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Standing Committee on Infrastructure, Transport and Cities
02/05/2018
Australian government's role in the development of cities

McKENDRY, Mr David John, Executive Officer, Mackay Regional Council

St CLAIR, Mr Michael James, Principal Economic Development Officer, Mackay Regional Council

[09:53]

Evidence was taken via teleconference—

CHAIR: I now welcome representatives of the Mackay Regional Council to give evidence today. Although the committee does not require you to give evidence under oath, I advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. I now invite you to make a brief opening statement before we proceed to discussion.

Mr St Clair : On behalf of the Mackay Regional Council, my colleague David McKendry and I welcome the opportunity to discuss our submission with you today. Mackay is the regional capital of the broader Mackay, Isaac and Whitsunday regions. With a population of 117,000 people, it is the 11th most populated local government area in Queensland. The region was forged on the back of the sugar industry and maintains a strong agricultural presence, but in recent years has grown into the resource services hub of Australia. While not a mining town as such—we don't have any actual mines—Mackay is the gateway to the coal deposits in the Bowen and Galilee basins and hosts much of the engineering, manufacturing and resource service industries associated with the sector.

On the back of Australia's recent boom the Mackay region experienced the most prolonged period of growth in recent history, growing in population from 89,000 in 2002 to 119,000 in 2013. With the population expected to reach 171,000 by 2036, the council faces the challenges of supporting the needs of a growing population whilst striving towards supporting a diversified and sustainable economy base. The greatest challenge for Mackay in this regard is withstanding the peaks and troughs of commodity prices, which the region heavily relies upon. Whilst the Mackay region is comprised of a strong business and industry mix, it has a concentration and dependence on mining and agriculture, with both industries being subject to exchange rates and cyclical commodity patterns over which the region has no control.

Diversity is the key to counteracting a cyclical commodity based economy. For Mackay to grow and prosper it is essential that a stable and diversified economy can be maintained. Population growth and business investment is driven by employment opportunities and sustainable economic outlooks. Mackay Regional Council is actively seeking these opportunities to deliver on both of these by supporting sustainable employment opportunities, enhancing social infrastructure and promoting the region's profile.

While infrastructure and land use needs of a city like Mackay differ from that of a capital city, Mackay has its own infrastructure needs that will support the growth and diversification of our region and the appeal and attractiveness of regional Queensland. Projects such as the Mackay waterfront redevelopment, which is currently being developed as a priority development area, will deliver significant business and tourism growth opportunities for the region and will act as a catalyst for population and economic growth. For Mackay Regional Council to deliver on opportunities such as this project, a shared commitment and long-term vision is needed across all levels of government. This commitment needs to support the growth of regional areas, which in turn must be supported by flexible and transparent funding opportunities and business incentives.

Competitive funding programs with changing guidelines and tight time frames are not conducive to delivering projects with the most benefit for regional communities. A coordinated regional development funding program linked to regional priorities over the term of a government would support project delivery and make a real difference to the region. The Works for Queensland funding program provided by the Queensland state government is a good example of flexible funding which allows local government to deliver positive outcomes for the region. Thanks for your time. We welcome any discussion.

CHAIR: Thank you.

Ms BIRD: Thank you for your submission and for your opening comments. You've touched on one of the real issues we're grappling with in terms of developing our regional cities, and that's around this issue of longer-term planning with a level of flexibility, as you described, to enable that to be delivered at the local level. You mentioned a particular state government program that you think works effectively in that way. Could you just expand on that for me.

Mr McKendry : The funding program that Michael mentioned was Works for Queensland, a funding program from the Queensland state government. Then council is halfway through the second phase of that. The first phase of that was in 2017 and the second phase is 2017-19. The funding from that for Mackay was around $10.4 million and $11.9 million for those two rounds. In simple terms, it was fairly unconstrained, subject to being spent and acquitted and subject to the approved projects being approved for funding. So we were granted a certain amount of money based on a formula for population and employment figures across Queensland. Then there had to be an agreement on what it would be spent on, and then it was unconstrained as far as the projects were concerned. That sort of funding just allows us a little bit of an opportunity to address projects that are not specific to funding criteria. Lots of times, funding changes from time to time. Also, if we have some certainty for that sort of funding going forward, we can program forward works together.

Ms BIRD: I think there was a federal program at one point in recent years that had similar per capita funding to councils. Is that similar?

