Coal Job Losses A Black Mark For All Concerned
Newcastle Herald
Friday May 4, 2007
Authorities at every level have a lot to answer for, says Joel Fitzgibbon.
THE loss of more jobs in the Hunter's coal industry is a national disgrace, an international embarrassment, and a devastating blow for the miners involved. They and their families will today rightly be asking: how could this happen during a record coal boom?And our overseas customers are right to be asking: are we a reliable country with which to do business?The federal and state governments and the companies who control Newcastle's coal port should collectively hang their heads in shame.The Federal Government, for a lack of leadership and for removing the urgency for action by condoning an anti-competitive arrangement in the form of the loading quota system.The State Government, for not acting more quickly in encouraging and facilitating coal port expansion and competition through the establishment of a third coal-loader.The coal companies who own and operate the coal-loader, for their lack of vision and their failure to invest in further loading capacity in a timely fashion.How did it come to this? It's simple. Port Waratah Coal Services (PWCS) has a monopoly on coal-loading in Newcastle. It's owned by a number of players, mainly coal companies including Rio Tinto and Xstrata.PWCS has had plans to expand its capacity for some time. But why would it rush in while ever it continued to enjoy a monopoly and full capital utilisation? To be able to accommodate surges in demand, port capacity must reach a level at which over-capacity will be present from time to time. No business facing real competition can even dream of sustaining a situation in which its assets are fully utilised on a full-time basis.For the past three years the Newcastle Coal Infrastructure Group has been seeking to provide that competition by establishing a new and separately owned coal-loader. But red tape and ill-informed opposition to the project has set the project back too long.The situation has been exacerbated by the Federal Government's preparedness to sit back and allow a market-distorting quota system to undermine the urgency for action. The quota system can only operate legally if the Australian Competition and Consumer Commission, a Federal Government-operated agency, grants immunity from prosecution for anti-competitive practices (so-called ACCC authorisation). The per se illegality of the quota system alone should have set alarm bells ringing in the ears of government years ago.The quota system, while offering short-term and temporary relief, acts as a disincentive for new market entrants and removes the urgency for government action. Indeed, the quota system may even be providing members of the PWCS club with the opportunity to lock-in long-term contracts, denying any new entrants potential customers. And the reliance of the quota system formula on historical through-put data disadvantaged Cessnock's Austar mine because it was in a development phase during the period in which the historical through-put volumes were assessed.The recent announcement by the State Government that it had finally approved both the expansion of the PWCS operations and the third coal-loader was welcome, but unfortunately too late for the 330 miners who have lost their jobs.Let's hope that more job losses will not follow. Let's hope we've seen the end of the procrastination and the planned expansion projects proceed at an urgent pace.Joel Fitzgibbon MP is the federal Labor member for Hunter.
© 2007 Newcastle Herald