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Joint Standing Committee on Northern Australia
16/02/2017

HILL, Mr Patrick, Chairman, Outback Highway Development Council Inc.

LEWIS, Mrs Helen, General Manager, Outback Highway Development Council Inc.

[10:24]

CHAIR: Welcome to this private briefing. We are all aware of the project. We have had some briefings on it, but this makes it a little bit more formal and puts it on the record. The committee is particularly interested to hear from you. Thanks for coming here today. The briefing will be recorded for those members who are unable to be at this meeting. Do you have any objections to it being recorded?

Mrs Lewis : No.

Mr Hill : No.

CHAIR: This briefing is a formal proceeding of the parliament. The giving of false or misleading evidence is a serious matter that may be regarded as contempt of the parliament. The evidence given today will be recorded by Hansard, as I stated earlier, and it does attract parliamentary privilege. I invite one of you to make a brief opening statement and then we can fire off some questions.

Mr Hill : The Outback Highway Development Council was formed in 1997 and consists of five local governments across from Winton in western Queensland and Boulia Shire, the town of Alice Springs and the Shire of Ngaanyatjarraku and Laverton in Western Australia. The sole purpose of forming the group was to lobby state, territory and federal governments to upgrade the road from Winton across to Laverton, diagonally across the country, linking Cairns to Perth. Since 1997 we have been lobbying. Only in the last couple of years have we had a significant amount of federal funding announced to be put onto the road, to develop the road into a sealed road. The council's goal now is to see the road sealed from Cairns to Perth. The funding that has been allocated so far will go a long way to getting that started. As we speak, the money is being spent.

Currently $75 million has been committed to it—that is, state, territory and federal funding. That was announced three years ago by the Deputy Prime Minister at the time, Warren Truss. The matching components by Queensland, the Northern Territory and Western Australia have been confirmed and are being spent on the road as we speak. On top of that, last year another $28 million was announced by Matt Canavan, the Minister for Resources and Northern Australia. That was matched by a component. It was 20 per cent, but it is more than that—they contributed up to $35 million. So there is $75 million, $35 million and plus, prior to the election, Minister Barnaby Joyce announced, subject to the coalition winning government, that they would commit another $100 million to the project. So in total over $200 million is committed to it now.

We are over here to discuss ways how we can basically spend the $100 million that has just been announced and what arrangements the federal government and Darren Chester in particular have in mind as to how we are going to spend it on the road. Obviously the five councils on the outback highway council have come to an agreement as to how we would like to see it spent, which we have notified Mr Chester about. There is currently a working party set up to consider ways of spending it. What I might do now is ask our general manager, Helen Lewis, to run through some of the technicalities that we have been discussing and a way forward. Are there any questions?

CHAIR: No.

Mr Hill : That is good.

CHAIR: We are fortunate in that we have had a pretty good brief on this earlier. Keep going.

Mrs Lewis : The prioritisation plan will be able to give us the priority work plan ultimately to completion, so we will have a rolling work plan and, as funding becomes available after the $100 million, we will know exactly which shovel-ready project to put the funding on. I want to add some specific northern Australia aspects and some observations we have had since being involved with the outback highway and being included in the northern Australia white paper and the progress of northern Australia development.

There are three or four points that we would like to give to the committee to enhance the implementation and the program rollout. We see it going very slowly at the moment, and possibly not as collaboratively as it could be. One of the things we would really like to see, and to make a recommendation about, is creating a project registry. That is so that across the entire Top End we get a map with an opt-in option on a simple website where project proponents can register their project. They can put in where it is, what it is, what stage it is at and whether it needs investment or not. That is then available for everyone to see, which means we are working on the basis of collaboration rather than competition, and also that we are building a picture of what already is available.

