A private members bill set to be debated on Tuesday in the NSW parliament could throw the future of Port Kembla as NSW's second container port into doubt.
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Independent member for Lake Macquarie Greg Piper's bill seeks to remove a penalty a future container terminal in Newcastle would be required to pay if it transports about 50,000 shipping containers per year.
The penalty, which was part of the sale of the Port of Newcastle in 2013, has been an impediment to the plans of the new owners of the Port of Newcastle to construct a container terminal.
Currently, Port Kembla is slated to be the second container port in NSW once Port Botany reaches capacity, likely in the 2040s. A development application for land reclamation at the Outer Harbour has been approved to facilitate a container terminal as the need arises.
Former CEO of the Port Kembla Port Corporation and current Wollongong City Council councillor Dom Figliomeni said Port Kembla was identified as the site of a second container terminal due to its proximity to the growth and demand centres of western and south-western Sydney.
"It's close to Port Botany, it allows the efficient interchange of containers, and the transport from the growth area of Sydney to Port Kembla is significantly less than to Newcastle," he said.
The backers of the Newcastle container terminal argue the location is suitable due to the connections to producers in regional NSW and the congestion in the Sydney transport network. However, Marika Calfas, CEO of NSW Ports - which owns Port Botany and Port Kembla - said this ignored how the container logistics chain operates.
"Eighty per cent of all import containers travel no further than 40 kilometres from Port Botany," she said. "What that means is that import containers need to be closest to the population centre."
Were either Port Kembla or Newcastle to become a container port, billions of dollars worth of upgrades to road and rail links between the ports and Sydney would need to be completed. In the case of Port Kembla this means the Maldon-Dombarton link or the proposed South-West Illawarra Rail Link (SWIRL), as well as upgrades to Picton Road.
Were the container port to move to Newcastle, this would jeopardise investment in this infrastructure, Ms Calfas said.
"What it would mean is that taxpayer money would be diverted to Newcastle in order to support its container terminal and that would be at the expense of investment in other infrastructure that's needed in areas like the Illawarra."
Member for Wollongong Paul Scully said the party would be introducing amendments to the bill when it reaches parliament and that a change would open the potential for a massive compensation payout.
"Every dollar that of taxpayers money that gets spent compensating ports is one dollar that can't be spent on schools and hospitals and the services that people want and need," he said.
Throwing a spanner into these works is the federal government's announcement that Port Kembla and Newcastle are on the short list to host a future fleet of nuclear submarines.
RDA Illawarra policy manager Alex Spillett said a future fleet base would make a hosting a container port a challenge, for either port.
"It will be difficult for any of those centres to accommodate a fleet base east and a significant container port," he said.
This is something that Ms Calfas agreed with, albeit noting that there was limited information about what the naval base would entail.
"It's not really a big space that's there that could accommodate those uses."
Others disputed this, with Councillor Figliomeni saying the saying the two could exist alongside each other.
"We had the same issue when we were looking at cars coming here and people said we couldn't handle them. There's so much capacity there that I don't really see that as an obstacle at all."
While neither a container terminal nor a submarine base would be built in any of the proposed locations until the 2040s, Ms Calfas said there needed to be work done now on improving freight connections in the Illawarra.
"The Illawarra needs a SWIRL now, not in 20 to 30 years."
Executive director of Business Illawarra Adam Zarth said modelling by his organisation found current freight constraints will cost the regional economy $230 million per year by 2041.
"The diversification of the port is what ultimately we want to see at Port Kembla," he said. "What that means is we're insured against all manner of economic disruptions because ultimately, the Illawarra economy relies on the fortunes of Port Kembla."
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