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Economics References Committee
09/04/2018
Governance and operation of the Northern Australia Infrastructure Facility

JOLLIFFE, Ms Elaine, Chief Executive Officer, Broome Chamber of Commerce and Industry

TAYLOR, Mr Peter John, President, Broome Chamber of Commerce and Industry

[9:42]

ACTING CHAIR: Welcome. I think we met the other day, Mr Taylor.

Mr Taylor : We did. You're not following me around, are you?

ACTING CHAIR: No. It's the nature of these things. Thank you for appearing before the committee today. I invite you to make a brief opening statement should you wish to do so.

Mr Taylor : Welcome to Broome, and the chamber also welcomes the current government's focus on northern Australia and the foresight to implement the NAIF. I think it's got great potential, but I don't think that potential is being realised at the moment. We are pleased to see that funds are already flowing to the Onslow Marine Supply Base—$16.8 million—which will be a huge step forward for that particular area. However, it is disappointing to see that since inception, according to the figures I have seen, there are only 16 projects totalling an amount of about $55 million that have reached the due diligence or execution phase. For a region like northern Australia, which has promised so much for so long and yet achieved so little under the generous NAIF initiative, it is cause for concern and self reflection by the regions. As Professor Julius Sumner Miller said, 'Why is it so?' I wish I actually had the answer.

There is no doubt about the north's potential; we have been hearing about it for years. If it is anything like the Kimberley, that potential has been analysed, people have been consulted widely and there have been so many reports generated that it has probably contributed to the success of the Australian forest industry, but I am not sure that it is actually done a great deal for northern Australia. This is in no way a criticism of state and federal governments; we all realise that reports and consultants coming in and analysing things are a key tool of government and are key reference documents but they are only reference documents and, in many respects, it often seems to us up here that when the report is published, the job is done.

Our view is that the missing step to promote economic development and actually achieve outcomes is the fact that report findings never seem to be turned into a high-level investment prospective marketing tool for each key project that has been listed in these reports, which can then be used to target and actually proactively go out and attract businesses to come and invest in these opportunities. Hundreds of thousands and even millions of dollars are spent on these regional reports with the main beneficiaries not necessarily being the regions but the city-based consultants that are engaged to do this. Unfortunately, much of the information that is beyond the actual report is lost to people who are not actually residing in the regions. Our view is that if the same investment in some of these reference reports were actually put into that next step of establishing businesses cases and marketing opportunities for those particular key investments that have been identified in those reports then a lot of the potential of northern Australia could be fast tracked and make a considerable and long overdue contribution to overcoming so many of the social issues faced in the north as well as creating prosperity for all.

Let me give you an example. The Browse Basin oil and gas field, which is about 200 kilometres north of Broome, is a 40-year field operation. It is basically due to start this year. The initial drilling has been done. The shell's floating platform is held in place there and is undergoing commissioning. INPEX have their drill in place and their pipeline to Darwin completed. These are huge operations spanning over 40 years. We also hopefully have Woodside giving their final investment decision later this year. They will also be tapping the Browse field but piping the gas down to their operations at Karratha.

However, in terms of Broome, other than seeing basically simple logistic supply chain for their day-to-day requirements—they've got a couple of floating vessels which go from here to there—Broome and northern Australia—this part of northern Australia, the Kimberley—are not seeing too many benefits from that. If this was anywhere else in the world, we would be seeing around Broome clusters developing of service industries that would benefit from the competitive advantage that Broome has through mainly the close proximity to that field. It is approximately 200 kilometres away.

The next service point is Darwin, which is probably the best part of 1,500 kilometres away. You've then got Henderson, in Perth. You've also got locations in Indonesia and Singapore, which are also basically servicing these operations. So far Broome has got a GE electrical motor overhaul and M-I SWACO mud plant. As I say, anywhere else in the world we would already have established clusters of service industries that could work on that competitive advantage. That, linked with the livability of Broome, and our supply chain, which actually is quite good from here, plus the airport means we must obviously have an opportunity there, but there is no funding.

There is no body constituted at the moment that can actually sit down, put together a scope to review what those opportunities are and then raise the money and employ somebody to analyse what those opportunities are but then, more importantly, go out and market those opportunities. The federal government has done its job in providing these concessional loans through the NAIF, but there is a missing link between the initial identification projects and concessional funding opportunities—that link in the middle. Small communities like Broome, Kununurra and others—I'm only speaking for Broome—do not have the internal resources to fund or put together that sort of analysis.