Mr McKendry : Yes. I think you may be thinking of the federal assistance grants.

Ms BIRD: That's it, yes.

Mr McKendry : They are still available and do have a calculation basis, if I'm correct.

Ms BIRD: Do you have a city deal at the moment? Are you working towards one? What's your current status with the federal government's City Deals program?

Mr McKendry : We're not working towards a city deal at this point in time.

Ms BIRD: Is there any particular thinking behind why you aren't? Is there something you would like to feed back to us about how you think the program might be more beneficial to a city like yours?

Mr McKendry : It would be something that we may give some consideration to for our priority development area that Michael mentioned. I suppose it's just a matter of locking in a fair bit of money forward with that project, and at this point in time we're still waiting for the approval of that through Economic Development Queensland and the minister. It's something we could certainly explore.

Ms BIRD: Just to go to the other aspect of our inquiry, we've had some evidence around livability and sustainability issues of cities. There's been quite a bit of discussion about both the opportunity and the challenges for regional cities as exemplars of modern innovative practices, perhaps with energy, water or some of those areas that are a significant challenge for all of us and about how sometimes the planning process actually makes it very difficult to be innovative. I'm interested in your perspective and experience in that space around livability and innovation.

Mr McKendry : I suppose the advantage that we have from a regional point of view is that livability is a little bit easier just by virtue of where we are and the traffic and access and those sorts of things. I suppose the bigger issue, away from innovation, is keeping up with the major infrastructure to support that. There are some major roadworks happening here. There's close to $1 billion being invested by Main Roads Queensland, with the support of the federal government, in major roadworks et cetera. All that helps with livability, and we could talk all day about beaches and boat ownership and that sort of thing. As far as innovation is concerned, I'm not aware of any major issues that we have. Mostly it just comes down to profitability and economics.

Ms BIRD: The way you're describing it to me, the livability aspects of our regional cities are really enhanced, if not protected, by actually having the connectivity issues resolved, yes?

Mr McKendry : Yes.

Ms BIRD: So where would you see Mackay sitting? What's its relative position in North Queensland? How would you describe the city? Why is it different? How is it the same? Do you know what I mean?

Mr McKendry : I suppose we see ourselves as a regional hub for the area, and you'll probably hear the same story from Cairns, Townsville, Mackay, Rockhampton et cetera. We've all got a unique position within the regional locality. We're all trying to find that little niche, if you like, in our own area, and we're all focused on livability and services holistically. Whether that's education through universities, jobs et cetera, we're all just trying to provide those same sorts of things. We believe that our climate in Mackay and our access to islands and those sorts of things are things that are unique from everybody else, and we're also on the doorstep of our major mining facilities, which a lot of other areas don't have. Other areas will talk more about tourism et cetera, and, whilst we are on the doorstep of the Whitsundays, obviously Cairns and those guys will have a tourism bent as well.

Ms BIRD: The reason I ask is that when we were in Victoria talking about decentralisation one of the arguments put to us was that it works most effectively when a regional city has a perspective on itself that understands its unique advantages. That way, rather than just going, 'Let's throw some government department out there,' it's actually linked to the fact that there's an expertise or a particular advantage in that city that would feed off that and be able to take that opportunity and grow it. There was some discussion about the National Disability Insurance Agency moving to regional Victoria, but that was also followed by some links to the university and some expertise, so that it was not a one-off, stand-alone thing; it was integrated with where that city was going. I'm really interested in your perspective on that decentralisation issue. As you say, you will have cities up and down the region all saying, 'Yes, we're the hub; we're the major one,' but it seems more constructive if they are able to find their niche and differentiate.

Mr St Clair : Looking at that side of things, playing to our own strength we definitely are established, as I said, on the back of the sugar industry. We are still very much agricultural. We produce one third of Australia's sugar, so there's definitely a lot of strengths in that region. But more recently there is the emergence of our resource sector. We have the Paget industrial estate, which is the service hub for the Bowen and Galilee Basin mining areas. It produces a lot of IP and a lot of technologies that are transferable to other industries. We look at the Paget industrial estate as the Silicon Valley of mining services. It definitely is one of our major strengths, in that we can service a lot of different industries that have heavy engineering requirements, which are then also transferable across other industries. We are looking at opportunities in defence at the moment as well. Because we have all that technology, innovation and intellectual property down in Paget, it really puts us at the forefront there.

Ms BIRD: Do you find state and federal governments receptive to your broader planning and view about where you could sit within a constructive series of state regional cities?

