ACCC Chairman Rod Sims. PICTURE: THE head of Australia’s consumer watchdog says he is keeping a “watching brief” over the privatised Newcastle Port.
Rod Sims, the head of the Australian Competition and Consumer Commission, told a Senate economic legislation committee earlier in October that the port sale was a “good example” of potential negative consequences of selling a monopoly asset.
“Our first concern with the Port of Newcastle was that it was privatised without what we would see as any effective regulation over price,” Mr Sims said.
“They bought it at $1.75 billion [and]revalued it to $2.4 billion and immediately pushed up the navigation charges by 40 per cent or more.
“So we thought that was, I am afraid, a rather good example of what we were worried about, because they are a complete monopoly.”
Mr Sims, who has been critical of the Newcastle Port privatisation in the past, also confirmed the ACCC had been consulted by the state government on its controversial decision to impose a cap on container ship movements as part of the sale.
“We did have a look at that [the cap] and we did engage with the state government on that,” he said.
“We are still keeping an eye on that.”
A spokeswoman for thePort of Newcastle said its pricing “remains competitive”, noting thatport charges account for“less than onepercentof the free on board cost of coal” which she said was comparable to other east coast ports.
“Port of Newcastle has an obvious commercial imperative to ensure that the port remains competitive and to maximise trade volumes through the port,” she said.
“The success of its business depends on it.”
She said Port pricing had only increased 1.2 per cent while under government ownershipin the 20 years prior to the pricechange introduced last year.
Mr Sims said the lack of pricing regulation was his “dominant concern”.
“We think that if you are actually increasing charges by those amounts and you have the potential to increase charges by that amount then that can have a serious effect on investment plans of the users of the port,” he said.
He said the “competition issue” with the cap was “more complicated” because “you have to think about what could happen if the clause was not there”.
“But it is a hard one because sometimes there is no need for an alternative [container] port for some time,” he said.
“On the other hand, sometimes that area would prefer to have a more local port.
“So we are just keeping an eye on what is going on there.”
The Newcastle Heraldfirst revealed the long-denied cap on container movements through the Port of Newcastle in July.
The agreement with the Port of Newcastledictatesonce a“cross-payment” threshold of 30,000 containers – plus 6 per cent yearly growth – was reached at Newcastle, the operator would have to pay the owners of the Port of Botany $1 million for every ship.
Premier Mike Baird described the cap as “smart”.