People like the Kimberley Development Commission and the RDA obviously have mandates in this area, but again it doesn't seem to take it from that initial identification through to actually putting together a high-level business case, demonstrating the opportunity and then going out to market it. We are 2,200 kilometres from Perth. Darwin is about the same. We are a small community on the north-west coast. Investors, organisations in these industries, do not wake up every morning and think, 'Let's go and have a look at Broome and see what's happening there and what those opportunities are.' We actually have to be proactive in going out and seeking people to come to Broome and see what those investment opportunities are.

I think a good model is the one that Yawuru have implemented. Obviously they have significant assets in Broome. Again, rather than sit there and wait for people to come to them, they have managed to establish networks and the internal funding to take a lot of the opportunities that they have identified and seek partnerships with organisations within Australia and overseas to attract those investment dollars, the skill and the know-how and the potential partnerships to come and invest in Broome with Yawuru. I think that is a great model. I think that's a model that small communities like Broome or small regions with limited financial resources could adapt to quite well. Again, it would provide that link between the initial identification of an opportunity and actually finding the people that could come and make that opportunity happen.

ACTING CHAIR: Thank you. Did you want to say anything?

Ms Jolliffe : No. I support what Mr Taylor said 100 per cent. We do appreciate the federal government's initiative in the NAIF funding. However, there have been reports and documents written but they have just been written; no further steps have been taken. Ultimately, what we'd like to see is those further steps being taken and some of the recommendations that Regional Development Australia, the Kimberley Development Commission and the consultants have identified come to fruition.

ACTING CHAIR: I want to come back to the fact that a lot of people at the local level seem concerned about the lack of investment by government or the capacity to attract or access investments that are on offer. What in your view should the NAIF be doing to respond to the concerns you've raised so clearly about local cohesion and participation—particularly if they're macro investors outside the region?

Mr Taylor : My key view, and it's been this for some time, is that communities or small regions like Broome need to have a capacity which brings together the key stakeholders to provide economic leadership. Places like Cairns did it 20 years ago with their Advance Cairns, which is not necessarily the best model. There are other models which tend to highlight issues and report problems. I think it needs an independent body with assistance or input from key government bodies, but it needs to be a body that has some funding—unfortunately, the only place that can come from is state or federal government—to employ the researchers and the analysts who can recognise the opportunities and turn them into a high-level business case, which can then be taken out and marketed to state and federal government and private industry. It also needs the capacity for a skill base or networks and close links into the finance industry.

Obviously, there are more sources of finance than NAIF—shareholder funds—particularly where you're looking at high logistical costs. Some of these things do not necessarily stack up in a small place like the Kimberley where we don't have the scale. A body like NAIF is allocated X amount for concessional loans, which come at a cost to government, but if some of that money could be diverted into establishing these smaller regional independent bodies whose remit is to seek out opportunities, establish the business case and then go and market those opportunities, I think then we would get a far more comprehensive and practical pipeline of infrastructure projects coming into the regions.

ACTING CHAIR: Would your view be that the non-mandatory $50 million—that's the figure which gets thrown about—ought to be brought down to something that is more manageable or relevant to the region?

Mr Taylor : Absolutely. My understanding is that the lower threshold was originally $100 million. My view at the time was that there was unlikely to be any project other than a major highway upgrade that would need that sort of money. We just do not have the scale of activity here that requires $100 million. We are pleased to see that you have lowered it down to $50 million. I believe that for particular projects here even $50 million may be too high, because, again, we don't have the scale of those projects. If it were lower and we had a number of smaller projects which can start to attract the scale, then obviously that's going to have a multiplier effect for the future. It's like throwing a tank at something that only needs something that big.

ACTING CHAIR: It seems to me that one of the positions you're putting is that if the NAIF were to look at a region like the Kimberley and there were people within the Kimberley with a range of views on development—economic development, commercial development, environmental considerations and all of those factors—and they put a plan together for the region but they would need assistance out of the NAIF to actually undertake that in a manner that could be accountable to the NAIF board, CEO or someone, it needs to be driven pretty much from a local perspective?