Mr McKendry : The simple answer to that is yes. We are working very hard with the local and regional areas of DSD, the department of state development, and also RDA in relation to a range of things such as those Michael mentioned. We have sessions for local businesses linked with defence contract opportunities, and we are also moving into a biofutures type area as well, which, on the back of the cane industry, has some opportunities there. Again, that's just utilising the resources we have here—whether that's manpower, IP or physical resources—to try and tap into some different markets. We work really hard with the local areas. It does get harder when you're in a regional area, particularly in North Queensland.

Ms BIRD: Just developing that further, there is an opportunity here because we have to make recommendations. Are there any particular federal government programs that you feel, with some tweaking or improvements, could be more useful to what you're trying to achieve here?

Mr McKendry : Apart from the obvious funding things—and they are what they are—its the sustainability sort of stuff that underpins the areas that we're talking about. So it would not necessarily be moving departments here, as you mentioned before, but it could be assisting areas to tap into defence contracts and those sorts of things that have an ongoing trail. We could service them really well; it's just that opportunity of getting through the front door, I suppose.

Ms BIRD: So a role in terms of navigating and assisting with access to those bigger contracts that happen at the federal level?

Mr McKendry : Very much so. It might well need some assistance, and we are working with the state and RDA about maybe bringing even our large local players together to be large enough to be able to deal with that market.

Ms BIRD: That's great. Thank you.

CHAIR: Michael, you said 'long-term planning' in your opening comments. Could you put that into a number?

Mr St Clair : For the long-term planning, our planning scheme has a 30-year horizon. In that regard, that's a long-term plan that our planning scheme would focus on.

CHAIR: With our previous witnesses we talked of the need that Infrastructure Australia had put forward in previous evidence for master planning and long-term planning of infrastructure, and the absolute need to have that attached to a land use plan. Philip Davies said that he was somewhat frustrated that this was not the case. In talking with our previous witnesses, we discussed the opportunity of, sometime in the future, linking Townsville, Mackay and Cairns through some form of high-speed rail, or faster rail, that would create a critical mass between the three cities and their region. If you had that in mind, would you plan differently what you're thinking of in the next 10, 20 or 30 years?

Mr McKendry : I must admit, it's something we haven't really given a lot of thought to. Those sorts of things would need to be underpinned by the need. Apart from the transportation, it would have to be underpinned by industry. We're going through the same types of conversations around airports. Every area wants its own international airport. At the end of the day, whilst it would be nice for us individually to jump on a plane and fly to New Zealand or wherever it is, the business actually needs to be underpinned by industry, whether that's agriculture, mining assistance et cetera. Interconnectivity between the major centres in North Queensland would be great, but from an economic point of view they'd have to lead to a market and they'd have to have an output somewhere, whether it was getting to a destination point in northern Australia that then leads to Asia—I'm not sure that connectivity by itself would assist much else, apart from getting people off roads.

CHAIR: For instance, in the case of wanting an international airport: if that airport were located at the halfway point outside of Mackay and you had rapid transport going north and south, then Mackay alone wouldn't need the critical mass to justify an international airport; that critical mass could be supplied by the three cities and the surrounding regional areas. That could be brought forward. It is under the veil of long-term infrastructure planning accompanied with land use. If those projects are further down the track, it impacts what you do today and gives you greater clarity and purpose for what you're planning in the next 10, 20 and 30 years.

Mr McKendry : Correct. From our point of view it also assists with livability. If you can live in regional centre such as Mackay and have easy connectivity to major services, albeit in another centre, at a reasonable price it makes living in a regional area a lot more attractive.

CHAIR: And combines then the benefits of a city with the advantage of a lower cost of living, as we've had in some of the evidence, where housing in this region is 20 per cent less than in South-East Queensland but wages are only five per cent less. If you were to build that into an index of wage, cost of living and quality of life, regional areas would be far more desirable than some of our urban areas. If you're looking to bring government agencies and departments to regional areas, rather than this being done randomly, it should be done strategically so as to leverage greater growth in certain regions. That gives the entire region a benefit, which would come under that heading of 'master planning'.

Mr McKendry : I agree wholeheartedly, and those sorts of things underpin an ongoing economic stream which helps with diversification from our point of view.

CHAIR: Mackay is an extraordinary region, isn't it? I think seven per cent of all coal exports go through your port; you've got innovation in industry in robotics—is that correct?

