Extract from The Pilbara Plan 2008

Extract from The Pilbara Plan 2008 Priority Issues and Solutions There are ten priority themes that align with the priority issues facing the Pilbara: seven under Community Infrastructure; and three under Essential Infrastructure. Under this there are a total of 43 individual project proposals. In addition, there are projects that fall under the key drivers of land and policy changes, without which, the essential and basic infrastructure projects will not have the full intended impact. DRIVERS Land Relatively conservative employment growth estimates for the Pilbara forecast an additional 3,000 FTEs over the next 10 years (Geografia, 2008). Notwithstanding the long-term prospects for the region, the reality is that the existing level of infrastructure provision is insufficient to meet current demand to a level that should be expected in regional Western Australia. Consultation with stakeholders to this project identified that a key element in this provision is access to sufficient, and well located, alienated land for construction of housing, commercial and light industrial purposes. In fact, this issue has been on the agenda since at least 1992, when access to appropriate land was recognised as one of the primary barriers to developing downstream processing in the region (Deloitte, Ross Tohmatsu, 1992). The key projects under this theme focus on fast tracking the release of land for housing, industrial and commercial activity, as well as strategically planning for future development so as to avoid the land availability bottleneck in the future. To achieve this will require, in the first instance, the resourcing of existing land development agencies to increase capacity and then the establishment of a (statutory) Pilbara Planning Commission made up of dedicated officers from relevant State and local agencies. Fast tracking release of alienated land for residential and non-residential activities in all main settlements. Develop a long-term strategic land release plan and land bank so that this problem is avoided in the future. Implement a program to rationalise and revitalise town centres through infill mixed use development. Policy Numerous consultative exercises and studies in the Pilbara (from the 1992 Deloitte, Ross Tohmatsu study to the 2008 Pilbara Dialogue and Commonwealth Senate inquiry into housing affordability) have identified the need to change tax policies that encourage Fly-in-Fly-Out operations, rather than 1

the residential option for the resource industry. The key proposal under this driver is to review regulations that are a disincentive to resource companies to provide housing for staff in the region. Community Infrastructure It has been argued that public investment in social infrastructure (schools, hospitals, etc.) can be seen as a sign of government commitment to a region, which, in turn, stimulates private infrastructure investment (Brown, 1999). Investment in projects under the themes below, while having substantial benefits in their own right, will stimulate further private investment. Accommodation The non-mining accommodation crisis in the Pilbara is common knowledge, not least due to the recent Commonwealth Senate inquiry into housing affordability (Commonwealth of Australia, 2008). Briefly: Residential Median house prices in the Pilbara regional centres are twice that of Perth. Housing costs are now at a 7 to 1 price to income ratio, over twice the ideal rule of thumb ratio (i.e. the cost of purchasing a house should not be more than three times the annual household income). As a consequence, lower and middle income residents have been pushed out by rental and purchase prices, high even by the standards of the recent housing boom (see Table Four). People with skills in non-mining occupations are unable to move to, or stay in, the region because of accommodation costs. Quality of accommodation also affects peoples willingness to stay in the region. In a recent survey of staff in Port Hedland and Newman conducted by BHP Billiton, 90% of respondents said that accommodation was a factor in deciding whether or not to accept a role in a remote location. Moreover, four out of five said quality accommodation increased the length of time they were willing to stay in the Pilbara. Accommodation is the principal reasons why the Pilbara has fewer than 14 community services businesses per 1,000 residents, compared with over 20 for the Goldfields and almost 24/1,000 residents for the South West region of Western Australia (DLGRD, 2008). Moreover, for those unable to relocate, crowding and homelessness are the result. For the young children of families facing this problem, there are negative health and education consequences. The Pilbara also has an ageing population yet there is limited availability of aged care and semi independent living facilities. Stakeholders note that there are currently nine residential aged care beds between Geraldton and Hedland and a clear need for retirement facilities, low and high care beds and respite and palliative beds in the Pilbara. Accommodation for compulsory and post-compulsory students is also in short supply. Many young people from across the region are required to attend schools in the main centres but struggle to find accommodation. This problem is even more acute for older students wishing to attend university, TAFE or other training programs (e.g., apprenticeships), in the main centres. 2

