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Joint Select Committee on Northern Australia - 10/04/2014 - Development of northern Australia

HIGHTOWER, Mr Owen, Vice-President, Port Hedland Chamber of Commerce and Industry

[9:52]

ACTING CHAIR: Welcome. You probably heard me say to the others that you are not giving evidence under oath but these are formal proceedings of parliament and giving false or misleading evidence is a serious matter and may be regarded as a contempt. The evidence you give today will be recorded by Hansard and attracts parliamentary privilege. Would you like to kick off with an opening statement of issues from the chamber as the chamber sees them?

Mr Hightower : Firstly, thank you for the opportunity to represent the chamber as part of this select committee inquiry. As background to myself and I suppose it leads into discussion about business, I have been in Port Hedland now for four years and I run, jointly with two other guys, a small business. I run it out of the spare bedroom of our unit. Thankfully my partner gets a house through work, which has allowed me to set up a new business. Recently the three of us made a decision to set up a new office and employ our first person, but unfortunately that has been done in Broome because it was simply too difficult to do it here.

Mr SNOWDON: What sort of business?

Mr Hightower : Professional consulting services. I am a town planner by background, so apologies if I delve too much into land development along the way.

Mr SNOWDON: They have a vacancy here.

ACTING CHAIR: Alan does the work under contract and gets paid a lot more.

Mr Hightower : Exactly. I do not want to go over what is in our submission itself. I think a lot of it has been covered by other submissions. I want to cover off on a few other points in the five minutes. The first one was about planning and research. From being up here, it seems the government is very good at doing planning, research and reporting with an unintended purpose—or maybe, sarcastically, an intended purpose—of putting it on a shelf and let it gather dust. I think that, moving forward, the government needs to take a much stronger focus so that, when you develop a plan or prepare a report, there is some progress made in actually implementing that. That really relies on the government allocating the money and the resources to ensure that these plans that we set up for the future of regional areas do make some progress over time. We are not talking about major capital investment, developing lands and putting in stuff; what we are talking about is deconstraining development opportunities, progressing environmental approvals, resolving the red tape and putting in line long-term financial plans to support the basic infrastructure of identified opportunities so that in five or 10 years time there has been some incremental progress and when businesses come to town there is somewhere for them to go and there is an opportunity to develop new business in regional areas.

As a case in point, I would take the Boodarie Strategic Industrial Area. It is a 4,000-hectare strategic industrial area here. It has been in planning or planned numerous times since 1996 and nothing has changed since 1996. Even during the recent boom period, it got to the position where big businesses like Orica and New Energy Corporation have come to town wanting to develop major multimillion-dollar development proposals and have simply had nowhere to go, because that enabling work as a result of plans done in 1996 and then 2002 and then 2006 has not been progressed any further. From our perspective, that is a big focus, and I would hope that, when the recommendations come out of the task force, one is about setting up some form of legislative framework to ensure that recommendations are implemented as an outcome of what you guys present.

The second one which we have experienced through business and decision-making processes is that we think there needs to be a focus on decentralising decision making to regional areas, and that needs to be supported by the government with resources to help with those decisions. All too often, decisions are made in Perth and are generally ill informed. That is not anyone's fault; it is just because they are not here enough. They come up for a day, do a workshop, leave and prepare a report. It misses out on that local knowledge and the know-how of people who have been here many, many years. I think that, if we provide regional communities with the decentralised decision-making capacity, supported by government resources, we empower those communities to progress their own future, we make the best use of that local knowledge, and we also bring new jobs through government employees and government support for that decision-making process. I know the state government has started doing it here to an extent with regional planning committees, but again those committees are majority filled by Perth-based people, with two regional representatives, which does not really get the outcome that is desired.

