Developing Northern Australia a Response to the Green Paper

DEVELOPING NORTHERN AUSTRALIA

A RESPONSE TO THE GREEN PAPER

Peter Long Mayor: City of Karratha

1 Developing Northern Australia – A Response to the Green Paper

This Submission

This submission is a short summary of the possibilities that the north-west of Australia offers the rest of the country, the issues that the area faces and what Government needs to do to stimulate industry here for the good of our nation.

I have not listed many facts and figures: these are available elsewhere. However, as a professional person who has lived 30 years in the region and who has had significant experience overseas as well, I think I can offer a unique perspective on what needs to be done.

The Author

My name is Peter Long. I am the Mayor of the City of Karratha, the largest Local Government area by both population and Gross Regional Product in the North-west of Western Australia. I am a Professional Engineer and Environmental Scientist and have lived in the Pilbara for 30 years. Before arriving in the north-west, I worked as a Civil/Structural Design Engineer and Project Engineer in Melbourne, Australia; Johannesburg, South Africa; London, England and in various capacities in the USA and Saudi Arabia. I started my own professional engineering and environmental consulting service in Karratha in 1985 and have worked all over the north-west of WA. This company is now about 60 strong and is based in Perth: while I now have nothing to do in its day-to-day running, it still gives me a window into the economic situation faced by professional people in Australia today.

I am passionate about the north-west and am enthusiastic to see that the Federal Government has finally realized the importance of Northern Australia to the health and wealth of our nation. I was disappointed in the Green Paper and include some comments in Appendix 2 to this submission. I am concerned that this entire initiative may go the way of so many others and sink from lack of commitment, a feeling that it is all too hard and that private industry should do it all anyway. Such attitudes are not what have made the economic revolutions in Japan, Korea and China and to a lesser extent in other South-east Asian countries. Now is the time for government to take big, bold decisions for the good of our country.

Peter Long

BE (Civil), BA (Eng Lit/Philos), BSc (Env Sc), CEnvP, CPEng (1989-2012), FIEAust Developing Northern Australia – A Response to the Green Paper

The Possibilities

There is enormous potential, as many realize, in the northern third of the continent due to its vast, sparsely populated lands and extensive natural resources. Western Australia and the Northern Territory in particular are undeveloped and ripe for investment. I don’t need to go into the list of resources and opportunities in detail: this has been done elsewhere many times. However, in summary they involve:

1. Non-renewable energy resources – primarily natural gas, both conventional offshore oil and gas fields, but also non-conventional shale gas 2. Renewable energy resources – primarily solar, but also wind, tidal, hydro and geothermal 3. Agricultural resources – land and water is available for more intensive pastoralism and horticulture 4. Aquaculture resources – biofuels (algae), coral, fish and shell-fish 5. Tourism – exceptional natural wonders including Karijini, the Bungle Bungles, the Kimberley Coast, Kakadu, the Dampier Archipelago and many others 6. Mining: I place this last because it is already a major industry, one which has been the back-bone of Australia’s North-west for 50 years.

So, there are incredible opportunities in this area: the question is, why haven’t these been exploited to date?

The reason is, simply, distance from markets, the cost of developing remote resources and the risks involved with such major investments.

Livability Issues

The cost of developing resources is partly to do with the large salaries that need to be paid to people to come and live and work in the north-west. With regards to livability, the north-west struggles with five major issues:

1. Cost of living: while normalizing, Karratha remains 18% more expensive than Perth and building costs are typically 50% higher. 2. Quality of education: recent investment in new schools has assisted in the quality of education available, but there remains a perception that teacher quality and the resulting education received is below city standards. 3. Health services: health services and infrastructure in the past was of variable quality, but of more a concern is retaining well-qualified, respected doctors. There are many holes in the suite of health services offered, particularly with regard to the elderly. 4. Infrastructure and commercial services: the things that are taken for granted in most of the country such as a good range of shops, sports facilities, transportation facilities, entertainment and diverse job opportunities have traditionally been very limited in the north-west. Through the chance of a hung parliament and a brave and visionary Developing Northern Australia – A Response to the Green Paper

individual, there has been considerable work to remedy this lack in Karratha and Port Hedland over the last 5 years but there is still much to do. 5. Climate: while this is a distant last on the list, the north-west is hot in the summer and not to the liking of many. Some established residents actually travel south for the summer and there is an influx of southerners in the glorious winters – the grey nomads. There is nothing we can do about this except for designing cities and facilities with the climate in mind – which recently government is starting to do.

