IN THIS EDITION
1. Three shortlisted for operations and management of Parklea Correctional Centre
2. John Holland to construct Sunshine Coast Airport expansion 3. ELECTION WRAP: Liberals favoured to win second term in Tasmania tomorrow; SA election heats up in a three way contest 4. ENERGY WRAP: QCA expects electricity prices in regional Queensland to fall; ACCC warns of ongoing supply issues for east coast gas market
5. Victoria passes legislation allowing AV trials in the state 6. Industry news
7. Industry appointments 8. IPA news
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1. Three shortlisted for operations and management of Parklea Correctional Centre
Three bidders have been shortlisted for the operations and management of Parklea Correctional Centre, and will now progress to the Request for Tender (RFT) stage. Parklea Correctional Centre has been privately operated by the GEO Group since 2009, with the existing contract to expire at the end of March 2019.
The shortlisted bidders are:
Serco; G4S; and MTC/Broadspectrum joint venture.
Expressions of Interest for the project closed in December 2017 and the contract is expected to be awarded in October 2018, with operations commencing on 1 April 2019.
The contract would be for an initial term of seven years and will include a possible five year extension, pending operational outcomes achieved during the initial contract.
Services to be provided under the contract include:
accommodation and custodial services; programmes and industries; health services; transport and escort services to and from funerals, healthcare facilities and other approved releases; and facilities and asset management.
Parklea Correctional Centre, which houses up to 1,000 maximum security and remand male prisoners, has recently experienced a number of safety and security issues. In response, NSW Minister for Corrections David Elliott stated that “Corrective Services NSW has developed a much more stringent contract for the future operations of the prison” including strengthening requirements for potential operators to demonstrate their capacity to achieve better security, safety and inmate rehabilitation outcomes. These are expected to be measured in the contract through the use of key performance indicators for:
safety and security; rehabilitation and reintegration; and respect and professionalism.
As a result of the previous issues experienced at the facility, the NSW Legislative Council launched an inquiry into the centre and its operational issues in November 2017. The scope of the inquiry includes:
benchmarking of prisons in NSW; adequacy of staffing levels and staff safety; inflow of contraband; facility security; appropriateness and operation of private prisons in NSW; corporate governance of the current operator and the facility; and any possible contraventions of the contract between NSW Government and the current operator.
Submissions for the inquiry closed on 28 February 2018.
Read the NSW Government’s media release HERE
View Parklea Correctional Centre on ANZIP HERE back to top
2. John Holland to construct Sunshine Coast Airport expansion
This week, Sunshine Coast Council (SCC) and the Federal Government announced that John Holland has been awarded a $225 million contract to construct the Sunshine Coast Airport Expansion project.
According to media reports, five companies were originally shortlisted for the project in November 2017.
The expansion will see the construction of a new 2,450 by 45 metre east-west aligned runway to the north-east of the terminal (shown in Figure 1), with the present second runway being decommissioned. The new runway will allow Sunshine Coast Airport to service passenger aircraft such as Airbus A330s and Boeing 787s.
The expansion also includes upgrades to the terminal and the installation of a new air traffic control tower.
Figure 1: Artist impression of new runway
Source: Sunshine Coast Council
The contract award follows the successful 99-year lease of the Sunshine Coast Airport by SCC to Palisade Investment Partners, who commenced operating the airport in December 2017. As part of the agreement, Palisade Investment Partners paid $82 million upfront for the airport and will pay SCC an additional $290 million fixed payment for the new runway in 2022.
This is in addition to a $181 million concessional loan the Federal Government has provided SCC to deliver the expansion. It is expected that the loan will be repaid by SCC using payments that it will receive from Palisade Investment Partners after the completion of the expansion.
Construction of the expansion is expected to commence in the coming weeks, with the new runway and facilities scheduled to be operational in 2020.