Mr Taylor : Broadly, in principle, that's what I'm suggesting. I think we have to be careful in using the word 'plan' again. Obviously any infrastructure has to be integrated here, but our view is that it needs to have a focus on projects. It's not about picking winners; it's picking what this industry needs in terms of infrastructure there and then supporting that and marketing it to private enterprise, where we can. Obviously, we're not going to get involved in roads and that. But where private industry can get involved with concessional loans, that should be the focus and the target.

ACTING CHAIR: So, for the Kimberley, would there be three projects you could think of that we ought to be targeting? We had a comment by the previous submitters about a coolroom concept in Kununurra that could have multipurpose usage. Is this the sort of thing you're talking about?

Mr Taylor : Absolutely. There is a project underway. I think the CRC are working on doing a feasibility study for coolrooms in Broome. We have the abattoirs here and we see the potential for that. That is just an example. But, again, my understanding is that has got help and assistance from the CRC. The agricultural industry has its own research resource there, but we don't actually have an economic development resource where you can go and pitch a project to them and then they will assist in finding expertise and putting together a feasibility study. I'm not saying that's necessarily the model there, but that's where that works for that. We need something similar for economic development. Again, this isn't a criticism of the RDA or the Kimberley Development Commission, but it seems their remit is more providing the list of projects that are needed rather than taking it to that next step and providing the information so people can start get exciting and understand the opportunity and are then going to spend some of their time, effort and money in researching that opportunity to see whether or not it's going to make them a return.

ACTING CHAIR: What do you think would be needed to get the state government as well as the federal government stimulated or interested to get to the marketing edge of this? As you've indicated, there are reports, there is a whole lot of information and there are various committees around, but there seems to be a gap between all of that data and the hard work that's gone on and getting to a market for those potential products. What will it take to get to that? Should it be built in at the start, for instance, so the marketing of the project has got to be part of it, not just the analysis of, 'Is this a good thing to be doing?'

Mr Taylor : Absolutely. For me, it just seems a rational linkage between actually identifying the potential and then saying, 'What's it going to take to actually identify that potential and put a business case together such that can be marketed?' There are some governments, I understand—overseas in particular—that fund inwards investment groups that identify what's needed in a certain region. Then they will go out and do that work and basically attract private investment and government investment and they are sometimes able to be linked there. Again, that's focusing on outcomes rather than just reporting on reference documents and documents that put things in context. We've had so many of those and they cost hundreds of thousands and millions of dollars. We're just missing the other component of getting it to the stage of actually attracting people here and taking those opportunities.

Senator SMITH: How would you characterise NAIF's engagement with the Broome community?

Ms Jolliffe : Very difficult at this stage. I had a roundtable with a number of key stakeholders scheduled today with a NAIF representative and unfortunately that NAIF representative did not respond. I guess that's the nicest way to say it. I have key stakeholders with a genuine interest in improvements to infrastructure within the region and throughout the Kimberley region. They want to be able to table some of their queries and concerns and find out a little bit more about the NAIF concessional loans. They're unable to because that representative from NAIF has declined the invitation to speak and meet with those key stakeholders.

Senator SMITH: How regularly do they decline your invitation?

Ms Jolliffe : Pretty much all the time.

Senator SMITH: Really?

Ms Jolliffe : Yes.

Senator SMITH: When was the last time the CEO, the chief executive, of NAIF was in Broome?

Mr Taylor : Let me think. I attended a get-together. It was just an opportunity to informally chat. It might have been eight, nine or 12 months ago. That's the only time that I can recall, in my two years in this role. It was a $100 million lower level to start with and I think that was a real disincentive for people to get involved and find out more. I try to keep abreast of things that are happening, but it was almost by accident that I heard. Somebody said, 'They've now lowered that threshold significantly.' Only recently we found out that it's $50 million. It's a great initiative, but, in terms of assisting people on the ground to actually get things moving—but that may not have been the remit of the NAIF fund. I don't know. Maybe it was just to accept higher levels—

Senator SMITH: It's hard to build a pipeline of projects without physically going somewhere and talking to local people.

Mr Taylor : Absolutely.

Senator SMITH: There is a pipeline. There are 12 projects or so that have been talked about. With regard to your experience, what would be the two or three projects that you're aware of or local needs that could be met if this missing link that you've referred to were corrected? If there were a bit more support for the development of these business cases around some projects, what types of projects do you think might come to fruition? Just put the $50 million to $100 million issue to one side. You mentioned the multiplier effect, which I think is important. It's not just the business investment itself for itself; it's all of the investment that is spun off that.

