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Impact of the global financial crisis on regional Australia

CHAIR —I welcome representatives of the shires of Geraldton-Greenough and Northampton. Although we do not require you to give evidence under oath, I do need to remind you that these are formal proceedings of the parliament and, as such, should be treated with the same respect as proceedings of the House. It is also customary for me to remind witnesses that giving false or misleading evidence is regarded as a serious matter and could be regarded as a contempt of parliament. With that nasty bit over, I would like to say welcome. We have received a paper from the Geraldton-Greenough city. I understand that you wish to have that kept confidential. There are some things in it that I am interested in, so hopefully that will come out as part of your evidence. I do want to thank you for appearing before us today to tell us what is happening in your district and what you are doing, as a local government, to combat those. Perhaps we can start with Geraldton. Do you have an introductory statement that you would like to make?

Mr Carpenter —I will defer to the CEO. He is the author of the report, but I am more than happy to provide any information that you might ask.

CHAIR —Thank you. If people want to take their jackets off, then please feel free to do so. It is quite warm in this room.

Mr Brun —From the city’s perspective we have not been significantly hit, at this stage, in terms of the financial crisis to the extent that might be described over on the east coast. However, there are a few elements that indicate that it is a thin veneer that is probably hiding the true scenario underneath. Several industries, including the crayfishing industry that we have here, have suffered some fairly substantial downturns. There are two parts to that. One is in terms of their catches and those issues with the sustainability of the fishery, although the tonnages this year are quite good. There are still long-term concerns about the sustainability of that industry and potential impacts of climate change or other things in terms of the cycle there. But what has hit them hard this year has been the lack of a market, especially in the traditional markets of the US and Japan. The local crayfishing industry sells a lot of their produce directly to the US to the casino market. That market has fairly well evaporated. I understand that Wayne Hosking from the Geraldton Fishermen’s Coop is talking to you this afternoon. So you will probably get a lot more detail then. That is the sort of thing that has hit them and that has historically been a strong industry for our city and the region.

Agriculture has been going relatively well. Following a couple of years of drought, last year was actually a productive year and they had record tonnages of wheat. That has probably gone counter to a lot of other industries.

The third point relates to the mining industry. As we have put in our submission, a few of the mining companies have either stopped or reduced production, which has led to downturns and staff being put off. Except for Iluka’s mineral processing, which is here locally, the rest are actually in the hinterland. So there is not a direct loss of employment here at the city, but it has an adverse effect. The hinterland is what drives the local city economy. So whenever they are hurting in the inland we feel it. A lot of that impact of the mining has been shielded by the very good year the farmers had with their wheat crop last year. As I mentioned before, there is a bit of a masking effect going on from unrelated factors.

The final one is building. Our building numbers have dropped considerably in the last six to eight months.

CHAIR —Is that in both commercial and residential?

Mr Brun —In both. We have now noticed that what is holding up our building licences is the first home buyers grant market. The $21,000 grant seems to be what is driving our local housing market at the moment—without a doubt. The secondary market and houses of a higher value, in terms of new construction, have disappeared. In terms of the commercial market, there is very little being built now. That covers the major issues affecting us.

CHAIR —We will hear some evidence a bit later on, but how are things like retail, hospitality and tourism faring?

Mr Brun —Through our discussions with the chamber it appears that they are still doing reasonably well. People are still buying discretionary items. One of the things that was quoted at a chamber meeting recently was that there are still people buying jet skis and the like, which would be considered luxury items when you consider their cost.

Again, there is a concern out there about how much of that is masked by the substantial impact that has come from the good season of the wheat farmers, whether that has pumped a lot more money into the economy that had been absent, and if that does not come through with a good season this year, whether we will be truly exposed. Generally, the traders have not indicated a major decline at this stage.

CHAIR —Thank you for your introductory remarks. Mr Carpenter, did you want to add anything?

Mr Carpenter —I would certainly concur with the information that the CEO has presented. The fishing industry is an issue that is going to have quite a marked effect on this area. Up until this week, fishermen were only able to fish four days a week instead of the usual seven. That has recently been increased back to five. That will probably help a little, but we are getting towards the end of the season. It finishes on 30 June. So there is not a lot of time left for them to make up lost ground. The concern is that the puerulus count that they do to establish the forward likely catch is very low and no-one has yet been able to explain why that is happening. That is certainly a concern for that industry.