We have the northern Australia map, which needs to be lowered, because now the boundary of northern Australia has come right down below that northern Australia resources map that we were always handed out at conferences. We need that to be updated, because it has to be lowered. And whole projects need to be put on that map, including the Outback Way, because the whole of the Outback Way is included. However, quite a bit of it in Western Australia falls below the Tropic of Capricorn line—but we know the Tropic of Capricorn line is now no longer the line for northern Australian projects, because with Tambo and a few others the border of the Northern Territory seems to be the new line. So we need to update that.

We also would like to see this project registry done so that everyone can see what infrastructure already exists—whether that is public infrastructure and public facilities or mines and other things. We know where all those things are because of that northern resource map, but now we need to add projects to that.

We were speaking to NAIF last night and they were saying, 'Everyone is really private,' but what about all the projects that are not even going through NAIF? Will they need a place to be registered? Otherwise, NAIF might sign off on something and keep it all secret—and that is fine, if that is what the proponent wishes—but then there might be another project running parallel which is similar, but no-one knows about it because NAIF was not informed. NAIF is only going to attract a certain number of projects; not all projects will have to go through NAIF. So there is a real concern that northern Australia could just have some ad hoc projects happening; we could have duplication and a lack of coordination, and that is a great concern when we want to make this a success.

So a project registry would be of great value and would really assist. We are doing new development; it is time now to move into the new economy process and activity, which is based on collaboration rather than competition. Let's do something new; let's get something different. Our history is littered with development programs that have been ad hoc and have not been well done. Here is an opportunity to try something different and to get a different outcome.

The other aspect of this was the northern Australia tourism partnerships program. I did a quick check around the councils at the AGM last year at Laverton, because we were interested in potentially being involved with that partnership program. It turns out that over the five shires we hit the baseline of the $750,000 entry point. So this makes even a shire ineligible for that partnership program. How are we going to increase tourism in regional and northern Australia when the entry point is so high? The average shire budget is $150,000 for us along our route, so—

CHAIR: What is it again?

Mrs Lewis : The average tourism budget is $150,000 for each of the shires along our route.

CHAIR: And the program—

Mrs Lewis : The program entry point is $750,000. So you have to be a very big operator—

Ms PRICE: Can you just go back a bit. What program are you referring to?

Mrs Lewis : The northern Australia tourism partnership program.

CHAIR: So for you to be able to capture your shires, to be able to capture any investment opportunity through that program—

Mrs Lewis : We are very happy to work as a collective, but that was a highlight to me, saying you have to be a fairly large operator even to be eligible for that tourism partnership program.

CHAIR: So the $750,000 is—

Mrs Lewis : It is the baseline. You have to have that as a turnover before you are even eligible to apply.

CHAIR: Before you can even be considered—okay, now we get it. Can I ask you a question on that: you are going to tell me that absolutely nobody in your area has had an opportunity to apply for a dollar from this program?

Mrs Lewis : No.

CHAIR: I think you have just got yourself a question for tomorrow. Are you here tomorrow?

Ms PRICE: Yes.

CHAIR: We have an inquiry here in the morning and the first witnesses are the ones that run this program.

Mr Hill : That is good.

Ms PRICE: That is the entrepreneurial program. Are we talking about the same thing?

CHAIR: We are talking about the same thing, aren't we? Yes, we are.

Mrs Lewis : We have engaged with them and we have contacted them, but when they came back to us and said the entry point is $750,000—

CHAIR: I suspect they are going to tell us tomorrow that there are very, very, very few that have been able to access it.

Mr Hill : That have got into it. Yes.

Ms PRICE: I do not think we have advertised it.

CHAIR: We will see what happens tomorrow, but this is very useful for us, because there is no point in having a program if those—

Mr Hill : We cannot afford it.

CHAIR: And when you look at all of those little tourism operations all along that highway there—

Mrs Lewis : Every town has a tourism asset that they could upgrade. We are very happy to work collaboratively, but we also then had the issue that it was cross-border; it would seem to be quite hard for them. Potentially, all we were eligible for was for someone to come out and review it and give us some business advice on a tourism business—not all five or 10, it was one. For the scope of northern Australia, the parameters of that program need to be very able to handle cross-border and also need to be able to handle small operations. It is not like the El Questros or the marinas on the coast of Cairns. There are a lot of towns in northern Australia that would love to update their tourism assets, but, really, they are just not eligible for this.

