Legislation clearing the way for a Newcastle container terminal has passed through the NSW lower house after the government and opposition supported the move on Tuesday.
The government moved amendments to a bill introduced last month by Lake Macquarie MP Greg Piper which would extinguish controversial penalties on Port of Newcastle developing a rival container terminal to Port Botany and Port Kembla.
Mr Piper said the legislation would allow the port to progress its plans for a large-scale container terminal, helping Newcastle to attract manufacturers and lowering freight costs for businesses and farmers across the Hunter and the state's north and west.
"Listening to people in their debate here most of us would agree the policy and the sale of ports as they were done in 2013-14 was a mistake," he told Parliament.
"I believe this is the opportunity we've got to make this right."
Labor MPs said the opposition supported the legislation but criticised the government for the "dodgy" way it privatised the state's three main ports.
They called on Treasurer Matt Kean to reveal how much compensation taxpayers would have to hand Botany and Kembla operator NSW Ports for removing the restrictions on Newcastle.
The compensation provisions in the NSW Ports deal expire in 2065.
The legislation will require Port of Newcastle to apply for a review of its lease arrangements and the treasurer to appoint an independent expert to determine within six months what the fair market price for the lease would have been if the restrictions on container trade were not in the original deed of agreement.
The penalty provisions will disappear when Port of Newcastle, which holds the 98-year lease, pays the state the difference between the new valuation and the $1.75 billion it paid in 2014.
The bill will pass to the upper house for a likely vote this week, a fait accompli now both sides of politics have endorsed the legislation.
The bipartisan support represents a breakthrough after years of political and legal wrangling over the port's plans to diversify away from coal.
The government introduced secret container penalties when it privatised the Botany, Kembla and Newcastle ports in 2013 and 2014.
The provisions require the government to compensate Botany and Kembla operator NSW Ports for container movements in Newcastle above a set cap, now estimated at 50,000 a year.
The lease deal with Port of Newcastle requires the Newcastle operator to reimburse the government for any compensation payments the state must make to NSW Ports.
The payment provisions were kept secret from Parliament and the public until they were revealed by the Newcastle Herald in 2016.
The Herald understands the government will use Port of Newcastle's top-up payment to compensate NSW Ports if Newcastle exceeds the container cap in the future.
Ms Catley questioned how much taxpayers would have to pay once the top-up payments ran out.
"While this bill is well intentioned, it does not extinguish the liability placed on the Port of Newcastle and still puts taxpayers on the hook," she said.
"I'd like the minister to confirm in this Parliament that the liability will not exceed the money collected from the Port of Newcastle."
In question time, Premier Dominic Perrottet would not provide a dollar figure.
"We have a port strategy in this state, and just like we want to support the communities of Newcastle, we also want to support the communities of Wollongong," he said.
"When it comes to the port of Newcastle and those arrangements, if that cap is reached, compensation will need to be paid to the taxpayers of NSW."
Mr Perrottet said the government's privatisation strategy since 2011 had "unlocked" capital to spend on "record schools, the Newcastle light rail".
"That's why here in NSW $112 billion of infrastructure over the next four years, twice as big as the Victorian investment which they call the Big Build."
Upper Hunter Nationals MP Dave Layzell, who had threatened to cross the floor if the Coalition did not back Mr Piper's bill, said the port deals were a "great success of privatisation".
"It is actually the private sector that is seeing the opportunities in the Hunter now and seeing the opportunities in Newcastle to be able to push forward for this container port," he said.
Mr Piper said Port of Newcastle had paid a "lesser amount" in 2014 because of the container restrictions "as opposed to the premium NSW Ports paid for the restriction that was put on the port of Newcastle".
He said the government amendments to his bill went "a long way" to addressing concerns over the liability of taxpayers to NSW Ports.
Newcastle MP Tim Crakanthorp said the bill's passing was the result of "sustained pressure from stakeholders all over NSW" and represented a "capitulation" by the government.
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