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Northern Australia Agenda Select Committee

TROMPF, Mr Nick, Executive Chairman, Advance Cairns

CHAIR: I now welcome Mr Trompf from Advance Cairns. I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I invite you to make a short opening statement, and then we'll have some questions.

Mr Trompf : Thank you. Firstly, thank you for the opportunity to present to you today, and also thank you for the opportunity to put a submission in to the review last September. I have just a couple of opening remarks—firstly, a little bit about Advance Cairns. We're a member funded private enterprise organisation whose role is to work on strategic opportunities to grow the region, specifically focusing on federal and state governments in terms of helping to enable growth in our region. We also are the secretariat for the Northern Australia Alliance, which is a group of like-minded organisations in the area stretching from Rockhampton to Karratha and Broome et cetera. So that's a little bit about us.

I have just a couple of general comments. The northern Australia focus that came from the white paper was very welcome in the sense that it opened up a substantial conversation and made a raft of recommendations. Obviously, since it was brought down, there have been a number of prime ministers and a number of ministers, but the opportunity hasn't gone away in any way. Has it been unlocked? I think there have been some good steps forward and a couple of specifics that stood out that we saw as real positives out of that. One was the establishment of the Cooperative Research Centre for Developing Northern Australia. I think it's doing some excellent work, and we'll come back to that a bit later during the conversation. Of course, the establishment of the NAIF, in concept, was really good. I think mark 3, subject to it being legislated in the new year, will be a significant step forward, because it's obviously been a bit of a stilted run for NAIF thus far. But those are two really specific initiatives that have real merit.

There are some other areas that are broader, like the National Water Infrastructure Development Fund and the Roads of Strategic Importance, for example. Those are really good programs, but they are national programs, which means the north has to fight for its share of the supper, if you like. That is a bit of a shame to some degree, but nevertheless it's been a real positive focus on the north, because the opportunities in the north are immense. I think they've become greater every day off the back of COVID as well. That is opening up eyes and minds to a whole range of opportunities that might accelerate.

But we're not without challenges and some barriers to unlocking some of that opportunity, which I'm happy to explore in the conversation. We did make a submission to the select committee, Chair, as you would be aware. We made a number of recommendations in that. I'm not sure it was because of our efforts, but a number of those have been embraced, particularly around NAIF, which is welcome. But there's still much to be done.

The only other point I would make is that this region, despite nearby regions laying alternative claims, is the most populated in northern Australia. There are around 280,000 people in this region. As a city, Cairns is slightly smaller than our southern neighbour, but the region is quite a bit larger, and the workforce is about 130,000 in this region, compared to about 109,000 in the Townsville region. I do not in any way wish to denigrate Townsville, because both of us are big centres, but I think that, in thinking about the north, the connectivity between the two largest centres in the north and the two largest regions in the north, in terms of unlocking opportunity, is real because Townsville and surrounds and Cairns and surrounds represent the vast majority of the population that live in northern Australia and therefore the opportunity that might flow.

Those are just a few general comments. Thank you for coming to Cairns to ask some questions and hear some more.

CHAIR: Thanks very much, Mr Trompf. You mentioned the CRC. I noticed in your submission that you're recommending that its priority areas be expanded to include tourism and energy. Is that still a priority for Advance Cairns, and, if so, why?

Mr Trompf : I think so—very definitely. Let's talk about energy first. Cairns is at the end of the national grid; it runs out just north of us. Therefore we've got real challenges, being at the end of the grid, and we've got a range of communities on the fringe of the grid and a range of communities off the grid. So we have different challenges than some of the other centres, although there'll be many in more remote parts that are completely off the grid.

Clearly the energy piece is emerging as a growth opportunity and a security consideration. One of the reasons that's raised is that energy has emerged as one of the principal costs for business in northern Australia. Energy costs have increased quite substantially over time. Energy and insurance have emerged very strongly in the last decade or so as substantial inhibitors on business growth, but they also have significant impacts on mums and dads. Clearly the energy space is one, and in the tourism space—there'll be others better qualified than I—this region in particular has done incredibly well off its core assets of reef and rainforest but hasn't really unlocked a lot of the opportunities that might exist in Indigenous and outback tourism that are on our doorstep. There's opportunity to further grow those. That's the reason we've raised those two.

