Port of Newcastle privatisation could cost NSW $4.3b

Privatising the Port of Newcastle has created a potential liability for the state of up to $4.3 billion, NSW Treasurer Daniel Mookhey says.

Daniel Mookhey

The Port of Newcastle, Australia’s biggest coal export terminal, was sold off to a consortium made up of Hastings Funds Management and China Merchants for $1.75 billion in 2014.

Mr Mookhey last week tabled contracts including details about the privatisation of the Port of Newcastle, Port Botany and Port Kembla, and the sale of five power stations by the previous government.

The previous government sold Port Botany for $4.3 billion and Port Kembla for $760 million in 2013.

Mr Mookey said the documents reveal that the state will be liable to compensate NSW Ports, which owns Port Botany and Port Kembla, if the Port of Newcastle develops a competing container terminal – an option the port is actively pursuing.

“The contracts include clauses which require NSW to compensate the owners of NSW Ports if Port of Newcastle ever builds capacity above 30,000 containers per year,” Mr Mookhey said.

Under legislation passed in 2022, port of Newcastle’s liability for developing a container port would be waived if it compensated the state an amount that’s currently being deterimined by IPART.

However,  NSW will still have to compensate NSW Ports, and preliminary analysis by Treasury indicates a potential liability of between $600 million and  $4.3 billion liability to the end of the contracts, the Treasurer said.

“It is fair to say that should the liability under the contracts entered into by the former government and the owner of Port Kembla and Port Botany be triggered, then Deloitte modelling shows that the potential liability is between $600 million and $4.3 billion to 2063,” Mr Mookey said.

Stamp duty dodged in power station contracts

He also said contracts relating to the sell-off of five power stations were structured so stamp duty was “hidden, discounted or otherwise written off”, amounting to the loss of up to $129 million in stamp duty.

“When Macquarie Generation was sold for $1.725 billion, the stamp duty that could have been payable was as much as $94.8 million; when Delta Energy sold Colongra for $234 million, the stamp duty that could have been payable was as much as $12.9 million,” he said.

“When Delta Energy’s western assets were sold for $160 million, the stamp duty that could have been payable was as much as $8.8 million; when Eraring was sold for $50 million in 2013, the stamp duty that could have been payable was as much as $2.735 million; and when Vales Point was sold for $1 million, the stamp duty that could have been paid was $40,490.

“It is unclear how much, if any, of this stamp duty the buyers of these assets paid.”

Comment below to have your say on this story.

If you have a news story or tip-off, get in touch at editorial@governmentnews.com.au.  

Sign up to the Government News newsletter

Leave a comment:

Your email address will not be published. All fields are required