Australian Senate Select Committee into Jobs for the Future in Regional Areas

Committee Secretariat Department of the Senate PO Box 6100 Parliament House , ACT 2600 By email: [email protected]

SUBMISSION by Hunter Joint Organisation

EXECUTIVE SUMMARY

The Hunter Joint Organisation (HJO) welcomes this opportunity to make a submission to this critical national discussion, thorough the Select Committee, on Jobs for the Future in Regional Areas. The HJO is a hub for local government collaboration with expertise in regional policy and program development as well as operating small businesses in a regional context.

The strategic focus of the HJO’s general observations, and its Hunter specific recommendations, is to highlight the critical importance of collaboration of all levels of government to systematise a platform for genuine, place based, local decision making and action. Only this approach will optimise the future job outcomes for the wide variety of communities that exist across Regional .

Drawing from its experience and action within the , the HJO offers the following observations in response to the Terms of Reference for the Select Committee. While these observations are initially expressed in general terms in the Executive Summary, they reflect important elements that will underpin the future of regional jobs in the Hunter. More specific discussion of what is occurring and the aspirations of the Hunter Region follows in the balance of the submission.

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New regional industries and employment opportunities will be realised on a region by region basis. Creation of these new opportunities is a function of the interaction between global economic and technological trends, national economic and demographic trends but applied to the unique local economic and employment context of each region in Australia. These interactions are complex even at a regional level. In particular, in considering how new industries can translate into employment opportunities, it is critical to look, on a region by region basis, both employment supply and demand in both the present and to forecast this into the future.

Clean energy technology and ecological services, both existing jobs and future significance, is again a region-by-region proposition. The feasibility of clean energy tech in a region relates to not just current and future demand, but to the nature of supply (base load or otherwise), the suitability of the region to a given technology and the ease of connectivity to the energy network. The Hunter provides a number of opportunities in this sector and existing clean energy tech projects in the Hunter are discussed later in the submission.

Lessons learned from structural adjustments in the Hunter, in particular, from the closure of BHP’s steelworks in Newcastle, was the importance of targeted skills development that is linked to trends within the specific regional labour market. This is a form of education and training led economic development that is relevant to both existing and new industries. For new industries to locate in a regional setting, the region must have key attributes that support the value chain of that industry, including, most critically, the necessary and appropriate ‘Human Capital’. This again emphasises why, on a region by region basis, both employment supply and demand in both the present and

2 the future requires needs to be modelled. Only then can a region look at how it develops a bespoke pipeline of education and training to ensure its Human Capital will support the industries it wants to retain, attract and grow.

Long-term planning to support the diversification of supply chain industries and local economies in a transparent manner (both in terms of the planning process and outcomes) is critical to provide certainty and clarity to all actors (public and private, individual and organisational) on both matters of timing and policy. Long term planning of this nature also prevents and/or mitigates sharp shocks from sudden industry decline or facility closure.

Community infrastructure to attract investment and job creation in regional transition helps frame the suitability of a region to meet the needs of its workforce and their families, and, therefore, is critical to attracting and retaining talent. In this regard amenity, accessibility of services and community infrastructure can become critical points of difference in the global market for talent but also in the task of retaining locally grown talent. Conventional measures of transition would focus almost entirely on economic outcomes which are often easier, on a relative basis, to quantify. In future, with new technologies, empirically gathering and analysing evidence of the impact of investments in amenity can also be assessed in relation to measuring satisfaction, happiness or ‘wellbeing’. In turn this enables assessment of how both these previously ‘intangible’ measures and economic measures are interdependent or otherwise.

The need for a public authority to manage the transition is not a given. Analysis of positive transition outcomes suggests that local leadership (from government, industry, academia, employee representatives and community) is key for sustainable success in transition responses. The role of central government, whether commonwealth or state, is better focused on provision and consistent use of tools to support local leadership in implementation, as well as funding and policy settings at state and federal level that are designed to deliver the necessary the autonomy to regional leadership to innovate. This does not preclude a role public authority but the research suggests that the focus should remain on empowerment of a localised governance.