Mr McKendry : Yes, that's correct.

CHAIR: And it's the best tourism destination in the world! Is that correct?

Mr McKendry : Certainly as a region with the Whitsundays, an internationally recognised brand, that's correct, yes.

CHAIR: I was looking for a little state-of-origin comment there! You guys are pretty good at that! It just seems to have an incredible diversity and, packaged together with your neighbours to the south and north, it is a spectacular region. As to what this committee is engaged in, while we're having to retrofit infrastructure into our major cities and effect densification around that infrastructure, it's probably more important for future growth, and with the issues that have been raised recently regarding immigration numbers, that we have a strategic decentralisation plan to be able to effect greater growth, because at the moment we're fighting with our regional hand tied behind our back, as Sydney and Melbourne have to absorb the greater part of our immigration. So it seems that our inquiry—particularly as to the opportunities that lie in regional areas—is very, very important.

Mr McKendry : Yes. I couldn't agree with you more. We see our region as our three council areas of Whitsunday, Isaac and Mackay. Quite simply, added together, Isaac has the mines, Mackay has the service underpinning those mines and Whitsunday is best known for tourism. So together we form a unique position in Queensland. Yes, you're right. The stats that pump out of our area are very high.

CHAIR: And there are opportunities, with better infrastructure. While Chinese tourism is increasing enormously, we probably haven't scratched the surface yet. Would that be correct?

Mr McKendry : Yes, very much so.

Ms BIRD: Your submission talks very eloquently about the challenges of regional cities that can be subject to the peaks and troughs of particular industry sectors. I come from Wollongong, so that rang a bell with me, given our historical reliance on steel and coal. One of the things that has been significant for us has been diversification of the economic base. You talk about the opportunity in emerging industry sectors for you to diversify your base. I'm just wondering where you would see an opportunity for the federal government to support regional cities to do that more effectively. You talk about tourism, engineering and robotics. I know there are programs that fund those things in all different portfolios, but it strikes me that there is not a strategic approach to them.

Mr St Clair : You're right. There are a lot of emerging industries. The challenge that we face is actually in picking the priorities and the winners up-front—knowing where we need to put our resources and for what we need to try to receive funding and support. Looking at that, a project which has significant potential and support from a lot of levels is our biofutures opportunities. Mackay already has a foot in the game in that area with our Mackay Sugar cogeneration electricity plant. Approximately one-third of the electricity that we receive is generated by co-gen, which is electricity generation from the sugar cane waste. At the moment, council and the state government have been working closely with proponents around a Mackay biofutures precinct site. It's a project which has be ongoing for a couple of years now. What we're looking at is a biofutures precinct that can be used as a selling point to bring in those sectors that can make the most out of our access to feedstock and our access to the markets. It is really a growing sector that we think we've got that competitive edge in already.

Ms BIRD: Is there something on that that you'd like to pitch to the federal government at this point in time?

Mr McKendry : I suppose the simple answer is yes. It's just a matter of getting some of those details together in relation to how that stacks up. As Michael said, there's been a fair bit of work going on, particularly in partnership with DSD locally. It's something that we would be trying to get together and pitch.

Ms BIRD: Thank you.

CHAIR: Is that one-third of energy supply from the sugar cane waste product coming at a similar price to other forms of energy?

Mr St Clair : It goes back into the grid, and then it is onsold through the electricity provider.

CHAIR: But is the actual cost of producing each kilowatt similar to the cost of coal production?

Mr McKendry : I understand that is the case, particularly when you link it to a holistic business case about utilisation of waste from those complexes and the cost of the feedstock. That's all part of getting these things economically viable, because if they're not economically viable they won't stack up. That's a scale thing, which is what the project's actually working towards.

CHAIR: Would you be able to provide us with any more information regarding those things?

Mr McKendry : Yes, I certainly could.

CHAIR: That would be appreciated. Is there anything else that you would like to say?

Ms BIRD: No, that's fine.

CHAIR: We're all done.

Ms BIRD: It was a very comprehensive submission and very interesting. Thank you.

CHAIR: Thank you for your attendance here today. If you've been asked to provide any additional information, would you please forward it to the secretary by Friday, 11 May. You'll be sent a copy of the transcript of your evidence and will have an opportunity to request corrections to transcription errors. Proceedings are now suspended until approximately 10.40.

Proceedings suspended from 10:22 to 10:38