22/11/2011
While South Australia's mining projects are expected to inject $60 billion in capital expenditure over the next 10 years, significant infrastructure spending will be needed to fully capture the economic gains, says the Regional Director of Parsons Brinckerhoff SA, Dr David Cruickshanks-Boyd.
Dr Cruickshanks-Boyd told a CEDA forum on infrastructure investment, hosted in Adelaide, that an infrastructure demand survey by the Resources, Energy Infrastructure Council (RESIC) identified $35 billion in capital expenditure among projects likely to go ahead, in addition to Olympic Dam. These projects spanned the Eyre Peninsula, York Peninsula and the Upper North regions.
However, Dr Cruickshanks-Boyd said significant investment would be required in electricity, water and ports to support the projects, which are spread throughout the state. This would need to involve government and the private sector he said.
"Industry collaboration is increasingly complicated and in many cases the data is not there to support it. So that's where government can have a role, to facilitate industry collaboration to deliver infrastructure," he said.
"In the electricity sector, there is concern about capacity and timing of upgrades to the grid... In water, there is a lack of information about where the water is and access."
Dr Cruickshanks-Boyd said work arising from the study, which is yet to be released, would support a consolidated infrastructure investment strategy for utilities, as well as models to finance investment and transport.
Department of Planning, Transport and Infrastructure Chief Executive Officer Mr Rod Hook said infrastructure spending in South Australia will support growth in mining, defence and advanced manufacturing.
Mr Hook said that the South Australian government was narrowing its strategic focus to ensure the state would seize the benefits of investment in the mining and defence sectors.
"A priority is not a priority if you have too many...The Government has flagged with its machinery of government changes where it wants to go ahead. While activity in mining and defence has been huge, there are significant opportunities in advanced manufacturing," he said.
Investment in critical infrastructure in SA has grown from $1 billion a year to between $3 billion and $4 billion over the past 3-4 years in South Australia - still some way behind the $6 billion in WA.
"We hope that's the level we will reach as mining takes effect in regional South Australia," Mr Hook said.
International financier Corinne Namblard said South Australia must present a business case to convince ratings agencies that its planned infrastructure spending to support growth in mining would be profitable for the state.
Ms Namblard, a former CEO of Luxembourg-based transport equity fund, Galaxy Fund, and now company director of Qantas Ltd and Codan Ltd, said South Australia must work quickly to secure finance for infrastructure if it wanted to capitalise on mining investment.
"The Government needs to present its business plan to ratings agencies and have a dialogue... (the ratings agencies) are not a tribunal...we have to look at it as a cost-benefit analysis," she said. This could enable South Australia to retain its AAA credit rating while continuing to invest in infrastructure despite a deteriorating budgetary position, she said.
"We need to have a bipartisan approach and demonstrate to outside investors that the infrastructure plan is not going to be derailed for petty political purposes."
Flinders Ports, Chief Executive Officer, Vincent Tremaine said that a new innovative method of loading ore using containers at Outer Harbour had enabled the company to capitalise on growth in bulk minerals exports from South Australia.
Mr Tremaine said the export potential of South Australian iron ore exports was expected to reach $5.2 billion but significant investment was required to develop transport corridors to support these exports, particularly given the use of different rail gauges throughout the state.
"We needed a fast track method (of moving iron ore). At Outer Harbour we had deep water and spare capacity but given the close proximity of neighbours, the solution needed to be dust free - and I mean, dust free.
The company has developed a system freighting ore in containers and loading it onto ships with a crane, spraying water to bind with the dust, he said.
"People have asked when the new operation is going to start and they are surprised when we tell them that we have already moved 1.2 million tonnes out of Port Adelaide", Mr Tremaine said.
Royal Automobile Association (RAA), Managing Director, Ian Stone said that developing new transport infrastructure to support vehicles, public transport, cycle ways and avenues for pedestrians would be critical to ensuring South Australia remained a comfortable place to live.
"We have much better travel times than Brisbane, Melbourne and Sydney but compared to five to 10 years ago the change in traffic congestion has been a lot greater than in those other states," Mr Stone said.
RAA research suggested that infrastructure spending on roads should focus on the North-South corridor, the inner city ring, a bypass at Port Wakefield, Renmark, Penola and Mt Gambier and in the longer term, duplication of Highway One to Port Augusta, he said.
"We would like to see more wire rope barriers on highways to divide the carriageways - that is a cost effective solution to make them safer," he said.
Bicycle lanes with physical barriers to protect cyclists, community funded bikes to travel around the city and community transport options to support an ageing population were also a key part of the RAA advocacy agenda, Mr Stone said.
Better Place, Corporate Affairs executive, Alison Terry said the Australian market had been targeted for early deployment of a family-sized electric car as it had a mass market business case for replacing petrol powered cars with electric cars.
Ms Terry said the roll out of a family-sized electric car in Australia starting could have important spinoff benefits for South Australia, providing a partner to support investment in renewable electricity.
"South Australia's use of electricity is one of the peakiest in the world. Ten hot days in February drives investment in electricity infrastructure. A managed fleet of electric cars will smooth the load ... it could be a valuable partner for increasing investment in renewable energy," she said.
The rollout of the Better Place electric car in Australia will begin in Canberra next year using a subscription model in which the company owns the battery, allowing drivers travelling longer distances to pull into a station to change batteries - just like refuelling at a petrol station. The Renault will be priced in the mid-$30,000s, competing in the family car market.
But Ms Terry said it was important that Australia should capture the opportunity not just to use clean transport technology but to produce it. And to this end, a proof-of-concept electric Holden Commodore is being built in Melbourne. This could have significant benefits for South Australia and jobs in the future.
South Australian Council of Social Service (SACOSS), Executive Director, Ross Womersley told the forum that mining companies should contribute to social infrastructure to support the communities they affect.
"There is a growing trend to question who takes responsibility for developing infrastructure. Traditionally mining companies were responsible for working with traditional owners and ensuring minimal damage to the environment and providing infrastructure," Mr Womersley said.
"But as states compete for mining projects, increasingly we hear companies saying to government, 'we will come but we need you to do this and this and this and this'.
"If government takes responsibility for infrastructure... mining companies take less interest in protecting communities," Mr Womersley said.
While the most vulnerable members of communities were not involved in conversations about planning for growth in the mining sector, they were often the most affected.
High housing costs associated with mining growth in regional areas, for example, push local people out. A fly-in-fly-out workforce creates tensions with the families workers leave behind and fails to create a community in regional areas.
"The model sets up strange relationships," Mr Womersley said. "I'm not suggesting we shouldn't proceed but we also need to pay heed to some of the social issues that go with this kind of economic change.
"We need to build structures now that prevent this kind of dislocation," he said.