CHAIR: You acknowledged that there may be other witnesses coming who might be a bit better qualified to talk about tourism, but I am interested in your views on tourism, given it's such an important industry for the Far North in general. Everyone acknowledges that the Far North, but Cairns in particular, has been hit more than most regions by the COVID downturn. What sorts of ideas are you hearing in the local tourism industry for what can be done to revive tourism?

Mr Trompf : There are a few levels to that. First and foremost, with COVID the emphasis is going to refocus on the domestic tourism market. It's important to note that, outside the capital cities of Brisbane, Sydney and Melbourne, Cairns is No. 4 in terms of international tourist visitation. More international visitors come here than go to the Gold Coast. One in three tourists here are international. Almost one in two tourism dollars here are international. So the international market is incredibly important. Bernard Salt dubbed this place as Australia's most global regional city, which it was pre-COVID and will be when it comes back. There was no other regional centre in Australia with the global brand and, indeed, global access that Cairns had pre-COVID. That's wonderful, but, in the middle of a global pandemic, it's a slight problem. So, clearly, the industry is readjusting very strongly to focus on the domestic tourism market, as it should.

There are those opportunities I alluded to before. Cairns and the Great Barrier Reef are often on the bucket list, but our repeat visitation is quite poor compared to other regions—not so much Port Douglas but certainly Cairns. So it is about broadening the tourism offering and getting people to stay for longer or to come back for different experiences that they mightn't traditionally associate with this region. One of the great assets in the outback up here is the Undara lava tubes. It markets itself as 'Australia's most accessible outback', because it is—you can fly into Cairns Airport and be at Undara in less than four hours. It's incredibly accessible in terms of an outback tourism experience.

Closer to home, the missed opportunity in Queensland has been in national parks tourism. If you look at the phenomenon that's swept Tasmania in particular and New Zealand, with cycling and walking tourism, we've missed the boat here. We're an ecotourism destination. This has been a Queensland challenge. The previous minister, Minister Jones, identified a couple of major projects. The Wangetti Trail that is under construction at the moment has enormous potential to unlock very substantial growth in cycling and walking tourism. The tiny town of Derby—which no doubt you've heard about—in Tasmania has gone from a backwater going nowhere to the place to go and visit, with most people getting there on pushbikes, which is pretty extraordinary. That's a natural extension to our nature based tourism assets that are there. There is good scope to refocus on the domestic market, build out from the existing strength of nature based tourism and unlock some of those inland tourism opportunities in the outback and on the Atherton Tableland.

The food tourism opportunity is one that has largely been missed. We don't grow very good wines—don't put that in your report—so buy the wine in, but there's incredible food grown on the Atherton Tableland. There are a few providers up there. We could be a mini version of Tasmania, in terms of food trail, with the quality and diversity of food that's grown on the Atherton Tableland.

CHAIR: So thinking about diversifying is the key to getting tourism going again in the region.

Mr Trompf : Yes. The first opportunity is to get Australians to come and enjoy everything we've got. I can't quote you the exact number, but more Australians travel overseas than international people come to Australia. There's a big market of Australians who would normally go overseas—present company included—who won't be for the next couple of years, so we're all looking around for something to do. That's the easiest get, for a start, but all of the tourism destinations are chasing the same thing.

Air access for us is vital. The international airport and the upgrade of the airport, domestically, is what unlocked this place in the eighties and nineties, getting the planes back in the sky and connecting back into Cairns. We were the Steven Bradbury of tourism, in the sense that the busiest airline route until a few weeks ago was Cairns-Brisbane—it's probably a title we didn't want to hold—and that was because of the closure of borders in other places.

CHAIR: I'm aware that Advance Cairns has done a lot of work in some of the industries that Cairns may be not as well known for but is a big player in, things like marine maintenance. Can you tell us what opportunities you see there and what government can do to make those opportunities happen?

Mr Trompf : I think the garrison cities of Townsville, Cairns and Darwin all have tremendous opportunities out of the step up to the Pacific that the government is running, and the increasing tensions between Australia and China, and the US and China, are only adding further momentum. So there's an opportunity for all three of those centres. Clearly, Townsville is much more focused in the Army and the Air Force. Cairns is the only operational Navy base in Queensland, and Cairns, Darwin and Perth have all been nominated as regional maintenance centres for the Navy. We are already seeing significant growth starting to flow off the back of the Navy's announcement that those regional maintenance centres would be set up. Some big players are coming to town. Recently, the Austal group, the only Australian owned local shipbuilder, bought one of our slipways. So we've got significant capital flowing for that sector, and I think there's much more to come. It's all a little secretive with Defence but, meeting with them in Canberra last week, they're doubling the tonnage and tripling the complexity of the naval fleet over the next 20 years. That starts to give you a sense of the scale of opportunity, particularly here on the doorstep of the Pacific where much of the tension arises. That's one.

