Port of Newcastle special projects director and Nationals senate candidate Ross Cadell has dismissed a report that the federal government could buy out China Merchants' 50 per cent stake in the port so the Navy can build a nuclear submarine base in the city.
The Australian Financial Review reported on Wednesday that Newcastle had emerged as the frontrunner to host an east coast submarine base ahead of Defence's two other stated options, Port Kembla and Brisbane.
The Morrison government last year signed a security pact with the US and UK under which America and Britain will help Australia acquire nuclear-powered subs.
The AFR quoted an unnamed Defence source as saying Port Kembla did not have enough space to house the base and Brisbane would require subs to travel for an hour through Moreton Bay before diving into deep water.
Newcastle has quick access to deep water and space for expansion and is close to Williamtown RAAF base.
The report quoted sources as saying the government was considering whether it would have to buy out the Chinese stake in the Port of Newcastle consortium.
"If they are going to put the base there, they are going to have to buy that stake out," the newspaper quoted a source as saying.
"You can't have a nuclear submarine base next to infrastructure owned by the Chinese."
Mr Cadell, who is on leave from the port to contest next month's federal election, said it was unlikely the government would feel compelled to address Newcastle port's ownership structure when it had no such concerns in Darwin.
Defence last year reviewed the security implications of China's Landbridge Group owning the 99-year Darwin port lease but found no grounds to overturn the deal.
Instead, the government has flagged spending $1.5 billion on a new commercial port in Darwin which could house Defence operations.
"Using Darwin as an example, the government is spending billions of dollars on a development at a port controlled by a foreign company," Mr Cadell said.
"In Newcastle, no such control exists. And Darwin's the same as us; they'd be using the same body of water."
He also pointed out that the government had just committed to spending $100 million to help establish Port of Newcastle's hydrogen manufacturing hub.
Mr Cadell said he had no knowledge of whether Defence officials favoured Newcastle as a sub base.
Defence journalist Bradley Perrett wrote in the Newcastle Herald last month that the city's most likely locations for a sub base were on former steelworks land at Mayfield or the south side of Kooragang Island.
