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Which are the key ports in your jurisdiction and what sort of facilities do they comprise? What is the primary purpose of the ports?
The key ports in Australia are:
- Melbourne (VIC);
- Port Botany (NSW)
- Port of Newcastle (NSW);
- Brisbane (QLD);
- Fremantle (WA);
- Port Hedland (WA);
- Dampier (WA); and
- Hay Point (QLD).
The Port of Melbourne is Australia’s largest international container port and largest automotive trade terminal, and has roll-on, roll-off (ro-ro) facilities. It also handles cargo, dry and liquid bulk, including crude oil and cruise vessels.
Port Botany has the largest container terminal in NSW and handles dry and liquid bulk, including crude and refined oils.
The Port of Newcastle is the world’s largest coal export port.
Brisbane Port is a multi-cargo port with container and cruise terminals and handles dry and liquid bulk, including crude and refined oils.
Fremantle Port handles ferry and passenger vessels, dry and liquid bulk cargo and containers.
Port Hedland and Dampier are operated by Pilbara Ports Authority and are predominantly iron ore exporting ports, with Port Hedland being the largest iron ore loading terminal in the world. The Pilbara ports handle containers, general cargo, livestock and bulk dry, liquid and gas terminals.
Hay Point is one of the largest coal export ports in the world and has ro-ro facilities.
Describe any port reform that has been undertaken over the past few decades and the principal port model or models in your jurisdiction.
State and territory governments have historically owned port authorities. There is a trend toward privatising port assets on a long-term lease basis.
Since the late 1990s, Australia has followed the international trend of reducing government involvement in port infrastructure to improve port performance and efficiency. However, before the sale of the Port of Brisbane (QLD) in 2010, only smaller public ports had been privatised. The Port of Geelong and Port of Portland in Victoria were sold in 1996, and the Port of Adelaide in South Australia was sold in 2001. The debt refinancing behind the A$2.1 billion Port of Brisbane privatisation has started the latest trend of significant Australian state capital city port privatisation.
The Port of Melbourne is the only major capital city port on the east coast of Australia still owned by a state government. Ports in Victoria went through major reform in 1994-1995, when the port system was extensively restructured. As part of that reform, the Port of Geelong and Port of Portland were sold in 1996. At that time, the government also intended to privatise Port of Melbourne but, following intense opposition from port users, it abandoned the proposal.
Private ports are not a new phenomenon and a number of bulk ports in Australia are privately built and owned, usually by the end user or a consortium of users.
State development policy
Is there an overall state policy for the development of ports in your jurisdiction?
Infrastructure Australia and the National Transport Commission developed Australia’s first National Ports Strategy after extensive industry and government engagement. The strategy was endorsed by the Council of Australian Governments in July 2012.
Responsibility for the planning and operation of Australia’s ports currently cuts across all three levels of government.
The overarching purpose of the national ports strategy is to drive the development of efficient, sustainable and safe ports and related freight logistics. The objectives of the national ports strategy include facilitation of trade growth and improving the efficiency of port-related freight movement across infrastructure networks.
Safety, environmental and national security objectives are also of considerable importance.
What ‘green port’ principles are proposed or required for ports and terminals in your jurisdiction?
Ports and terminals are subject to Commonwealth and state environmental legislation.
Commonwealth responsibilities relating to ports include an environmental assessment of port developments where matters of national environmental significance are concerned.
In Western Australia, ports are required to comply with environmental licences approved under the Environmental Protection Act 1986 (WA), and provisions that require a port authority to manage the port environment are included in the Ports Authorities Act 1999 (WA).
In Victoria, under the Port Management Act 1995 all managers of local and commercial ports must prepare a Safety Management Plan and an Environment Management Plan (together known as SEMPs). The act requires all port managers to prepare a SEMP annual report on the safety and environmental performance of their port. The SEMP annual report is to be provided to the Minister for Ports, the Environment Protection Authority Victoria, Transport Safety Victoria and WorkSafe Victoria. Similar requirements exist in the other states.