The other one is the agricultural space. We did a piece of work funded by the Cooperative Research Centre for Developing Northern Australia. This is a report that was released in the middle of the year. But I want to call out one of the challenges in this sort of body of work. There's a gap in the funding piece to bring a lot of this research to life. There's an enormous amount of tremendous research done by CRCNA and others. Where it often breaks down, though, is in the activation of it on the ground, the bringing to life of reports such as this.

I think if consideration could be given—it's not in the submission here, although we did suggest more money might be allocated to CRCNA—if some funding could be allocated to that delivery piece in the early stages of a report like this, and it doesn't mean ongoing but perhaps for the first couple of years, if there's a seminal piece of research where there are multiple stakeholders, the challenge is: who's going to own it and drive it? If there were a funding pool available to allow groups, such as ours, and others to apply for some implementation or activation funding, I think that could make a difference from taking reports like this out of the drawer and into the paddock or into the mines or into wherever they go. It seems to be a gap in models. Governments traditionally don't want to fund that sort of sort of activation. They want to leave it to private enterprise and others, which makes sense, but I think there's a need for a bridge, a transition, in that. So I think that's another opportunity that could accelerate the agricultural growth.

Clearly, Chair, as I've said to you privately, in a world of climate change water is the new gold, and we live in one of the wettest parts of Australia. Tully and Babinda fight out for who's going to be the wettest part of Australia every year. In terms of growth opportunities, there is no shortage of water that falls out of the sky here. Our challenge is that a limited amount is captured. The principle water resource for agriculture in this area was built 60 years ago in the Tinaroo Dam scheme, which is now stressed in the sense that it's on the point of being overused in that pricing of water has gone up fivefold in the last nine years. Water is the new gold; capital is chasing it. Big farming families and corporates are only too willing to invest in the north. The reason they want to come here is to access the water because of the drought that has crippled the Murray-Darling Basin commission, excluding this year of course—they've had a boom season for much of this year, but it's been quite dreadful for the 10 years before.

CHAIR: In the context of the marine opportunities, you linked that to the whole approach involving the Pacific that Australia's pursuing. Is there anything beyond the marine maintenance and shipbuilding that you see is a potential that comes to Cairns and Far North Queensland out of Australia's renewed interest in the Pacific?

Mr Trompf : Yes, very much so. One of the policy priorities for Advance Cairns is for Cairns itself to be the operational hub for the delivery of the step-up to the Pacific. We met with the Office of the Pacific in the Department of Foreign Affairs and Trade last week. The Pacific Labour Scheme is a really important labour scheme for many industries, but, most notably, for agriculture and hospitality. I think I'm right in quoting these numbers. The scheme was running at about 14,000 before COVID; it fell back to about 8,000. The expectation is that it will grow to about 22,000 in quite a short period of time. If you look at this region's cultural connections to PNG, in particular, but the Pacific more broadly, the closest capital city to Cairns is Port Moresby. It's closer than Brisbane. The cultural, sporting and other connections into that region are strong. Much of what could be delivered in terms of the step-up to the Pacific could be operationalised out of northern regions, such as Cairns, and potentially Townsville as well with its deep seaport and its greater seaport capabilities and our air access and so on. It goes beyond just a military associated opportunity.

I would stress the importance too of the sustainment of those naval vessels, for Darwin and Cairns in particular. Those contracts are going to be 30- to 35-year contracts for maintenance. So, whilst the vessels are being built in South Australia and Western Australia—and that's fabulous for those cities during the building phase—once they sail out of those ports, it's the maintenance piece that is the really long tail. In a city like this that's had a long history of shipbuilding and ship maintenance, it could be central to strengthening the economy, as it could be for Darwin, and, similarly, from the Army and Air Force perspective, out of Townsville.

Senator McDONALD: We have talked many times about the potential and opportunities for Cairns and its surrounds. I thought your comments around population were well made. Is it correct that the industrial part of the Cairns economy is equivalent in size to Townsville?