Read the Federal Government’s media release HERE
View the Sunshine Coast Airport Expansion on ANZIP HERE back to top
3. ELECTION WRAP: Liberals favoured to win second term in Tasmania tomorrow; SA election heats up in a three way contest
Tasmania will go to the polls this Saturday with opinion polls indicating that the incumbent Liberal Government, led by Premier Will Hodgman, is favoured to secure a second term. Meanwhile, the South Australian election to be held on 17 March, is shaping up as a three way contest between the incumbent Labor Government led by Premier Jay Weatherill, the Liberals led by Steven Marshall and SA Best led by former Federal Senator Nick Xenophon.
The Tasmanian Liberal Government has committed to delinking the wholesale electricity prices from the Victorian benchmark within the National Energy Market (NEM) by mid-2021. This policy would see Tasmania create its own regional reference price, similar to other NEM jurisdictions, whilst remaining within the NEM.
While repeatedly ruling out asset recycling as a means of funding the State’s infrastructure priorities, the Liberals have committed to investing $125 million over five years into the second stage of the Tasmanian Affordable Housing Strategy 2015-25 to deliver an additional 1,500 new affordable housing dwellings.
A new $270 million prison in the north of the State, with capacity for approximately 270 inmates, forms the centrepiece of the Liberal’s plan for new prison infrastructure. It will be developed in two stages, with the $150 million first stage to be completed within five years. Construction of the new prison would commence in 2019/20.
Other Liberal commitments include the continuation of the $500 million Midland Highway upgrades, including the $80 million Perth Links Project.
See the Liberal Government’s election policies HERE
Meanwhile, Tasmanian Labor’s campaign has focused on health infrastructure, renewable energy development, as well as addressing Tasmania’s water and sewerage infrastructure needs.
Labor has committed to call for Expressions of Interest (EOIs) for private providers to build a new co-located private hospital on the existing Launceston General Hospital site. It is unknown how the project will be delivered, or what the funding arrangements will be.
Labor has also announced that it will provide $250 million, as part of the Future Hospitals Project, to fund hospital upgrades across the State.
The Opposition has committed to a 500MW Renewable Energy Development Target, to be achieved by securing up to $200 million in public financing from the Clean Energy Finance Corporation (CEFC). It has also expressed support for the completion of a business case into a second Basslink cable to export surplus renewable energy to the mainland.
In terms of water and sewerage infrastructure, Labor has announced that TasWater and its existing network will remain Government-owned. For water projects that sit outside TasWater’s current works plan, Labor will seek equity investment from Australian industry super funds to finance projects including relocating Macquarie Point Sewerage Works and Cameron Bay Treatment Plan, upgrades to Launceston’s sewerage and water systems and other minor capital works.
To finance capital works of this size, Labor has said it will take advantage of the “historically low interest rates and an extremely competitive superannuation market that is looking for low-risk, long-term infrastructure opportunities to keep rates of return low and minimise on household bills”. Media reports suggest that Opposition Leader Rebecca White has also ruled out asset recycling as a means of paying for infrastructure priorities.
Read the Labor Opposition’s election policies HERE
In South Australia, Labor’s campaign has focused on transport, energy and freight, while the Liberals have focused on freight, energy, and health. Nick Xenophon's SA Best party has released minimal policy detail to date, except for a proposal to create a new community-owned energy retailer for low income households.
If re-elected, the Weatherill Government plans to have solar and battery storage systems installed on 50,000 households to create a 250 megawatt (MW) “Virtual Power Plant”. In order to encourage households to install solar and battery storage systems, Labor would also allow any household to access seven year interest-free loans of up to $10,000 to assist with installation costs. These policy announcements feed into a broader commitment to increase South Australia’s Renewable Energy Target (RET) to 75 per cent by 2025 (from the current 50 per cent).
Additionally, under a Labor Government, SA Water would be decorporatised by creating a new Energy & Water Services Department, in order to retain these assets under public ownership.