The State has spent large amounts of money improving livability in the Pilbara over the last 5 years, but more needs to be done from a Federal level.

Political Issues

There are a range of other issues of course, which exacerbate these problems, which I have called “Political Issues”. These are the things which have traditionally made resolution of the difficulties of remoteness itemized above, that much harder:

1. The region is not on the radar in Canberra, or in the eastern States generally. The enormous contribution the Pilbara makes to the nation is simply not understood - unless some federal program needs funding and then “tax the miners” seems to be the knee-jerk reaction. Equally, the possibilities of the region are not understood. This attitude needs to change. 2. The region has a low population so even with regards the State Government, the north-west has little political pull. Numbers talk and spending money in this area has rarely been a priority, the governments of Sir Charles Court and Barnett/Grylls being notable exceptions. 3. To date, the infrastructure has been mainly provided by private industry as a part of its project development: towns, ports, roads, water supply – even shops and hospitals have been built by the mining companies. Government often hasn’t seen the need to be involved: simply getting a bitumen road in the north-west is seen as a major victory and having it maintained is sometimes just as hard. The Great Northern Highway, for example, has been the lifeblood of the mining boom and has been allowed to deteriorate to a dangerous level. 4. Due to the above points, there has been little enthusiasm in the past to diversify the economy, increase the population and make the north- west an area where Australians are prepared to live their entire lives. However, public infrastructure and diversification of the economy is vital to the development of permanent populations in the north. 5. Due to the fact that investment has been privately funded and the lack of awareness of the magnitude of this investment - there has been extremely limited defence infrastructure built in the north-west, the most substantial being the (generally un-manned) air-force bases at Learmonth (near Exmouth) and Curtin (near Derby). This neglect is a concern to investors in Australia, particularly with the possibility of Developing Northern Australia – A Response to the Green Paper

terrorist attacks from nearby countries and asylum-seeker boats passing nearby. There is of the order of one trillion (a million million) dollars of infrastructure in the north-west, currently “protected” from Townsville, 3000 km away. 6. Taxation regimes promote a fly-in/fly-out culture which greatly reduces population growth and the advantages this provides. A company can receive a tax deduction for the flying in of its workers and for their accommodation in a camp at their mine or construction site. However, the same company has to pay tax to supply its permanent staff a house in the area. There are Australian Taxation Office zone tax offsets available and a small provision called an Area Allowance exists to recognise the additional costs incurred by social security income support customers who live in remote areas. These allowances have minimal effect as they are so small. 7. The majority of land in the north-west is Crown-owned and potentially subject to native title claims. This makes development slow and expensive.

Solutions

What can government do to bring the north on-line to further develop its extraordinary assets and to ensure it becomes a more dynamic and integrated part of the country?

The solutions needed to address the limitations identified above, include infrastructure and service investment – making the area more pleasant and attractive to live - plus assistance to develop the mooted new industries.

Below I have identified some programs and investments the Federal Government could be involved with to develop the North. Generally, these include:

1. Financial assistance with minor programs, including location of staff in remote areas 2. Financial assistance with major infrastructure – ports, roads etc 3. Financial assistance developing new industries: tourism, agriculture, renewable energy, aquaculture 4. Financial assistance with social infrastructure 5. Support for simplifying regulations, a reduction in red-tape, bureaucracy, State/Federal duplication etc 6. Making taxation fair and reasonable so that it is not promoting development out of the region 7. A mega-project, which could be game-changing for the nation as a whole.

