Newcastle coal port must serve producers’ interests

Partnerships with foreign investors have been a cornerstone of Australia’s economic development and living standards for more than 200 years. Given our vast landmass, relatively small population and limited capital base, overseas enterprises have been crucial to unlocking resources, building new industries, funding technological innovation and creating local jobs. The regulation of such investment must always serve our national interest, as well as the business bottom lines of the investors, which is why concerns about the operation of the Port of Newcastle raised by 15 Coalition MPs deserve attention by Scott Morrison and Josh Frydenberg. The port is 50 per cent Chinese-owned. The MPs, a range of Liberal and National backbenchers, want new arbitration measures imposed on the port because they believe its ownership structure gives the “Communist Party of China a geopolitical advantage over the export of Australian coal”.

The letter, sent by Tasmanian Liberal senator Eric Abetz to the Prime Minister and Treasurer last week, was signed by MPs across the Coalition spectrum. More could join the push. Signatories included former ministers Barnaby Joyce, Matt Canavan, Bridget McKenzie and Kevin Andrews, and prominent backbenchers Sarah Henderson and Concetta Fierravanti-Wells. Their concern, Geoff Chambers and Joe Kelly report, is that the port’s half-owner, Chinese state-owned China Merchants Port Holdings, could “impose punitive costs to hurt Australian coal exporters”. The MPs said it “seems incredulous’’ that a half-Chinese-owned company that controls a monopoly bottleneck in the coal export chain could increase charges at its own discretion, forcing up prices for Australian coal overseas and making our second-largest ­export commodity less competitive.

Newcastle, the world’s largest coal port, which handles 40 per cent of Australia’s coal exports, was leased for 98 years in 2014 by NSW premier Mike Baird’s government. The privatisation, which was a good move economically, funded major infrastructure development in NSW and a revitalisation of Newcastle, the state’s second-largest city. Earlier this month, The Australian revealed coalminers were ramping up their campaign against the port over pricing wars.

The MPs’ call for a review of the rules surrounding the port’s operations comes after Australian Competition and Consumer Commission chair Rod Sims told a Senate estimates hearing that it was a “monopoly” with no regulatory oversight. The MPs want Mr Frydenberg to declare the port a monopoly, which would ensure that if a coal producer could not agree on terms to access the port, the ACCC could resolve the dispute through arbitration. Such a mechanism would be “similar to the ACCC arbitration mechanism for other monopoly assets”, the MPs argue. Most coal producers in NSW have no alternative but to use the port, the MPs noted. But a spokesman for Mr Frydenberg said the independent National Competition Council had considered multiple times whether the Port of Newcastle should be declared under the National Access regime and each time had recommended against it. The government had followed that independent advice.

The MPs’ concerns have arisen amid growing geostrategic tensions and Beijing’s blocking Australian coal imports. Australian Strategic Policy Institute executive director Peter Jennings confirmed the problem. Any Chinese company, he said, “can be subject to pressure from the Chinese Communist Party to meet its political objectives”.

Once privatised, deals involving the sale or lease of assets to overseas investors should be honoured for the sake of Australia’s sovereign risk profile. But the MPs have raised an important issue that should be debated, in the national interest.