Pilbara Housing Costs Location Average Rent/Week Median House Price 2001 2008 2001 2008 Karratha $393 $2,178 $233,000 $702,000 Port Hedland $190 $1,567 $173,000 $680,000 Newman $121 n.a $52,000 $500,000 (Source: PDC, 2008; ABS, 2006) Commercial Consultation also reveals that office and residential accommodation for not-for-profit organisations and small business are effectively non-existent. Any available commercial space is quickly consumed by the resources sector, which, unlike small business, is better positioned to meet the current rents. The aim of the accommodation component of the Pilbara Plan is to provide immediate access to housing for essential (non-mining) workers so that job vacancies in these sectors can be filled. This will eventually relieve pressure on housing costs in the region. Following this, accommodation for service professionals, mixed use development, transitional and retirement housing will follow. The Plan proposes the construction of a range of accommodation with capacity for an additional 1,050 residents across the region. The resource sector estimates each house/land package (i.e. a three-bedroom dwelling) is worth $1 million to the regional economy. On this basis, basic monetary benefit of this project proposal is in the order of $350 million. Simplified Accommodation Provision Costs & Benefits Objective Cost Benefit Net Benefit +1,050 additional beds -$240.6 million +$350 million productivity benefit +$109 million over 10 years in productivity gain to resource industry Develop (non-mining) residential accommodation for essential workers; Develop residential accommodation for service professionals; Develop mixed use residential/small business accommodation in town centres to make it viable to establish essential retail and other services; Develop transitional housing units in a hostel/boarding style for students attending regional centre education facilities; and Develop well aged seniors accommodation in Port Hedland and Karratha. 3

Health In terms of community infrastructure, health is cited as the number one priority. Expansion and upgrades to health services across the region is necessary, including the introduction of services that are currently not available and redevelopment of facilities built decades ago and for populations that were 50% smaller. Currently there are 2.3 hospital beds per 1,000 Pilbara residents compared with 3.3 in the Great Southern region of Western Australia and 4.2 in Perth. The WA Department of Health has undertaken extensive analysis of the priority needs and compiled a coordinated program of upgrades and expansions. The health component of The Pilbara Plan is a rescue package. It does not fully cover the spectrum of problems in the region. All of the hospitals were built to service significantly smaller populations and despite drug and alcohol consumption being amongst the highest in the State, there are no facilities in the Pilbara, or even the neighbouring Gascoyne region. A rescue package for the Newman Hospital combined with modification of part of the existing hospital to introduce community and primary health services; A similar rescue package for Nickol Bay Hospital in Karratha; The development of a Karratha Super Clinic with GP services. This would be attached to Karratha s Nickol Bay Hospital and address the shortfall in outpatient services in the region. Patient accommodation would be included in this project; The Roebourne Shared Health Services Complex. This includes the development of clinical consulting spaces; and extension of the existing Mawarnkarra Aboriginal Health Service building; Expansion of comprehensive Indigenous Health Services, including annual funding for professional resources for screening, intervention and referral programs plus environmental health promotion programs, reliable utilities supplies and health hardware provision; The development of three Indigenous Drug & Alcohol Facilities in the Pilbara; A Cancer Care Centre based at the Hedland Regional Resource Centre. There is no capacity for simple chemotherapy in the region, which means that all drug and radiation therapy must be carried out in Perth. The establishment of a regional treatment centre will generate savings in the Patient Assisted Travel Scheme and decrease the level of stress associated with having to regularly travel to Perth; and Improvements to the Royal Flying Doctor Service. Education Education is regularly cited in community surveys as a key issue. The region has a shortfall in its resident population of some 2,000 15-19 year olds compared to similarly sized regions. This is because families leave once their children reach high school age: a reflection of the limited opportunities for secondary and post-compulsory education, as well as the poor community infrastructure. The working hours and highly transitory nature of the population results in high levels of truancy and the Indigenous community is particularly hard hit as there is very little capacity for them to travel in from settlements to take up schooling at the regional centres. 4

While there were aspirational goals such as the expansion of tertiary opportunities, the review of the education priorities identified the urgent need for: Increased apprenticeship training places in the region; The establishment of a Pilbara Mining Academy; and General expansion and upgrade of existing facilities. Social There are a high proportion of young families in the Pilbara. The skew largely results from the lure of high income for young workers (20-40) in the resources sector. Typically this group spends a large part of their childrearing years in the Pilbara and so the percentage of children under 12 is high. Census data shows that, over the whole Pilbara, 9% of the total population is under 4, with 26% being under 14. These figures are significantly higher than metropolitan Perth where there are only 6.2% of the total population under 4 and 19.5% under 14. Three issues arise from this. Firstly, the demand for quality obstetrics and gynaecological services totally overwhelms the services on offer. Community perception that the service is inadequate causes the majority of young mothers to return to their home town or a major city (usually Perth) for the necessary support, straining family relationships and diminishing the opportunity for important neo-natal services to the mother and baby. Secondly, ongoing health and medical support is warranted when the wife and child return to the region. Again it is poorly provided. Finally, with the children healthy and needing development stimulation, playgroups and childcare places are in high demand. The Shire of Roebourne alone estimates a shortfall of around 300 day care places and the lack of retired grandparents living in the region to offer informal child care reduces notional supply by around 20%. Childcare allows the primary care giver the opportunity to rejoin the workforce, thus increasing the size of the local labour force without the need for additional housing. This has direct productivity and cost saving benefits and, in fact, the resource industry places a value of $1 million on every child care place that results in an additional employee. The Pilbara Plan includes a comprehensive childcare program incorporating facilities, accommodation for staff and, under the education theme, training for Pilbara residents in childcare services. The provision of housing for child care results in a further net benefit to the community. Improved child care services will reduce overall labour turnover by adding to local amenity. In addition to this, there is the intangible benefit of the opportunity to work that is welcomed by the primary care giver, which results in a more balanced family structure and adds further to the stability of the workforce and the community at large. A total of 575 child care places are proposed, at a cost of $69 million. 5