Going through these in more detail:

1. Federal Government Assistance. Minor investment in programs and staffing could make a big difference to the Pilbara. Programs that Developing Northern Australia – A Response to the Green Paper

would assist include: a. Locating Federal Government staff in the area, in particular Karratha, to assist with business development, trade, native title etc b. Support for an Innovation Center which would undertake research in the industries for which the region has opportunities such as Oil and Gas, aquaculture, renewable energy etc c. Support for a Business Incubator: these are proven to be very effective at bringing new business into a region. d. Supporting Tourism – both through significant infrastructure investment as indicated below, but also through Federal program assistance. e. Supporting Social Infrastructure, in particular aged care, education and programs for indigenous people. f. Communications: while the Pilbara is quite well served by popular radio and television, a rapid roll-out of the NBN across the towns would be a great boost to business.

2. Significant Federal Government Investment - the critical areas for investment in the north west include: a. Ports – the Dampier Marine Service Facility, a multi-user general and specialised cargo load and unloading facility should be developed to service the local oil and gas industry and to allow the export of product from smaller projects including agriculture ventures and small mines. (Appendix 1) b. Roads – a bitumen road is essential between Karratha and Tom Price to open up the enormous potential of the hinterland and especially the Karijini National Park. Another important Pilbara road which requires completion is the Marble Bar Road. c. Other infrastructure areas such as airports, a north-west integrated power grid; new water source development; new waste site establishment etc are, in the author’s opinion, of lower importance at the present time. The north-west integrated power grid would need Federal Government assistance, but other infrastructure can be developed through current processes or private investment.

3. Federal Government Assistance - investment assistance developing new industries will bring substantial benefits and the finance required is not large: a. Tourism: the Pilbara interior lacks a single 4-Star resort. Such a resort at Karijini National Park, linked with a bitumen road to Karratha would be a huge boost to regional tourism. Assistance in a range of lesser tourism ventures including an eco-resort on the Dampier Archipelago, a Visitor Center on the Burrup Peninsular, marinas at Dampier, Port Hedland and Onslow and grants for new tourism ventures would be extremely helpful in kick-starting this vital industry. b. Defence: the trillion dollars of investment in the Pilbara is Developing Northern Australia – A Response to the Green Paper

guarded by the Pilbara Regiment of 30 Army persons, spread over a number of sites. No patrol boats scout the huge offshore platforms and gas plants. I have personally heard the expressions of concern from senior international investors at this situation. The stationing of two Armidale-class patrol boats at Dampier and a further 200 personnel across the Pilbara would provide a much needed boost to the defence capability, act as a significant deterrent and provide a great economic benefit to the region. c. Renewable energy: the City of Karratha will probably soon be the site for a Renewable LNG pilot project, sponsored by Mitsubishi. This project uses PV solar electricity to produce hydrogen from sea-water, converts it to methane and then compresses this renewable LNG for export to Japan. The extraordinary solar flux in the Pilbara makes solar energy very attractive and with the development of fuel cell technology, may make a power gird unnecessary. d. Biofuels: Karratha has been the site of a trial algal fuels project and also a beta-carotene project. The expansive coastal mud flats and long sunny days make such projects viable in this area. These projects were marginal but as local costs drop, it is expected they will become viable. Assistance with this type of project, which could fuel the nation, would be a wise Federal investment. e. A range of aquaculture and agriculture projects are being considered: the warm, protected waters of the Dampier Archipelago are ideal for this type of venture. Assistance with research and seed funding for chosen projects would kick-start this industry.

4. Financial assistance with infrastructure has already proven a huge boon to Karratha with the Federal Government’s investment in the City’s landmark Leisureplex development. This type of infrastructure makes a world of difference to the livability of the area and does not come at a huge price. There are a range of projects currently on the drawing board across the Pilbara which require assistance.

