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Socio-Economic Impact of the Australia Singapore Military Training Initiative a Report for the Department of Defence – June 2017 Disclaimer

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Socio-Economic Impact of the Australia Singapore Military Training Initiative a Report for the Department of Defence – June 2017 Disclaimer Socio-Economic Impact of the Australia-Singapore Military Training Initiative A report for the Department of Defence June 2017 kpmg.com.au Socio-Economic Impact of the Australia Singapore Military Training Initiative A report for the Department of Defence – June 2017 Disclaimer Inherent Limitations This report has been prepared as outlined in the Scope section. The services provided in connection with this engagement comprise an advisory engagement, which is not subject to assurance or other standards issued by the Australian Auditing and Assurance Standards Board and, consequently, no opinions or conclusions intended to convey assurance have been expressed. No warranty of completeness, accuracy or reliability is given in relation to the statements and representations made by, and the information and documentation provided by the Department of Defence and other stakeholders consulted as part of the process. KPMG has indicated within this report the sources of the information provided. We have not sought to independently verify those sources unless otherwise noted within this report. KPMG is under no obligation in any circumstance to update this report, in either oral or written form, for events occurring after the report has been issued in final form. The findings in this report have been formed on the above basis. Third Party Reliance This report is solely for the purpose set out in the Scope section and for the information of the Department of Defence, and is not to be used for any other purpose or distributed to any other party without KPMG’s prior written consent. In that regard, we note that KPMG has consented to the public release of the deliverable by the Department of Defence. This report has been prepared at the request of the Department of Defence in accordance with the Official Order dated 15 December 2016. Other than our responsibility to the Department of Defence, neither KPMG nor any member or employee of KPMG undertakes responsibility arising in any way from reliance placed by a third party on this report. Any reliance placed is that party’s sole responsibility. Socio-Economic Impact of the Australia Singapore Military Training Initiative A report for the Department of Defence – June 2017 Contents 1.1 Scope 2 1.2 Economic Measures 3 1.3 Report Structure 3 2.1 Overview 4 2.2 Regional Economic Profile 5 3.1 Economic Context 10 3.2 Construction Capacity 11 3.3 Major Infrastructure Projects 13 4.1 The Agriculture Sector 14 4.2 Fitzroy – Land Quality and Cattle Numbers 15 4.3 Townsville – Land Quality and Cattle Numbers 16 5.1 Training Area Upgrade / Enhancements 17 6.1 Direct Impacts 20 6.2 Economy-wide Impacts 21 7.1 Overview 29 7.2 Methodology and Approach 30 7.3 Impact Areas 31 7.4 Summary of key findings 31 8.1 Local Sourcing (Construction Services) 39 8.2 Agricultural Industry 41 © 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. Socio-Economic Impact of the Australia Singapore Military Training Initiative Executive A report for the Department of Defence – June 2017 ExecutiveSummary Summary Background The Governments of Australia and Singapore formalised their defence relationship on 10 February 1988. In June 2015, the two Governments made a joint declaration to enter into a Comprehensive Strategic Partnership (CSP). The CSP contains five defence and security-related elements. The Australia Singapore Military Training Initiative (ASMTI) is the first of these and relates to “increased access to, and joint development of, military training areas and facilities in Australia”. 1 In particular, as part of the CSP, the Australian Government agreed to increase Singapore Armed Forces (SAF) access to Australian military training areas via a Memorandum of Understanding (MOU) signed in October 2016. 2 The MOU identifies that, under the Australian Singapore Military Training Initiative (the “ASMTI”), up to AUD$2.25 billion will be invested in the training areas around the Townsville and Rockhampton (hereafter referred by its electoral name of Fitzroy) regions. This investment in enhanced training facilities will provide for more Australian Defence Force (ADF) and SAF unilateral training activities in the two regions each year. 3 This is in addition to the existing Defence activity and investment in the region. For example, in 2015-16, the Townsville Field Training Area (TFTA), Cowley Training Area and Tully Training Area together spent over $4.6 million on wages and salaries, almost $4 million on supplies to support the operation of the facilities, and $2.6 million on capital and equipment for the facilities. In the same year, another $1.5 million was spent on wages and salaries at the Shoalwater Bay Training Area (SWBTA), almost $4 million on supplies to support the operation of the facilities, and $821,000 on capital for the facilities. 4 A proportion of this current expenditure will be spent in the local region, helping support local businesses and jobs. Further, according to the latest available census data (2011) 5, there were almost 4,000 people employed in the Defence sector in the Townsville region and another 150 people in the Fitzroy region. KPMG was engaged by the Department of Defence (Defence) to undertake a socio-economic impact assessment of the Australian Singapore Military Training Initiative (the “ASMTI”) in Central and North Queensland. Specifically, this report is designed to provide Defence with a better understanding of the potential socio-economic impacts of the development of training areas (including any purchases of land) to support extended ADF and SAF training rotations in the Fitzroy and Townsville regions. 6 Methodology The socio-economic assessment has been presented in two distinct parts. 1. Economic Impact Assessment A quantitative (measured) assessment of the potential impact of the proposed training area development (including any purchase of land/industry displacement) and the additional training rotations – including (but not limited to): total gross regional and state product (GRP/GSP) and employment in the affected regions and the State as a whole; and industry-specific activity. 2. Social Impact Assessment The social impact assessment presented in this report is an adaptation of the standard model presented by the Queensland Government.7 This approach was modified to better represent the specific nature of this project and the information available to date. Thus the qualitative (descriptive) assessment of the social impacts presented in this report include the areas of: agriculture, employment & training, industry & participation, health & community, and Singapore relationship. It is noted that this social assessment is based on qualitative research, and thus no quantitative conclusions can be drawn. Findings are based on the perceptions of interviewees, focus group participants, and views expressed through written submissions and (often anonymously) on social media. In particular, to inform the social impact assessment, a comprehensive stakeholder consultation process was conducted through January to early March 2017. This included: 13 interviews with opinion leaders and community representatives in 1 http://defence.gov.au/Initiatives/SingaporeTraining/ 2 https://www.minister.defence.gov.au/minister/marise-payne/media-releases/minister-payne-signs-military-training-agreement-singapore 3 http://defence.gov.au/Initiatives/SingaporeTraining/ 4 Source: Chief Finance Officer Group – Defence Expenditure by Electorate. 5 Australian Bureau of Statistics. (2011). Census of Population and Housing. 6 These regions are defined at the Australian Bureau of Statistics SA4 level –Townsville SA4 region includes Hinchinbrook, Townsville, Burdekin and Charters Towers; and Fitzroy SA4 region includes Livingstone (Marlborough and Stanage Bay), Central Highlands, Rockhampton, Banana and Gladstone. 7 http://www.statedevelopment.qld.gov.au/resources/guideline/social-impact-assessment-guideline.pdf KPMG | i © 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. Socio-Economic Impact of the Australia Singapore Military Training Initiative A report for the Department of Defence – June 2017 Townsville, Rockhampton, Yeppoon, and Marlborough; ten focus group discussions held in Townsville, Rockhampton, Charters Towers, Yeppoon and Gladstone; social media analysis tracking influential posts over the period May 2016 - February 2017; and review of all 18 written submissions provided to KPMG via the public submission process. 8 The remainder of this section provides results of the full socio-economic impact assessment by: • summarising the potential economic impacts of the ASMTI; 9 • discussing the possible social impacts associated with the ASMTI; and • examining ways in which the potential economic benefits might be maximised. Potential Economic Impacts To estimate the potential impact of Defence expanding the land used for training in the Fitzroy region and the Townsville
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