I would certainly agree with the information about what the retail traders are saying. I would add that our tourism numbers are quite substantially up—that is domestic tourism. We are very pleased about that. I would see that as something that will help to bolster our economy. I think that is about all I can add.

CHAIR —Thank you for your introductory comments. Mr Parker?

Mr Parker —I would like to back up what Mr Brun said. Northampton shire is much like the city with the two years of drought. We have had our financial crisis over the last two years. Even though last year was a very good year, it takes more than one year to pick up after two disasters. The crayfishing industry affects our shire a lot, too. We have three crayfishing ports in our shire and they are suffering badly. The on-flow from that is still on the way.

With respect to tourism, we have Kalbarri in our shire and two other coastal towns, Horrocks and Port Gregory. They are not suffering yet, but we do not know what is going to happen down the line. They tell me that some of the people who generally go to Broome and Exmouth might be coming to Kalbarri. They are not travelling as far, but how long that lasts nobody knows. This financial crisis has not hit us hard yet, but it is going to. We do know that.

CHAIR —I want to ask you some questions about that. In terms of where you are at the moment, you are obviously monitoring how things are going. What are you anticipating might come your way? I noticed that there was something in the newspaper about it this morning, that it may not hit until later. What sorts of things are you hearing and what are you doing to prepare for that?

Mr Brun —Very much what we are hearing relates to the mining sector and that is the potential lack of development of the major iron ore deposits in our hinterland. If they do not proceed then that is going to have a very substantial adverse impact on our economy. That is our biggest risk, without any doubt.

The reality of our location in the northern agricultural region is that there is always going to be a high risk of failures with our crop yields up here. It is always recognised as more of the marginal end of the agricultural districts. If you throw in the increased risk of climate change and the like, then it only makes it more likely that we will not get two or three consecutive years to make up for it. At some point the benefits of agriculture will disappear and we will be exposed.

With the mining, we are looking to counteract that by making sure that all the processes are in place to enable them to go ahead. We see the key to that is ensuring the infrastructure is right, especially through Oakajee port and even with the existing port—enabling it to go from its current tonnages up to 12 million to 15 million tonnes per annum for iron ore. We see that as being critical because the next three to five years are probably the most important ones for our iron ore industry to develop as a major iron ore province. There is a general feeling within the industry that, if it does not occur in that period, it is likely to pass by this area.

We have issues here with our iron ore area being dislocated from the ports by quite some way, so infrastructure is a key part of getting that in. There are two types of iron ore that are out there, hematite and magnetite. The Pilbara iron ore is predominantly the hematite variety, which is easier to process and export but has a high refining cost offshore. The magnetite has a high refining and energy cost within Australia, but it is easy to process when it goes to a steel mill offshore. We are blessed here with large quantities of magnetite, but that is going to have impacts for us, especially with the carbon pollution trading scheme proposal. The whole-of-life cycle of magnetite, which uses far less energy than hematite, would be adversely punished in that environment. So the industry is at risk because of that.

The other risk is also the building of infrastructure. As I said, there are the key rail lines and the port developments. Obviously, we have been seeking to advise both the state and Commonwealth governments, through their respective programs, to bring on those as priorities. We see the future of this region and the city is very much linked to the development of iron ore as an industry and the development of Oakajee as a logistics hub. Oakajee forms the nation’s largest clear area of land freehold by the state that is zoned for heavy industry that is adjacent to a genuine deepwater port. Oakajee, when it is built, will allow for 210,000-tonne ships, 19-metre draft, which makes it one of the deepest ports in Australia. It would be the only deepwater port with an industry park next to it. We see that the iron ore is a lever to get that infrastructure funding and the works happening and then this region developing as a major industry hub into the future.

They are the strategies we are working on. We are hoping to diversify our industries beyond agriculture, fishery and even mining, to be honest.

CHAIR —I know that this committee has received evidence before in terms of the Oakajee port. Is that a privately owned port or a port owned by the state government?

