NSW freight at the cross(rail)roads

The NSW Ports Consortium, led by IFM Investors, and also comprising Australian Super, QSuper, Cbus, HESTA, HOSTPLUS and Tawreed Investments Limited, a wholly owned subsidiary of the Abu Dhabi Investment Authority, took ownership of Port Botany and Port Kembla in April 2013.

They paid a premium price for Port Botany being protected against competition from Newcastle port. In return, the NSW government agreed to pay this consortium more than $100 per container for throughput at Newcastle port in excess of 30,000 per year, plus a margin for growth.

The Newcastle port container throughput fee – over $100 per container for throughput more than 30,000 per year plus annual ‘organic’ growth – is economically unjustified. Should this anti-competitive fee be removed – secrecy prevents it from being examined for lawfulness and enforceability – the NSW government has no means for paying NSW Ports.

This fee is a job destroyer by preventing competition for Port Botany and denying northern NSW access to a container terminal on competitive terms. Well might Stephen Anthony, chief economist of Industry Super, claim that ”we need strong economic leadership to overcome shallow, short-term thinking emphasising speculation on financial assets and real estate”, as he wrote in the Australian Financial Review on 21 September, because the biggest single investment by Australia’s biggest industry super funds demonstrates otherwise.

The Commonwealth Government is equally at fault. It has transport requirements in Sydney due to the proposed Badgery’s Creek Airport and the proposed Moorebank Intermodal Terminal. Both projects require new rail infrastructure. Cost-effective rail services cannot be provided to either because of inadequate rail transport planning by the NSW government and lack of funds.

Consequently, the Badgery’s Creek Airport and Moorebank Intermodal Terminal projects should not proceed without rail transport infrastructure arrangements being in place which meet the transport needs of the residents of Sydney.

In order to provide a rail freight service between Port Botany and western Sydney intermodal terminals, including Moorebank, the NSW government is required to spend more than $7 billion: $1 billion is required for a new rail freight line into Port Botany; $1 billion is required for the Western Sydney Freight Line, between Chullora and Eastern Creek; and $5 billion is required for stages 2 and 3 of the Northern Sydney Freight Corridor, between Newcastle and Strathfield. The NSW government does not have the funds to build this infrastructure and the investment is not a Commonwealth responsibility, even if the funds were available, which they are not.

It is feasible for a rail freight bypass of Sydney, between Newcastle port and Glenfield, to be built and paid for by the private sector. Apart from replacing the need for rail freight upgrades costing $7 billion, the primary benefit is enabling all of Sydney’s existing rail infrastructure to be used for passenger trains by removing all freight from the network. There would be no rail freight service to Moorebank, therefore an intermodal terminal would not proceed. By converting the Southern Sydney Freight Line to passenger rail, it would be a short extension to Badgery’s Creek Airport.

An airport at Badgery’s Creek might not be required were Sydney Airport’s short (2,600 metres) parallel runway to be extended to 4,000 metres. This would enable all flight paths to occur over water, thereby eliminating aircraft noise from residential areas. Extending the runway within the airport is achievable if the displaced facilities are relocated to the Port Botany container terminal site after terminal operations are relocated to Newcastle port.

The rail freight line between Newcastle port and Glenfield would be paid for by railing containers between the port and western Sydney intermodal terminals, and converting general freight that currently enters Sydney by truck to rail.

The Port Botany/Port Kembla leaseholder, the Port Botany container terminal operators and the Newcastle port leaseholder, all stand to improve their financial returns by participating in the rail freight line, which would carry all containers for the Sydney market and replace trucks for Sydney-bound freight.

The Turnbull government should not permit the Moorebank Intermodal Terminal project and the Badgery’s Creek Airport project to proceed unless net public transport benefit to the residents of Sydney is demonstrated – and the economic reports are not heavily redacted, as with the Moorebank Intermodal Terminal business case.

For its part, the NSW government must demonstrate that the Newcastle port fee is economically justified, lawful and enforceable, before proceeding to remove the heavy rail line. This $340 million cost is funded from the lease of Newcastle port.

Source: http://www.tandlnews.com.au/