Ms PRICE: It is something that I have thought about in terms of a charter fisherman and if they want to expand their business. Often it is, 'Well, I've got to go and buy another boat'. I have often thought that if we had small grants in terms of infrastructure, then that would meet your needs.

Mrs Lewis : Yes.

CHAIR: Or a new toilet block for a caravan park or shade cloth for a kids' playground.

Ms PRICE: Yes. It is not millions of dollars of investment, but it is a grant that—

Mrs Lewis : But it is going to make a big difference.

Ms PRICE: Yes, absolutely. That is right.

Mrs Lewis : Yes, and it will make the experience of being in that town far more pleasant.

CHAIR: That is a very, very useful piece of information. That will fit in well with the questions that we will ask tomorrow in relation to this, because, at the end of the day, this fund is not there just for the big operators in the capital cities.

Mrs Lewis : Well, it is a lot of taxpayers' money to be tied up doing nothing.

CHAIR: Either that or a disproportionate amount of it will go into a couple of operators who can really afford to do it themselves.

Ms PRICE: Yes.

CHAIR: It is all those little ones—

Mrs Lewis : Missing out.

CHAIR: It spreads benefit out. I suspect that—

Mr Hill : That is what the Outback Highway Development Council is trying to do. In the Outback Highway Development Council we have two components. Obviously, we raise funds for the road building but we also promote the cross-border tourism aspect of the council. That is to get people in traffic on the road and promote it as a major tourism route across Australia, and—as Helen just said there—those issues through northern Australia are counteracting that.

CHAIR: I will be interested, and we might ask the question to see if we can work it out, but I suspect that by those sorts of criteria, and possibly others, we could be looking at excluding 80 or 90 per cent of the region. We will move on.

Mrs Lewis : That is great. The third point we wanted to make was that in northern Australia we are very concerned that many of the projects will not get support at the Infrastructure Australia level, because they are still only assessing projects purely on economics. They do not have a social assessment tool to check projects. I know that they have to be over $100 million to be subject to Infrastructure Australia. However, there is no social impact assessment tool being used by Infrastructure Australia to assess projects under that priority list. It is purely economics.

I would suggest that a majority of northern Australia projects would not stack up, purely on economics. It is the bigger business case and the social case that make those projects worthwhile. If our major decision maker for infrastructure priorities does not have adequate facilities to assess those projects fairly and equitably, we have a big problem.

CHAIR: That is a good point.

Mr Hill : Or otherwise we keep it right out of Infrastructure Australia.

CHAIR: We might do that, because the road side of things is very important in relation to the tourism stuff that we are just embarking on. We might do a public hearing or something later on and invite you to come along to that. Would you be happy to do that?

Mr Hill : Yes.

Mrs Lewis : Yes, certainly.

CHAIR: We will also do that with our previous witnesses. A lot of the points you are making here are very relevant. I think the social side of things is absolutely critical.

Mr Hill : It is, yes.

CHAIR: There is the cultural side as well, which is the connectivity of these communities. As you go further out and have a look at them, most of them are communities. But the other element, too, which is often not considered, is the environmental side and the value for dust pollution and a range of other things—

Mrs Lewis : All sorts—

CHAIR: Water contamination, where you end up with roads lower than the landscape and they become channels. All of those things—

Mrs Lewis : We have some of that.

CHAIR: Forgetting the economics, there are a number of other factors that scream for investment into those to address those factors. The economics are actually by-products of dealing with those other issues.

Mrs Lewis : The other aspect of that was that Building Queensland, which is the quasi-government body that does all the very big investment for Queensland, have actually created their own social assessment tool. So there is one floating around the country. It may need expanding and it may need tweaking to fit Infrastructure Australia, but rather than reinvent wheels there are social assessment tools about that need to be looked at and just tweaked to fit what is required.

