The Port of Newcastle says a new container terminal would reduce pollution and congestion in Sydney, lower the state's freight costs and boost the NSW economy by $6 billion by 2050.
Australia's competition watchdog on Monday instituted proceedings in the Federal Court against NSW Ports - which operates Port Botany and Port Kembla - over the $5.1 billion privatisation agreement it entered into with the state government in 2013.
The controversial deal contained provisions requiring the Port of Newcastle - which itself was privatised in 2014 - to compensate NSW Ports if it developed a rival container terminal.
The ACCC says the deeds are "anti-competitive and illegal" and make a container terminal at Newcastle "uneconomic".
It means Botany essentially has a monopoly on significant container movements for the next 50 years.
The Port of Newcastle on Tuesday released a report which suggested if it was allowed to develop a large-scale container terminal NSW's gross state product would increase by $6 billion through to 2050.
Over half of that would come from lower freight costs, the analysis by economic consultancy AlphaBeta found.
"The report clarifies for us that not only will Hunter and northern NSW businesses and households benefit from a container port at Newcastle, but so will Sydney in terms of pollution, congestion and freight costs, which will come down with competition from Newcastle," Port of Newcastle chief executive Craig Carmody states in the report's foreword.
Mr Carmody argues the Port of Newcastle already has the deep channel required to manage super-sized container ships that are becoming the norm, and heavy rail infrastructure with access to the waterfront.
Tuesday's report says a terminal at Newcastle could reduce freight costs by up to $500 per shipping container. By 2050 up to 750,000 container truck trips could be taken off Sydney's roads each year.
Opposition leader Michael Daley vowed to subject the privatisation of NSW's ports to a judicial inquiry if Labor wins government in 2019.
"If I become the premier I intend to shine a light on this and overturn the bad behaviour of this government so that no government can do this again," Mr Daley told reporters.
Premier Gladys Berejiklian has said the coalition stood by its decisions, while NSW Ports defended the 2013 agreement as in the best interests of the NSW economy, stating it would "vigorously defend" the ACCC legal action.
The competition watchdog expects the court case could run for up to two years.
If the ACCC wins it would effectively "undo" the compensation arrangements, freeing up Newcastle to build a container terminal, chair Rod Sims said on Monday.
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