5. Support for simplifying regulations, a reduction in red-tape, bureaucracy, State/Federal duplication etc is very important. Streamlining approval processes to make land available and to allow a project to rapidly commence can make a huge difference. a. Access to Crown Land and Pastoral lease property rights is a State matter and these issues are recognized. However, pastoralists need to be given the opportunity to run a number of businesses such as tourism or industry on their land, which currently they cannot. In WA, the State has so much Crown Land that it cannot manage this properly, but putting it under local government control is problematic as the local authority usually does not have the resources to manage this land properly either. Assistance to local governments to manage Developing Northern Australia – A Response to the Green Paper

Crown Land in their regions is required. b. The Federal Government does have authority over Native Title clearances. These are currently very slow to achieve and are a great disincentive to investors. This area is ripe for some major modification, which retains the original Aboriginal rights but provides a much faster settlement process.

6. Making taxation fair and reasonable so that it is not promoting development out of the region is essential. a. FIFO tax reform: it is market distorting and unfair to provide a tax deduction for all the costs associated with a FIFO worker, while actually taxing a resident worker because he gets accommodation supplied. This distortion must go. It can be limited to regions north of the 26th parallel. b. Tax Zone Rebate reform. This system is broken, being either too small to be of real incentive, or unfairly applied to FIFO workers. c. A Special Economic Zone in the Pilbara I consider is the best option to promote new industries across the region. The scope of the SEZ could include agriculture, aquaculture, renewable energy etc and it could be multi-sited across the region to suit the particular attributes of each locality. A Special Economic Zone should be managed by an independent authority established under (State?) law with the ability to gift land, provide approvals and also finance projects: this would be a game changer. No SEZ exists in Australia and while no tax exemptions are recommended, it is considered this would be a huge boost to investment and development (Appendix 3).

7. A mega-project. The project outlined in Appendix 4 has been proposed by a colleague of mine, but of course has been on the drawing board since the Whitlam years. The crisis affecting east-coast electricity markets and the cost to industry and employment there is huge and little is being done about it. This project proposes the construction of a natural gas pipeline from Karratha to Moomba, which would provide the huge gas resources of the north-west for the east coast and would finally join the nation with a road across the middle and a truly national pipeline grid.

This is provided to stimulate a broader conceptualization of our country’s necessary development. Developing Northern Australia – A Response to the Green Paper

APPENDIX 1

To ensure efficient movement of product and material through the port, the Dampier Port Authority (DPA – recently the Pilbara Ports Authority) has developed plans and received approval to construct a multi-user general and specialised cargo load and unloading facility adjacent to the Dampier Cargo Wharf. When constructed the Dampier Marine Services Facility (DMSF) will support and complement the activities currently undertaken at the Dampier Cargo Wharf (DCW) and provide additional opportunities for existing and new customers to the Port.

The State Government has given the green light to a private public partnership between the Dampier Port Authority (DPA) and a successful bidder to boost its port capacity. The Treasurer indicated “More private sector investment at Dampier Port will help alleviate capacity constraints and delays, ease road congestion by allowing freight to be transported by sea to the port, while removing risks to Government associated with financing, building and operating the facility.

A market-sounding process carried out by DPA in 2012 identified sufficient commercial interest for the Dampier Marine Services facilities, which will include the Dampier Cargo Wharf, Dampier Bulk Liquids Berth, Heavy Load Out Facility, Alternative Load Out Facility and about 7.2 hectares of leasable land.

The Dampier Port Authority will retain responsibility for the safe operation of the port.

The benefits of increased commercialisation of port assets and expansion of new facilities include: • An increase in construction and operational jobs • Improved levels of trade and regional economic growth • Reduced freight costs • Reduced congestion and increased port capacity. The expansion plans follow previous private sector investment in floating deck applications at Dampier Port.

• The Port of Dampier is one of the world’s largest ports by tonnage and plays a vital role in the economic development of the State and the nation • Continuing high levels of growth have meant the Port of Dampier has insufficient capacity to meet current and projected demand • The Dampier Cargo Wharf is at near capacity with berth occupancy rates projected to increase. Private investment is needed to expand facilities

An estimated $95 billion worth of resource projects in the Pilbara region depend on the port in some way Developing Northern Australia – A Response to the Green Paper

