brisbane economic series issue two: march 2012 infrastructure

Transcription

1 brisbane economic series issue two: march 2012 infrastructure

2 foreword Welcome to the second edition of the Brisbane Economic Series, a bi-monthly publication providing vital insights into the city s many exciting business, investment and growth opportunities. Brisbane s booming infrastructure sector is the focus of this issue which features three industry leaders from the rail, infrastructure funding and digital infrastructure industries. Business leaders Lance Hockridge, Mark Birrell and Martin Stewart-Weeks share with us their forward-thinking visions for Brisbane. Learn first-hand how Brisbane will maximise its economic opportunity through the continued delivery of world-class infrastructure. With Brisbane s population set to reach 3.9 million by 2056, I recognise our infrastructure challenge is significant, but with continued and substantial investment in this area, I am positive it is a challenge we are well placed to meet. Brisbane s position in the global digital economy is also a focus of this edition because it is an area which will ultimately underpin the resilience and sustainability of our economy. Our city s success and the future prosperity of our residents and businesses lie in collaboration, informed planning and investment in the crucial infrastructure sector. Recent successful projects that demonstrate Brisbane s capability to deliver major infrastructure include Legacy Way, Clem 7, and the Go Between Bridge. Through the delivery of these key infrastructure cornerstones, Brisbane is set to thrive. Graham Quirk Lord Mayor of Brisbane 2 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

3 contents Issue two Brisbane and Queensland s infrastructure challenge is significant. Strategies from the government at all levels in partnership with the private sector are vital for supporting future growth. MARK BIRRELL Chairman, Infrastructure Partnerships Australia Smarter connected: our world is growing exponentially more digital and networked. Advances in infrastructure in the digital economy will contribute to building Brisbane s economic resilience and sustainability. Martin Stewart-Weeks Senior Director (Public Sector), IBSG, Cisco The booming resources sector lies at the heart of Brisbane s unprecedented growth forecasts, and is driving substantial investment in rail infrastructure that will have far reaching benefits. Lance Hockridge Managing Director and Chief Executive Officer, QR National 3 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE ACKNOWLEDGEMENTS // CREDITS

4 Brisbane is the engine room of the Queensland economy. In 2011 its contribution was valued at $114 billion, accounting for 46.7 per cent of the entire State s economy. Brisbane and Queensland s infrastructure challenge is significant. Strategies from the government at all levels in partnership with the private sector are vital for supporting future growth. MARK BIRRELL Chairman, Infrastructure Partnerships Australia The vitally important reconstruction task in the wake of last January s floods understandably dominated Queensland s infrastructure program last year. But against this backdrop we saw significant progress on a number of major infrastructure projects, including the Sunshine Coast Hospital PPP, Gold Coast Rapid Transit and the ongoing construction of the Airportlink and Legacy Way. As we head further into 2012, the Federal and State governments will engage in an open debate around the projects which will help the Sunshine State and in particular Brisbane maintain its economic competitiveness and help reverse the nationwide fall in productivity. The infrastructure challenge remains significant. Traffic congestion, hospital waiting queues and straining public transport networks are constant reminders of the infrastructure task facing Australia s 4 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

