NSW could be forced to pay up to $4.3bn compensation if Newcastle becomes container port, modelling shows
The New South Wales government could be forced to pay up to $4.3bn in compensation if Newcastle becomes a container port, after it was privatised a decade ago along with two other major ports.
The government will on Thursday reveal the contracts used in the sales of Port Botany and Port Kembla in 2013 and the sale of the Port of Newcastle the following year, as well as modelling commissioned on the northern port’s plan to develop container abilities.
The treasurer, Daniel Mookhey, planned to table in parliament the contracts that underpinned the privatisation of the three ports which netted $6.82bn for the state.
It comes after he wrote to the owners of the ports last year requesting consent for the contacts to be published as part of the Labor government’s promise to “end the secrecy” around major privatisation deals.
“After more than a decade, the people of NSW are finally seeing what the impact of selling off their assets looks like,” he said.
“They shouldn’t have had to wait this long to see these contracts. All this government had to do was ask.”
Under the agreements, Port Botany and Port Kembla owner NSW Ports would be eligible for compensation from the government if the Port of Newcastle was to develop a competing container terminal, as it intends to do.
In 2022, legislation was passed to eliminate the Port of Newcastle’s liability for developing a container port, if it agreed to compensate the state an amount to be determined by the NSW Independent Pricing and Regulatory Tribunal (Ipart).
The amount is separate from the state’s liability to the owner of Port Botany and Port Kembla, which modelling conducted by Deloitte Access Economics on behalf of NSW Treasury found could be between $600m in 2024 and up to $4.3bn in 2063.
The figure will be offset, at least in part, by the amount to be determined by Ipart.
Privatisation was a key issue in the 2023 state election.
Opposing privatisation was one Labor’s signature policies while the Coalition preached the benefits of its “asset recycling” scheme. The Coalition eventually committed to no further privatisation if it was re-elected.