Simplified Childcare Provision Costs & Benefits Objective Cost Benefit Net Benefit +575 places -$69 million child care provision +$49.5 million labour benefit to resource industry +$144.6 million over 10 years in productivity gain to resource industry +$20 million staff housing benefit +$14.4 million annual reduction in labour turnover costs 100 child care places, including staff quarters each in Port and South Hedland; 200 places and staff quarters in Karratha; 50 places and staff quarters in Wickham; 75 places and staff quarters in Newman; and 50 places and staff quarters in Tom Price. Cultural Tourism & Economic Development There is a strong and widely acknowledged synergy between cultural tourism, economic development and Indigenous cultural development, particularly in regional Australia. Apart from the resources sector, tourism has the most economic potential in the Pilbara, particularly with respect to Indigenous cultural and nature-based tourism. Currently there are limited facilities for tourists in the region and, outside of the resource sector, few opportunities for economic expansion. The four cultural tourism facilities proposed in the Plan have been subject to considerable investigation by local government, the Ngarluma and Yindjibarndi Foundation and Marnda Mia. The facilities create a Pilbara-wide network of tourist experiences, with training and employment opportunities for the Indigenous community in each facility. A cultural complex in Roebourne including museum, performing arts spaces, retail and hospitality outlets, offices and multipurpose rooms and private spaces; An Indigenous Arts and Cultural Centre in Newman; The redevelopment of the Victoria Hotel in Roebourne (recently purchased by Marnda Mia and now called the Ieramugadu Inn). Renovations would constitute a long-term training 6

program for Indigenous residents and the facility would eventually be run as tourist accommodation incorporating ongoing hospitality training; and The Hedland Aboriginal Cultural Precinct. Sport & Recreation Sport and recreation opportunities are the basis of social capital building in regional Australia. Access to high quality sport and recreational facilities, particularly in a landscape with an unfavourable climate, is essential to quality of life, and therefore, to labour retention. The provision of sporting and recreation facilities instils meaning to life outside the workplace and encourages people to participate, commit, enjoy and therefore stay within the community. Of the 12 sport and recreation projects proposed in the region, six were identified as priorities. They focus on developing multipurpose facilities that recognise shifts in recreation behaviour, as well as the unique climate, work conditions and distances between settlements. This means that indoor, informal or unorganised services (such as gyms) are part of the proposal, as is the intention to create a network of facilities that can support inter and intra-regional participation. Additionally, there is a complementary benefit in providing greater boating facilities with economic development opportunities (e.g., charter fishing and commercial tug berthing). A leisure and learning precinct in Karratha; A multipurpose sports centre in South Hedland; A new sporting precinct in Newman; A multipurpose sports centre (incorporating an emergency evacuation centre) in Onslow; The redevelopment and expansion of the Port Hedland Marina; and The redevelopment and expansion of the Dampier Marina. Environment While most infrastructure proposals in the Plan will reduce the impact on the environment (e.g., more efficient - including renewable - electricity generation), there are three key projects with specific environmental objectives. These are: A coastal mapping exercise to identify vulnerable areas as a consequence of global warming and climate change. Currently there is no data to inform future planning or elevation maps for the coastal zone; Research into and the development of more appropriate and energy efficient construction materials and building forms for Pilbara conditions; and Demonstration projects for residential and non-residential construction using new building materials and forms in order to stimulate buy-in from the private sector. Essential Infrastructure Research has shown that Australia s shortfall in productivity, in comparison with other countries, is largely due to distance and low population density, which result in diseconomies of scale in both capital and labour investment (e.g. Productivity Commission, 1999). Consequently, infrastructure 7