5 major cities, and Brisbane is not alone in having to deal with a number of challenges that come from booming population growth. Brisbane is the engine room of the Queensland economy. In 2011 its contribution was valued at $114 billion, accounting for 46.7 per cent of the entire State s economy. The Federal Government s State of Australian Cities report, released last year, predicted Brisbane s population would increase from million in 2010 to million in The population across wider South East Queensland is forecast to increase from 2.99 million in 2010 to 4.39 million by 2031 by which time more than 15 per cent of all Australians will live in South East Queensland. These projected growth patterns have attracted the attention of policymakers, who are acutely aware of the inevitable strain on the city s transport, utilities and social infrastructure networks. The focus moving forward will rightly be on innovative ways to fund the required investments. The State Government s Queensland Infrastructure Plan (QIP), released last year, identifies $134 billion Legacy Way (Artist s Impression) Partnerships will be particularly important because many of the major projects needed in Brisbane and its surrounds are simply beyond the funding capacity for any single government or industry alone. FIGURE 1: BRISBANE GROSS REGIONAL PRODUCT ESTIMATE, 2011 BRISBANE $114b; 9% rest of qld $102b; 8% rest of SEQ $39b; 3% rest of australia $1,029b; 80% Source: Brisbane Economic Development Plan, 2012 worth of infrastructure investment for Brisbane and surrounding regions to Progress will be made on the new motorways, rail networks and social assets through a joint effort from the Commonwealth, the Queensland Government, Brisbane City Council and the private sector. Partnerships will be particularly important because many of the major projects needed in Brisbane and its surrounds are simply beyond the funding capacity for any single government or industry alone. And while the planned major transport projects in Brisbane gain the most national attention, consideration will also be given to the regionalisation in South East Queensland. In 1986, nearly 47 per cent of Queenslanders lived in the capital. That proportion eased to 45.4 per cent by 2006 and by 2031, is expected to fall to 44.1 per cent. The regionalisation of South East Queensland will hasten the need for improved transport connections to and from Brisbane to burgeoning satellite centres such as the Gold Coast and Sunshine Coast. That s why there has been a broader discussion around the funding models needed to deliver major infrastructure across South East Queensland and farsighted dialogue about the projects needed over the long term to grow Brisbane and regional centres. With the right planning, evaluation and delivery frameworks in place, government at all levels will be well placed to turn their attention to delivery of the projects that Queensland needs. In the case of Brisbane, this must include investments that will deal with the city s urban congestion, which cost 5 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

6 Mechanical and electrical fit-out in Northern Busway tunnel the city $1.8 billion last year and is expected to rise to $1.9 billion this year. By 2020, congestion costs will reach more than $3 billion, creating further pressures on the city s productivity and efficiency. All political leaders agree that enhanced rail capacity is a first order issue for Brisbane and Queensland. An Environmental Impact Statement for the proposed Cross River Rail, released last September, stated that without additional network capacity, the existing rail system in the inner city will reach capacity later this decade. The proposed Cross River Rail project would see an 18 kilometre rail line connecting Salisbury in the south with Bowen Hills in the north - including 10 kilometres of underground tunnels, four new underground stations and two new surface stations; and would substantially increase capacity across the metropolitan rail network. But the floods in January saw a revised timeline for the CRR, with completion now estimated as The economic arguments for a mass transit solution are solid. The EIS states that the CRR would deliver more than $9 billion in economic benefits to the region and would boost the number of trains through the CBD from 84 trains per hour to 132 trains per hour at full capacity. No doubt the procurement of such a major project would be guided by the lessons learned from the procurement of the North West Rail Link in New South Wales the largest and most complex public transport project in Australia. And while more immediate term solutions such as track and signalling upgrades would help deliver additional capacity across the rail network, a decision will be needed on the long-term heavy rail requirements for Brisbane s CBD. Of course the Cross River Rail or a similar rail solution will not be the panacea for the city s congestion concerns. The Eastern Busway project is another of the State s top infrastructure priorities. Stage one of the dedicated bus-only roadway - between the University of Queensland and Buranda - has already been completed and Stage 2a is under construction. The State has submitted a proposal to Infrastructure Australia for stages 2b and 3 of the Eastern Busway, valued at $685 million and $140 million respectively, with IA deeming it a threshold project in its 2011 report to the Council of Australian Governments (COAG). By addressing the limited access to high frequency public transport in Brisbane s eastern suburbs, the project is viewed as important in easing congestion and opening up opportunities for further urban consolidation. The State said that the Eastern Busway also meets IA s goal of growing national productivity and transforming cities. The continued upgrade of the Bruce Highway is another key infrastructure priority. A report by the Australian Automobile Association (AAA), released in January, found that the 1700 kilometre highway is the nation s most dangerous road. An estimated $2.3 billion has been spent on upgrading the Bruce Highway over the past five years, with the Bruce Highway Upgrade Strategy (Brisbane to Cairns) put forward by Queensland to Infrastructure Australia as a priority project last November. A sustained investment in Queensland s most crucial freight corridor will lead to safety improvements and better connectivity to key gateways - and also drive Brisbane s long-term productivity growth. While progress is being made on these major projects others remain under consideration, with decisions still to come on funding commitments from the Federal or State Governments. All political leaders agree that enhanced rail capacity is a first order issue for Brisbane and Queensland. 6 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