Mr Hill : We keep updating our cash-benefit analysis and we have just had Ernst & Young upgrade the current one. During the process of that we were in constant contact with Infrastructure Australia, but trying to get the economic cash-benefit analysis out there was quite hard. This is what happens: there is no social component in that, which is what it needs. This is where Infrastructure Australia will not take that into account.

CHAIR: I can, and I am sure you are the same—we can see a recommendation being drafted up here in relation to this.

Mr Hill : That is great; that would be good.

Mrs Lewis : The final point we had was that we understand currently there is a national freight-and-supply-chain strategy scope being written by Darren Chester's office. We have mentioned to the minister that we would like to ensure that the remote supply chain is included in that scope, because otherwise it will be the ring around the outside of Australia and there will be the donut in the middle. It would possibly also be a recommendation from this committee that the remote supply chain is included in that. You would expect it to be, but that is the problem: we probably assume it will be, however, remote supply chain is not written into the scope and we miss out as regional, rural and remote Australia. And northern Australia is a big player in that. Obviously, for northern Australia it is all about the supply chain; it is all about connectivity, and that needs to be included. It should boost that national freight-and-supply chain. It is not just about the south-eastern corner of the country.

CHAIR: You can see that: the 'longest shortcut.' That is a great way of getting from east to west, isn't it? In all seriousness, it is. That makes a lot of sense.

Mrs Lewis : It is not just about our road; it is about the development of the whole of the north.

CHAIR: And by doing that, it does provide an incentive for further development, of course.

Mr Hill : That is really good. That map we have provided to you there is our brochure. The red parts are sealed, and the green parts are the gravel sections of it.

Mrs Lewis : We have mentioned in lots of meetings this week the road pricing and the aim, again, for northern Australia, and particularly, the Northern Territory. The expense of road building in the Territory, and their procurement process it would seem, continue to be factors. We do not know what is causing that. I just wanted to raise that because it could also inhibit further development of northern Australia, and that is a factor.

CHAIR: They did not want to spend the money on the bitumen?

Mrs Lewis : No, it is actually the cost per kilometre. They are at $700,000 to $1.2 million per kilometre, and the shires either side are at $300,000 per kilometre.

Ms PRICE: It is the same issue as we have discussed with the Queensland mob.

Mrs Lewis : Yes.

Mr Hill : The Outback Highway council honestly believes it really should be looked at seriously from a ministerial point of view.

CHAIR: So are you saying it is $300,000 from either side from the shires, as opposed to $700,000 to $1.2 million? We have had this before. You are looking at two or three or four times the cost.

Ms PRICE: It is getting better bang for our buck and making sure the money stays locally.

Mr Hill : That is what we want—

Mrs Lewis : And there is an opportunity for the Northern Territory government to equip MacDonnell shire and Central Desert shire to build capacity in their communities and get them out road building. We feel sure it will be cheaper. Obviously, we need to do the figures, but it would seem it would have to be cheaper than their current process of road-building.

We understand that the landscape is different and that reasons from the department keep coming up, but no-one is stopping to review it and ask for a fresh look. We have been encouraging Senator Malarndirri McCarthy to take it back to the Northern Territory government to ask for a fresh look at their whole procurement process.

CHAIR: She is on the committee here, and I think there is another one we can be looking at. We will try and work something up here, because there is always limited resources, and it is a matter of making sure you get more bang for your buck.

Mr Hill : That is right.

CHAIR: And we will be specifically looking at the Northern Territory expenditure.

Mrs Lewis : And the department is simply implementing the policy. The policy has to be questioned.

CHAIR: Unfortunately, she is not here, but I will certainly raise it with her and we will put together something we can come out of this with.

Ms PRICE: I have to say though that the lion's share of what needs to be completed looks like it is Western Australia.

Mrs Lewis : That is why we have come up with a dollar per kilometre for gravel and single lane.

Mr Hill : The five shires have come up with a proposition.