provision that helps to overcome transport, communication and other basic service provision are particularly necessary in remote and regional parts of Australia. Transport The OECD s (2002) review of the impact of transport infrastructure investment in regional areas of member nations (including Australia), concluded that this investment has direct benefits to users and that this stimulates behavioural change in users that has wider impacts on regional efficiency, access and externalities (such as traffic pollution). Both direct and spill over benefits can be measured, including: Direct Benefits Improved travel time Reduced cost of travel Improved safety Socio-economic spill-overs Improved accessibility to and from region Increased regional employment (e.g., in construction, operation and maintenance of infrastructure) Improved regional industry efficiency Improved connectivity between communities Changes to environmental effects The preliminary findings of the Pilbara Freight Study note that the growth in road freight is straining the road infrastructure beyond capacity. This adds weight to Main Roads WA s (MRWA) urgent program for road bituminisation and connections. The MRWA priority program is incorporated into the Pilbara Plan. It is a list of urgent priority unfunded projects to be rolled out over 10 years as follows: Marble Bar Road (MBR) Sheet/seal north of Jigalong Road from Munjina to Roy Hill Road (24km); MBR Alignment improvements to various sections of Nullagine to Ripon Hills (90km); MBR Realignment of Coongan Gorge (4km); MBR Construct Kalgan River Floodway between Newman and Jigalong Road; Jigalong Road to Community - Improve; Nanutarra to Munjina Road through Rio Tinto Gorge - Reconstruct (stage 1, 3km); Karratha to Tom Price Road - Seal from end of current seal to Millstream National Park (20km) Munjina to Roy Hill Road - Improvements to various sections/floodways; and Redbank Bridge on Port Hedland Road Duplication. 8

Figure below uses the MRWA value for money (VFM) index to estimate the returns on this investment. Simplified Transport Infrastructure Provision Costs & Benefits Objective Cost Benefit Net Benefit Improved road connectivity and safety -$134.3 million +$286.2 million value for money over 10 years +$151.9 million value for money over 10 years The second part of the transport component of The Pilbara Plan is the expansion of general cargo berth facilities, which operate in support of the bulk cargo operations. The priority is for the extension of the Dampier port with 600 metres of general cargo berth. Utilities Energy and water supply agencies in Western Australia have compiled comprehensive plans to improve and secure utilities services both to support industry expansion and provide for the population. The North West Interconnected Electricity System (NWIS) is a proposal to integrate electricity generation and transmission in the Pilbara. It is a three-stage program, the first two of which are absolutely essential as a result of the mining sector shutting off electricity generation currently servicing coastal towns. The third stage will provide necessary expansion of capacity in the event of proposed mining operation increases. The projects are: The Cape Lambert to Port Hedland transmission line upgrade (necessary within the next 2-3 years); The Karratha to Cape Preston new transmission line (necessary within the next 3-5 years); and The Port Hedland to Newman new transmission line (necessary within 5+ years). The combination of these projects will improve the reliability and efficiency of the network, as well as provide certainty to regional industry; reduce the impact on the environment through a reduction in CO 2 emissions of around 3 million tonnes per year; facilitate the development of renewable energy generation; and facilitate rail and pit electrification in the mining operations. 9

Simplified Electricity Infrastructure Provision Costs & Benefits Objective Cost Benefit Net Benefit Interconnected Transmission & Generation System -$1.5 billion +$350 million p.a. gas savings +$410 million p.a. in savings -3 million tonnes p.a. CO 2 emissions reduction +$60 million p.a. in carbon credit The other key part of the utilities component is upgrades to the water supply system. Potable and treated effluent water supplies in the region are in need of substantial upgrades to run-down infrastructure and to respond to increased residential and industry demand. The Western Australian Water Corporation has plans in place to upgrade water and waste water infrastructure over a 5-10 year time frame. It includes: West Pilbara Water source/conveyance investigations and construction for Onslow, and the West Pilbara water supply scheme (Dampier, Karratha, Roebourne, Wickham, Point Sampson, and Cape Lambert); Waste water conveyance and treatment asset upgrades; East Pilbara Water source/conveyance investigations and construction for Port and South Hedland and Marble Bar; and Waste water conveyance and treatment asset upgrades for Port/South Hedland. The two schemes are planned to be operated independently of each other to serve the needs of the respective districts. Communication Connecting to the National Broadband Network and extending mobile coverage along transport corridors between towns are essential for economic development and quality of life and necessary to improve safety. When travelling the hundreds of kilometres between towns, there are up to eight hour periods where people are out of communication. A comprehensive mobile phone network coverage along the transport corridors between the settlements in the Pilbara; and The inclusion of the Pilbara in the National Broadband Network coverage. 10