Mr Trompf : Yes. I didn't know this until former state development minister, Cameron Dick, released his manufacturing policy. Actually, at that time a couple of years, Cairns had more manufacturing jobs than Townsville, which surprised most people. Rockhampton had even more than us. There is a significant industrial base here and much of it pivots around the marine maintenance sector. But there are also quite sophisticated maintenance repair and overhaul capabilities at the airport and a range of other industrial facilities. We have a bigger mine servicing centre than most people would give credit to. Mackay, Townsville, Rockhampton and Gladstone have been very focused on that. But Cairns, because of its access to some of the mines and the big FIFO market out of here being such a significant airport in terms of Australian airports, has a big FIFO market as well.

Senator McDONALD: Thank you for that detail. Tourism Cairns has always been well known for tourism, and it has meant that COVID, as you've already discussed, has had such a big impact. It's important that there already is some diversification of the economy in Cairns. You touched on the population that's outside of the Cairns city proper. Have you heard about the access to finance and insurance being raised as a major inhibitor for the development of this region? Is this something that your members are raising?

Mr Trompf : I think it's less about finance than insurance. Finance has become challenging in the sense that banks have been somewhat shy of some of the regions that have been impacted by major natural disasters. It's been an issue. We don't hear finance being as big an issue now. It is available; you can get it. It's just that there are lots of hoops to jump through, but I think that's true right across Australia. The royal commission on the banking sector obviously led to a whole raft of regulation and that tightened up a whole lot of things amid fears of a property boom. That made finance harder to get. Since then, the regulators have relaxed a lot of those controls that were there. So, finance is less difficult to obtain than it was, although there are hurdles for business investment in areas like agriculture. You've got to have a lot of equity. There are slightly different answers.

Insurance, in my view, is rapidly emerging as one of the greatest risks for investment in northern Australia. In my personal view, it's the reason why this region missed the last property upswing. If you look over the last 30 years, residential property markets at the Gold Coast, Cairns and the Sunshine Coast follow a very similar pattern. They have similarly structured economies. When they fly, they fly; when they crash, they crash. We all crashed in the GFC pretty hard. The Gold Coast, the Sunshine Coast and Cairns all started to come out of it in 2012 to 2014, but our market did not accelerate off of the back of Yasi in 2011. The market here flattened and went the other way at the time the Gold Coast and Sunshine Coast took off. A lot of that is to do with insurance costs.

The practical reality is that a suburban house in Cairns will cost you $4,000 to $5,000 to insure, and the same house in Brisbane might cost you $1,200. These towns, particularly Cairns, have a big investor market. At a mum-and-dad investor level, that's a huge deterrent. If you think about a $3,500 difference in interest, that would cover a mortgage of almost $200,000 in today's low-interest rate environment. When investors do the numbers at the mum-and-dad level, it makes a real difference, but, when you go into the business space, when you go into body corporates, it's crippling. It's getting to the point where a lot of people are either underinsuring or they're not putting on more people, they're not expanding, they're not investing in equipment, and so on. It's about insurance and energy. Staff and rent used to be the two things that stood out. Electricity has crept up as a significant barrier, but insurance is the one that's really become a major challenge, and it's a worldwide issue. The insurers are reassessing their position when it comes to the tropics across the world. There's the ACCC review that's been done, and the Assistant Treasurer has that in his hands at present. We met with him last week. It appears to us that there needs to be some form of market intervention—some form of government market intervention—because the market itself will not correct it, and, if anything, it will get much worse. That's probably the greatest threat that's emerging to the opportunity of northern Australia: the insurance piece. It's starting to become prohibitive for many who want to expand or come to the region.

Senator McDONALD: I'll just add to that. In addition to the ACCC inquiry, the small business ombudsman released their report into business insurance last week, and there was similar commentary around business insurance in northern Australia. Could we move to business electricity costs? Do you want to talk a little bit more about that? A previous witness talked about electricity governance. What are your concerns about business electricity?