Mrs Lewis : An allocation process.

Mr Hill : Hopefully Minister Darren Chester will consider that.

Mrs Lewis : It is still on the table

Mr Hill : That is dollar per kilometre. The states that got the most gravel, which is WA, always get the most funding out of that—

Mrs Lewis : And single lane. Ultimately, when we break it up, it is around $40 million that goes to WA, and they can seal 200 kilometres with that.

Ms PRICE: The state government can?

Mrs Lewis : No, Laverton and Ngaanyatjarraku. The state government automatically pays out to the shires, Laverton and Ngaanyatjarraku, to do the roads for them.

Ms PRICE: On this particular project? Would they automatically do that?

Mrs Lewis : Yes. And the same goes for Queensland.

Ms PRICE: But not the Northern Territory?

Mrs Lewis : Shires do not do roads in the Northern Territory. It is purely territory procured.

Mr Hill : I might make mention that the Central Desert Regional Council and MacDonnell Regional Council are not local government councils; they are regional councils. They have changed. In Western Australia and Queensland, we do roads by going to tender for hourly rates for graders and bulldozers and trucks and all that sort of machinery. Then we put project managers on and pull the machinery off and on as we want it.

In the Territory, it seems that if there is five kilometres of road they want of a particular standard, they will put that out to tender, and there is a risk factor driven into that. The whole process definitely needs looking at in detail.

Ms PRICE: Nonetheless, you are getting there, Pat!

CHAIR: Those are some good points that we can raise. At the end of the day, this is going to have a significant impact on bringing tourism into the area. It certainly is providing an alternative, is it not? It will almost be a ring road.

Mrs Lewis : Yes, you can do a figure eight. You can do all sorts of things. You can zigzag the country. The tourism component is enormous, and over the last five years our road counter numbers have doubled. There is a lot of interest from people who are wanting to do the road or actually doing it. At trade shows, all of our brochures run out. People are just so keen to see this route happen.

Mr Hill : It opens up a lot of other opportunities for mining especially and for Indigenous training, which we have taken on board. We are trying to get an incorporation going in Laverton to provide training for the local Indigenous people and set up training programs with the Ngaanyatjarra Council as well. That is the whole essence of it: to try to build that social factor up, and support in the communities.

Mrs Lewis : Also, just thinking about our project as an example for tourism development in the north, you may have some fledgling ideas. For example, we have an idea to collate and actually assess all of the Indigenous stories from the communities and what they would like to do with their tourism and actually build it up as a business case to then get further funding to make some of that happen. Or, we want to update all the tourism assets along all the shires as a collective. The shires have already budgeted a certain amount for each of those expansions, so we use that as the leverage of 20 per cent contribution and then we actually apply for the balance, but as a collaborative regional tourism project across the country.

Those are the things that we are looking at trying to do. There is really no funding avenue for that to occur. There is Building Better Regions. That would actually be infrastructure but with infrastructure you need to already have your business case. Then there is nowhere to go and get that business case done. So maybe there is an opportunity for business cases to be done for certain tourism projects, just putting out some ideas so that—for a better use for some of the funding.

Mr Hill : Overall, we think that, with northern Australia the whole concept is fantastic. It puts that focus on the top part of Northern Australia, which really needs it. There is a great opportunity for the whole country there.

CHAIR: We just have to make sure that the processes are right so that we can capture those opportunities.

Mr Hill : That is right.

Ms PRICE: Make the most out of the money we get for the north.

Mr Hill : That is exactly right. That is exactly what we want to see.

Mrs Lewis : There has never been a painted vision of what we want it to look like. When northern Australia is at its best, what will it look like? Let's describe that and then actually start making some decisions towards that. Even some of the projects can then actually ask, 'Am I moving us towards this picture?' That has not been described. That would be very helpful in regard to people buying into the project and buying into where it is taking us as a nation.

Ms PRICE: I agree.

CHAIR: You made some very good points. I appreciate that. Is there anything else you need to raise?