Mr Brun —It is a state port—the land on it is all state owned. The state government went through a tender process with two tenderers at the time. Essentially, it has been agreed that it will be a privately funded port, although the state government has now committed to putting in funding towards the common user infrastructure. The port will be run and managed by the Geraldton Port Authority. There is already an existing port here in the city and they will be the statutory authority that runs it. At the end of 30 years the actual assets are handed over across to the state as well.

CHAIR —Thank you. Mr Neville?

Mr NEVILLE —I have a couple of questions on the fishing. When you say ‘sustainability’, on the east coast that means two things. Sustainability is when you have enough fish to keep fishing. The other thing that people talk about is that some of the environmental rules have been so draconian that it has driven a lot of the fishing fleet away. Which ‘sustainability’ are you talking about?

Mr Brun —The mayor is a bigger expert on fishing, but I will give you the first comment. It is both. As the mayor highlighted, the puerulus count indicates the larvae form of the crayfish. In the last season they basically saw none and they still have not. They are a very reliable indicator of what you will get for crayfish four years out. This is the first time that has ever happened. There are two concerns there: have the currents changed and the larvae are further out, or have they just completely gone? We do not know. We do not know if it is a cause from overfishing or a cause from climate change and changes in water patterns? We do not know. That is research that needs to be done. That is the sustainability question that sits there.

In terms of the industry, there has been a lot of contention about how it has been managed. There is definitely a lot of concern about the regulations making it a lot harder for the smaller operators at the moment and that it has seen a consolidation to smaller and a few larger operators. We are not sure whether that is a good or bad thing for the industry. It is a bit like the impact of farming and the move towards larger and larger broadacre farming. You get less and less employees with less and less economic drivers coming out of having a certain production in an area, and I think that is something that is happening within fishing as well.

Mr NEVILLE —The counterargument to that is that the smaller fisherman, who is more reliant on the weather in going out to fish, is controlled by the elements, so to speak, whereas sometimes when all the fishing gets into the hands of bigger operators, some of whom have processing boats even out on the ocean, there is a tendency towards overfishing.

Mr Carpenter —There is no processing on the ocean here; it all must come back to land. The tendency is certainly to larger vessels. I think you may have indicated to smaller ones.

Mr Brun —It is smaller groups of people, so smaller businesses. So the smaller operators disappear.

Mr Carpenter —That is right.

Mr NEVILLE —Besides the lobster industry, what other fishing industry do you have? Do you have prawns and fish?

Mr Carpenter —There are no prawns here, but we certainly have pearls at the Abrolhos Islands. It is a particular type of pearl which is almost a black pearl. It is very beautiful and quite profitable. We have the Batavia Coast marine facility here which does aquaculture research, and that supports a fair bit of what goes on at the Abrolhos Islands.

Predominantly, it is Western Australian rock lobster fishing and there is some line fishing, but the impositions that have been made by the state government on that industry have almost wiped them out, which is unfortunate. The catch is not there and they want to keep the fishery sustainable, so they have put lots of restrictions on it.

Mr NEVILLE —I would like to deal briefly with the rail. What moves have you made with the state government in terms of upgrading the rail? Is the line from here to Perth one of those taken over by QR or is it still run by the state government?

Mr Brun —The whole of the network here is owned on a lease by WestNet Rail, which is part owned by Babcock investment. Queensland Rail is now the only operator through their subsidiary company, the Australian Rail Group. There is a difference between the line owner and the operator. The line between here and Perth is probably not the most reliable. There are sections now on both of the existing routes that you could take that are effectively redundant where they have not been maintained. The only remaining lines are those north of Dalwallinu and Moora which feed this way for the grain network. But you would struggle to get a train through to Perth, even on the Moora line now.

Mr NEVILLE —That means that you would have to fund that by grants. If the state government is the ultimate owner, then you would have to have a deal between the owner and the operator and possibly the federal government if you wanted to do a major upgrade. Is that the only way?