Community consultation, as it is experienced by communities in general terms, is insufficient and often not meaningful reflecting the issues of a given place. Case studies indicate that the effectiveness of any response requires regional communities to be directly involved in establishing the process of assessing their current situation, planning for a response and delivery of that response.

Even within this very localised context, genuine engagement with those likely to be most affected, is critical to providing a foundation for sustainable transition.

An additional factor present in many examples of improved transition outcomes is the genuine engagement, if not direct leadership, provided by local institutions (both public and private).

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The role of vocational education providers in enabling reskilling and retraining will remain important even in the shift to knowledge based economies. Research suggest that jobs of the future will be ‘high tech (technical know-how and deep specialisation), high touch (roles that are hands on in ‘doing and delivering’’), high care (high personal and emotional engagement).’

Degree qualified study will continue to grow in importance for future jobs. However, it is equally true that the presence in any given region of an appropriately skilled workforce will require the regionally based VET to respond with the necessary skills training for that region. The velocity and adaptiveness of the VET response will be key factors in local transition resilience. This is currently an area of risk ripe for reform focused on empowering regions and greater flexibility in designing and delivering skills based training. The highly centrally regulated approach to the VET sector and the need to often involve both state and commonwealth governments to drive meaningful reform makes this one the most complex yet critical challenges.

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The general submissions above are drawn from experience in the Hunter and the early work of the HJO’s Standing Committee into Economic Transitions (discussed further below).

The balance of this Submission focuses on the situation in the Hunter and is arranged as follows: 1. Introduction to the Hunter Joint Organisation of Councils 2. The Hunter Region – Profile 3. Regional Opportunities and Challenges 4. A Planned, Collaborative Transition 5. Building on Regional Strengths 6. Key Ingredients: Transition Literacy and Skills Pipeline, Local Leadership, Leveraging/Clustering Local Industry Strengths 7. Conclusion and Recommendations for the Hunter

OUTLINE OF SUBMISSIONS

1. INTRODUCTION TO THE HUNTER JOINT ORGANISATION OF COUNCILS The Hunter Joint Organisation (HJO) was created as a hub for local government collaboration. Our mission is to strengthen our communities by being the local voice on regional strategic priorities in the Hunter and delivering tailored local government solutions. HJO has a unique perspective on ‘the future of jobs in regional areas’ given that its operations comprise both its role as:

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1. a statutory body corporate – constituted under s400Q of the Local Government Act, 1993 (NSW) (the Act) – with the function, amongst other things, of establishing strategic regional priorities for the Hunter Region; and

2. the operator of small businesses that add value to and service both the local government sector as well as regional industry (relevant to our operations) and our communities.

The HJO has the following member councils: • The City of Cessnock; • Council; • The ; • The ; • MidCoast Council; • Council; • The ; • ; • ; and • Council.

The HJO has established a Hunter Economic Transition Standing Committee (HESTC) with representatives from all member councils. The HESTC supports the HJO in giving strategic focus to the issue of economic transition and jobs for the future in the Hunter Region. We note also that at least one of our member councils, the City of Lake Macquarie, intends to make a separate and independent submission to the Select Committee.

2. THE HUNTER REGION – PROFILE The Hunter is the largest regional economy in Australia, with a greater economic output than , the and the Australian Capital Territory. It drives approximately 28% of regional ’ total economic output and is the largest regional contributor to the State’s gross domestic product.

The Hunter is home to more than 860,000 people, making it the most populous regional area in Australia and has an estimated workforce of 373,631. The projected population in the region is estimated to be 1.1 million by 2036.

The Hunter Region is often referred to as the ‘powerhouse of the nation’, as demonstrated by:

• four black thermal coal-fired power stations that account for 25% of the National Energy Market (NEM). The Hunter Region’s power generation industry produces over 60% of New South Wales’ electricity grid supply and employs approximately 2,200 people and contributes up to 14,000 indirect jobs; and,

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• 24 coal mining operations that account for approximately 11% of globally traded thermal coal. The Port of Newcastle is the largest coal export port in the world. The mining of thermal coal continues to be a significant component of the Hunter Region’s economy with over $19.4 billion in coal exported through the Port of Newcastle. The coal sector in the Hunter is estimated to provide direct employment for up to 11,000 people and contributes up to 40,000 indirect jobs.

