Connectivity isn't everything, but it's almost everything. Faster, better and cheaper is transforming our daily lives. And connectivity isn't just about broadband access. It's also about fast and efficient freight transport.
Australia's prosperity as an island continent depends on its transport linkages, particularly through our seaports. Today, over 95 per cent of the world's non-bulk commodity trade is shipped in containers.
Without efficient container port access, economies are unable to grow to their full potential. They are at a competitive disadvantage in the fastest growing areas of global trade, such as advanced manufacturing, agribusiness and renewable technologies.
Newcastle is proud to be the world's biggest coal port, but we are also realistic about coal's prospects. With the end of the mining boom and the need to transition to a more knowledge-based economy, the composition of Australia's trade is changing. And much of this trade will be carried in containers.
That's why all levels of government committed two decades ago to a container terminal on the former BHP Mayfield site. With its unrivalled sea, road and rail connections, this investment was seen as a driver of regional growth and diversification.
The NSW Ports Growth Plan 2003 stated that, "Newcastle will be the state's next major container facility". Yet the most recent NSW Draft Freight and Ports Plan 2018 now says, "Port Kembla will act as a progressive overflow facility for Port Botany once its operational capacity has been reached".
What happened? In 2013, Port Botany and Port Kembla were privatised under conditions to maximise their sale price. These conditions included a restriction on the development of a viable container terminal at Newcastle when its port was privatised a year later.
This restriction is now the subject of an investigation by the Australian Competition and Consumer Commission. Clearly, privatisation was meant to foster competition, not stifle it with a new monopoly. Especially as this one would effectively confine Newcastle to a future of bulk commodities.
NSW's freight task is set to double in the next 20 years to at least 5 million containers annually. Port Botany might just be able to handle this volume of freight, but the question that has to be asked is, at what cost to Sydney and the NSW economy?
In most countries, as industrial land becomes more expensive around city ports, new ports are developed where land is cheaper and access more efficient. A prime example is Tauranga port outside of Auckland, with its own dedicated freight rail line.
Even with more than $27 billion in infrastructure spending planned to "decongest" Sydney, most containers there will still be moved by road. And these will cost an additional $18 million a year in tolls on new motorways like WestConnex.
We sometimes hear the claim that 85 per cent of container imports end up in Sydney, so another container port would not be viable. This claim is disingenuous. First, if there was any substance to it, surely there would be no need to impose an anti-competitive restriction on a container terminal at Newcastle.
Second, the claim is only true until the containers are unpacked and the goods sent around NSW. A recent study by Deloitte Access Economics found that the Hunter region and northern NSW is the destination of over a quarter of NSW container imports, and the source of 40 per cent of exports.
Hunter exporters are paying a premium of 30-50% in freight costs to send containerised grain, aluminium, wine, timber and manufactured products past the Port of Newcastle to ship via Port Botany. Such an absurdity has in effect created a non-tariff barrier to the region's exports.
As a global gateway for regional Australia, the Port of Newcastle with new CEO Craig Carmody is ready to go with landside connectivity, interested shippers and a deep channel port operating at only half its capacity.
The choice is clear - whether to invest taxpayers' money in unnecessary and expensive Sydney infrastructure, or to allow Newcastle to develop a world-competitive container port as a catalyst for new business opportunities and a more efficient NSW freight and ports system.
Professor Roy Green is Chair of the Port of Newcastle.