LAST week, the NSW government ruled out the former Newcastle steelworks site becoming a container terminal. It will be used instead for general cargo.

The government’s decision means that manufacturers in the Hunter and northern NSW will never have decent access to a container terminal. It is already prohibitive in terms of cost and logistics to move goods by truck to Port Botany from anywhere in northern NSW, because of Sydney’s clogged roads.

Manufacturers in regional areas must have certainty of access to a container terminal if they are to export. In addition to discouraging manufacturing industry in northern NSW, I believe the government’s policy will increase pressure on Sydney’s already stretched urban infrastructure by encouraging economic growth in Sydney.

There is enduring private sector interest in developing the Newcastle site for a container terminal to serve northern NSW. The site’s former owner, BHP, proposed a private container terminal for the site in 1998.

Newcastle’s competitive advantage is rail. A container terminal at Newcastle can serve northern NSW and allow regional manufacturers to plan for the future with greater certainty.

The NSW government has form on container terminal policy. In mid-2000, the NSW government entered into a confidential Memorandum of Understanding with BHP. Two months later, the NSW government received BHP’s development application for the site. The DA was approved; ownership of the site was transferred to the NSW government.

In 2003, the government announced that Newcastle would be the site for NSW’s next container terminal after Port Botany reached capacity. In 2005, the government approved expansion of Port Botany container terminal to 3.2 million twenty-foot equivalent units (TEU) per year. The Coalition’s Andrew Stoner lambasted the plan, saying “the Coalition supports more container freight on rail”. One of the conditions of consent for further expanding Port Botany terminal was “further environmental assessment”.

But last week, the Roads and Ports Minister, Duncan Gay, revealed that the cap was now abolished. The information was provided in answer to a question in the NSW parliament. There has been no other announcement. It is not known if the requisite environmental assessment was undertaken. It has not been revealed how an increase of 5 million TEU movements (from 2 million in 2011 to 7 million in 2030) will be accomplished.

Port Kembla was included in the government’s scoping study for selling Port Botany terminal, when it was realised that the Port Botany line would not cope with the long-term increase in container movements.

Presumably, containers will be railed from Port Kembla to south-western Sydney. The proposed Moorebank intermodal terminal (IMT), with its capacity of about 1 million containers, is too small. Neither the NSW nor the Australian governments have revealed where additional IMT capacity will be located in south-western Sydney.

I believe the NSW government’s motive for abolishing the cap on Port Botany container movements, and for including Port Kembla in the sale offer, had nothing to do with transport policy; it was to increase the sale price. It is possible that other assets are for sale, such as Enfield terminal.

It was recognised in 2000 that Newcastle presented an alternative to further development of Port Botany. A game-changer is the decision by the Australian and NSW governments to spend $1.1 billion upgrading the Northern Sydney Rail Freight Corridor to Newcastle.

This upgrade alone will not allow Newcastle to replace Port Botany. Its purpose is to allow for more rail freight between Sydney and Brisbane – all of which will pass through urban areas of Newcastle. But by completing a number of additional upgrades, the line is capable of accepting container rail from Newcastle.

About $559 million has been allocated by the Australian government to shift the School of Military Engineering from Moorebank to make the site available for an IMT.

These funds are better spent on completing the upgrade of the North Sydney Rail Freight Corridor to Newcastle and developing a greenfield IMT in Sydney’s north-west, with private capital.

But it appears the NSW government has not considered the possibility of Newcastle replacing Port Botany. Along with the Australian government, it appears it won’t consider completing the upgrade of the North Sydney Rail Freight Corridor to Newcastle. There is no impediment to the government making the Newcastle site available for private development of a container terminal to serve northern NSW. Cost to the government? Nothing. Benefit to the community? Significant.


Greg Cameron is a public affairs consultant based in Canberra and a former BHP Newcastle executive.

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