How the NSW Government could save $7 billion on the building of new railways

How the NSW Government could save $7 billion on the building of new railways
Port of Newcastle

Port of Newcastle.

Greg Cameron

Building new rail freight capacity for Port Botany will cost $7 billion. This cost can be avoided by building a rail freight bypass of Sydney, between Newcastle port and Glenfield. Railing containers will enable a rail freight bypass line to operate profitably.

The government’s plan is to build the Northern Sydney Freight Corridor to provide the equivalent of a dedicated rail freight line between Newcastle and Strathfield. Stage 1 will be finished this year. Work must commence immediately on stages 2 and 3 costing $5 billion. These stages are required to be in place by 2028 to meet predicted demand.

The Western Sydney Freight Line, between Chullora and Eastern Creek and costing $1 billion, must be built if containers are to be railed between Port Botany and Eastern Creek. A new rail freight line into Port Botany must be built to increase freight capacity between the port and Chullora. This line will cost up to $1 billion.

The government leased three ports – Botany, Newcastle and Kembla – for $6.85bn without setting aside funds for upgrading rail capacity to service Port Botany.

The solution is to close Port Botany and relocate operations to Newcastle port. The cost can be met from a charge on container and general rail freight using the bypass line.

While the line is being built over 10 years, the southern section can be built immediately, connecting Glenfield and Eastern Creek. Container throughput at Port Botany can be railed to a new intermodal terminal at Eastern Creek via Glenfield.

One issue is the government’s container throughput cap on Newcastle port. This cap existed on 17 October 2013 when it was disclosed to parliament by The Hon. Duncan Gay MLC, in his then capacity of Minister for Roads and Ports. There can be little doubt that the purpose of this cap was to deter or prevent competition for Port Botany from a container terminal at Newcastle port.

Under Section 46 of the ”Competition and Consumer Act 2010” (CCA) it is unlawful to misuse market power to deter or prevent competition in a market. S46 did not apply to the NSW government if the cap was imposed as part of the government’s privatisation of the port. A government privatising an asset is not considered to be ”carrying on a business”.

However, the NSW government was carrying on a business – as Newcastle Port Corporation (NPC) – in 2008 when tenders were called for a 1-million TEU capacity container terminal at Newcastle port. The government was still negotiating with the successful tenderer, Anglo Ports Pty Ltd, when Mr Gay disclosed the container throughput cap on 17 October 2013.

The government’s negotiation with Anglo Ports concluded in November 2013, but the company said it did not withdraw from this negotiation, as later disclosed to the NSW parliament on 10 February 2015.

Had the container throughput cap existed for the purpose of the negotiation with Anglo Ports, the government would have been ”carrying on a business” and may have been required to comply with S46 of the CCA. The container throughput cap would still exist if it was imposed for the purpose of privatising Newcastle port.

Does this cap still exist?

 

 

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