My question is directed to the Minister for Roads and Ports. How much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port?"
Former Labor MP Adam Searle asked this question in Parliament on October 17, 2013. In his answer, the minister failed to disclose that on May 31, 2013, the-then Coalition government made a commitment to pay NSW Ports for the number of containers handled at the Port of Newcastle above a cap. The fact that the question was asked proved that Labor knew about the government's deal with NSW Ports, but had no hard evidence.
At that time, a negotiation was taking place between Newcastle Port Corporation (NPC), a statutory state-owned corporation, and Mayfield Development Corporation (MDC) over development of the port's container terminal site. A deal was ready to be signed in December 2010, when a competing proposal to use the site for a coal loader was brought to the-then Labor government. This proposal was later investigated by the Independent Commission Against Corruption. However, NPC's negotiation with MDC was not concluded when the March 2011 state election intervened. The Labor government was replaced by a Coalition government.
On August 6, 2013, NPC informed MDC that it was required to reimburse the government for the cost of the commitment made to NSW Ports on May 31. But on October 14, 2013, MDC informed NPC that it considered the government's requirement to be illegal under the Competition and Consumer Act 2010.
Three days later, Searle asked his question in Parliament.
Then, on October 28, the treasurer announced that no decision had been made about leasing the Port of Newcastle to the private sector because the government had not received a scoping study. But on November 5, 2013, the Treasurer announced that the scoping study had been received and the decision was taken to lease the port. On November 8 2013, the treasurer terminated NPC's negotiation with MDC.
The Port of Newcastle was leased to Port of Newcastle Investments (PON) on May 30, 2014. PON agreed to reimburse the government for the cost of the commitment to pay NSW Ports. PON had full knowledge of the commitment's history.
Hastings Funds Management was the lead partner in the PON consortium. In December 2012, Hastings was one of seven bidders to lodge "indicative" bids with Treasury for the Port Botany and Port Kembla leases. These bids were judged to be too low. Hastings then proposed to substantially increase its bid if the Treasurer would agree to pay for the number of containers handled at the Port of Newcastle above a cap. The treasurer agreed, but also offered the deal to the other bidders. One of these was IFM Investors.
By April 2013, only Hastings and IFM remained in the bidding. IFM won with a bid of $5.07 billion, but Hastings' bid was just $14 million lower. Consequently, Hastings knew what to bid for the Port of Newcastle lease. Hastings would have reduced its bid by at least the amount that it increased its bid for Botany/Kembla.
The indicative bids for Botany/Kembla were not disclosed.
Between October 17, 2013, and July 29, 2016, the Labor opposition asked more than 100 further questions in Parliament. These questions were based on the answer the minister gave on October 17, 2013. The commitment was denied to the public and the Parliament until the government was forced to admit it by the Newcastle Herald, on July 29, 2016.
Last week, in Parliament, Premier Chris Minns confirmed the ACCC advised against the commitment to pay NSW Ports. The Premier said the commitment gave the state a liability of between $600 million and $4.3 billion. The commitment to pay NSW Ports was concealed and denied because Parliament did not intend to authorise the government to incur a massive liability. This makes the commitment unlawful under the Ports Assets (Authorised Transactions) Act 2012. Mr Minns is yet to acknowledge that the previous government denied the commitment.