3. REGIONAL OPPORTUNITIES & CHALLENGES

Greater Newcastle is well positioned to be the second city of New South Wales and the Greater Newcastle Metropolitan Plan (discussed further below) provides a road map for this opportunity. The HJO have identified this as a strategic priority and supported its implementation with a dedicated standing committee of its members.

The Hunter Region already possesses a diverse economy which makes it a genuine option for strategic government investment in growing a second economic and population hub in NSW.

Outside Greater Newcastle, the Hunter is home to globally competitive industries including mining and resources, equine and wine-making industries as high profile examples. These foundational expertise provide a platform from which to plan our future in light of both global and local trends which introduce uncertainty in the longer term horizon for the Hunter Region.

With the right governance, strategic planning and investment, Greater Newcastle and the Hunter offers an alternative option for dealing with population pressures in major cities not designed with higher populations mind and for generating new industries as both a mitigation and growth engine for the region’s economy.

It is important to acknowledge the need for the region to mitigate the significant risks from the economic trends facing the future of thermal coal mining and power generation as well as from automation. The Hunter Region’s key markets for thermal coal – , Korea, China and Taiwan (collectively representing over 90% of thermal coal exports from the Hunter) – have plans for transition away from coal-fired power generation. These plans are being operationalised through various policy levers, including: increasing coal importation tariffs; embargos on new or expansions to coal-fired power stations; repositioning of energy generation towards gas and renewables; and, carbon pricing mechanisms.

Domestically, the Hunter’s four coal-fired power stations – Liddell, Vales Point, Eraring and Bayswater – have planned closure dates of 2023, 2028, 2034 and 2035 respectively.

Given that the mining and energy generation sector directly employs over 13,000 people and indirectly contributes to the employment of over 50,000 Hunter residents, these international and domestic trends have critical implications for communities across the region.

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Critically, the HJO would advocate that the response to these issue should not just be considered through the prism of a discrete ‘fix’ but as an opportunity to enable the Hunter to do more for New South Wales and Australia.

4. THE NEED FOR A PLANNED, COLLABORATIVE TRANSITION The HJO has prioritised economic transition, diversification and resilience and is determined to ensure that the Hunter Region becomes an exemplar in undertaking successful regional economic transition.

Too often regions across the globe have to go into decline before embracing economic transformation. International case experience demonstrates that earlier planning and investment is the key to avoiding catastrophic decline and ensure successful regional transition.

The Hunter Region has a number of initiatives underway to build its transition infrastructure, community literacy, and capacity in transition by facilitating and supporting new industries and transition ‘frontrunners’ and improving science, technology, engineering and mathematics (STEM) education and training.

Two of the HJO members, City of Newcastle and the City of Lake Macquarie, are well recognised for their progressive approach to planning and building a Smart City. There is significant opportunity to leverage this existing local expertise across the region, creating a genuine point of attraction and difference to businesses and employment talent.

The HJO and its members, in cooperation with the NSW State government support various planning and innovation initiatives, including:

• Strategic planning. The Hunter Regional Plan 2036 aims to strengthen the Region’s economic resilience, protect its well-established economic and employment bases and build on its existing strengths to foster greater market and industry diversification with the goal of adding 64,000 new jobs.1 Other strategic documents include The Greater Newcastle Metropolitan Plan 2036, which is first-ever Metropolitan Plan for a non-capital city in Australia, and the Upper Hunter Economic Diversification Action Plan: Implementation Priorities.2

• Australian Transition Academy (ATA). The ATA is established by the Monash Sustainable Development Institute (MSDI) as the first transition science training centre in Australia.

• Australian Foundation for Economic Transitions (the Foundation). The Foundation is an initiative of the HJO and is intended to be a cross-sectoral multi- industry alliance which will lead industry sectoral transitions within the Hunter

1 NSW Department of Planning, Industry and Planning (2016). The Hunter Regional Plan 2036, NSW Government 2 NSW Department of Planning, Industry and Planning (2018). The Greater Newcastle Metropolitan Plan 2036, NSW Government

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initially but ultimately seek to support other regions and whole of government responses to regional transitions through the sharing of practical learnings, frameworks and tools.