Mr Taylor : That's right—how we can start building some scale. One of the key ones is that we are constrained by our port at the moment. There are potentially a couple of proposals for putting alternative port facilities in place. I think one is quite well developed; the others are still developing.

Senator SMITH: Is it the Broome marina project that you're referring to or is it separate again?

Mr Taylor : No, that's something different. That's more for, I guess, the tourist market. We're looking at the cruise-ship market. We're looking, potentially, at a floating jetty, which could meet all the requirements of the largest ships, cruise boats, that come through Australia there. That's one which would be, I think, a heads up for that. I guess, if we want to increase our ability to service the Browse Basin, there still needs to be work done on a port or alternative marine base, similar to the Onslow one, which I think people are starting to look at now. There is the, I guess, potential for a gas supply to Broome, for cheap power, with the gas fields onshore. That's a key one that could start providing Broome with a bit of an industrial base, if we got cheap power there.

There are obviously things like the chillers for the beef industry; that's another one. I guess the concept I was talking about before—where we've got this 40-year operational life of the Browse Basin there—the potential for Broome to be a cluster service centre for that, is huge, giving our steaming distance a competitive advantage. Again, it's not going to happen unless some analysis is done and the opportunity is identified and those business cases are done.

Senator SMITH: Is there a unanimous view in Broome that economic development is good?

Ms Jolliffe : It's fifty-fifty, I'd say.

Mr Taylor : I listen to the silent majority. I'd say James Price Point, which I guess you're referring to, was a huge wake-up call for Broome. I can understand people's fear of what that might have been, and you could probably never allay that fear, those feelings. But since then, I think, a lot of those people who were adamantly against that broadening of the economic base that James Price would have given us have realised that we have a very narrow economic base here and there is very little new money coming into town. Basically, property prices have been falling for almost 10 years now. Our population isn't growing strongly. A lot of our young people are having to leave town to establish full-time jobs and careers there.

There has been a lot of work done by Broome Future, in terms of consultation, right across the spectrum of the community. I'm fairly confident—and I will disagree with you on 50 per cent; I think it's much greater now—that people understand Broome needs to diversify its economy, that oil and gas, maybe not as an onshore facility, can co-exist with the tourist industry, that Broome needs to grow and provide opportunities for young people. I don't think there'd be any issues with those, other than you will always get your five or 10 per cent of people who will be vehemently and adamantly opposed to any growth or change. That's just a fact of life.

ACTING CHAIR: You mentioned the Yawuru, and I'm a member of the Yawuru native title entity, as you know. I don't have much to do, day to day, but it was pleasing to hear that comment. Are you familiar with Indigenous engagement or strategy within the NAIF?

Mr Taylor : No, I didn't know they had one.

Ms Jolliffe : They don't promote that very often.

ACTING CHAIR: We may ask that of the Kimberley Land Council when they come and meet. It's interesting that you don't know and you've heard of the initiative the Yawuru are taking. The only other matter—I think we may have touched on it—is consideration of the broader economic, environmental, community and infrastructure requirements that all go together. Do you think sufficient attention goes into the consideration of proposals, or are we just looking at the economic bottom line of the return on investment? You could get other returns from a nice, liveable place like Broome: the opportunities for other, smaller businesses to prosper with something built for a more universal purpose. Do you think much thinking goes into this, or is it pretty siloed?

Ms Jolliffe : I feel it is very siloed. They look at the bottom line and their return, not the overall return, the outcomes for the community, social wellbeing and the environment. I feel they look at that dollar figure.

ACTING CHAIR: If more people from the Kimberley were on or involved with the NAIF board, do you think that would make some difference?

Mr Taylor : I would assume you had people from a selection of the regions on the board. Is that not the case?

ACTING CHAIR: It's pretty sparse. If you're unfamiliar with the NAIF and they're not dealing with you in some appropriate matter then the good intent of the government is not getting the right feedback.

Mr Taylor : In my view it would be a positive outcome if that were the case.

ACTING CHAIR: Thank you for your presentation and your presence here.

Proceedings suspended from 10:17 to 10 : 44