NSW Ports has recently announced it will introduce an environmental incentive to apply to vessel-related charges levied by NSW Ports at Port Botany and Port Kembla. NSW Ports is the first Australian port organisation to introduce such an incentive.
The incentive takes the form of a discount on vessel-related charges levied by NSW Ports on vessels that call at Port Botany or Port Kembla.
Legislative framework and regulation
Is there a legislative framework for port development or operations in your jurisdiction?
The private sector is the major player in port operations and investment, with the regulatory framework set by government. State and territory governments have responsibility for land use planning and controls, including for ports, their adjacent land areas and connecting transport systems.
Local government also makes decisions that affect ports, including on matters such as planning requirements and local road access.
Is there a regulatory authority for each port or for all ports in your jurisdiction?
There is a regulatory authority for each port or, in some cases, groups of ports in Australia.
As noted in question 5, state and territory governments have traditionally owned port authorities. As such, it is an area in which the federal government has not typically involved itself.
There is no single regulatory authority responsible for oversight of Australia’s ports. However, there are aspects of port regulation, particularly security and environmental matters, that are impacted by federal regulators.
Otherwise, port regulatory authorities exist at state and territory level. For example, the Port Authority of NSW is a state-owned corporation that performs port safety functions. The NSW Minister for Roads, Maritime and Freight issues a Port Safety Operating Licence to the Port Authority, enabling it to perform the above port safety functions. Each of these functions must meet relevant performance standards and requirements set out in the licence. The Port Authority submits to the minister an annual report of its performance in respect of the licence, and is independently audited on an annual basis to verify that the port safety functions are being carried out in accordance with the licence.
In Victoria, the Victorian Ports Corporation (Melbourne) is a statutory authority created in 2016 following the lease of the commercial operations of the Port of Melbourne. Its responsibilities include management of commercial shipping in Port Philip Bay, navigation, waterside emergency and pollution response and management of the cruise ship facility.
Regional authorities also exist; for example, the Victorian Regional Channels Authority manages the commercial navigation of the channels in Geelong and Hastings port waters and oversees channel management for the Port of Portland.
What are the key competences and powers of the port regulatory authority in your jurisdiction?
There is no single authority, and the competences and powers are derived from the legislation establishing the authority.
As an example, the Port Authority of NSW performs has responsibility for elements of the following:
- port communications;
- navigation aids;
- channel and berthing box depths;
- navigation service charges and pilotage charges;
- dangerous goods;
- emergency response;
- investigations of marine pollution incidents;
- vessel arrival system; and
The Port Authority also administers dangerous goods legislation concerning the handling, transportation and storage of dangerous goods within the ports under its jurisdiction.
How is a harbourmaster for a port in your jurisdiction appointed?
The appointment is governed by the legislation applicable to the port.
The Victorian Ports Corporation (Melbourne) engages a licensed harbourmaster for the port waters of the Port of Melbourne in accordance with Chapter 6 of the Marine Safety Act (Vic). The Victorian Ports Corporation (Melbourne) is also empowered to authorise persons to act as Assistant Harbour Masters, in accordance with section 229 of the Marine Safety Act (Vic).
The Port Authority of New South Wales appoints a harbourmaster under the Marine Safety Act 1998 (NSW).
Other authorities have similar provisions in the legislation or regulations governing the particular port.
Are ports in your jurisdiction subject to specific national competition rules?
Ports in Australia are subject to the competition rules that apply nationally. There are no specific rules for ports, but particular ports are subject to specific undertakings and requirements under the general legislation.
The Australian Competition and Consumer Commission (ACCC) has also monitored the container stevedoring industry since 1998-1999 under a direction from the Australian government. The ACCC currently monitors the prices, costs and profits of container stevedores at five Australian container ports.