In health, if re-elected the Labor Government would spend $528 million to build a new Adelaide Women’s Hospital (to be co-located with the new Royal Adelaide Hospital) and $270 million upgrading the Queen Elizabeth Hospital.
In transport, Labor has committed to establishing a Level Crossing Removal Authority to lead work on removing seven level crossings across South Australia. The $1.33 billion policy would see level crossings removed at:
Torrens Road, Ovingham ($220 million); Park Terrace, Salisbury ($210 million); Bight Road, Hove ($165 million); Cross Road, Westbourne Park ($210 million); Tapleys Hill Road/Trimmer Parade ($125 million); Goodwood Road, Goodwood ($160 million); and Marion/Cross Road, Plympton Park ($240 million).
Labor has committed $279 million to the three-kilometre EastLink tram extension which would run along East Terrace and Rundle Street out to Kent Town, then along the Parade West terminating at Norwood Place. The project would also involve the purchase of four new trams and the construction of five new stops.
Labor would also fund the $259 million two-kilometre ProspectLink tram extension which would travel along King William Road and O’Connell Street in Adelaide, terminating near Piccadilly Theatre. This project would also involve the purchase of eight new trams and the construction of four new stops along the route.
Finally on freight, the Labor Government has committed to injecting $150 million of equity into a new South Australian Ports Authority to “allow the new Authority to borrow more than $500 million” for the construction of a new deep water port in the Spencer Gulf.
Read the Labor Government’s election policies HERE
The Liberal campaign has focused primarily on energy, freight and health in the infrastructure space.
The SA Liberal Party has focused heavily on energy during the election campaign, following the blackouts experienced in the State in early 2017. The energy plan includes $200 million to develop a new interconnector between South Australia and New South Wales. The Liberals are also opposed to the current Government’s plan to build a new Government-owned gas power plant. The energy plan also includes measures such as holding a reverse auction to obtain 276 MW of reserve capacity and $180 million for home storage and demand management.
On freight, the Liberals have released a policy titled Globe Link. Globe Link would see the development of an alternate corridor for heavy freight (shown in Figure 2).
Figure 2: Proposed alternate heavy freight route Source: South Australian Liberal Party
Other elements of the policy include:
connecting the South Eastern Freeway to the Sturt Highway and the Northern Connector; exploring options to build a new curfew free freight-only airport near Murray Bridge; and creating a new Intermodal Export Park near Murray Bridge.
Should the Liberals be elected, a business case for the project will be developed and submitted to Infrastructure Australia for assessment. It is envisaged that State and Federal funding as well as private equity would be used to deliver the project.
In health, the Liberals have committed to delivering a new Women’s and Children’s Hospital (co-located with the new Royal Adelaide Hospital) by 2024. Within 100 days of being elected, the Liberals would establish a taskforce to develop a fully costed proposal for the project. In other health commitments, the Liberals have committed $270 million to upgrade the Queen Elizabeth Hospital and $110 million to upgrade Modbury Hospital.
Read the Liberal Opposition’s election policies HERE back to top
4. ENERGY WRAP: QCA expects electricity prices in regional Queensland to fall; ACCC warns of ongoing supply issues for east coast gas market
This week, the Queensland Competition Authority (QCA) released its 2018/19 draft determination on regulated retail electricity prices in regional Queensland. The QCA forecasts decreases in both customer and small business tariffs for the period.
The review commenced in December 2017 to determine regulated retail prices (notified prices) in regional Queensland for the period 1 July 2018 to 30 June 2019. According to the report, “notified prices are paid by customers who have not entered into a negotiated or market contract with their retailer.”
The draft determination forecasts “decreases across all tariffs, including the main residential and small business tariffs”. More specifically, a 2.3 per cent decrease is expected for a typical customer on the main residential tariff, and a 4.3 per cent decrease for the typical customer on the main small business tariff.
Figure 3 provides an example of how notified electricity prices for typical residential customers compares to the actual costs of supply for regional Queensland.