Mr Trompf : There are two different things. The energy policy space is incredibly complex. There hasn't been a clear position on energy policy at a federal level for a number of years. It's waxed and it's waned and it's still somewhat unclear. There are more expert people than me to discuss it. Having looked at the complexity, the various levels of players, it is extremely complicated. The challenge, of course, in our part of the world is that there's no retail competition. The reality is that retail is only about 25 per cent of the final cost. Generation is roughly 25 per cent and the poles and wires are the other 50 per cent. The 'poles and wires' piece, which is obviously driven by the state government in Queensland, is one where those costs have crept up significantly over time. In fairness, it's a massive network to have to maintain, and that investment is enormous. The growth in energy costs now is such that people talk about doubling, tripling and quadrupling of energy costs over a short period of time. That, along with insurance, will start people questioning, 'Why do I continue to do business here?' or: 'I can't expand. If it weren't for my energy costs and my insurance costs, I could have an extra two, three, four people on the payroll; I could put in another piece of equipment; or I could build another shed.' Of course, they're a sunk cost. People expect electricity. They expect things to be insured. So they don't actually add any value to the businesses—they're a sunk cost—unlike staff, which add value. The premises that you rent might add value, depending on where it is. Electricity is one of those things that everyone expects to be there. So a big initial—

Senator McDONALD: Essential service.

Mr Trompf : Yes.

Senator McDONALD: We've talked about insurance, we've talked about electricity and we've talked about access to capital. Are there any other major issues making it difficult to attract private investors into northern Australia, particularly Cairns?

Mr Trompf : I think more broadly you can look at Cairns as the as the hub to the two First Nations people, those of the Torres Strait and Cape York. I've noticed you've got a witness that is much better qualified than me. The land tenure piece is the other great inhibitor, if you like, particularly on expansion of the agricultural sector and to some degree the resources sector as well. I note you have Melinda Eades presenting to you today. Melinda is far better versed than me in this. The vast majority of land north of Cairns is not privately owned. That's a very significant consideration in unlocking some of the growth, and it's not unique to here; it's obviously present right across northern Australia. I'm not an expert in that space, but you've got others who are better versed than me. I'd certainly encourage the committee to thoroughly explore that, because that would be one of the other substantial inhibitors to that growth in agriculture, in particular, and, to a degree, tourism.

Senator McDONALD: Given that we're talking about northern Australia across three jurisdictions, how aligned is your advocacy with similar groups?

Mr Trompf : Good question. It's often challenging. Most of the groups of the Northern Australia Alliance, which we're the secretariat of, will typically have somewhat parochial advocacy initiatives, understandably, particularly when it comes to things like infrastructure. Clearly most regions have specific infrastructure opportunities and needs they'll advocate for, so it's difficult to get alignment there. But where there is some alignment increasingly is in areas like skills. More and more you hear that, in Cairns right now, there are many blue- and white-collar jobs in which people can't get the quality of people they want. They can't get the skilled people that they're looking for. This is common right across northern Australia. So that's an area of uniformity. The insurance piece is one as well. Whilst we haven't formalised our position as a collective, that is something that we will be undertaking to discuss with our colleagues where we see there is a common interest. So there are a few areas such as that. Of course, there's the land tenure place, although that's got state implications to some degree too. There's an element of joint advocacy, but at times it's also understandably parochial. We do work together to elevate the northern Australia conversation at a key juncture each year. When the minister releases his statement on northern Australia, we have an event in Parliament House to celebrate some of the successes in northern Australia, and we at Advance Cairns look to lead that activity. Naturally that didn't occur this year due to COVID, but it will again next year.

Senator McDONALD: We'll look forward to having you there. You touched on water being the new gold, and I reflect on the success of Tinaroo dam and the half a billion dollars a year of agricultural produce that comes out of that region. It's been put to me that that dam wouldn't be built now under the feasibility of the 30-year project return. Could you just talk a little about what you think the pathway forward is around that. We had a previous witness talk about water allocations being made subject to environmental approvals, so how do we better free up that water approvals space?

Mr Trompf : One of the key hurdles is the Infrastructure Australia guidelines that are widely used by Building Queensland in the assessment they do. They're the same guidelines regardless of project, region and nature. Doing a detailed business case and a cost-benefit analysis on a road in the Gold Coast is light years away from doing a comparison of a long-term nation building exercise like Lakeland dam north of Cairns. I think there needs to be some form of material review around those guidelines, those parameters, because they do shackle the states to some degree. So that's one area that I feel could make a substantive difference if there was a different lens applied to the north.