APPENDIX 2 GREEN PAPER ON DEVELOPING NORTHERN AUSTRALIA COMMENTS

Page Com Response ment A: Errors and Omissions – Sections A, B and C 1 “Town Cities on the north-west coastline have also grown very strongly – Karratha has s and shown the highest growth, averaging 5% pa between 2001-12 compared with the cities next highest Yeppoon (3.3%) and Cairns = 2.8%pa. continue to grow, particula rly along the north east coastlin e” 4 Figure 3 Hedland’s 2012-2016 growth is not predicted to be higher than Karratha – Projecte d growth 5 Natural Comments on north-east, but not north-west climate are provided. Environ ment Developing Northern Australia – A Response to the Green Paper

Page Com Response ment and Resourc es 6 World The Burrup, Karijini and the Bungle Bungles – not mentioned – are also outstanding Heritage natural features with major cultural value Sites 7 Box A1 $24B of projects recently completed seems far too small. These numbers are a bit suspect: the reference is “unpublished data” which is also suspect. The list is missing many north WA minerals such as Vanadium, Tungsten, Nickel etc 8 “recent This statement is incorrect. ly a steady increase in northern unempl oyment and a sharp rise in northern Western Australi a” 9 “with A very large figure – and none are located in the Pilbara where $1T of investment over exists: why not? Developing Northern Australia – A Response to the Green Paper

Page Com Response ment 15,200 service personn el and public servants based in the north” 10 Figure 6 There needs to be Australian Government Public Servants in Karratha – shows no Australi an Govern ment Public Servant s in Karrath a 10 ”Gorgo In the late 1980s, the North West Shelf Project was the largest resource n LNG development in Australian history AND the largest engineering project in the world. will be In dollar value today Gorgon is bigger but in real value Gorgon is smaller than NWS. Australi It is good to build up the importance of Gorgon on a national level, but having the a’s largest project in the World is not something that should be forgotten either. Developing Northern Australia – A Response to the Green Paper

Page Com Response ment largest single investm ent project” 10 “Com I think the $23B is far too small. mitted iron ore and coal projects are worth over $23 billion” 11 ”Austr Should read ”Australian iron ore ports at Port Hedland and the Port of Dampier are alian the largest in the country..” iron ore ports at Port Hedland , Port of Dampier , Cape Lambert and Developing Northern Australia – A Response to the Green Paper

Page Com Response ment Cape Preston are some of the largest in the country. .” 11 Figure 8 The comparison is good. Note that WA produces nearly 3 times QLD and twice as much as the rest combined but for clarity the graph would be best divided into Iron Ore, Coal, Hydrocarbons and Other Minerals. 12 “Unem This negative comment should be put in context – in most regions of NW WA the ploymen figure is below 5%. t rate is over 20%...” 13 Per cent It would be interesting to see these statistics for northern WA – I do not expect the of ratios would look nearly as good: north-west infrastructure is often inadequate. hospital s in northern Australi a 14 Airport Karratha is second highest in WA and 8th in Australia, from memory. It would be traffic good to see a comparison of traffic at all the major northern ports – KTA, PHL, BME, Developing Northern Australia – A Response to the Green Paper

Page Com Response ment DWN, TVL etc. 21 Defence They have not quoted the defence personnel – only defence + public servants. It would be good to see defence broken out and the locations indicated. 22 Defence And zero of this substantial investment went to northern WA, which will soon … produce 40% of the nation’s exports. This is ridiculously inadequate. WA needs contribu defence protection. ted $864 M to northern QLD and NT economi es..” 22 “This Yes, particularly in the Pilbara Regiment. A figure showing the density of investment could versus defence staffing would be revealing. include expandi ng bases …” 25 Econom A huge thing the Feds could do to improve tourism and general development in the ic NW is to bitumise all key roads – the Tom Price and Marble Bar roads being two of diversifi the most important. cation - tourism Developing Northern Australia – A Response to the Green Paper

