Newcastle port sale to raise $700m
Following the success of the sale of Botany and Port Kembla ports, the Newcastle port will be leased for 99 years.
Announcing the strategy as part of the NSW state budget on Tuesday, Treasurer Mike Baird said about $340 million of the proceeds would be spent on a revitalisation project for Newcastle, including light rail. The government would also tip an extra $120 million from other sources into the project.
The proposed light rail line will link Wickham and Newcastle, and is expected to be extended in the future. The government will spend $10 million to explore the potential for this link to spread to surrounding suburbs and beaches.
Superannuation funds had expressed "lots of interest" in the Newcastle port lease, Mr Baird said.
Mr Baird said the venture was "a fantastic opportunity for Newcastle off the back of this budget".
The 2013-14 budget will invest a total of $60 billion in infrastructure throughout the state.
NSW Opposition Leader John Robertson said the O'Farrell government's decision to privatise the port was a "bad deal" that would cheat the Hunter out of its key asset. "The O'Farrell government is selling off the biggest coal port in the world to replace a heavy rail line with a light rail line," he said. "That's not a win for the Hunter - it's a gun to the head.
"Hunter residents and businesses already contribute more than $1 billion in royalties and taxes to Sydney - why couldn't the money have come from there?"
Mr Robertson said Newcastle port generated revenue of $70 million per year.
"Once privatised, that revenue stream is gone forever - a stream worth much more than just $340 million."
General manager of the Tourism Industry Council NSW Andrew Jefferies said Newcastle's revitalisation was a critical step for tourism in the Hunter.
"I'm glad to see the government renew its focus on our state's second-largest city," he said.
Chief executive of Infrastructure Partnerships Australia Brendan Lyon said privatising Newcastle port made sense.
"When you've got economic and social infrastructure requirements and an inflexible budget and a high level of debt, it would be hard to understand the case against privatisation," he said. "There is clearly a global appetite from investors who are wanting exposure to important economic assets like ports and electricity, so governments in other places around Australia should be paying close attention."
Mr Baird announced in April that Port Botany and Port Kembla would deliver $5.07 billion to the government, to be spent on infrastructure projects including the planned WestConnex motorway and an upgrade of the Pacific Highway.
He said the NSW Ports consortium had agreed to pay $4.31 billion for Port Botany and $760 million for Port Kembla for a 99-year lease.
The result was well above the $3 billion expected from the sale, which was announced in last year's budget.
Frequently Asked Questions about this Article…
The NSW government plans to lease the Newcastle port for 99 years. The move is part of the 2013–14 state budget and is expected to raise a conservative estimate of $700 million, with roughly half the proceeds earmarked for revitalising Newcastle’s infrastructure.
The sale is expected to raise about $700 million. Treasurer Mike Baird said about $340 million of the proceeds will be spent on a Newcastle revitalisation project (including light rail), and the government will add roughly $120 million from other sources. The budget also allocates $10 million to explore extending the light rail link to nearby suburbs and beaches.
The proposed light rail would link Wickham and Newcastle as part of the city revitalisation funded in part by the port lease proceeds. The government intends the line to be extendable in future, and it has committed $10 million to study whether the link could spread to surrounding suburbs and beaches.
The article says superannuation funds have expressed "lots of interest" in the Newcastle port lease. Industry commentators also noted a global appetite from investors wanting exposure to important economic assets such as ports.
Following the successful sale of Port Botany and Port Kembla, those two ports yielded $5.07 billion for the government. The NSW Ports consortium agreed to pay $4.31 billion for Port Botany and $760 million for Port Kembla under 99‑year leases. The Newcastle lease is being pursued in the same model but is expected to raise a much smaller, conservative estimate of $700 million.
Supporters, such as Brendan Lyon from Infrastructure Partnerships Australia, argue privatisation makes sense when budgets are tight and there is strong investor demand for assets like ports. Critics, including NSW Opposition Leader John Robertson, call it a "bad deal," warning that privatisation will remove a revenue stream (he cites $70 million a year) and that replacing heavy rail with light rail may not benefit the Hunter region.
The 2013–14 NSW budget commits a total of $60 billion to infrastructure across the state. Proceeds from port leases are intended to fund specific projects — for example, Port Botany and Port Kembla receipts were flagged for major projects like the WestConnex motorway and Pacific Highway upgrades — and Newcastle’s share is earmarked for city revitalisation.
Opposition figures warn the Hunter could lose an ongoing revenue stream (about $70 million a year cited in the article) once the port is privatised. At the same time, Tourism Industry Council NSW welcomed the revitalisation focus, saying renewed investment in Newcastle is critical for tourism in the Hunter. The article presents both the economic concern and the potential tourism upside.
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