The 2016-2017 container stevedoring report prepared by the ACCC presents the ACCC’s monitoring results and observations about the role of competition in Australian container stevedoring.
Through a direction from the Australian treasurer under Part VIIA of the Competition and Consumer Act 2010, the ACCC monitors the prices, costs and profits of container terminal operator companies at the ports of Adelaide, Brisbane, Burnie, Fremantle, Melbourne and Sydney.
The last few governments have demonstrated a preference to rely on price monitoring arrangements as a means of influencing monopoly port infrastructure pricing.
ACCC chairman Rod Sims recently delivered a keynote address at the Ports Australia Conference in Melbourne. Sims said appropriate regulatory regimes should be in place before assets with monopoly characteristics are privatised.
The ACCC may also require a port operator to give certain undertakings to maintain competition. For example, Melbourne’s International Ro-Ro Terminal was required to give an undertaking to secure a long-term lease of the automotive terminal, which requires non-discrimination among port users, among other things.
Are there regulations in relation to the tariffs that are imposed on ports and terminals users in your jurisdictions and how are tariffs collected?
Regulations exist for individual ports, or groups of ports in some cases. There is no overarching framework for regulation of tariffs.
By way of example, the Port of Melbourne (Consolidated Group) operates under a regulatory framework that took effect on 1 July 2016. The regulatory framework is set out in the Port Management Act 1995 (Vic) and in Pricing Orders issued by the governor in Council.
The regulatory framework primarily relates to prescribed services, which include channel services, berthing services, short-term storage and cargo marshalling facility services and other services that allow access to or use of port infrastructure.
Under the Pricing Order, the Port of Melbourne is required to submit a Tariff Compliance Statement to the Essential Services Commission (ESC) by no later than 31 May each year. The Tariff Compliance Statement must explain how prescribed service tariffs for the upcoming financial year comply with the Pricing Order. The ESC is responsible for monitoring and reporting on the Port of Melbourne’s compliance with the Pricing Order. The ESC must conduct a public review of the Port of Melbourne’s compliance with the Pricing Order every five years and report its findings to the ESC Minister.
Similarly, the Ports Management Act (NT) and Ports Management Regulations establish the Utilities Commission of the Northern Territory as the regulator for the access and pricing regime for the Port of Darwin.
The Commission’s role is to regulate prices for the Port of Darwin. The regulatory framework specifically states that the Commission must use price monitoring as the form of price regulation. Further, price regulation only applies to prescribed services.
In some cases, price monitoring and regulation is undertaken by the ACCC (see question 9).
Are there restrictions relating to the currency applied to the tariffs or to any fees that are payable by a port operator to the government or port authority? Are any specific currency conditions imposed on port operators more generally?
There are no specific currency conditions imposed on port operators. All tariffs and fees are set in Australian dollars.
Public service obligations
Does the state have any public service obligations in relation to port access or services? Can it satisfy these obligations through a contract with a private party?
The state does not have any public service obligations in relation to port access or services. Australia is a signatory to a number of international conventions, and the Australian Maritime Safety Authority has powers to issue marine orders to implement obligations under those conventions.
Can a state entity enter into a joint venture with a port operator for the development or operation of a port in your jurisdiction? Is the state’s stake in the venture subject to any percentage threshold?
It is possible for a public sector body to enter into a joint venture with a port operator. Statutory authorities regularly enter into contracts with the private sector, particularly in relation to the development of infrastructure.
There are no specific conditions that cover all statutory authorities. The relevant enabling legislation determines the scope of any restrictions or fetters on the arrangements the body may enter into.
This has not been the preferred model for the development or operation of ports in Australia.
Are there restrictions on foreign participation in port projects?
There are no specific legal restrictions on foreign entities bidding for and participating in port projects in Australia. There have been many foreign entities involved in consortia bidding for Australian projects generally.