Mr Brun —At the moment there is a separate inquiry—I think it is a joint state and Commonwealth one—that is dealing with the grain network. Obviously the focus has been on grain for the Western Australian network because we suffer from being on the narrow gauge. A lot of that is old infrastructure built in the fifties and sixties and a lot is degraded and the key connections are gone. It has basically fallen back to catchments of the original ports. For example, if you look around the state, most of the southern wheat belt now will feed towards Albany, to a small portion; the central wheat belt goes towards Kwinana and Perth; and the northern wheat belt heads this way. Originally you could get right across the whole network—north, south, east, west. It is those links in the middle that, for cost-saving reasons, have been progressively removed over the last 10 to 20 years. Some real opportunities have been lost due to those decisions made at the time because, essentially, the major ports such as Geraldton, Albany and Bunbury as regional centres have lost the capacity to have a broader hinterland catchment to feed off. We see that there is a need to get that back on the agenda and reinstate some core linkages.

Following what I was talking about before regarding Oakajee and the Oakajee industry park, a key factor to its success is going to be standard gauge rail back to Perth or to the east via Leonora-Leinster. That would need a whole new line of standard gauge in the order of 400 kilometres.

Mr NEVILLE —If you have narrow gauge grain lines feeding on to that then would you not need dual gauge?

Mr Brun —Not necessarily.

Mr NEVILLE —You do not want to have to transfer the grain from one container to another en route.

Mr Brun —You would not necessarily need to change it. The current infrastructure and wagons are there to service on narrow gauge, and narrow gauge can work fine in terms of tonnages for both minerals and wheat. That is not the issue. The issue that we have is really the connectivity between regions and nationally. Obviously, with Oakajee port, as I mentioned, we are hoping that the federal government gets behind it. We had the pleasure of hosting Minister Albanese in town recently and he spoke positively about that project. We are hoping that at some stage it gets announced as part of the major Commonwealth investment program. Building the port would only be part of the story. The key is actually linking it onto the national network. That would provide some real alternatives, not only nationally in terms of a genuine deepwater export port, which we believe would be substantially better than what even Darwin offers because of the access that it has to a genuine industry precinct, but it is good access to Asia, India and the African continent. It is also good for Western Australia.

In terms of its port at Fremantle and the proposal for Cockburn, there are constraint issues at Fremantle. There are issues as to whether that is the best use down there. There are issues about the environmental degradation in Cockburn Sound. In my previous role as Chairman of the South West Catchments Council I was quite involved in terms of the impacts of the seagrass community down there. One of the concerns is that it is trying to wedge a lot of industry and port operations into the metropolitan area when there is a viable alternative. If we could get that connection up here it would change the state logistic framework completely. It really takes pressure off the urban area of Perth and it provides an opportunity to get things like lead, which is going through Fremantle at the moment, but should not be. They should be going through ports like Oakajee which have the buffers. Nickel, which is causing problems down at Esperance, could obviously come through a port like Oakajee again. It really opens up the opportunities for those types of uses. In the context of what your committee is about, it diversifies our economy; that is the main game. What we have been pushing as a city is really about creating economic diversity. Regional centres struggle when they have a small centre of economic drivers. We believe that getting that industrial sector going is important to really make a long-term sustainable centre.

Mr NEVILLE —Would you like the committee to recommend that to the federal government?

Mr Carpenter —Definitely.

Mr NEVILLE —We are asking you what are the inhibiting factors to your regional development. Quite a few of the cities just have not said what they want or what they perceive is wrong. We would like you to say what you really want.

CHAIR —I think we will take that as read.

Mr Brun —I think you can take that as read. I am not sure what the timing is like, but there is one thing that I would not mind quickly raising, if that is okay with you.

CHAIR —I know Ms Parke, as the member for Fremantle, is very keen to ask you some questions. We might do that and then I will let you raise that. I have some further questions as well. I am assuming Ms Parke has some questions about ports.

Ms PARKE —Thank you. Mr Brun, I do appreciate your comments about lead through Fremantle. I could not agree more. In terms of the Oakajee deepwater port and rail development, what exactly is holding up the beginning of that project?

Mr Brun —The state government has now signed a development deed with the proponent, Oakajee Port and Rail, which is half owned by Murchison Metals and the other half is owned by Mitsubishi Corporation. They now have 12 months to develop a bankable feasibility stage. So they have to come back to government by 31 March with whether they have the financing in order and doing all the detailed feasibility analysis of it. Realistically, the biggest hold-ups with it are the lack of approvals. There is an existing environmental approval for the marine side, which goes back to the previous Kingstream iron smelter proposal from the mid-nineties. The marine environmental approval is in place.