Mrs Lewis : Not at this time.

CHAIR: The interaction is there. There is a number of things there that really stand out. At the end of the day is all very well us to be committed to what we are doing in relation to northern Australia, but if the overwhelming majority of businesses and communities cannot qualify for it, or the processes is too difficult, then of course we do not achieve what we want. You have raised a number of points there that have been noted. I am confident in relation to cost and in relation to accessibility to the tourism program—

Mr Hill : And to be eligible for the fund.

CHAIR: The other thing I would like you to reflect on is that a lot of this money has come out of just a couple of programs—there is money out of the $600 million for strategic roads and $100 million for beef roads. I would assume that you are of the view that this needs to be committed to the end project.

Mr Hill : Yes.

CHAIR: And not just an ad hoc thing. The project does not stop at the end of this current funding round.

Mr Hill : We would like to make mention of that. The $100 million is obviously a good part of it. With the development program—that Darren Chester and the state were working on with the Outback Highway Development Council—we want to see that program extended so that it gives a full map of the development of the road, right to 2025. That is what we want to see—

CHAIR: You want to see a map that shows the road completed?

Mrs Lewis : Yes. That is the priority plan we are doing with the three jurisdictions now—in these next few months. It will provide us with a priority project work plan to completion. Those projects will be costed for the $90 million that is left, because $10 million has been used for the beef roads submissions that the Northern Territory and Boulia put in. So there is $90 million plus the 20 per cent from me to the jurisdictions to go on top of that. That than will be costed out. However, we will then have a rolling work plan for any extra funding that is coming. So, after this $200 million, it would be $400 million to finish the job. It will be sealed with $400 million, after this $200 million.

CHAIR: We encourage you to make sure that that is something we continue to pursue. The other thing is to ensure that there is a timely assessment done so that there is continuity of funding and you do not wait until the money runs out before the next—

Mrs Lewis: That is why probably next year, 2018, and even later on this year we would be looking to try to get into. The road project funding is 2018-19 rollout. That is when the money finishes. That is the road program we are in. I am not sure when the Northern Australia money and the beef roads money expires.

CHAIR: It is four years.

Mrs Lewis: Four years also. So that is about 2018. I think it was all part of that $5 billion of road funding that Minister Truss put out a few years ago. It really almost needs to start into the budgetary process at the end of this year, for next year—for 2018-19. So we should be starting soon. Then they can also put it out to forward estimates so that we can then guarantee that from 2019 on to 2025—it does not have to be $100 million; it could be $80 million, and we still get to our endpoint by 2025.

CHAIR: You do not build a Sydney Harbour bridge by getting a commitment to building a quarter of it and then saying that when we run out of money—

Ms PRICE: We will think about it.

Mrs Lewis: That is right. We are very conscious that over $200 million has been allocated to this project by this government, which we are grateful for, but we also acknowledge the responsibility that comes with that in regard to taxpayers' money. To stop funding it is actually worse than to keep funding it.

CHAIR: Absolutely. And there has to be that unconditional commitment.

Mr Hill: That would be great.

CHAIR: Thank you for your evidence. If there is any additional information that you have and would like to provide please forward it to the secretariat as soon as possible. If we have any further questions we will contact you through the secretariat. A proof transcript will be sent to you and you will have the opportunity to make minor changes, such as grammar and spelling. We will be travelling around over the next few months and I would very much like you to keep in touch with us on things that are happening. If you see that there are any road bumps or problems, let us know independently so that we can actually raise it. We have done exactly the same with the inland roads in the Queensland road action plan. It was the same thing. They had concerns in relation to a number of things there about processes and making sure that locals get the work et cetera. But we cannot act on it if we know about it after the fact.

Mr Hill: We appreciate the opportunity to come and talk to you and raise those points.

CHAIR: The reality is that this is an opportunity that is unprecedented in our history and we have to make sure we capture it. Thank you.

Mr Hill: We are only too happy to provide further information. Thank you.

Committee adjourned at 10:58