• Advanced Energy Integration Initiative (AEII). AEII is collaboration between the University of Newcastle, the University of New South Wales and the University of . AEII’s objective is to develop and progress catalyst projects that explore the stability of our energy future.

• Workforce Transitions Initiative. The HJO in collaboration the Hunter Region Employment Facilitator considers the facilitation of pooled redundancy schemes, regional workforce planning, re-skilling and up-skilling of the workforce, STEM education, and other education and training initiatives. However, given the existing challenges to the regional workforce, the HJO recognizes that there is insufficient support and funding available for the Employment Facilitator for the Hunter.

Whilst these initiatives demonstrate a commitment from the HJO and its members to the strengthening of the Hunter’s economic and social resilience, the Federal and State government’s involvement, through enabling policies and funding, is essential in the Hunter Region, in a genuine collaboration with local government. Government, collectively, then needs to prioritise the early deployment of locally led transition governance, hard and soft infrastructure, community transition literacy, capacity building, and the facilitation of new industries.

Lessons learned from the Latrobe Valley Worker Transfer Scheme confirm that social, economic and employment transition programs, when funded and executed properly, can be successful. The Latrobe Valley Community Infrastructure and Investment Fund and the Latrobe Valley Authority were established to minimise the impact of the Hazelwood power station and mine closure. This partnership between government, unions, and the power plant operators was supported by $266 million of government funds. Similar support is needed for the impending closures of Liddell, Vales Point, Eraring and Bayswater power stations.3 This imperative for intergovernmental coordination and cooperation includes the need for resourcing of local projects, planning system flexibility, and policy certainty for clean technology investment—particularly renewable energy storage and firming.

5. BUILDING ON REGIONAL STRENGTHS The Productivity Commission (2017) recognised that ‘(r)egional development should…work with, rather than against, the natural, historical or social advantages of a region.’4

3 Latrobe Valley Authority (2019). Latrobe Valley Worker Transfer Scheme Report, March 2019, State Government 4 Productivity Commission (2017). Transitioning Regional Economies, Initial Report, Canberra.

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As noted above, the Hunter Region already possesses a diverse economy which makes it a genuine option for strategic government investment in growing a second economic and population hub in NSW. It’s existing stability and diversity allow for a longer term view to be taken with respect to establishing appropriate governance and government investment in transition programs.

The Hunter Region is ideally placed to benefit from the transition to a sustainable, low carbon future. It has the natural assets, infrastructure and skills to become Australia’s ‘new energy’ powerhouse, capitalising on the global momentum behind clean energy, sustainable food and bio-innovation to create new industries, new jobs and a new path to prosperity for Hunter communities.

Aside from its exiting stability and diversity, the Hunter’s key comparative advantages include:

• Transport and enabling infrastructure. The Hunter region is connected to the rest of NSW and Australia the Pacific Highway, the -Newcastle railway, Port of Newcastle as well as the Newcastle Airport, which has plans to double its passenger traffic capacity by 2036.5

• Close energy system integration, including comprehensive high and low voltage power system, transport infrastructure, regional networks, industrial diversity and experience.

• Skills base: highly adapted to new industrial developments in renewables, storage, bio-innovation and food systems.

6. KEY INGREDIENTS: TRANSITION LITERACY AND SKILLS PIPELINE, LOCAL LEADERSHIP AND LEVERAGING/CLUSTERING LOCAL INDUSTRY STRENGTHS Successful regional economic transitions are built on the ability of regions, in collaboration with all tiers of government, to harness the collective capacities of changemakers. The Productivity Commission (2017) noted that ‘(s)trategies that facilitate successful transition and development are those that focus on supporting people in regional communities (rather than businesses or industries) to adjust to changing economic circumstances’.6

Below are some of the key Hunter based initiatives that, with the right support, can provide the key ingredients to a sustainable transition for the Hunter in a manner that will not only benefit the Hunter but support the needs of New South Wales and Australia.