7 Aerial view of major Brisbane infrastructure under construction One major project awaiting commitments from the State and Federal Governments is the upgrade of Kingsford Smith Drive, which links the CBD to Brisbane Airport. Stage one of the upgrade has been completed and Brisbane City Council has allocated $1.5 million in this year s budget towards further investigations for stage two of the upgrade. In spite of the size of the challenge, there is reason for real optimism about the future of infrastructure across Brisbane and Queensland. There is strong community appetite for substantial reform and a similarly strong commitment from governments to engage in a rational debate around the critical reform pathways. But as with the other states, the delivery of major projects will only be possible through sustained partnerships across all levels of government. n There is strong community appetite for substantial reform and a similarly strong commitment from governments to engage in a rational debate around the critical reform pathways. Mark Birrell is the Chairman of Infrastructure Partnerships Australia. He is the national leader of the infrastructure group at Minter Ellison Lawyers and serves on the statutory board of Infrastructure Australia. He has extensive experience as a company director and lawyer and is a fellow of the Australian Institute of Company Directors. Previously he was Minister for Major Projects and Government Upper House Leader Victoria, working on successful PPPs and capital works {initiatives like CityLink and the Docklands. 7 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

8 What started with a focus on cost, carbon and convenience has turned into an engine of systematic serendipity that fires innovation and creativity. Smarter connected: our world is growing exponentially more digital and networked. Advances in infrastructure in the digital economy will contribute to building Brisbane s economic resilience and sustainability for the future. Martin Stewart-Weeks, Senior Director (Public Sector), IBSG, Cisco In Amsterdam a couple of years back, a few business, government and community organisations got together to solve a problem that is pretty familiar to cities all around the world. How could the city escape the congestion and inconvenience that were increasingly the hallmarks of growth as people spent more and more wasted and frustrating time getting from home to work and back again? And, into the bargain, how could Amsterdam drive towards some aggressive targets to reduce carbon emissions and make the city greener and more efficient? The answer was a smart work centre. Think Qantas Club, on steroids, in the suburbs. The idea is simple. You fit out a building to accommodate a wide range of work styles and needs individuals at a computer, informal meeting spaces over the coffee machine, meeting rooms large and small. Throw in the best available broadband-enabled, networked collaboration technologies, like high-end telepresence video. And make sure the centre is close to transport, shops and services, child care. The result is the rapid growth of these centres across the metropolitan regions of Amsterdam, all now connected into a network that allows you to book online space to work, a room to meet or a telepresence screen to collaborate virtually. And sometimes just to get some work done over a cup of a coffee and a quick chat. From the initial pilot group of 7 centres, Amsterdam now has a network of over 120. And interesting things are happening. People are using the city differently as they find more convenient, carbon-reducing and cost-saving ways to work. But the new shared workspaces are sparking unexpected connections as people, almost literally, bump into other people with useful ideas and skills. So what started with a focus on cost, carbon and convenience has turned into an engine of systematic serendipity that fires innovation and creativity. In Seoul, the government has announced the intention to spread a network of 450 smart work centres. Not surprising when you consider the population of Seoul is roughly the size of Australia. That s what s called taking it to scale. Take another example. The United Nations Secretary- General has started a program of inter-cultural dialogue 8 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