Page Com Response ment 26 Indigen Federal help to LGs responsible for remote Aboriginal communities is essential – ous local people cannot fund this. The Commonwealth also needs to fund on-going develop maintenance, not build places and leave them untouched for 20 years as happened ment after the early 1990s remote community investment initiative. 26, 27 Natural This aspect is totally neglected in environmental impact assessments and Resourc consideration by higher level governments who simply want to see a project happen es and to get people employed and the bank balance looking healthier. Landscape, tourism Landsca potential, recreation needs etc all need to be considered for new projects. pes 37 Failure The Ord River Dam Irrigation Area Stage 1 also had some spectacular crop failures of at first agricultu re venture s in northern Australi a 39 Red The large Hydrocarbon Projects – Gorgon, Wheatstone, Pluto etc, had over 300 Tape permits required. “70 … authoris ations .. .” B: The Way Forward and Section D – Policy Directions vi The This is great – a promise which must not be broken Developing Northern Australia – A Response to the Green Paper

Page Com Response ment Govern ment is committ ed to the develop ment of Norther n Australi a vii Table 1 Agree with the 6 broad policy directions ix Introduc The Pilbara’s enormous economic power, the huge royalty and taxation income it tion generates, the longevity of this financial dividend and its vital importance to our nation needs to be recognised. This does not come out at all well in the Green Paper. A Growth The vitality of the NW towns, Karratha in particular, its rapid growth etc need to be Profile made more apparent in the text. The paucity of government services and infrastructure, in relation to both its population and the income the region generates needs to be emphasised. Tourism The beauty of the landscape and the huge tourist potential – including the Burrup, Karijini, Bungle Bungles etc needs to be brought out. Econom The breadth and importance of WA minerals to Australia is not well indicated – y provide some numbers. Public Find the correct number in the NW. servants Educati Appear to be bad figures all over the north – a clear for investment Developing Northern Australia – A Response to the Green Paper

Page Com Response ment on B Defence Much can be argued in this field as indicated above. Investment v protection level is Opps very poor. Technol Photovoltaics, Solar Hydrogen, Biofuels, Aquaculture, Hydroponics, Agriculture – are ogy and not or are barely mentioned. A proper uni campus as per the CQU proposal would Innovati be hugely beneficial. Specialised post-graduate research into Pilbara geology, on hydrocarbon industry issues (drilling, extraction, seabed conditions, cyclone loadings, transport, marginal field development, etc), renewable energy, agriculture, aquaculture, archaeology, ethnography - with reasonably priced accommodation, research could flourish. A doctor of geology once told me “there is a PhD around every corner in the Pilbara”! Econom Tourism needs some serious investment, particularly in high level or luxury tourism. ic A 4-star or 5-star resort at Karijini with bitumen road access could be very diversifi successful; development of a resort on the Dampier Archipelago and other islands in cation the vicinity; development of Cossack and Roebourne as historic towns – there is an enormous amount could be done but this needs good roads and investment in facilitates. Indigen There is huge opportunity in Indigenous economic development as many groups ous now receive substantial on-going income for the resource companies. Joint ventures economi with other organisations with specialty capability could see some good quality tourist c ventures, business and new infrastructure projects initiated. There need to be certain develop rules of engagement established in this space which are uniform over the State to ment ensure no parties are hurt and full responsibility is assumed by the participants. Natural It is of personal concern to me that some beautiful areas of the Pilbara are being Resourc destroyed for mines and infrastructure and like the consumption of atmospheric es and oxygen, is not a topic on anyone’s agenda. Related to landscape are community Developing Northern Australia – A Response to the Green Paper

Page Com Response ment Landsca issues including recreation, conservation and tourism – no one wants to live in a pes destroyed landscape and we need to ensure that the world we leave to our grandchildren is one they see as attractive and valuable. These requirements fly in the face of both higher level governments (State and Federal) and large private enterprise, both of whom essentially want to see development at any cost. How to fix: ensure Local Government has real input into project proposals and include Landscape as a legitimate impact that must be avoided as far as possible. C Whole Barriers have all been well identified. Barriers Section – pages 29 to 42. D Some relevant but broadly topical notes and suggestions from personal experience. Policy General Notes: Direction  Infrastructure is essential – people living remotely should not (within reason) be denied the benefits of civilisation taken for granted in the cities. Health, transport, communication and entertainment needs to be provided and the Federal Government can play a big part in assisting with these as they are largely capital-rich projects. This is particularly important in the North, which provides a disproportionate amount of the nation’s wealth but due to its low voting power, its history, the large proportion of private developments (except in the NT) and the fact that it is “out-of-site/out-of mind” means its huge successes and its residents so often go unnoticed.  Decentralisation, though somewhat out of favour currently, is an important policy initiative that should be pursued by all governments. The cost of infrastructure – huge bridges, road, tunnels, railways etc in the State capitals – is enormous and rarely seems to be considered in a whole-of-nation cost-effectiveness aspect. Europe has Developing Northern Australia – A Response to the Green Paper