Mr RANDALL —Are you waiting for an approval from the minister for environment?

Mr Brun —The marine side has got approval as it stands. The previous government extended the Kingstream approvals. So that is in place for the marine side. The non-marine side has not had its environmental approvals as yet.

Mr RANDALL —Who are you waiting for on that?

Mr Brun —That is the state at this stage. I am not aware whether it has been brought up to federal.

Mr RANDALL —Which particular minister?

Mr Brun —That would be Minister Faragher, who is the current state environment minister.

Mr RANDALL —You should use every opportunity to let her know that you want it done sooner rather than later.

Mr Brun —We want to make sure that the due process has been gone through. Whilst we are keen to see Oakajee go ahead, we want to make sure that there are no adverse impacts for the community and that things are done properly. We are worried, though, not only in terms of environment, that planning has been quite delayed. It has taken 10 years for the various state agencies to get their planning in place to where it is at now, which is not very advanced, and there is a real risk that the Department of Environment and the Department of Planning and Infrastructure could take upwards of another 10 years to get their approvals.

From our view, we would like to see that. Given the significant nature in terms of state and national significance of the project, it almost warrants a state agreement act or a special piece of legislation and the fast-tracking of some form of inquiry and assessment to get it through quicker, so that within 12 months to two years it is actually approved. Because it is such a unique development and because of the scale of it, your normal planning and environmental frameworks struggle. In a sense, they just do not work. They create long delays and they create extra risk. I think there is an opportunity to actually fast-track those approval processes. I want to stress that it is not something where the city wants to push bypassing normal environmental assessments. We believe that they need to happen. In terms of economic and social impacts on the city, we think that if Oakajee goes ahead there will need to be substantial upgrades on infrastructure within the city in terms of schools, roads and the like because it will have a dramatic impact on our community. That has got to be done. We just need a framework to deal with it much quicker than what is currently proposed.

Ms PARKE —What are the federal government implications of Oakajee? Is it mainly funding or other things as well?

Mr Brun —At this stage, it is predominantly funding. It is securing funding for not only the port common user infrastructure but also access to it with road networks. It is similar to the package that Minister Albanese announced last week for Port Hedland—the $160 million for roads around the Port Hedland area. That is the sort of spend that we would need on top of Oakajee for improving our road network and rail access in and out of the port. On top of that is actual funding towards the port itself.

We are not sure, at this stage, in terms of the environmental approvals, whether the EPBC comes into play. That is something that we have not heard. Obviously, if it does, we would like to see some sort of commitment from the Commonwealth that they seek to fast-track or at least provide resources so that it does not delay it unnecessarily.

Mr Parker —We will definitely need Commonwealth money to acquire the land for the service corridors and also the new railway. I do not believe the new railway will follow the route of the old one. The land for that all has to be purchased from someone and I do not think the state or the proponents have the money.

Ms PARKE —What is this Mid West region set to receive from the state government under the Royalties for Regions program?

Mr Brun —I will not quote on the region because I have not got those figures. In terms of the city itself, we receive $1.7 million in the first year. It is proposed to remain at $1.7 million for the next financial year and then it drops down to about $1 million with the balance then being distributed on a new collection of councils basis. Only last week Minister Grylls announced $1.1 million for our airport enhancement to get security which would enable jet services here.

Ms PARKE —Is that $1.1 billion?

Mr Brun —It is $1.1 million. We would gladly accept $1.1 billion.

Ms PARKE —That would be a fancy airport.

Mr Brun —Obviously, that is to match the city’s $1.5 million for our upgrade. That is to bring jet services. That is part of the expansion that we would see. Currently, the grants rounds are out on a regional basis, and we have several applications in on that. However, we have not been advised as to whether we have been successful. That allocation is $4.4 million per annum on a regional basis. So the Mid West region through the Mid West Development Commission assigns that to community projects, and there is no definition on how small or large they are.

Ms PARKE —Thank you.

CHAIR —Then on top of that you have had the Commonwealth’s Regional and Local Community Infrastructure Fund as well.

Mr Brun —Yes. We will receive $772,000—that is the city.

CHAIR —Mr Parker, what does your council receive?