This is not intended to be an exhaustive list of regional initiatives but exemplars of the key inputs to successful transitions - transition focuses skills pipelines, local governance and ownership, focusing on industry that leverage and/or can cluster around existing attributes.

5 Newcastle Airport (2018). Delivering the Airport the region deserves: 2036 Newcastle Airport Vision. 6 Productivity Commission.

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The Australian Transition Academy (ATA) is the first transition training centre in Australia. Established by Monash Sustainable Development Institute (MSDI - Monash University), the ATA’s goal is to provide context-specific and tailor-made executive training, professional development, undergraduate and postgraduate courses to Australia and the Asia Pacific.

Leading transition practitioners and scholars from MSDI have partnered with the Dutch Research Institute for Transitions (DRIFT) to create a collaborative entity that will provide access to the emerging Australian and Asia Pacific markets for transitions education, training and research.

Drawing on the transitions expertise of MSDI and DRIFT, the ATA will position itself at the forefront of training, research, policy development, and advocacy through strong academic partnerships with leading national and international transition agencies and stakeholders. Whilst the ATA has a key focus on executive training and professional development, the Academy will also host a policy and research team to provide tailor- made solutions and consulting services to business and governments.

Australian Foundation for Economic Transitions (the Foundation). The Foundation will be a cross-sectoral multi-industry alliance which will lead industry sectoral transitions across regions and better coordinate whole of government responses to regional transitions.

The HJO and industry partners believe that, by working together they can achieve more sustainable practices for industrial transitions. To that end, the Foundation will develop and facilitate initiatives to attract investment and support economic growth and associated employment opportunities in the Hunter.

The establishment of the Foundation is supported by universities, industry, and local governments in the region, as they look to support the Hunter region, in the first instance, through the closure of the Liddell and Bayswater power stations and the ensuing economic and energy transition.

Research and tool development on regional transition issues undertaken by the Foundation will be communicated with stakeholders, the community and will inform government policy. The Foundation will also attract capacity for industry-led research and deliver research, training and other professional services.

The Hunter BioValley is a vision for the first fully integrated green growth and innovation region in Australia. The BioValley represents a move away from ‘single technology/project’ thinking and towards a coordinated, researched and planned transformation of regional economies based on the interaction of renewables, bio- innovation, sustainable food, circular systems, and enhanced ecosystems. Initial scoping work is being supporting by the New South Wales State Government, the HJO and Musswellbrook Council.

The vision for a Hunter BioValley is to mirror the synergistic relationships built between land uses across Europe, where sustainable food systems improve ecosystems, agricultural and urban waste feeds bio-refineries and renewable energy and storage drive the integrated system.

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In Europe, this approach in a regional context delivers outstanding economic ouput, job creation, local ownerships and environmental enhancements. A notable international example is Flanders Bio-Based Valley (FBBV) in Belgium where this model has worked to attract new investment and jobs into regional economies. The FBBV was established as a Public Private Partnership between Ghent University, the City of Ghent, the Port of Ghent, the Development Agency East-Flanders and a number of industrial companies related to the Ghent region, active in the fields of generation, distribution, storage and use of bio-energy. The FBBV attracted over 420 million Euros and created more than 500 jobs.7

The opportunity for the first combined City and Regional Deal with the Greater Newcastle and the entire Hunter Region. City and Regional Deals aim to align planning, investment and governance between all levels of government. The purpose of those partnerships is to accelerate growth and job creation, stimulate urban renewal and drive economic reforms to secure the future prosperity and liveability. A unique economic, social and environmental relationship exists within the Hunter Region between its rural, regional townships and urban communities and the already diverse industry sectors contained within it. This relationship is synergistic and greatest benefit would be achieved by framing a ‘deal’ that draws on and enhances this synergy. .