Page Com Response ment traditionally been decentralised and major industries exist across that continent, often in quite small communities. In Australia, we appear to have some fear of the outback and we cling to the major urban areas, but economically this may not be sustainable (have the costs ever been investigated?). Regional centres can be less expensive, can provide superior liveability, have less environmental impacts, are often an important part of our defence structure, and are an essential part of our nation, providing the primary industry on which the rest exists. The North is the new frontier and these rules have relevance: the area provides a hugely disproportionate sum of the national income and those who live there need to partake more equitably in the wealth they create for the county.  Remote towns need to be LIVEABLE. Their look and feel, their facilities, their environment, their community must be developed so people WANT to live there, rather than having to be paid to live there. People want peace and beauty – look at every expensive suburb in the country – we must strive for this in all our communities. What the federal Government Can Do:  The Federal Government has the economic power to assist with large infrastructure projects where they are needed – roads, railways, ports, power etc.  The Federal Government can assist with taxation: tax holidays for special projects and/or for residents of remote regions where infrastructure expected elsewhere is not available; return of a proper GST portion to each State or perhaps an increase in the GST with a guaranteed return so that inefficient State taxes and resulting disincentives to investment and employment (payroll tax, stamp duty on house and land transactions etc) can be fully done away with.  In remote areas, bitumen roads are the first requirement for both the economy (including tourism) and liveability. This is one area the Federal Government can assist in a massive way. Developing Northern Australia – A Response to the Green Paper

Page Com Response ment  A national network of roadhouses on selected important highways, privately owned, but perhaps subsidised to ensure a consistent, premium standard would make outback travel much more civilised and comfortable.  Tourist signage in the north on roads is very poor – assistance to local governments in this area would be very useful.  Government needs to understand the importance of and the necessity to fund maintenance after it has funded capital. Otherwise local communities either have to make do with a deteriorating asset or somehow foot the bill from a small rate base. What the State Government Can Do:  Establishment of legislation to allow a Special Economic Zone, scoped to promote industries which are best suited to that area should be enacted. This legislation would establish an authority for the SEZ with the power to provide land, environmental and other approvals. SEZs have been proven to be extremely effective in nearly all nations of the works – except for Australia: we need to changes this provincial attitude.  In general, in planning and approvals for projects, Local Government must be able to have real input into the process, with the ability to sanction certain areas – within limits of course.  Some serious work on the WA EP Act should be undertaken to reduce the overlap of Part IV and Part V approvals, a major red (or green) tape issue for new projects. Developing Northern Australia – A Response to the Green Paper

APPENDIX 3

SPECIAL ECONOMIC ZONES

Special Economic Zones have become the darling of the developing world. Across Asia, the Middle East - and now increasingly in Africa - these engines of economic growth have been springing up to catalyze national economies and drive social change.

The argument for Special Economic Zones (or SEZs) is hard to refute. Singapore's meteoric development was built on the back of SEZs. Today, China and India, the two global powerhouses of the emerging markets, are making them a cornerstone of their growth agenda.

Not a simple recipe

But developing a successful SEZ can be a significant challenge for national governments. For one, SEZs generally require a unique policy framework that encourages investment and removes barriers to growth. India's 'basket' of incentives includes the duty free import of goods for development, 100 percent Income Tax exemption for some businesses and a 'single window' clearance process for Central and State level approvals. In other jurisdictions, policy frameworks also include relaxed tariffs, fast-tracked immigration and financial guarantees.