Mr Parker —We receive around $700,000 from the Royalties for Regions.

CHAIR —What is the figure for the federal government’s Regional and Local Community Infrastructure Fund?

Mr Parker —I am not quite sure what that one was without having the CEO and the money crunchers here with me.

Mr Brun —Obviously, this afternoon, the parliamentary secretary, Gary Gray, is coming to pay us a visit.

Ms PARKE —Is he?

CHAIR —You are anticipating something.

Mr Brun —We are anticipating that he is coming with a cheque for about $2.4 million, which we will gladly accept. Obviously, at this time, we are getting a few funds, but we would note that on our long-term planning, that is within the next 10 years, we have $150 million worth of projects that are unmet. That ranges from recreation centre development—

CHAIR —Just in case we got the impression you were getting too much money!

Mr Brun —It was just highlighting that. A concern that we had with the Royalties for Regions program was that a comment was made as to whether we were happy with the $1.7 million. I pointed out to the respective ministers for local government and regional development that they actually left a zero off the end and I was not being greedy. It was because, as a regional centre, we have some major needs.

A concern that we had with that program was that, as we submitted to their parliamentary inquiry on the Royalties for Regions scheme, between the local government fund or the $100 million over four years and the development commission’s $375 million over four years, there was $775 million being spent in the regions without any major initiative being funded out of it. There was a risk that program could become a vegemite program, where it was spread thinly across the state with no major developments. We highlighted our concerns and hopefully the state government will take them on board and look at how it can assist the major centres in delivering big outcomes. We have a fear—and it is a political risk fear from our point of view—that it is probably a unique opportunity that as a regional community we were actually getting funding directed to us. We have to ensure that the metropolitan voters see that there is a benefit for them and that there are economic gains for the whole state. Projects that we are supporting are purely about economic gains for the whole state, because if they are beneficial at a state level then they are definitely going to drive our local economy.

CHAIR —I know that you have some additional information that you want to give us. In terms of some of the work force issues, there have been job losses, particularly in the mining sector. What is happening with those workers? Obviously coming from the south-east there has been a really big thing about people moving over to the west because that is where the jobs are and we have lost lots of skilled workers. What is happening with the workers who have lost their jobs? Are they staying in the area or going somewhere else?

Mr Brun —There has not been a lot of study done on what is happening. Anecdotally, we are hearing that people are moving back to the metropolitan area in some cases. If they are losing their jobs, then they are moving their families back. That is probably not surprising. It depends on where their home base is and moving back to family or support. Again, I would stress that is anecdotal. We have not done an analysis of where that is happening.

In terms of the mining jobs in the hinterland, a lot of those were actually fly in, fly out. So they may have been Perth based anyway.

CHAIR —In terms of your capacity with the workforce, despite having $150 million worth of projects—you have a few on the go now—how are you going in managing all of those? What is the capacity of local government to actually build these things and get these major projects out?

Mr Brun —It is reasonable. We struggle here. Especially in Western Australia local government does not have access to developer contributions or headworks charges as in other states. In a place like Geraldton, which has been growing quite rapidly, and even, to some extent, Northampton, which has the encroaching urban growth, there is no capacity to hit the development industry up to pay for things like community facilities such as new libraries out in regional centres or sports fields. We have to fund that and that is hurting us. It takes up a lot of our budget. Our discretionary capacity is not so discretionary, for want of a better word. We tend to have to allocate any spare capital funds that we have towards community facilities, and that restricts our capacity to go and look at other areas. We try to be as innovative as we can.

CHAIR —That is in respect to your finances. What about in terms of your people? Projects take a while to actually do. You have planning approvals that you need to go through. Certainly, if your area is anything like my area, you would have a real shortage of planners to get the work through the department, although you have said that there has been a drop in building development.

Mr Brun —Fortunately—touch wood—right through the crisis the city enjoyed a full complement of planning staff.

CHAIR —What have you done? If you could tell us your secret that would be helpful.

Mr Brun —A lot was based on employing people—and nothing can be attributed to me because it was before my time—they got in a lot of younger staff, facilitated extra training and encouraged them to be here. Our planning team is extremely young and they seem to all get on really well. To be honest, it is that simple. There is probably a group of 10 in that team and it works fine. It is building up the skill in-house. They are predominantly local people. So it is encouraging them to do further studies and funding that. It seems to have worked. The market has changed now for us, though. We did have a vacancy. One of the surrounding shires picked up a couple of our planners. It was not Northampton. It was at Chapman Valley.