However, the Foreign Investment Review Board advises the Australian government on foreign investment matters, although ultimate responsibility for making decisions on foreign investment rests with the federal treasurer. The treasurer can impose binding conditions on any transaction to ensure it is not contrary to the national interest.
The Critical Infrastructure Centre has dedicated resources to identify and manage national security risks to critical infrastructure, which includes ports, with an immediate focus on those assets and sectors identified as highest risk: water, ports, electricity and gas, and telecommunications.
The Critical Infrastructure Centre also administers the Security of Critical Infrastructure Act 2018, which enables the Australian government’s ability to manage national security risks in sectors including ports.
The type of ownership or participation restrictions that may be imposed are dependent on the circumstances of any transaction and the nature of the asset.
Public procurement and PPP
Is the legislation governing procurement and PPP general or specific?
Though not a legislative framework as such, the National PPP Policy and Guidelines present a unified national framework for the procurement of PPPs in Australia. The National Guidelines set out the processes that should be followed in the investment, procurement and delivery stages of PPPs, as well as considering the appropriate risk allocation and commercial principles. Some individual state governments also have their own jurisdictional requirements and departures that are read in conjunction with the National Guidelines.
Virtually all categories of public infrastructure have been or are prospectively subject to PPP transactions in Australia. Transport and social infrastructure feature most prominently in the types of projects delivered through PPPs in all Australian states and territories.
PPPs are procured at every level of government in Australia. However, they are typically done at state level. The National Guidelines only apply to the federal, state and territory governments.
In line with the National PPP Policy Framework, the Australian, state and territory governments will consider a PPP for any project with a capital cost in excess of A$50 million. Projects of less than A$50 million may also be suitable for PPP delivery if they exhibit sufficient value for money drivers.
May the government or relevant port authority consider proposals for port privatisation/PPP other than as part of a formal tender?
PPPs in Australia are typically procured through a competitive tender process, which is carried out in accordance with strict probity rules in relation to issues such as confidentiality and tenders submitted by related companies. However, unsolicited proposals are becoming more common.
The National Guidelines state that each state jurisdiction will have its own policies and procedures for dealing with unsolicited proposals. The guidelines for PPPs in New South Wales and Victoria have specific processes, including requirements for the initial proposal to contain essential information to conduct an initial evaluation, conducting an evaluation of that proposal, developing that proposal with the proponent and then making a decision as to whether to finalise an agreement with the proponent or take the proposal to tender.
Joint venture and concession criteria
What criteria are considered when awarding award port concessions and port joint venture agreements?
Port concessions and other arrangements for port privatisation are assessed against typical criteria including:
- economic and commercial matters;
- environmental matters;
- physical characteristics of the port;
- planning matters; and
- proximity to other transport and integration with broader transport strategies.
Individual tenders are evaluated against criteria published in the request for tenders relating to their technical solution, compliance with a proposed form of contract and price (in particular, comparative value for money).
Is there a model PPP agreement that is used for port projects? To what extent can the public body deviate from its terms?
There is no model PPP agreement that is used for port projects.
More generally, the government can consider proposals to deviate from the terms of any particular procurement.
Deviations are generally assessed on the value for money provided by the proposed solutions, in terms of both the quantitative and qualitative aspects.
What government approvals are required for the implementation of a port PPP agreement in your jurisdiction? Must any specific law be passed in your jurisdiction for this?
Government approval will be required at various project milestones throughout the PPP procurement process.
Generally PPPs will need to comply with the National PPP Guidelines and the specific requirements of the state or territory in which the PPP is to be undertaken.
Detailed guidelines exist in most states and are typically published by the relevant treasury department.
On what basis are port projects in your jurisdiction typically implemented?
Port projects have been individually implemented and have typically been based on privatisation on a long-term lease basis.
Is there a minimum or maximum term for port PPPs in your jurisdiction? What is the average term?
There are no terms for port PPPs in Australia.
Concession terms for leases vary from 20 years to 99 years. The most common lease term in Australian ports has been 99 years.