This leads to the second major challenge for governments: demonstrating value and competitive advantage. Governments and SEZ planners must be able to articulate a strong value proposition to potential investors. Often, this centers on proximity to either raw materials or market access points that can deliver a clear competitive advantage.

But equally important is what is offered within the ecosystem itself: a secure and low- cost supply of power, effective waste management, and reliable water supplies to name just a few.

Which, of course, leads us to infrastructure; the third major challenge for SEZs. Obviously, these ecosystems require efficient, effective and sustainable infrastructure that matches the unique needs of the industrial sector that they plan to attract. Petrochemicals, for example, require large ports, railheads and lots of power. Technology focused SEZs will want to prioritize communications networks and airports.

Managing the demand risk

But matching up industries to infrastructure is relatively straightforward stuff. The real challenges come in delivering that infrastructure in a well-planned, carefully integrated and financially sustainable way.

Probably the biggest complexity facing governments comes down to demand risk. SEZs require a massive amount of base infrastructure to be developed, and often Developing Northern Australia – A Response to the Green Paper before a single tenant even moves in. This not only means a tremendous outlay of capital to finance, but also a long-term outlook and innovative approach to managing risk.

Particularly in the case of 'Greenfield' developments, governments may inevitably need to underwrite a level of risk in order to successfully deliver the basic underlying infrastructure necessary to support industry. In some cases, governments may consider creating a special-purpose fund that can act as a government guarantee against these risks.

SEZs are also significantly different from conventional city infrastructure developments in that they require a high degree of integration and vision to successfully deliver. Whereas urban infrastructure generally deploys in a very 'siloed' fashion (where different government departments hold responsibility for different parts of the urban infrastructure puzzle), SEZs can only be successful when overlaid against a Master Plan and delivered along a strict timeline.

The role of private investment

While governments will undoubtedly need to take on some of the financing and oversight, there is still a significant role for private enterprise in the development of infrastructure. In this, however, governments and SEZ planners will need to be pragmatic. Certain areas of infrastructure development can realistically be transferred to the private sector (such as ports, telecommunications and even the day-to-day operations and management of the SEZ). Others will often stay the remit of government - either because returns can be slow to generate (as with basic underlying systems), or because of political sensitivities (such as land acquisitions).

That said, there have been a number of examples of 'Private SEZ' developments throughout the world that have met varying degrees of success. But some have also been severely hampered by a perceived mismatch between government policy and private objectives. And since SEZs rely on incentives such as special tariffs, streamlined regulations and access to markets these disconnects can very quickly stall or derail promising development.

If these challenges can be mitigated, then governments should find that Public Private Partnership models provide a number of benefits; not only as a method for mitigating risk and reducing cost, but also as a way to tap into sources of expertise, technical know-how and structures that can help bring new ideas and approaches to SEZ development. Exporting SEZs to the Western World

Following the global financial crisis, many western governments may be seriously considering the benefits of SEZs in their own countries. The crisis quickly demonstrated the acute need for some economies to diversify beyond their traditional industries and to put a greater focus on competing on the world stage for Foreign Direct Investment.

And while the value proposition for an SEZ in the US will be very different from one in China (which leverages low-wage and low-cost resources), governments in the western world still have a number of levers that can deliver significant incentives to foreign companies.

Western governments may want to look to Poland for inspiration. The only EU Developing Northern Australia – A Response to the Green Paper country to successfully deliver a SEZ, the country now has fourteen that span a number of industrial sectors. Interestingly, Poland was the only EU country to avoid a decline in GDP during the recent recession (in fact, it had the highest GDP growth in the EU in 2009) and is considered to be one of the healthiest economies to come out of the post-communist bloc. Developing Northern Australia – A Response to the Green Paper

APPENDIX 4

A NATION-FORMING PROJECT:

TRANSCONTINENTAL NATURAL GAS PIPELINE - DAMPIER WA TO MOOMBA SA.

By: Kenneth A Bracher BE, FIEAust, CPEng, NPER