Tinaroo is a great case study, built in 1958. For a long period of time, it supported the tobacco industry. When the tobacco industry disappeared, the view was that water storage facility might not be the great benefit that it could have been. But in actual fact, it was the opposite. It unlocked great innovation in agriculture and has now become really Australia's tropical food bowl, with half a billion dollars a year of produce coming out of there. I'll leave you with a couple of lines: 'This region is the banana capital of Australia, it's the lime capital of Australia, and very soon will be the avocado capital of Australia.' That's very substantial positioning in really stable products, particularly bananas and avocados and, of course, limes are welcome in this era of coronavirus, for those of you who drink Corona beer.

Senator McDONALD: That is a terrific recommendation around the feasibility guidelines for infrastructure projects. What I'm looking for are practical recommendations that drive the agenda forward. This is bigger than politics.

Mr Trompf : It is.

Senator McDONALD: This needs to be a multijurisdictional push to how we can really get projects approved and going.

Mr Trompf : Certainly the Nullinga Dam business case is a recent case study of how the rules, if you like, are not set up for dams to get the right BCR. It is extremely difficult for a dam to meet that BCR. The reality is that if dams were able to be built profitably by private enterprise—regulations aside—private enterprise would build them; there would be no shortage of capital. The reality is that most, if not all, have had to have substantial government investment in them in the spirit of state or nation building and that will be the case in the future as well. So full user pays is not realistic when it comes to those sorts of pieces of infrastructure. Substantial user contribution, yes, but full user pays, no.

CHAIR: We had a brief chat there about workforce shortages. Do you see that the main solution or main change that is required is simply a matter of greater investment in training in the region? Or is there a lack of planning around what skills are needed or anything else? What would we be recommending be done differently?

Mr Trompf : It's an incredibly complex space and the sectors differ as well. If I look at white collar for a start, the world's biggest social experiment in COVID has opened people's eyes that they can live and work pretty much anywhere in Australia, particularly where there is good internet access, which there is here now, so it will be very interesting to see. There is already anecdotal evidence of highly skilled white-collar workers starting to reassess where they live and work. So, in a perverse way, that may well be a real scope and a real opportunity. The harder end is the industrial end, if you like—boilermakers, welders, those sorts of guys. Getting a proper pipeline flowing through the TAFE program and vocational education is so important in that space.

Clearly we have, and will continue to have, labour needs at a semiskilled and lower skilled level that have to be filled by schemes like the Pacific Labour Scheme and by backpackers and so on. That's not likely to go away. It's in those other tiers of semiskilled and higher skilled workers where the challenge lies, so greater pipelines of workforce coming in. The retention piece is the challenge as well. Historically a lot of people get developed in young regional areas and then the gravitational pull to capital cities tends to pull them away for career advancement, particularly in the white-collar piece. It will be very interesting to see what plays out with COVID. There's been quite a psychological shift; the glitz and glam of the big capital cities might not be so pleasant anymore. There could be something that starts to influence skills flowing into regional areas, with COVID evacuees.

CHAIR: Thanks.

Senator McDONALD: Just to finish on that, a previous witness was giving evidence around this immediate requirement for a workforce in the north. We talked about JobSeeker. I know how important that's been to Cairns. You have a large casual workforce in the tourism industry. How do you see that playing out now? Is it still necessary? Is it time to wind it back? What are your views?

Mr Trompf : I'm a member of the Economic Response and Recovery Sub-Committee that was set up by the Cairns Regional Council under the Disaster Management Plan. That committee has recommended that JobKeeper be extended for a further three months, particularly for acutely impacted regions such as this. This region is different to many other tourism regions in that the March to June period is historically one of the worst periods for us, if not the worst period, because it's the middle of the wet season and the tail end of the wet season. So there's a slight difference here to other tourism regions, even Queensland, with the Gold Coast and the Sunshine Coast, where the peak seasons are Christmas through to Easter. I note Gareth from the Association of Marine Park Tourism Operators will be providing evidence shortly. I think I'm right in saying that they would be at the most acute end.

