much needed private and public infrastructure investment.

Reference was made to an independent advisory panel recently appointed by the NSW Transport Minister Jo Haylen to work with her department and provide independent and expert advice on the new freight strategy. Transport for NSW gave a commitment to FTA, APSA and CTAA for a facilitated introduction to the panel.

FTA and APSA will continue to keep members up to date on these important developments.

Paul Zalai - Director FTA | Secretariat APSA | Director GSF

Port of Newcastle Compensation Payment Valued at $13 million