On what basis can the term be extended?
Any extension to a concession is governed by the terms of the contract granting the concession.
There was considerable debate about whether there should be an option to extend the lease of the port of Melbourne, and whether such extension should be subject to parliamentary approval.
What fee structures are used in your jurisdiction? Are they subject to indexation?
A fixed sum is typically paid for any concession.
Does the government provide guarantees in relation to port PPPs or grant the port operator exclusivity?
See question 20. More generally, Australian governments do not provide guarantees for PPP projects, except for the state of New South Wales, which has specific legislative procedures for its treasury to issue sovereign guarantees.
Does the government or the port authority provide any other incentives to investors in ports?
Owing to the fact that port projects have been implemented on a case-by-case basis, any incentives will only apply to the specific port under the terms of each individual agreement. Generally, the government does not provide incentives to investors outside of the ordinary rules applicable to the taxation of investments.
Port development and construction
What government approvals are required for a port operator to commence construction at the relevant port? How long does it typically take to obtain approvals?
State and local government approvals are typically required for any construction at a port depending on the nature and extent of the works proposed.
Different legislative regimes apply in each state to building works, which may include state or local planning approvals and building approvals. Each such approval may in turn require further approvals from other governmental or semi-governmental bodies.
For example, in NSW, some requirements are set out in the State Environmental Planning Policy (Infrastructure) 2007.
Does the government or relevant port authority typically undertake any part of the port construction?
The government does not generally undertake port construction works. The government’s role is generally limited to regulatory oversight and auditing. The port authority is responsible for managing the relevant port(s), including undertaking maintenance and construction works in accordance with state and federal legislative requirements.
For example, dredging is heavily regulated in Australia and is subject to Commonwealth legislation, including the Environment Protection (Sea Dumping) Act 1981, Environment Protection and Biodiversity Conservation Act 1999, Great Barrier Reef Marine Park Act 1975 and a variety of state legislative requirements. The dredging of Port Phillip Bay in Melbourne was subject to extensive assessment under the Environment Effects Act 1978 (Vic) to ensure the authority could effectively manage the project’s environmental impact on the bay.
Does the port operator have to adhere to any specific construction standards, and may it engage any contractor it wishes?
Generally, all construction must be done in accordance with relevant Australian standards. There are a significant number of standards that may apply, depending on the nature of the works.
A port operator can typically engage any contractor it wishes, so long as the contractor or a relevant individual is licensed to build the proposed works in the jurisdiction. Each state operates its own building licensing scheme, which can vary substantially from state to state.
The nature of the licensing schemes and the industrial climate in the building industry in Australia also provide practical limitations on the contractors that may be engaged for particular projects.
There may also be some instances where national security concerns circumscribe the contractors who may carry out particular works.
What remedies are available for delays and defects in the construction of the port?
As between the port operator and the contractor, remedies will almost always be set out in the construction contract.
Remedies for delay are typically liquidated damages at a prescribed rate, with termination of the contract a possibility for extended delay.
Remedies for defects typically include an obligation on the contractor to undertake rectification works and damages.
What government approvals are required in your jurisdiction for a port operator to commence operations following construction? How long does it typically take to obtain approvals?
A licence to operate a port is typically separate from approvals required to commence use of recently constructed facilities.
The licensing regimes are particular to each port (see question 6).
Approvals to occupy and use facilities constructed at a port are governed by the building regulations in each state and may be subject to additional regulatory oversight by port authorities.
What services does a port operator and what services does the port authority typically provide in your jurisdiction? Do the port authorities typically charge the port operator for any services?
The services provided by port operators vary depending on the contractual arrangement.
Port operators typically manage and coordinate the terminal(s) and may provide all services or may engage contractors to provide the services. Such services include pilotage, towage, mooring, stevedoring, bunkering, watchstanders, surveys and security. Users are charged for these services in addition to fees for wharfage, anchorage, berthage, storage, hazardous cargo and tonnage, port improvement and maintenance, and additional equipment.
