‘Secret’ deals mean NSW taxpayers liable for port privatisations

The sale of the state’s ports has left taxpayers with a potential liability of between $600 million and $4.3 billion under a deal struck by former treasurer Mike Baird, which means the government is liable for compensation to NSW Ports if Newcastle develops a container terminal.

The liability estimates and previously secret port privatisation contracts will be tabled in NSW parliament on Thursday, along with a host of other deeds from the sale of public assets.

Other deeds that will become publicly available include the sale of electricity networks TransGrid, Ausgrid and Endeavour and the privatisation of AGL and Origin power stations.

A financial penalty was placed on Newcastle as part of the Baird government’s 2013 port privatisation deal.Credit: Sam Mooy

The then-Coalition government sold 99-year leases for Port Botany and Port Kembla for $5.07 billion in 2013 to a consortium called NSW Ports. A year later, the Port of Newcastle was acquired for $1.75 billion by a joint venture made up of The Infrastructure Fund and China Merchants.

NSW Treasurer Daniel Mookhey said under the former government’s ports deal, the state would be liable to compensate NSW Ports if Newcastle developed a competing container terminal, which would be a move to diversify the world’s largest coal export port away from fossil fuels.

In a report commissioned by NSW Treasury, preliminary estimates by Deloitte Access Economics show that the government’s liability could range from $600 million to $4.3 billion until the end of the contract in 2063.

Last year, Mookhey wrote to the port owners requesting consent to release the contracts, arguing that the public should know the details of the sales and whether it was good value for taxpayers.

The documents to be tabled also outline the details of a commitment deed signed with the Port of Newcastle. The deed requires the state to compensate Port Botany and Port Kembla if container traffic at Newcastle exceeds a cap.

Another 50-year deed, signed in 2014 when Newcastle was privatised, requires the Port of Newcastle to reimburse the government for any compensation paid to Port Botany and Port Kembla.

However, the Independent Pricing and Regulatory Tribunal (IPART) is working to set the price for a one-off payment to the state, which would mean the Port of Newcastle could choose a lump sum rather than reimbursing the state government for payments to NSW Ports.

Mookhey will deliver a ministerial statement on Thursday before tabling the contract in parliament.

“After more than a decade, the people of NSW are finally seeing what the impact of selling off their assets looks like [but] they shouldn’t have had to wait this long to see these contracts. All this government needed to do was ask,” Mookhey said.