The third thing I wanted to touch on was small business. It is a big part of this community. As a background, statistically we have half the number of businesses per 1,000 people that the rest of Australia does—45 businesses per 1,000 people, compared to 90 across the broader Australia. Of those 92 per cent are small businesses, and of those two-thirds do not employ anyone else; they are individual sole traders or subcontractors to the construction industry. We need to find a way to get those small businesses to have opportunities to grow—people like me, I suppose, as an example. There are a few options that the chambers looked at, in conjunction with the Pilbara Development Commission. One is obviously strengthening local procurement, and one way that could be an opportunity is for the government, with peak industry bodies like us and the WA Chamber of Commerce and Industry, to work with big businesses to set up a voluntary local procurement situation that works to ensure smaller businesses get an opportunity. One point with that is the government doing it itself. There are small local procurement elements that are involved, but I think it is about the next tier down, because so many of the projects issued up here are to big business, and small business obviously cannot win those contracts. It is about that next tier down: once that head contractor wins that job, who are they going to subcontract to help them?

Most of the time they are going to find their own preferred contractor from Adelaide, Perth or Brisbane. The small businesses need to at least have the opportunity to tender and be competitive.

ACTING CHAIR: So it is like a small business procurement plan that needs to be part of—

Mr Hightower : Yes.

CHAIR: Are you talking about government contracts?

Mr Hightower : I think government should set an example, but I think that major industry and government should work to set a voluntary—not legislative— procurement procedure that everyone signs up to. It should be part of the procurement process for maintenance contracts or major construction. That will help small business have longevity here. Year on year you would know that it is a three-year contract—not a 20-year contract. Having assurance that you are going to get some form of preference or an opportunity is really important to help small businesses to make long-term investment decisions.

The other opportunity I would like to raise is entrepreneurship and facilitating a way for innovative proposals to be presented to the government. I think that all too often we get caught up in the scare of process and probity and whether we are getting the best deal for the government—as in the days of the Panama hat. If we are going to encourage businesses to come here and invest we need to give them the security that their ideas will be protected. If they present something to the government they will not be told, 'We've got to go out to tender; put the proposal out.' That is a disincentive for businesses to make those proposals.

New South Wales has the unsolicited proposal concept, which has resulted in Barangaroo and James Packer's six-star hotel. I do not know whether there is a way to set up, in northern Australia, an unsolicited proposal scenario.

Ms PRICE: Could you give us a thirty-second thumbnail sketch of that?

Mr Hightower : Industry identifies an opportunity and says, 'There's a way to make money in this industry or in this region but we need government approvals,' or it is on government land. We want to come to government and say, 'This is our proposal; can you facilitate it for us?'

All too often you put a proposal in and the government says, 'We haven't identified that proposal ourselves. There are issues around probity. Are we getting the best deal for government? We need to put that to the entire market to ensure that there is fair and transparent process.' I think that that disincentivises businesses from investigating their own opportunities to help develop the region. It imposes more on the government to first identify the opportunity and to allow the business to invest. I think that, looking at it a different way you could see a lot more interest from business actively looking to try and create investment and business opportunities.

ACTING CHAIR: It is fraught with dangers, though, Owen. I am thinking of an example here which you could see could have gone completely pear shaped. With respect to the Cooke Point lands if someone had made a phone call to the minister: 'I think it'd be a good idea to develop it.' To what extent should you get an inside running because you have got on the phone to the minister and said—

Mr SNOWDON: You should not.

Mr Hightower : I am not saying that you should not have a process around it, but the New South Wales government has that unsolicited proposal scenario that allows industry to make representations to the government about a proposal. It goes through a stringent process: it this in the state interest? Are we getting fair and reasonable value for money? It ensures that that proposal is maintained between the person who has presented it to the government and the government itself. It is not a matter of, 'Thanks, but we need to go to everyone else, now.'

Mr SNOWDON: So, ultimately the decision is made by the government. There is a process at arm's length from the government—

Mr Hightower : There is a transparent process that it still goes on. The James Packer Barangaroo casino option is one of those that has been done.

ACTING CHAIR: There were a couple of cases in WA where that has not been a totally happy experience.

Mr Hightower : Yes.