Mr Parker —We got one a couple of years ago.

Mr Brun —The response is different to what an advert would have run two years ago. When I was a director at Bunbury going back four years, we could not get planners for love or money. The only way we actually filled staff was to bring them in from the UK or South Africa. It reached the point where I had more Afrikaans spoken in my engineering planning team than English for a while, but that is what you had to do to get staff on.

CHAIR —Thank you.

Mr Carpenter —It is a fair comment to say that the amalgamation of the city and the shire has made us a bigger entity and we have perhaps got a little bit more money to spend on staff now than we have before.

Ms PARKE —I wanted to ask about the submission from the Mid West Gascoyne Consultative Committee. They mentioned that there has been an impact on tourism in this area because of the lack of available accommodation in Geraldton. Is that an issue?

Mr Brun —That is a big issue the city has faced. Historically, the city has not been seen as a tourism city, so there has been a lack of infrastructure. There has been fairly major works, obviously with the foreshore redevelopment and just the general reprofiling of what Geraldton offers as a tourism base. The market is growing. Last year in July the city took over the visitor centre services and tourism in the city. So we saw that as needing to take a lead role and drive that. We have been experiencing 20 to 25 per cent monthly growth rates in tourist numbers. There is probably a mix in that. Part of that is what we are doing in terms of increased promotion and the other part is in the context of a response to the financial crisis where people are holidaying locally instead of touring overseas. One of the things that has come up now is that there is a lack of accommodation. The sites are there.

The issues that we have had over the last few years have been building costs. It has been too dear to build tourism developments. The problem that we have now is that firms that are proposing to build accommodation cannot get financing for them. So you cannot build a hotel now unless you have got the cash. Four years ago, when I was involved in a few issues in the south-west, we were looking at 40 per cent being your equity in a tourism project. Banks are now asking for between 70 per cent and 80 per cent equity, which would effectively mean that they are not providing financing for tourism development. That is something that needs to be addressed. The reality is that if you cannot get financing then a lot of opportunities for new developments will disappear. There is a great opportunity on the west coast of Western Australia for tourism accommodation. It has not been marketed well, it has not been promoted in terms of accommodation and there are very few facilities. It is something that needs to be done. Our fear is if things do not get done or they get done on the cheap and we get a poorer quality product in the end.

Ms PARKE —I would also like to ask Mr Parker a question, because my family has traditionally enjoyed holidays up in your part of the woods. We have not had any trouble in the past finding accommodation. Is that starting to be a problem now?

Mr Parker —No. There have been a couple of new developments in Kalbarri lately. The more upmarket ones are having a bit of trouble filling up, but the other ones said that they had one of the best Easters that they have had for years. That is what is going on with the tourism at the moment. We have big trouble with Port Gregory because the town cannot grow any more. It is surrounded by unallocated Crown land and we have been at the state government for the last few years to try to get some of that released so the place can grow. It is only a few years ago that we put a decent road through there and now we have all of these tourists and they cannot stay anywhere because there is no further land to develop. We have a big problem there, but that is a state government problem and not yours. We are trying to work on it.

Ms PARKE —Thank you.

CHAIR —Mr Randall?

Mr RANDALL —I would like to add to a couple of the questions asked. In terms of infrastructure needs, you have outlined the ones that you sorely need, but if there was one piece of infrastructure now that you would desperately ask to be funded that would help you in the current situation, what would it be?

Mr Brun —Oakajee.

Mr RANDALL —While we are on Oakajee, you said that some of the issues there are the authorisations that the state government seem to be operating in solo rather than together. To help you with that framework, do you think a development authority would be a good vehicle?

Mr Brun —If it was given the powers, yes. The risk with a development authority is that a lot of the respective planning and environmental powers do not get transferred wholly across to it. It would be a good model if the relevant provisions under those acts were passed across to it. As we said, we do not particularly have any desire to see inappropriate development or lack of a thorough process. It is just getting it done quickly and properly.