9 If you look at the way a company, a city, a State or a whole country invest in infrastructure, you ll learn a lot about the imagination, values and aspirations from which it is, quite literally, being built. and collaboration to make a contribution to reducing tensions across political and cultural divides. One of the tools being developed is Dialogue Cafe ( Basically, a Dialogue Cafe is a public space, like a cafe, that is easily accessed and informal, with a telepresence screen that allows people to quickly and cheaply connect to other Cafe spaces where they can talk with others around the world. What they talk about can be pretty much anything ideas for new social change programs, artists collaborating on a piece of music, students swapping ideas and projects, social entrepreneurs looking for great new ideas to help them in their work. What s the link between these two initiatives? They are both powerful examples of the new capabilities that cities need to create so people can get the most out of their engagement with the digital economy. And those capabilities - better communication, simple and effective collaboration and powerful new connections rely on a bunch of new infrastructure assets. Rising to these new infrastructure demands is becoming table stakes for cities and regions that want to succeed in a more open and connected world. Infrastructure is all about the future. It requires often massive investments whose size and focus say a lot about our collective future. If you look at the way a company, a city, a State or a whole country invest in infrastructure, you ll learn a lot about the imagination, values and aspirations from which it is, quite literally, being built. In a very real sense, our collective identity is made manifest in the decisions we take about what, where and how to build the infrastructure assets that sustain resilience. Possibly the single most significant factor that has changed the way we think about infrastructure in the past 20 years is the increasingly central role that networked digital technology now plays in defining our world and its risks and possibilities. Our world is growing inexorably more digital and networked. Just to put that in context, Cisco estimates that, after increasing eight-fold in the past five years, global web traffic will quadruple during the next five years. Three forces are at play - mobility, connected devices and video. By 2015, the number of devices will be twice the world s population, traffic from wireless devices will exceed that from wired devices and nearly two-thirds of consumer traffic will be in the form of video. How well and how easily we can connect across the Internet or other digital platforms will make or break our aspirations for innovation, inclusion and sustainability. And that is certainly true for Brisbane and Queensland. Rebuilding from last year s floods and cyclone, there is an opportunity to match Queensland s boundless vision and optimism for the future growth, inclusion, innovation with the infrastructure of resilience and sustainability. And central to the new demands to build resilience and sustainability into the heart of Queensland s cities, towns and regions is the imperative to invest in the human and technology fabric of the digital economy. The evidence suggests the results are worth the investment. 9 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

10 A recent study for the UK Government estimated that spurring an additional investment of 15 billion in the UK s ICT infrastructure would create approximately 700,000 UK jobs. They also estimated that over half of these jobs would be in small businesses. In the US, a 2007 study looked at the economic multiplier effects (increases in GDP, jobs, tax revenues) that can be calculated from broadband investment. It found the increase in local GDP is more than ten-fold the value of the investments in broadband infrastructure The OECD published a report a couple of years back pointing out that broadband networks increase the impact and efficiency of other public and private investments. Broadband is needed as a complementary investment to other infrastructure, the report suggested, such as buildings, roads, transportation systems, health and electricity grids, allowing them to be smart and save energy, assist the aging, improve safety and adapt to new ideas. A 2009 study ( found that reducing congestion and increasing travel speeds enough to improve access by 10 percent to key employment, retail, education, and population centers within a region increases production of goods and services by one percent. The study reported that achieving free-flow traffic conditions (that is, reducing congestion) around key urban and suburban destinations in eight U.S. cities Atlanta, Charlotte, Dallas, Denver, Detroit, Salt Lake City, the San Francisco Bay Area, and Seattle could boost the economies in those cities alone by $135.7 billion and generate close to $9 billion in new tax revenues. This is all important grist to the infrastructure investment mill. Roads, bridges, schools, hospitals, ports, big public transport systems, new housing all of these traditional assets are still important. But when an entrepreneur is looking for investors or partners to develop a great new product or service, when a teacher wants to connect her students to experts on the other wide of the world or in the next town, when someone needs access to specialist health care or the care of a collaboration of family, medical experts and community support teams, they need to find people, connect and talk with them easily and often work together across large distances and over long periods of time. The ability to connect what you might call soft infrastructure, becomes crucial. In the digital and distributed future, whether we are trying to make our cities and towns easier to live in, to start new businesses and create new jobs, or to keep our water clean and our energy sustainable, we ll be smarter, connected. Brisbane s aspiration to be Australia s new world city tells us a lot about its sense of the future. And that means we know something of the city s infrastructure priorities and investments on which that future depends. Some big ideas and bigger ambitions are at stake. How does the city provision new models of working, mobility, innovation and creativity? What are the new assets and capabilities that business, large small, need to invest, create jobs and develop competitive products and services? How does Brisbane create thriving places and lively communities that are inclusive, accountable and resilient, places where people want to make their homes and make their mark? Creativity, inclusion, innovation, sustainability these In the digital and distributed future, whether we are trying to make our cities and towns easier to live in, to start new businesses and create new jobs, or to keep our water clean and our energy sustainable, we ll be smarter, connected. 10 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