Figure 3: Notified electricity prices versus actual cost of supply
Source: QCA
According to the draft determination, forecast decreases in residential and small business electricity prices are largely due to reductions in network costs. It also notes that although there are expected to be reductions in wholesale energy costs, these will be mostly offset by increases in the costs of the Large-scale Renewable Energy Target (LRET).
Submissions on the draft determination close on 9 April 2018, with the final determination scheduled to be published by 31 May 2018.
Also this week, the Australian Competition and Consumer Commission (ACCC) made comments surrounding Australia’s domestic gas market supply, referring to the findings of the Gas Inquiry 2017-2020. The interim report states that there is “not enough production forecast in the southern states to meet southern demand in 2018.”
The ACCC notes that one of the key reasons behind the imbalance in domestic demand and supply is due to the Gippsland Basin Joint Venture (GBJV) reaching the end of its 45-year operation. GBJV, the biggest offshore producer in south-east Australia, is forecasting significant declines in production for 2018, following high production levels in 2016 and 2017. The ACCC notes that this decline “is not being offset by new onshore development, as moratoria and other regulatory restrictions in NSW, Victoria and Tasmania are preventing or impeding onshore gas exploration and development.”
Read the QCA’s draft determination HERE
Read the ACCC’s media release HERE back to top
5. Victoria passes legislation allowing AV trials in the state
The Victorian Parliament has passed legislation allowing for trials of autonomous vehicles (AVs) to take place on Victorian roads. The legislation supersedes Victoria’s current AV trial regulations.
The legislation amends the Road Safety Act 1986 to allow for the operation of AVs on Victorian roads. VicRoads will have responsibility for issuing Automated Driving System (ADS) permits to organisations and individuals wishing to trial AVs on Victoria’s roads. Permits will be issued for a maximum period of three years and will require a human supervisor to monitor AV trials at all times.
As shown in Figure 4, presently only NSW, SA and Victoria have legislation in place allowing for AV trials to occur. The new Victorian legislation supersedes the current AV trial regulations, which are based on the UK’s code of practice.
Figure 4: State of AVs in Australia
Source: IPA
Trials already underway in Victoria include:
Transurban conducting trials on the Monash-CityLink-Tullamarine corridor; the Australian Road Research Board (ARRB), ConnectEast and Latrobe University trialling on EastLink; and the National Connected Multi-Modal Transport (NCMT) test bed established in the Melbourne CBD by the Victorian Government.
The National Transport Commission (NTC) is currently developing legislative reform options to clarify how current driver rules may need to be amended to support AVs on Australian roads. Reform options are expected to be presented to the Council of Australian Governments (COAG) Transport and Infrastructure Council in May 2018.
The trials and the NTC’s work comprise Phases 1 and 2 of IPA’s four phase national process towards the adoption of AVs, outlined in IPA’s 2017 research paper “Automated Vehicles: Do we know which road to take?”.
Read the Victorian Government’s media release HERE
Read IPA’s Automated Vehicles: do we know which road to take? discussion paper HERE back to top
6. Industry news
Light rail vehicle testing has commenced on the CBD and South East Light Rail project. The Citadis X05 trams are being delivered by Alstom as part of the ALTRAC consortium comprising Acciona, Alstom, Capella Capital and Transdev.
Palisade Investment Partners has acquired the remaining 50 per cent of Ross River Solar Farm in Queensland, and has reached an agreement to purchase the remaining 50 per cent stake in the Port of Portland in Victoria. Palisade Investment Partners will now have 100 per cent ownership of both assets.
Works have commenced on removing the Carrum level crossing, part of the Southern Program Alliance under the Level Crossing Removal programme. The Southern Program Alliance project is being completed by an Alliance comprising Lendlease, Acciona’s Coleman Rail, WSP and the Level Crossing Removal Authority.
