Privatisation failing NSW coal producers

Imagine living in a town with only one service station, located thousands of kilometres from any other place where you could buy petrol.

Now imagine how you would feel if you drove up to the bowser one morning and found fuel prices had tripled, and were told by the operator that further big price increases were on their way too.

With no choice than to fill your tank at the only petrol station in town, you’d be forced to pay.

The service station would make a lot more money, without having to do anything extra in return.

In real life this scenario would be unlikely. Most businesses in Australia are monitored by regulators, like Australia’s watchdog for fair trading, the ACCC, to ensure they don’t rip-off their customers.

Users of the Port of Newcastle however, enjoy no such protections. As a result, the Port has recently announced it will triple its Wharfage Charge for all port users, including the mining sector.

This announcement was made following a token period of ‘consultation’ by the Port with its customers, which essentially presented the increases as a ‘done deal’, and with more increases to come. Some Port customers were even left out from this ‘consultation’ process, while others are still waiting for responses from the Port to their legitimate questions and concerns.

The Port of Newcastle is an important strategic asset for NSW, with a monopoly on the movement of almost all NSW coal to our key export markets. This means NSW coal exporters must use the Port to get their coal to customers overseas. There is no alternative Port nearby.

Despite this, the Port of Newcastle is an unregulated monopoly, and the ACCC has no role in relation to pricing at the Port. Over the last decade the Port has taken advantage of this situation, repeatedly using its unregulated status and monopoly power to increase charges.

Since privatisation of the Port in 2014, Navigation Service Charges have tripled. Wharfage Charges at the Port are also set to triple, taking them to a level five times higher than 2014, and three times higher than wharfage charges at comparable Queensland coal loading ports.

The ACCC has repeatedly expressed concerns over the monopoly status of the Port, and called for regulatory changes to ensure the Port is appropriately regulated. So far, this hasn’t happened.

All Port users should be very concerned about the ongoing pattern of fee increases at the Port and the impact it will have on the mining industry in NSW. With the Port seeking to diversify its operations in the future, other potential Port users should also be extremely wary.

So far, the Port of Newcastle has also been publicly silent on any further plans for future fee increases, or how this will affect the economic viability of their plans to diversify the Port.

The Port of Newcastle needs to come clean. It must provide a reasonable explanation for such massive increases in its charges, if there is one. It must also outline the full extent of future planned price increases for all Port users.

It’s also time for the ACCC to finally be given a regulatory role in relation to the Port of Newcastle. Only this will provide Port users some protection from the rampant price gouging of the last decade.

Stephen Galilee
CEO, NSW Minerals Council