The flip side, though, is that there is also a risk around the creation of a welfare mentality, if you like, with JobSeeker and, to a lesser degree, JobKeeper. I was talking to a significant hotel operator this week. With a bit of a peak in demand over Christmas, they're really worried about being able to get staff to fill jobs because so many backpackers have left the north. Obviously the inflow of backpackers is not there anymore. There's also been an element of semiskilled and lower skilled people who have not been able to work, because the work hasn't been there in recent times, and they've been protected, as they should have been, by these programs. But the danger is that those programs and that welfare culture becomes something that they, if you like, rely on, and they don't have the desire to go back to the workforce. So it's a delicate balance. Certainly for people like some of the marine tour operators, if it weren't for JobKeeper, most of them or many of them would have gone out of business by now, and they would be looking for further support. There are many other sectors that initially qualified for JobKeeper that are no longer receiving JobKeeper because they're trading quite well. So it's not one story in Cairns. If you were to go to Mareeba, for example, which is agriculturally aligned and resource aligned, the economy's very strong at the moment. It hasn't been much affected by COVID at all, because tourism is quite a small part of the economy.

CHAIR: Thank you.

Senator ROBERTS: Thank you for coming today, Mr Trompf. In your submission, you pointed out that there's been sustained population growth in the major capitals and that, at the same time, rural and remote Australia faces population decline. You say that, where growth exists, it is typically anaemic, with notable exceptions being centres within 1½ hours of major capitals. What are some initiatives to fix that?

Mr Trompf : One of the one of the areas of concern is in some of the population narrative that is emerging. There's a lot of focus on satellite cities around the capital cities—Geelong, Ballarat, Wollongong, Newcastle, Gold Coast and Sunshine Coast. They were already getting significant growth pre COVID. There's evidence emerging now that regional property markets in a lot of those centres are running very fast in terms of growth. Those centres, in many ways, are going to have organic growth accelerated by COVID. There clearly needs to be that for more remote areas like Cairns, Townsville and Darwin, but also the smaller centres. Cairns and Townsville in particular have had population growth. It's the smaller centres and more remote centres that have been declining, as you'd be well aware, in western Queensland and other places. This is complex. I don't have a prescriptive solution for you, but some form of incentive or incentives to encourage people to move and stay in those regions clearly needs to be considered.

Continued investment in resources, particularly in infrastructure and health services, is really important. One of the gravitational pulls, if you like, to larger regional centres and capital cities is quality of health care. It would be valuable if that divide could be overcome and e-health were more widely used to allow people to stay in those regions rather than having to move for health care, but there also need to be more proactive incentives to encourage people to move and live in those regions—taxation incentives or the like. There's the COVID window where a lot of people are reassessing life. I think this Christmas break will be a period where there's a whole lot of life reassessment done. It's a tremendous window of opportunity for regional Australia more broadly, not just northern Australia.

Senator ROBERTS: Thank you. With regard to the skilled workforce section, you said there's been some benefit from designated area migration agreements. Could you elaborate on that, please? How's that working and what are the benefits?

Mr Trompf : Our sister organisation, the Chamber of Commerce, is your subject matter expert on that. I note that they're appearing this afternoon. They actually run the program. They're closer to the program than we are. They didn't put in a submission—

CHAIR: They're not going to attend. They had to cancel.

Mr Trompf : That's a shame. I'm not sure that the committee has capacity to follow up with them. They are at the coalface of delivering them. That is the organisation that delivers the designated area migration agreements. They're better versed than I am to elaborate on that. Their view is that the volume of roles is not enough. There are different types of roles that they would like to see qualify for DAMA that don't currently qualify. I'm paraphrasing some of the advice they've given me before. Those are certainly a couple of key areas that they would like to see more of. Given the stresses on workforce and some of the growth areas that are emerging, the designated area migration agreement could be one of the key opportunities to unlock some of that growth opportunity, if it can be tweaked. Senator, I encourage you, if you have the channels, to reach out to the Chamber of Commerce, which actually runs the program. They could give you a deeper—

Senator ROBERTS: Basically, how does it work and how is it affecting the north?

Mr Trompf : With certain sets of criteria, it allows people to bring in migrants to fill labour force opportunities that otherwise can't be filled through—

Senator ROBERTS: There are exemptions from migration requirements for designated areas?

Mr Trompf : Yes; exactly. Obviously, it's a bit of a challenge at the moment with COVID. None of them are coming in. But, yes, that's the purpose—for sectors that have specific needs and where time has shown they aren't being fulfilled with the Australian workforce in a way that we would like.

Senator ROBERTS: In Cairns yesterday, I was listening to people concerned about the future of the port—

Mr Trompf : The seaport?