11 are increasingly the hallmarks of successful cities and communities into the future. And reaching for the rising standards they imply will increasingly be a function of the confidence with which the city and its citizens master the new demands of the digital economy. Connecting, communicating and collaborating are the new engines of progress. And that means investing in the necessary infrastructure assets, capabilities and culture. This is now the stuff of leadership in the digital economy. For Brisbane and Queensland, the task is how to achieve economic resilience in a connected and competitive world, make a transition to a low-carbon economy and lifestyle and make communities safe, creative, clever and inclusive places to live. That means investing in the digital fabric of the new economy whose technology assets are becoming more visual, virtual, social and mobile. More smart work centres and Dialogue Cafes, for example? n Connecting, communicating and collaborating are the new engines of progress. And that means investing in the necessary infrastructure assets, capabilities and culture. This is now the stuff of leadership in the digital economy. Martin Stewart-Weeks has over 25 years experience in organisational management and consulting in the corporate and public sectors and with a wide range of not-for-profit organisations. Martin works with the Internet Business Solutions Group (IBSG) at Cisco with a focus on the public sector. In January 2007, Martin took up a position to lead IBSG s public sector practice in Asia-Pacific, leading a small team of senior consultants working on transformation projects in government, education and urbanisation in India, China, South-East Asia and Australia and New Zealand. Martin writes and speaks extensively on changes in government, service design and policy driven by reform opportunities at the intersection of public sector reform, {technology and public and social innovation. 11 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

12 Growth will be sustained and opportunities will emerge if we continue reform in areas of labour, productivity and infrastructure. The booming resources sector lies at the heart of Brisbane s unprecedented growth forecasts, and is driving significant investment in rail infrastructure that will have far reaching benefits. Lance Hockridge Managing Director and Chief Executive Officer, QR National It s little more than a year since QR National made its debut on the ASX a momentous day for our Brisbaneheadquartered company with over nine thousand employees across Australia. While the $4.6 billion float in November 2010 was the biggest IPO in Australia in more than a decade, equally it marked new beginnings for this iconic Queensland company with a 145-year history. Like many in 2011, we were confronted by the Queensland floods. Our operations fortunately withstood the onslaught remarkably well, and we start 2012 with renewed optimism and determination to deliver on the changes needed for our company to support the rapid growth forecast for the region. This is against the backdrop of a strong, though patchy Australian economy and continuing global uncertainty. In this context, the focus is for individual businesses and the domestic economy to be more efficient and competitive. Growth will be sustained and opportunities will emerge if we continue reform in areas of labour, productivity and infrastructure. For our part, the transport and logistics industry in Australia should be a world-class enabler of competitive 12 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