The HJO has already expressed readiness to pursue a partnership with the New South Wales and Commonwealth Governments. In its Intergovernmental Partnerships Project, the HJO outlines the benefits of developing a collaborative governance approach for the Greater Newcastle and the Hunter.8 Regional Councils, together with the State and Federal governments, can jointly work of achieving the objectives of existing strategic documents such as the Greater Newcastle Metropolitan and Hunter Regional Plans. In addition, the HJO developed a population paper, titled A Growth Agenda for the Hunter, which it hopes to initiate a much-needed intergovernmental dialogue.9 The HJO recommends that the other levels of government join the discussion around the terms of reference for the Intergovernmental Partnerships Project.

Special Activation Precincts (SAP). SAPs are designed to create jobs, attract business and investors and fuel economic development. Williamstown aerospace precinct has shared access to $20 million allocated from the Snowy Hydro Legacy Fund and will likely be designated as a SAP.10 A 76-hectare prescient, called Astra Aerolab, was already provided with $11.7 million by the NSW Government to develop vital infrastructure.11 While primarily Williamstown precinct will cater to the defense industry, other related industries will also benefit, such as education, aerospace, aviation, advanced manufacturing. Astra Aerolab is expected to ultimately deliver 5,500 new jobs.

7 Dobbelaere, Sofie (2019). Flanders Biobased Valley a Leading International Biobased Cluster. PowerPoint Presentation March 2019, Ghent, Belgium. 8 The Hunter Joint Organisation (n.d). Intergovernmental Partnerships Project Partnering for Prosperity: a collaborative governance approach for the Greater Newcastle and the Hunter. 9 The Hunter Joint Organisation (2019). A Growth Agenda for the Hunter: Drivers of Population Growth. 10 NSW Business Chamber (2019). Hunter Business Chamber June update, 19 June 2019. https://www.nswbusinesschamber.com.au/Media-Centre/Resources/June-2019/Hunter-Business-Chamber- June-update 11 See Astra Aerolab (2019). https://www.astraaerolab.com.au/

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Other potential SAPs in the region can accelerate the job and economic growth in the Hunter (e.g. AGL’s Liddell site).

Development of the metallurgical coal industry. Australia is the largest exporter of metallurgical coal, followed by the US and Canada. Australian ‘met coal’ is primarily exported to Asia, primarily to India, Japan and China.12 Metallurgical coal is the primary source of carbon used in steelmaking and, therefore, the market is dependent on the global steel industry.

According to the International Energy Agency (2016), Australia is forecast to export 198 Mtce of metallurgical coal by 2022 and have a trading share of 72%.13 The stability and growth of the global market is not surprising considering that ‘met coal’ is difficult to be replaced. A report commissioned by the Minerals Council of Australia (2018) explains that coal serves threefold purpose in the blast furnace and it is therefore technologically difficult to find a suitable replacement.14

The Hunter has significant reserves of export quality low-ash soft coking coals and additional metallurgical coal mines are expected to come online.15 Malabar Coal is undertaking exploration studies for its Spur Hill Underground Project in the Hunter Valley and it will likely become operational within five years. The region can benefit from additional research and strategic solutions for further development of the regional metallurgical coal industry.

Aluminium Industry. Aluminium smelters require reliable power supply as they are heavily dependent on electricity. Some aluminium companies, like Rio Tinto, are also involved in power generation. At present, this industry is at risk of increased wholesale price of electricity and interruptions in the power supply.

Since its establishment in 1983 in the Hunter Valley, Tomago Aluminium Company has grown to produce 590,000 tonnes of aluminium per annum, employ 1,150 staff and contractors and support more than 1,800 jobs. Tomago consumes about 12% of the NSW electricity consumption and is concerned about future reliability of electricity supply in the NEM.16

An operation such as the Tomago Aluminium Company can have strategic relevance beyond its own direct economic and job creation capacity. Often local institutions. including private enterprise such as Tomago, provide critical mass acting as a hub or anchor to attracted and agglomerated aligned industries. These industry

12 Department of Industry, Innovation and Science (2019). Resources and Energy Quarterly, Office of the Chief Economist. 13 International Energy Agency (2016). World Energy Outlook 2016.; International Energy Agency (2017). Coal 2017. 14 Minerals Council of Australia (2018). Market Demand Study: Australian Metallurgical Coal, Commodity Insights 15 Division of Resources and Energy (2017) Coking Coal Opportunities in New South Wales, Australia, NSW Government 16 Tomago Aluminum (2017). Tomago Aluminium Company Pty Ltd - Submission to the ACCC Inquiry into Retail Electricity Supply and Pricing.

