Fifteen Australian politicians, including the deputy prime minister, have called for action from the federal government on the Port of Newcastle (PON), which is partially leased to China Merchants, a Chinese state-owned enterprise.
In a letter to Prime Minister Scott Morrison and Treasurer Josh Frydenberg seen by The Australian, Senator Eric Abetz of Tasmania expressed concern that the Chinese Communist Party (CCP) will be given a geopolitical advantage by proposed changes to the National Access Regime (NAR). The NAR governs the operation and investment into critical infrastructure around Australia.
Signed by a contingent of Coalition politicians, the letter raised issues around the PON, including that 50 percent of the 91-year lease is owned by a company backed by CCP, with Abetz also saying that it operates in a monopolistic way which needs urgent assessment.
The PON handles approximately 40 percent of Australia’s export volume of coal every year—4,400 ship movements and 164 million tonnes of cargo. It has been privately owned since 2014 by The Infrastructure Fund and China Merchants Port Holdings Company (CMPorts).
Also of major concern for the Australian politicians was that CMPorts has earmarked the PON as a “Port-Park-City” development under Beijing’s controversial Belt and Road Initiative.
“The Port of Newcastle is an important strategic national economic asset as coal exports that go through it represent around 40 percent of Australia’s national coal export volumes,” Abetz said. “In 2020, China imposed steep restrictions on Australian coal imports and ongoing price increases at the Port of Newcastle will impact the global competitiveness of Australian coal exports and Australia’s capacity to export coal to other countries.”
Further, he noted that the port had used its monopoly position in relation to coal exporters from the Hunter region to create “uncertainty that threatens jobs and the global competitiveness of coal exports through the port.”
This monopolistic behaviour also means that the PON is open to geopolitical exploitation, the senator warned.
“It seems incredulous that a half-Chinese-owned company that controls a monopoly bottleneck in the coal export chain can increase charges at their discretion, forcing up prices for Australian coal overseas and making our second-largest export commodity less competitive,” the parliamentarians wrote in the letter, which has not been viewed by The Epoch Times.
Concerns over the PON have been raised since 2016 but were solidified in 2019 when the federal government did not extend price controls over the port’s operator. This prompted Rod Sims, chairman of the Australian Consumer Competition Commission (ACCC), to describe the PON operators as “a monopolist without constraint” in 2019.
“A monopolist that controls this type of bottleneck infrastructure, operating without any regulation, has a clear incentive to maximise profits by raising prices even if this means reduced volumes or less use of their service,” Sims said.
“It is bad for the economy when bottleneck infrastructure, at the end of a crucial value chain, is in the hands of a company with unfettered market power. A monopolist in that situation will always use its power; the question is only by how much and how often.”
Sims believes that the federal government needs to declare the port under the NAR, which will enable the ACCC to have oversight over the port’s workings.
The New South Wales (NSW) Mineral Council also wants the government to declare the port under the NAR.
NSW Minerals Council CEO Stephen Galilee told The Epoch Times in an email that because there is no alternative port for users in the regions, the PON has been able to set and increase shipping charges at its discretion. The port users have no alternative but to pay the increasing prices.
“The Port is clearly demonstrating aggressive monopolistic behaviour,” Galilee said. “Since the Port was privatised by the NSW Government in 2014, the Port of Newcastle has used its monopoly position to increase user charges on coal exports by nearly 120 percent.”
This is despite three separate requests from the Hunter coal exporters for the Port to enter into an ACCC-approved voluntary collective bargaining process with the producers after they failed to offer acceptable individual commercial agreements with port users.
“The Port has simply refused all requests,” Galilee said. “Its exertion of market power through price increases damages markets dependent on its services, including the coal industry and associated mining supplier industries.”
“In addition, the Port has commenced legal proceedings in an attempt to make any such processes illegal,” he said.
The letter was signed by Liberal and Nationals politicians, including Deputy Prime Minister Barnaby Joyce, Matt Canavan, Bridget McKenzie, James McGrath, Sarah Henderson, Alex Antic, Kevin Andrews, Paul Scarr, Phillip Thompson, Llew O’Brien, Concetta Fierravanti-Wells, George Christensen, Gerard Rennick, Eric Abetz, and Susan McDonald.