Port authorities handle the management and coordination of commercial vessels within the port limits and undertake port maintenance. The port authorities charge for the activities and resources used by each vessel.
Access to hinterland
Does the government or relevant port authority typically give any commitments in relation to access to the hinterland? To what extent does it require the operator to finance development of access routes or interconnections?
Funding of major infrastructure projects at ports is often shared between state and federal governments and port authorities. The federal government recently announced a A$400 million rail upgrade project at Port Botany.
Port authorities may also be required to implement transport strategies such as those required under the Port Management Act 1995 (Vic), which require the Victorian Ports Corporation (Melbourne) to provide a rail access strategy within three years after the first lease of port land assets.
The extent to which an operator may be required to finance future development is particular to each concession. The arrangements can vary significantly from port to port.
How do port authorities in your jurisdiction oversee terminal operations and in what circumstances may a port authority require the operator to suspend them?
Port authorities oversee terminal operations under the regulatory framework applicable to the port. Responsibilities for aspects of operations may be allocated under specific instruments such as the Port Management Acts that exist in a number of Australian states.
It is not practical to list arrangements for each port, but repeated failure to adhere to concession conditions, particularly security, safety and environmental conditions, may permit suspension or other step-in rights.
Port access and control
In what circumstances may the port authorities in your jurisdiction access the port area or take over port operations?
This depends on the terms of any concession. Typically step-in rights can be exercised in emergency situations, to avert or minimise the risk of injury or harm to persons, property or the environment.
Failure to operate and maintain
What remedies are available to the port authority or government against a port operator that fails to operate and maintain the port as agreed?
Remedies are typically governed by the terms of any concession.
What assets must port operators transfer to the relevant port authority on termination of a concession? Must port authorities pay any compensation for transferred assets?
A port operator will often be required to surrender assets, including improvements and fixtures, to the port authority without compensation on the expiration or termination of a concession.
Special purpose vehicles
Is a port operator that is to construct or operate a port in your jurisdiction permitted (or required) to do so via a special purpose vehicle (SPV)? Must it be incorporated in your jurisdiction?
Port operators carrying our construction or operational activities must conduct their activities through an entity incorporated in Australia, although the local entity may be owned by a foreign subsidiary.
Port operators may and often do undertake such activities through an SPV.
Transferring ownership interests
Are ownership interests in the port operator freely transferable?
Change of ownership in the port operator will be subject to the terms of the relevant terminal operations deed and Foreign Investment Review Board approval.
Can the port operator grant security over its rights under the PPP agreement to its project financing banks? Does a port authority in your jurisdiction typically agree to enter into direct agreements with the project financing banks and, if so, what are the key terms?
Rights under concession agreements can be financed.
Agreement variation and termination
In what circumstances may agreements to construct or operate a port facility be varied or terminated?
Variations to any port operation concession are typically governed by the terms of any concession.
Some variations may require regulatory or parliamentary approval.
What remedies are available to a government or port authority for contractual breach by a port operator?
The rights are governed by any applicable agreement. Rights typically include step-in rights in specific (and usually rare) circumstances and termination of the concession.
Must all port PPP agreements be governed by the laws of your jurisdiction?
Any port PPP agreement will be governed by applicable federal and state laws.
How are disputes between the government or port authority and the port operator customarily settled?
There is no particular custom. The dispute settlement process will be set out in any concession agreement or may be mandated in the applicable regulatory framework.
Updates and trends
Updates and trends
Updates and trends
The privatisation of Australia’s ports is in its relative infancy. The progress of development and pricing over the life of leases granted to many of Australia’s major ports and the benefits of different approaches will be more readily identifiable as time passes.
The tension between environmental and social concerns and future port development, particularly mining development in what are perceived to be sensitive locations, will be of continuing political interest.