Upper Hunter MP Dave Layzell admits a bill designed to dismantle port commitment deeds constraining the development of a Newcastle container terminal will test the Coalition's unity.
But the Nationals MP said he hoped the project's benefits to the state's regional economies would persuade Sydney-based Liberals to support a private members bill.
If passed, the bill would effectively remove the deeds which the state government entered into as part of the privatisation of Port Botany and Port Kembla in 2013.
The deeds require the government to compensate NSW Ports if container traffic at the Port of Newcastle exceeds annual indexed cap. It is not not known how much the compensation bill would be but estimates range from $300 million to $1billion.
Mr Piper hopes to meet with the leadership of the Coalition and Labor before introducing the bill.
Mr Layzell said Mr Piper's proposed legislation would bring a long-running debate within the Coalition about a Newcastle container terminal to a head.
He is among a number of Nationals MPs with constituents who will directly benefit from the terminal.
However, Sydney-based Liberals with links to with former premiers Mike Baird and Gladys Berejiklian, are likely to oppose the removal of the deeds.
"There is a lot internal debate on our side about the pros and cons of developing a second container port but it is very clear there are a lot of benefits for regional NSW that may not necessarily be acknowledged by Sydney-based MPs," Mr Layzell said.
"I'm absolutely (hopeful the bill will pass). A container terminal is important for our region and I'm very supportive of it. I haven't seen the details but, in principle, I'm highly supportive of developing that capability in our region."
Hunter Labor MPs have also previously spoken in favour of establishing a container terminal.
A spokeswoman for Labor leader Chris Minns said the party was awaiting to see the proposed legislation.
"NSW Labor continues our long standing support of a container terminal at the Port of Newcastle," a spokeswoman said.
"We know the terminal is crucial for diversification and the creation of local jobs in Newcastle and the Hunter."
In response to a concerted community campaign to establish a Newcastle container terminal, NSW Ports wrote to the region's state MPs in August to argue that the project was flawed and unnecessary.
"If landed in Newcastle, these containers would need to be trucked or railed to their final destination, notably the population centres of Sydney and West Sydney some 200km away," the letter said in part.
NSW Ports invited the MPs to individual briefings to discuss its arguments in more detail.
Mr Layzell said he attended the briefing, but remained convinced of the benefits of a Newcastle container terminal to the Hunter.
"I listened to their point of view, but at the end of the day I'm still a believer in competitive economies. Despite the economies of scale that may exist by focusing on one or two ports, it will still be cheaper overall to have a competitive industry. If I put my parochial hat on, I want that economic benefit in the Hunter," he said.
Nationals Northern Tablelands MP Adam Marshall was expected to announce his intention to table a bill similar to Mr Piper's on Tuesday, but failed to do so.
The Herald has been unable to contact Mr Marshall to discuss why he pulled his bill.
Mr Piper said on Wednesday that he had been working on his private members bill for some time and only became aware of Mr Marshall's intentions on Tuesday.
Mr Layzell said the intriguing sequence of events was "a crazy coincidence, but no coincidence."
Greg Cameron, a Canberra-based public affairs analyst with a long-standing interest in the Port of Newcastle, said Mr Piper's bill would enable the parliament to consider whether the previous parliament authorised the treasurer under the "Ports Assets (Authorised Transactions) Act 2012" to penalise the government for changing container terminal policy in the future.
"The long title of the "Port of Newcastle (Extinguishment of Liability) Bill 2022" states: 'An Act to extinguish certain liabilities of the operator of the Port of Newcastle relating to an agreement between the State and the operator of Port Botany and Port Kembla; and for related purposes.'
The bill recognises that the government's lease contracts with NSW Ports are separate from its lease contract with Port of Newcastle. Consequently, the Port of Newcastle container penalty can be extinguished without affecting the contracts with NSW Ports for Botany and Kembla," Mr Cameron said.
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