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agglomerations can be provide the depth and quality of expertise which act as incubators for innovation and new industry development.

This sets the context for considering the incentivisation of the development of pumped hydro and other firming energy or peaking supply, the Australian Government can ensure the long-term growth and productivity of the aluminium smelters. Timely Government action would also keep the Australian aluminium production internationally competitive. To achieve this, more investments are needed in the renewable power generation and storage to offset the power supply gap by the closures of Liddell and Bayswater power stations.

Alternative power generation. The Hunter region has enormous potential for alternative power generation and storage. The local geography and existing electrical grid in the Hunter present opportunity for investments in renewable energy generation which can preserve the Hunter region’s importance as the powerhouse of NSW.

The Hunter is home to many renewable energy projects that will be completed in the next decade, including Liverpool Range Wind Farm (1000MW), Bell’s Mountain Pumped Hydro Power Station (250MW), Liddell Lithium-ion Battery Array (250MW), Bowman Creek Wind Farm (250MW), Upper Hunter Energy Park (113 MW), Vales Point Solar Project (55 MW), Summerhill Solar Farm (5 MW). Collectively, these projects will provide thousands of jobs during both the construction and operational phases.

The Government must ensure energy policy certainty for firming supply and storage to build confidence amongst potential investors. To further manage the ongoing energy transition, the HJO also recommends that appropriate funds are allocated to the Australian Renewable Energy Agency (ARENA). The HJO recommends that ARENA releases a National expression of interest for the delivery of incentivised firming or stored energy investment around the key parameters of affordability, reliability, timing and environmental sustainability.

Advanced manufacturing. Advanced manufacturing encompasses all aspects of the value chain from concept to end-of-life considerations. Use of innovative technologies and methodologies for improved competitiveness in the manufacturing sectors is increasingly important. Technologies such as advanced CNC, 3D printing, robotics, laser cutting and automation have improved many existing local industries and the technologies designed and manufactured in the Hunter are competitive on a global level. NSW Advanced In 2018, the NSW Manufacturing Industry Development Strategy recognized the Hunter as a potential growth region especially in areas such as defence systems and equipment, aircraft maintenance, crew training systems and mine disposal. Advanced manufacturing is also one of the main areas of strengths which were recognized by the Smart Specialisation Strategy (S3) for the Hunter Region.17

17 Regional Development Australia Hunter (2016). Smart specialisation strategy for the Hunter region: a strategy for innovation-driven growth

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Advanced manufacturers in NSW provide the most valuable and skill-intensive parts of the production process. As a result investments are needed in new technologies, R&D processes, facilities to test ideas and products. The HJO recognizes that advanced manufacturing requires advanced knowledge, and more opportunities are required for the local workforce to obtain the necessary education and skills.

A SMART Region approach and development of a skills pipeline. Some industry sectors report significant skills shortages. In the 2019 Workforce Skills Survey done by the NSW Business chamber it is noted that the Hunter Valley (excluding Newcastle) is one of the regions with most significant skills shortage.18 As a result, businesses face difficulties in recruiting suitable staff and are at risk of missing opportunities and losing customers. This also acts as an anchor on investment attraction. The HJO is championing the leveraging existing expertise from its member councils to promote a SMART Region which could act as both a major feature to attract and retain talent and investment. Another key attraction for investment is the existing of a skills pipeline that leads potential employees through education right up to job readiness. This starts within the education system and across the Hunter there are ongoing initiatives to increase the number of students enrolled in STEM subjects. Regional Development Australia (RDA) Hunter designs and implements initiatives which focus on moving students towards future technologies such as 3D design and printing, robotics, Unmanned Aerial Vehicles, cybersecurity and embedded systems. 19 Whist improving STEM education outcomes has been relatively successfully deployed across the Hunter, it has been a bit of a hit and miss exercise in some areas, including in the Upper Hunter. Additional investments and future government support is needed, particularly to the RDA Hunter, in order to prepare the young workforce with the right skills for the jobs of the future. Providing pathways to university education for students from both urban and rural areas in the Hunter region is equally important. Deloitte forecasts that the ongoing shift towards cognitive-based jobs will continue and about 80% of the Australian jobs created by 2030 will be for knowledge workers.20 As per the most recent Census, 34% of all employees in the Hunter did not have any form of education or were still studying. Most of the employees with a completed education had certificates (31.4%), while only 15.5% employees had a Bachelor degree.21 Low numbers of well qualified employees suggests that many residents in the Hunter are vulnerable to the transition process. Educated and skilled workforce is resilient to automation and structural industry decline. As witnessed during the decline in the Australian car industry, many automotive workers were able to successfully move to other manufacturing sectors due to their transferable