13 advantage for local companies and industry. Rail can make a genuine and sustaining contribution to the next wave of productivity for the Brisbane and Queensland economies. From a long, proud history in Queensland s economic and social development, QR National has grown to become the country s largest rail freight company. The network carries more than $50 billion worth of Australian exports each year. And now the move to a publicly-listed company will help accelerate the changes required to sharpen our performance and customer service, delivering better commercial outcomes for industries that rely on rail freight. Continued investment in growth projects will be a critical driver for future success for both our organisation and the region s economy. Our business covers coal on the eastern seaboard, iron ore in Western Australia, intermodal freight and a range of rail-related products such as heavy-engineering and track maintenance and construction. QR National s heritage and heartland are in Queensland, so Brisbane is the logical HQ for the company. From here, we can efficiently and effectively run our operations, stay in touch with major customers The transport and logistics industry in Australia should be a world-class enabler of competitive advantage for local companies and industry. Rail can make a genuine and sustaining contribution to the next wave of productivity for the Brisbane and Queensland economies. and connect with regional communities. Brisbane has a great balance of dynamism, energy and the right opportunities to help us realise our aspirations for the region s infrastructure development. Its world-class liveability and increasingly sophisticated social and cultural scenes provide an ideal platform for a company like QR National to breathe and grow. Home-grown enterprises and a range of leading national and multi-national companies now call Australia s new world city home. There s a burgeoning industry of IT excellence invigorating the business landscape. QR National, with its national footprint is very much at home in this city. It serves as the perfect hub from which to connect with other states, South- East Asia and further afield, with its world-class and easily accessible domestic and international airports via Brisbane s Airtrain. And importantly many of our largest customers, the resource companies with extensive Queensland operations, are based here. This co-location allows us to remain engaged and in touch. We also share a large regional employment presence and a connection with regional communities. Like others, an emerging challenge for QR National has been the fierce competition to attract and retain talented people both at the executive management level and in engineering and trades. Brisbane, with its vibrancy and energy, provides a positive context in which to face these challenges. The lifestyle capital of Australia is now matched by unprecedented migration rates and career opportunities. That I could take a CEO role in Brisbane, was a driving factor for me in repatriating with my family from the U.S. in I know my experience is shared by many executives now residing in Brisbane and the Sunshine State. In terms of infrastructure investment and growth, Queensland s capital IS in the box seat. The Deloitte Access Economics Investment Monitor released in February identifies planned or committed projects in Australia totalling more than $900 billion. Unsurprisingly, mining accounts for almost half of investment activity. Around 40 % of these projects are 13 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

14 The challenge here for the transport and logistics infrastructure industry is to align with the demand curve for Australian resources and to continue to exploit all the benefits that technology and operational excellence offer. slated for the resource rich states of WA and Queensland. For QR National, which is 80% leveraged to the resources sector, and other Brisbane based companies servicing the resources sector, we see great growth opportunities in these type of numbers. Rail is a major player in Australia s resource supply chains where bulk commodities account for nearly 90 percent of total rail freight tonnages in this country. Coal and iron ore make up about 75 percent of this, primarily in coal on the eastern seaboard and iron ore in the west. QR National s focus is on supporting a strong and growing export market where Australian resources remain highly-competitive globally. We know that Australian resource supply chains are among the best in the world but the pressure is on for accelerated improvement. The challenge here for the transport and logistics infrastructure industry is to align with the demand curve for Australian resources and to continue to exploit all the benefits that technology and operational excellence offer. While Korea and Japan traditionally are the biggest consumers of Australian coal about 54 per cent for FY the emergence of the Chinese and Indian economies will underpin the next phase of growth. We re also seeing a strong direct investment from these countries as they seek to create vertically integrated supply chains to lock in supply and price over coming decades. In Queensland, thermal coal reserves in the Galilee and Surat Basins will come into play, building on the continuing growth of high-quality metallurgical coal exports from the Bowen Basin to international markets. Coal infrastructure supply chains in Queensland and New South Wales are about to embark on their next phase of growth. Current nameplate capacity of coal ports stretching from Port Kembla to Bowen is around 425 million tonnes per annum. Projects already announced would add another 780 million tonnes, taking the total to more than 1.2 billion tonnes. The value of these projects will 14 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

15 run to tens of billions of dollars. Obviously these will not all progress along the same approval and commissioning path, however it does underscore the scale of growth anticipated. Here in Queensland, the current rail infrastructure and port capacity is in the order of 200 million tonnes across QR National s network and into ports at Gladstone, Mackay and Bowen. Our capital program is growing this network capacity in alignment with customer and industry needs and in a manner which is operationally efficient and commercially sensible. QR National is currently delivering a 30% step-change increase in this system capacity with more than 70 million tonnes per annum being added from now through to This will take total system capacity to around 300 million tonnes. Major projects, comprising more than $2 billion of investment, include: Goonyella to Abbot Point Expansion (adding an extra 34mt) Wiggins Island Rail Project (27mt extra) Hay Point Expansion (11mt extra) The first component of the $1.1 billion GAP Expansion was opened to rail traffic in December When completed in June 2012, the project will take to 50 million tonnes, the annual capacity on the Newlands system to Abbot Point Coal Terminal. It s a project underwritten by five foundation customers - BMA, Rio Tinto Coal, QCoal, Macarthur Coal and Lake Vermont Resources. Importantly, the project has been designed to allow significant future expansion - from 50 to 100 to potentially 200 million tonnes as customer demand dictates. Similarly, the $900 m Wiggins Island Rail Project, announced in September 2011, is leveraging our existing infrastructure to deliver a 30 % boost to coal exports from the southern end of the Bowen Basin to meet increasing demand from Asia and beyond. It will deliver 27 million tonnes of extra capacity per year through the proposed new terminal at Wiggins Island, at the Port of Gladstone. Wiggins is being developed by a consortium of eight mining companies the same companies with whom QR National struck a commercial agreement on the project s rail component. In terms of infrastructure investment and growth, Queensland s capital IS in the box seat. 15 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