Mr RANDALL —That is a potential vehicle? It appears to me that in addressing the global financial crisis as it affects your region that it is not so much the fact that anything has gone wrong other than the crisis of confidence. Would I be correct in saying that?

Mr Brun —Pretty much.

Mr RANDALL —That is why people are not spending, investing and so on. You have talked about first home buyers. One of the issues that seems to be raised is that first home buyers funding would be better allocated to new housing rather than existing housing. How do you respond to that?

Mr Brun —Currently, that $21,000 grant would appear to be driving our new first home market here. I would not dispute that statement. I think that any sort of incentive to encourage new houses to be built is obviously going to be an advantage, especially in regional centres that are growing like ours. It seems to be a big driver for us.

Mr RANDALL —I have heard in relation to rail—and I think it is an absolute shame to see the way the Western Australian rail infrastructure has collapsed. CBH have huge concerns about that. What about the other more relevant modern-day infrastructure needs such as broadband? Where are you with that?

Mr Brun —Broadband relates to the issue that I wanted to wrap up on. It is critical for us. For the members who are not aware, there is the proposal for the square kilometre array radiotelescope, which is proposed to be the largest radiotelescope array in the world. That is to be built 350 kilometres east of here. There is a preliminary SKA pathfinder project, the one per cent, and $110 million is being committed by CSIRO currently. That needs connectivity back to Perth. Our broadband is pretty well non-existent—there is actually a relatively good pipe back to Perth, but it is controlled by Telstra and the charge rates are less than generous. Broadband is critical. Obviously, on the front page of today’s paper, Minister Buswell highlighted the critical need for a link between Perth and Geraldton in terms of any new infrastructure program federally.

I attended a delegation with Commonwealth and state reps at Cape Town for the SKA international meeting that was held in February. South Africa is a formidable opponent in terms of that project. That is one example of how we need to get our infrastructure up and ready, and getting better broadband connectivity from Perth to here is essential. One of the things that was highlighted there was the need for Australia to get a new link to Europe, Africa or Asia from the west coast. We have only got a very small line from Perth to Singapore. Our main connectivity on the internet is actually from Sydney to the US. So there is no redundancy. If something was to happen on that line we would basically lose internet across Australia. There is an opportunity to actually connect us to the rest of the world via Western Australia, and that can lever off the SKA project and make us more competitive.

Broadband is very important. The SKA, for us, is one of those other elements in terms of creating a new industry here. It is all based on scientists, new technology and creative people. If you ever had a classic study on how to diversify an economy, then that project is it for us. We see that is one where the Commonwealth has a greater impact than the state in terms of ensuring that we win that bid.

Mr RANDALL —I have more questions, but because of time I will stop.

CHAIR —Thank you. Did that cover the last points that you wanted to make?

Mr Brun —It was just highlighted to me the issue of an infrastructure project that is purely state, which is the new 330 kVA powerline up here. It is under threat because of the state finances and the budget risk. The risk with that project is that it could stop iron ore developments. What we see as being more tragic is that it prevents Oakajee from developing to its potential. But what we see as our greatest jewel in the crown for our region is our renewable energies. We are one of the major providers of wind energy here, but we are also a perfect base for wave, solar, biomass and geothermal. We are apparently one of the only regions in Australia that ticks all five boxes in terms of the big five. In effect, with that line we could provide all the green power for the state from this region. Without that powerline none of that happens. The proponents are ready to roll. We have recently approved a $900 million expansion of the wind farm for a 330 megawatt power station. The only thing that is stopping that happening now is that powerline back to Perth. We see ourselves as being a green exporter of energy. Obviously again, in diversifying your economy, that is a big tick.

CHAIR —Thanks very much for providing evidence here today. It does seem that there are certainly lots of opportunities in terms of diversifying your economy but some challenges in enabling you to do that. It has been very helpful for us to hear that and also the role the Commonwealth may be able to play in relation to that. We may have some further questions—obviously Mr Randall had some as well—so we will write to you via the secretariat. You will receive a proof transcript of the Hansard. If there are things that you felt that you did not have the opportunity to put to us then please feel free to write to us again. We will certainly accept additional submissions from both of the local government areas that are here today. Thank you for appearing before us.

[11.49 am]