ACTING CHAIR: We could have a look at the unsolicited proposals. I think your point about decentralisation of decision making is absolutely critical.

Mr Hightower : I thought I would bring that up.

ACTING CHAIR: I totally support that.

Mr SNOWDON: Can I just make an observation. This committee, for all that we might want it to be the most powerful committee in the world, is not. We will make recommendations which the government may or may not support, and at the same time the government is preparing, in parallel, a white paper on Northern Australia. We will have to suck it and see, in the end, but we are obviously united in the purpose of trying to make some recommendations which we think collectively will make a difference, and no doubt the sorts of things you have talked about will influence us.

Mr Hightower : Yes.

ACTING CHAIR: It is really very much appreciated. Any questions, Alan?

Senator EGGLESTON: The Boodarie estate, which you raised, is a very interesting matter. It was set up when the HBI plant was built and it was planned that there would be a lot of industry out there. Is there any infrastructure out there at all?

Mr Hightower : There is a power station—but, other than that, no. It is still tied up with native title. There is no infrastructure to support development. The last proposal that the state put to industry going there was that industry would have to pay for everything themselves, including developing the land, and then they would not even be allowed to buy it; they would have to lease it for 20 years. So the government would maintain the asset that the private sector had entirely funded itself, after it resolved all the issues itself—native title, core infrastructure, fill, roads and whatnot. But industry would not even have ownership at the end. If you want to encourage investment, you need to make it easier than in Perth or than in other regions; and, to do that, you need to have more enabling legislation and you need the government itself to be more proactive in enabling that by getting rid of red tape and resolving those issues.

ACTING CHAIR: Certainly, resolving the native title issue would be something for the government.

Mr Hightower : Yes, and broader things than that—doing those enabling works that come out of a report that recommends that we resolve native title, that we need to provide infrastructure; ensuring that those things go into various governments or government agencies and into their long-term financial plan; and that there is progress. It does not have to be overnight, but it is incremental. If we had started in 1996, in 2010 the Boodarie estate might have been ready to go and New Energy Corp. would be building their recycled gas power plant here. But they cannot.

Senator EGGLESTON: Do you know anything about the Maitland estate in Karratha?

Mr Hightower : It is a similar scenario. They have done a lot of planning and—

Senator EGGLESTON: Do you want to make a comparison?

Mr Hightower : I do not know a lot about it but I know that there has been, again, some planning done around it—

ACTING CHAIR: But the native title was all negotiated around 2002, 2003.

Mr Hightower : Yes. And I do not know if that is because there is no demand for it or what.

Senator EGGLESTON: I thought the concept was that they provided service blocks to various industries. I think that is what Maitland is all about.

ACTING CHAIR: That is what I thought it was about.

Senator EGGLESTON: And I thought that was what Boodarie was all about. I am shocked to hear that nothing has happened.

Mr Hightower : Yes. It should be. At a local level it is causing massive issues because we have huge industries that are needed to support major business here that simply cannot come into town.

Senator SIEWERT: Why hasn't it gone ahead?

Mr Hightower : The state government has looked at it. At the end of the day, it is to do with the core, holistic infrastructure needed—the supply of trunk, water and power.

Senator SIEWERT: Okay. So it is their unwillingness to invest in that infrastructure?

Mr SNOWDON: The headworks.

Senator SIEWERT: The headworks?

Mr Hightower : Yes. Obviously, LandCorp as a body has to make a profit, even though it should have reviewed that after the last report, and is looking at it from a land feasibility perspective—fair enough; it is not feasible. But, if the federal government were to support something like that, they would get their money back in the long term through company tax and income tax on the business that it generates. It is an ongoing local issue here.

ACTING CHAIR: To be honest, though, I think part of the problem when you have so many issues that you have to deal with in an area is that you have a finite availability of, say, planners. You have a finite availability of planners to do the work. You are desperately trying to get the residential land sorted. You are desperately trying to get the light-industrial land sorted. It is part of this paradox that, during those very busy times, you are dealing with stuff that is speculative. The advantage that Maitland had was that those industries started talking in about 2000-2001 that they wanted to relocate, so that work was actually done in 2001, 2002 and 2003, before the boom really hit. So for Maitland you actually had the planning and, most importantly, the native title solved.