16 These companies are Xstrata Coal, Aquila Resources, Bandanna Energy, Caledon Resources, Northern Energy Corporation, Yancoal Australia, Wesfarmers Curragh and Cockatoo Coal. First railings are scheduled for mid-2014 with completion by March 2015, subject to the project s approval by the Queensland Competition Authority. Future expansions for Wiggins Island contemplate construction of the Surat Basin Rail or so-called Southern Missing Link to tap into Xstrata s massive Wandoan mine and others in the region. QR National is part of the consortium for the Surat Basin Rail with Xstrata and ATEC. The industry contemplates Wiggins Island terminal going to more than 80 million tonnes and our rail network is well-positioned and capable of expanding to meet that future demand. We can use the existing 2,300 kilometre Central Queensland coal network to support this on-going growth for existing customers. There s tremendous opportunity to leverage the existing network in combination with greenfield railway for emerging markets. This is the position we are advocating in the Galilee Basin where we believe a consolidated industry approach will allow an earlier path to market. While Galilee is a significant growth opportunity for our company, we re equally focussed on the next phase of Bowen Basin expansion. The Bowen Basin remains one of the world s most outstanding reserves of coking coal and already has established supply chains from mines to ports. One of our committed projects is the $185 million Hay Point Expansion that supports growth of 11 million tonnes per annum on the Goonyella network feeding into the Hay Point Coal terminal. This project is well underway and scheduled for completion in Likewise, the $195 million Blackwater electrical system upgrade is designed to cater for the growing coal export demand in the region by increasing the electrical capacity of the system. It is on track for completion in June 2012, six months ahead of schedule. As the ASX s second largest Brisbane-based company, QR National looks forward to continuing to invest and grow our business nationally, delivering benefits for customers, communities and the broader Brisbane and Queensland economies. n Lance Hockridge became Managing Director & CEO of QR National after its structural separation from QR Limited in July Lance joined QR as Chief Executive Officer in November 2007 with more than 30 years experience in transportation and heavy industrial sectors in Australia and the United States with BHP and BlueScope Steel. In QR, and now in QR National, he has led a transformation program aimed at delivering world-class safety, customer service excellence and superior commercial capability. Lance played a leading role in QR National s preparations for the IPO, overseeing structural separation and the company {through the transition from government to private ownership. 16 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE

17 acknowledgments SPECIAL THANKS Brisbane Marketing is indebted to our special contributors for their generous involvement with the Brisbane Economic Series, namely: Mark Birrell, Chairman, Infrastructure Partnerships Australia. Martin Stewart-Weeks, Senior Director (Public Sector), IBSG, Cisco. Lance Hockridge, Managing Director and Chief Executive Officer, QR National. IMAGE CREDITS Smart work centre images: Matthijs Borghgraef - Airportlink images: Courtesy of Thiess John Holland CONTACT Level 8, Roy Harvey House, 157 Ann Street, Brisbane, Queensland, Australia, 4000 PO Box 12260, George Street, Brisbane, Queensland, Australia, 4003 Phone: Fax: invest@brisbanemarketing.com.au As a wholly owned subsidiary of Brisbane City Council and the city s economic development agency, Brisbane Marketing plays a key role in the ongoing evolution and success of our city. We drive economic and social benefits to residents and business by profiling Brisbane globally as Australia s new world city and as a destination for business investment, export, international students, conventions, tourism, major events, and CBD retail. PUBLISHED BY 17 BRISBANE ECONOMIC SERIES ISSUE 2: INFRASTRUCTURE