Senator ROBERTS: Yes. Trinity Inlet. One of the things that I came away with is that Cairns has the port with the largest number of vessel movements in Australia, in a regional city. It's quite staggering. Every river and every creek carries silt naturally. In every harbour, where the moving river or creek meets the still marine water, silt is deposited, so every harbour has to have dredging. There are two types of dredging, as I understand it: maintenance dredging to maintain the current depth of the harbour, and capital dredging to expand the harbour, deepen the harbour, widen the harbour or lengthen the harbour. I'm told that the state government was brought kicking and screaming to the table. And just before the previous election, which was 2017, when the Liberal Party made a commitment to dredging the harbour, the Labor Party, last May, just before the election, promised to spend, I think, $120 million on moving four million cubic metres of harbour material. Apparently only 700,000 has been moved.

I'm not asking you to get into a political fight, but I'm just saying that these people are very concerned about the future of Cairns Harbour, from two perspectives. One is that the maintenance is not going to be kept up, and that's a key area for the region's income. The second one is in expanding the harbour, deepening and widening it to enable larger cruise liners to come in, because the worldwide cruise industry is moving to bigger vessels. At the moment, those vessels have to anchor off the coast and you don't have as much income coming in to the region. Apparently the boundaries for the marine park were moved to be within the harbour area, which has limited dredging. The way it was put forward to me is that it was capricious and didn't have any scientific basis. They're very worried about the future of Cairns.

Would you care to make any comment on that? Is it coordinated, the environmental requirements? Is it science based?

Mr Trompf : I think your next witness is much better qualified than I, to make an observation around the science of that, without wishing to answer for him. It's probably an area I'm reluctant to comment on, other than to say that the modelling done by government owned corporation Ports North around the cruise shipping industry was such that, with the volume of capital dredging that was done, it would unlock the majority of cruise liners that operate in Australian seas to be able to come in—the really big ones, not your QE2s and so on. The modelling they did was that it would still unlock significant growth.

There's clearly a balancing act here. We are in an incredibly environmentally sensitive area, on the doorstep, and are the guardian, for want of a better expression, of the Great Barrier Reef, so it has extra complexity here. It's probably something I'd prefer to stay out of the politics of, Senator. But, clearly, other ports in Queensland have greater flexibility with capital dredging, and that may open up other economic opportunities for them. Cairns is not likely to be a major industrial port, you wouldn't think, with the current view of the state.

Senator ROBERTS: I was given an example, yesterday, of oil tankers, not very large ones, going past Cairns, dropping their oil in Brisbane and then road freighting it back to Cairns. That would seem to be inefficient, especially for the people in North.

Mr Trompf : I'm not familiar with the specific case that you refer to. What is true to say is that a lot of freight gets moved, of various types, from the north to the south and then gets shipped the other way, particularly agricultural produce. I don't know the specifics of what you're referring to, so I'd prefer not to comment on that.

Senator GREEN: I have one quick follow-up question about the designated migration area agreement. I don't expect you to verbal the chamber, but I was wondering if you had some more information about what occupations they were looking to add on to that agreement. I've read the list of occupations and it's pretty broad. One of the occupations it includes is a vocational trainer. When we're talking about getting more skilled workers into Cairns, when we already have a six per cent unemployment rate, it's got to be a bit of a balance. Where does that sit in relation to the Pacific workers scheme, which was touted as being able to bring in communities that we have close relationships with, here, in Cairns? What's the balance, do you think, that we need between those two agreements?

Mr Trompf : The Pacific workers scheme is largely and predominantly for semiskilled and lower-skilled workers. The DAMA is much more focused on filling skilled positions that the organisations have been unsuccessful in filling. I don't see the two in conflict. The more we hear of the Pacific Labour Scheme and its potential, the more significant it becomes, particularly for the agricultural sector and the hospitality sector, where it's great to have a backpacker for three months—but then you're training a new one the next day, and the next day and the next day. The Pacific Labour Scheme is for three years, so it provides a much greater continuity to the employer. And it also has great benefit in their home country, where those funds are taken back and support families in the Pacific. That scheme, I think, is one that, particularly in agriculture—there are a lot of farms that are using them and getting great results from the workers from that region. I don't see the two in conflict. I think they're quite different.

Senator GREEN: What are the areas that the DAMA would be expanded into?

Mr Trompf : I'd defer to the chamber on that, Senator.

CHAIR: Thank you very much, Mr Trompf; we appreciate your evidence today. Have a good break.