Imagine living in a town with only one service station, and that town was thousands of kilometres from any other place where you could buy petrol.
Now imagine how you would feel if you drove up to the bowser one morning and found fuel prices had tripled, and were also told by the operator that further price increases were also on their way.
With no choice other than to fill your tank at the only petrol station available, you'd be forced to pay whatever the operator demands, and keep on doing so. The service station operator is price-gouging. Making a lot more money, without having to do anything extra in return.
In real life this scenario would be unlikely. Most businesses in Australia face competition from others that keeps them honest. Even natural monopolies such as airports and telecommunications networks are monitored by regulators, like Australia's watchdog for fair trading, the ACCC, to ensure they don't rip-off their customers. The Port of Newcastle has no such constraints.
The Port of Newcastle is an important strategic asset for NSW, with a monopoly on the movement of almost all the state's coal to export markets. This means almost all NSW coal exporters must use the port to get their coal to customers overseas. There is no alternative port to provide competition and choice for its major users, and therefore constrain prices.
The NSW government also has almost no power to constrain prices either. This is because when the port was privatised in 2014, a higher sale price was prioritised over the need for regulatory protections for port users. To maximise the price received for this important strategic infrastructure monopoly, the new port operators were effectively given the ability to charge users whatever it wanted, despite a public assurance from the government at the time that any privatisation of the port would '... include protections for Port of Newcastle users'.
The ACCC, which would normally have a regulatory role over such a monopoly, is also unable to act, due to a loophole in current competition law that means it can regulate pricing and access at other monopolies, but not the Port of Newcastle. Over the past decade the port has used its unregulated status and monopoly power to massively increase its charges.
Since the port was privatised in 2014, its navigation service charges have tripled. Wharfage charges have also tripled, including for container movements, and are now five times higher than they were in 2014. These wharfage charges are now also three times higher than similar charges at comparable Queensland coal loading ports, which are regulated by the Queensland Competition Authority.
The ACCC has repeatedly called for regulatory changes so it can ensure pricing and access at the port is properly regulated. Former ACCC chair Rod Sims publicly campaigned for several years for such changes. This included appearing before a senate committee in 2021 where he explained how the Port of Newcastle enjoyed a significant monopoly, called for legislative change, and described regulation of the port as "non-existent".
His calls went unheeded. In a submission to the Commonwealth Competition Review in February the ACCC said, "The Port of Newcastle was a stark example where no adequate regulatory framework led to an unconstrained monopoly that could charge inefficiently high prices."
All users should be very concerned about the pattern of big fee increases at the port, including potential future users. The mining industry is the port's biggest user by far, but the port is seeking to diversify its operations. Potential port users should be extremely wary. While it may be mostly the mining industry paying these high charges now, others can expect to do so in the future.
Given the port's critical role for the Hunter and NSW economies, it needs to come clean. A credible explanation for the massive price increases would be a start. Full public transparency on its plans for future price increases is also needed.
It's also time for the ACCC to be given the regulatory power to protect all port users, now and in the future.