Mr Hightower : I am sure there have been a lot of businesses over time that have talked about Boodarie in the same context. That is what I am saying: it is about doing that planning and getting those approvals in place and deregulating those paperwork issues, the red tape, so that when businesses come—Maitland is an example—they can come into town.

Senator EGGLESTON: It was a facilitation concept, wasn't it? You had everything ready and the business just came in and locked into the power, the water and everything and there were no issues.

Mr Hightower : The only one I can think of as a comparative—it is actually in the Kimberley and it is aquaculture—is the Kimberley Aquaculture Development Zone, where the state government has gone and progressed all the environmental approvals, they have identified the area that it is suitable for, and now it is a 21-day approval process for any aquaculture fishery that wants to go in there. Having a similar scenario like that for other industries is something that just makes things—when a business is looking to invest they are not allowing a four- or five-year time frame before they can actually make the investment; they are ready to go and they can make that investment as soon as the opportunity or the market exists, because up here, in four or five years, the market can change and then they are no longer interested.

Mr SNOWDON: One of the issues which has been raised in other places is the issue of insurance. How much is that is an impediment?

Mr Hightower : The real estate agents are well and truly all over that. I know Morag Lowe, who is the principal of Hedland First National, raised it in her submission to the committee. But from what I understand—I do not really get involved; I do not own a house here because I could not afford to do it—with strata insurance and the issues around the increasing risk profile of this region, and rightly so, insurance companies are seriously reviewing the costs of that insurance, to provide them with the security that they will actually make some money through the insurance process. I know it has got to a point with strata housing developments and whatnot that is phenomenal. I could not quote how much, but I would encourage you to look at Morag Lowe's submission. She goes into that in quite some detail.

ACTING CHAIR: Thank you very much. We really appreciate that. Thank you very much for coming along.

Mr Hightower : Can I make one last point, about education?

ACTING CHAIR: Yes, sure.

Mr Hightower : From a business perspective, increasing the access to education here is important not only because it will deliver some a more locally based skilled workforce but because it will also assist in resolving the transiency of our population. So many people leave town because they do not feel that the education opportunity for their kids or for themselves is here. That only perpetuates the transient nature of employment and it makes it more difficult for those kids who do grow up here to stay here in the long term—that gap. A case in point—it is something that is a local issue, again, but it is an example—is that there is no private high school here. Many people, at the end of the day, want the choice to send their kids to a private high school. Incentivising those types of educational institutions, whether it is through tax incentives or supply of land, is something that will help alleviate that issue in the long term.

ACTING CHAIR: Is St Luke's in Karratha a Catholic school or an Anglican?

Mr Hightower : I am not sure.

Senator EGGLESTON: There was a Catholic secondary school here in Port Hedland as well, but it was not sustainable.

ACTING CHAIR: How long ago was that?

Senator EGGLESTON: At least 10 years, I would say.

ACTING CHAIR: Yes, because I am not aware of it.

Mr Hightower : There have been feasibilities done on it since, and a lot of the push-back has come more from the state government saying that the South Hedland high school is not full so we should not issue another licence for another high school. But there are a lot of people here who went to private schools themselves and probably have an affinity to them and want to have that choice to send their kid to a private school.

ACTING CHAIR: Are there one or two high schools here?

Mr Hightower : There is one.

ACTING CHAIR: Just the South Hedland high?

Mr Hightower : Yes.

Senator EGGLESTON: There are a lot of primary schools, and there is a Catholic primary school here too.

Mr SNOWDON: You can bet your bottom dollar that, if your population grows quickly enough, there will be a Catholic high school. That is the way it works.

ACTING CHAIR: Thanks very much, Owen. I appreciate that.

Mr Hightower : No worries.

Proceedings suspended from 10:14 to 10:29