18 NSW Business Chamber (2019). Workforce Skills Survey. 19 Regional Development Australia Hunter (2019). https://www.rdahunterstem.org.au/ 20 Deloitte (2019). The path to prosperity: Why the future of work is human, Building the Lucky Country #7, Deloitte Insights. 21 Australian Bureau of Statistics (2016). The Census of Population and Housing.

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skills.22 The Hunter region is facing similar challenges and needs to ensure its workforce is resilient, agile and adaptive.

8. CONCLUSION & RECOMMENDATIONS FOR THE HUNTER

With intergovernmental collaboration on policy and funding but delivery through local leadership and regional specific programs, HJO is committed to advancing its strategic regional priorities, protecting the region’s well-established economic and employment bases and building on the Hunter’s strengths to prepare for the future. The Hunter Joint Organisation makes the following recommendations in relation to the Hunter Region:

That the Select Committee recommend to the Senate that, given the particular issues facing Australia’s largest regional economy, the Government:

• Collaborate with, and provide funding to, the Australian Foundation for Economic Transition, established by the Hunter Joint Organisation of Councils, to undertake a detailed strategy identifying:

 Opportunities for the development of critical industry clusters in areas of comparative advantage or opportunities to develop existing clusters together with identifying infrastructure or other targeted investments necessary to unlock growth and private sector investment in emerging or potential clusters,

 Opportunities for the further development of airport infrastructure, aero-based or defence related advanced manufacturing,

 Opportunities for the development of the metallurgical coal industry, and

 Opportunities for the development of a bio-based industry (for example bio-fuels and value chain ‘from farm to port’ in the Hunter Region – identifying gaps in the value chain and opportunities to invest;

• Collaborate with, and provide funding to, the Hunter Joint Organisation on a SMART Region Strategy, leveraging the recognised SMART City expertise of the City of Newcastle and the City of Lake Macquarie.

• Collaborate with, and provide funding to further the STEM education expertise of RDA (Hunter) for linking . to undertake a detailed strategy for building upon its STEM education and training initiatives in the Hunter Region – and particularly deploying those initiatives in areas of an identified gap;

• Collaborate with, and provide funding to, the Australian Transitions Academy (Monash University) to deliver bespoke training in economic transition management to build capacity and transition literacy throughout the Hunter Region;

22 Deloitte.

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• Provide $1M annually in support of initiatives recommended by the Hunter Region Employment Facilitator to enhance future employment pathways for transitioning workers;

• Prioritise the first combined City and Regional Deal within the Hunter, incorporating its both its metropolitan heart, Greater Newcastle and the industries and communities based in the sub-regions existing urban areas;

• Release a bespoke expression of interest for delivery of energy security to the Hunter Region’s aluminium industry beyond 2022/23 with a view to incentivising the development of pumped hydro and other firming energy or peaking supply by a fixed date to ensure the long-term growth and productivity of that industry; and

• Empower and fund the Australian Renewable Energy Agency to release a National expression of interest for the delivery of incentivised firming or stored energy investment around the key parameters of affordability, reliability, timing and environmental sustainability.

HJO urges the Select Committee to carefully examine the information outlined above and to consider the recommendations in this Submission.

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