An extra lane has opened on the Tullamarine Freeway as part of the $1.3 billion CityLink Tulla Widening project. The project is being completed concurrently in two sections, with Transurban and CPB Contractors completing the Bulla Road to Power Street section, while VicRoads and Lendlease are completing the Melbourne Airport to Bulla Road section of the project.
The Royal Bank of Canada recently released first quarter results for FY2018, headlined by a net income result of CA$3 billion (A$3.1 billion). This represents a seven per cent increase in net income compared to the first quarter of FY2017.
Perpetual recently released first half results for FY2017/18 showing revenues of $266.8 million. This represents a six per cent increase in revenue compared to the first half of FY2016/17.
KPMG has reached an agreement to sell its superannuation and fund administration business to OneVue. KPMG’s superannuation and fund administration business currently has $2 billion in funds under management. The sale is expected to be completed by April 2018.
Acciona recently released financial results for FY2017 headlined by an ordinary net profit result of €233 million (A$366.05 million). This represents a 59.8 per cent increase in ordinary net profit compared to FY2016.
John Holland will create a new national building group within its organisational structure. The new team will be led by David Lehmann. Mr Lehmann joined John Holland in May 2017.
Qube recently released first half year results for FY2017/18 showing underlying revenues of $811.9 million. This represents a 7.1 per cent increase in underlying revenue compared to the first half of FY2016/17.
Melbourne Airport saw a record 1.03 million international passenger movements through its terminals in January 2018. This represents a six per cent increase in international passenger movements compared to January 2017.
RCR Tomlinson recently released first half results for FY2017/18 showing a net profit after tax result of $16.3 million. This represents a 63 per cent increase to net profit after tax compared to previous forecasts.
OMERS recently released its 2017 investment results showing that it achieved a net investment return of 11.5 per cent after expenses. This result is above the 7.3 per cent benchmark OMERS aims to achieve on an annual basis. back to top
7. Industry appointments
Michael McCormack has been elected as the new leader of the National Party – and has consequently been appointed Deputy Prime Minister and Minister for Infrastructure and Transport. Minister McCormack held various ministerial positions outside of Cabinet prior to his elevation. Graham Millett has been appointed as Chief Executive Officer of WSA Co, the government-owned corporation overseeing construction of the $5 billion Western Sydney Airport. Mr Millett has been part of WSA Co’s management team since September 2017, and previously held senior roles at Qantas. Maryanne Graham has also joined WSA Co as Head of Corporate Affairs. Ms Graham joins WSA Co from Sydney Motorway Corporation where she was a Director, Communication and Stakeholder Engagement.
Former New Zealand Prime Minister, Sir John Key GNZM AC has joined the Board of ANZ as a Director, effective immediately. Sir John is also the current Chairman of ANZ’s New Zealand subsidiary.
Kevin Sneader has been elected Global Managing Partner of McKinsey & Company for a three year term, commencing 1 July 2018. Mr Sneader is currently McKinsey & Company’s Asia Chairman.
GHD has appointed Rory Waddell as Manager for Sydney, succeeding Tasos Katopodis. Mr Waddell was most recently Operations Manager – Sydney at GHD. back to top
8. IPA news
IPA hosted a leaders’ luncheon in Sydney with Marika Calfas, Chief Executive Officer, NSW Ports. The luncheon was hosted by Michael Hanna, Head of Infrastructure – Australia, IFM Investors. Ms Calfas provided insights into the National Supply Chain Strategy and freight infrastructure priorities needed to boost Australia’s productivity and international competitiveness.
IPA Water Taskforce IPA will be holding a W ater Taskforce with Tracey Slatter, Managing Director, Barwon Water.
Date: Wednesday, 4 April 2018
Time: 10.30am – 12:00pm
Venue: PwC
Brisbane - 480 Queen Street
Melbourne - 2 Riverside Quay, Southbank
Sydney - One International Towers, Watermans Quay, Barangaroo
Ms Slatter will be attending in Melbourne.
To register to attend the Water Taskforce, please email Katie Aherne HERE back to top
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