From the air it’s an incredible sight. Sweeping down the coast across the blue green waters just south of Mackay you arrive at Hay Point where over fifty massive cargo ships are moored at intervals the length and breadth of Dalrymple Bay. Coal conveyor belts snake out from the shore to ships at the dock pouring coal into the gigantic hulls twenty-four hours a day. But it is still not fast enough. Each of the hulking vessels idling quietly in the crystal clear waters does so at cost of $50 000 a day. Far to the south, at one of the world’s largest coal handling facilities in the world, Port Waratah at Newcastle, a further twenty-five ships are waiting to dock to receive their cargo.
Coal is black gold for both State and Federal Governments. The world coal market is going gangbusters and with China and India’s insatiable need for our number one export not likely to plateau any time soon, some analysts have suggested Australia will earn around $25 billion over the next two years rising to $30 billion plus by 2007-8. The export dollars involved alone are simply staggering, but all will come undone if the ongoing delays, at Dalrymple Bay in particular, are not resolved as quickly as possible.
Dalrymple Bay from the air |
At the heart of the problem is of course a lack of adequate infrastructure to cope with demand a very common theme these days. All players involved in this saga have adopted the favourite ‘it’s not my fault’ line and endlessly blame one another. The truth is the Federal Government, the Beattie Government, the Queensland Competition Authority, the coal industry and the port operator, Prime Infrastructure, must all shoulder a portion of the responsibility for the impasse.
But be assured, there’s nothing like money and a good dose of sledging to bring pointless hand wringing and finger pointing to a speedy end.
When the Queensland Government set about privatising the Port of Hay Point facility it seemed to be an eminently sensible idea. They’d get a big fat lease fee as well as millions in royalties. It’s expected the Sunshine State will pocket a tidy $800 million this year. The Government was mildly surprised at the interest in Dalrymple Bay and eventually the contract was awarded to Prime Infrastructure who immediately dropped $100 million to enhance the port’s capacity. Former Queensland Treasurer, David Hamill, quite fortuitously found himself with a tasty board position not long after leaving Parliament and he is now the Chairman. The man who never misses a good news story opportunity, Premier Peter Beattie, turned up with his mega-watt smile to duly open the upgraded facility at the end of 2003. The Beattie Government and the operators were the best of friends.
However, way back in June 2003, Prime lodged a proposal to alter user access arrangements with the Queensland Competition Authority. In part, they sought the changes to fund massive infrastructure redevelopment of the port. The guts of the proposal suggested a revenue profit sharing arrangement between Prime and port users and upping an infrastructure charge for handling the coal from $2.08/tonne to $2.77/tonne. Sixteen months later the QCA released a draft of its decision that recommended slashing the rates and imposing a revenue cap. The decision is still not final. Understandably, Prime was none to happy and has refused to embark on any further planning or spending until a final report is delivered, adding the uncertainty made it impossible for them to seek appropriate investment. So Prime used its valuable time to start lobbying, and to lobby hard.
After meeting with Prime Infrastructure, Peter Costello took up their cause and with his sidekick Mark Vaile, the two have been happily sledging and ridiculing the QCA and the Beattie Government at just about every opportunity. The taunts were simplistic and at times ill-informed but they hit their mark very effectively.
After a string of negative stories in the domestic and international press and a couple of fire-side chats with ‘interested parties’ Peter Beattie last week managed to find a billion dollars to fund a feasibility study, a port upgrade up the road at Bowen as an alternative to Dalrymple Bay, and a better rail network. The ‘Human Headline’ (as Beattie is often called) was pipped at the post by the Prime Minister who announced his own Infrastructure Taskforce a few days earlier. A first-step plan hatched nearly three years after the Australian Council of Infrastructure Development urgently called for an integrated national approach. Of course back then National Security were the only words politicians and pundits were interested in.
The PM’s A-team, which includes his former number one man Max Moore Wilton, needs to come back to him around Budget time (no later than 20 May) with a can-do list. Given that much of the desperately needed infrastructure upgrades revolve around transportation networks, it was interesting to see that John Anderson, who is the presiding Minister, was not and probably will not be involved nor have any input into the Taskforce.
One of the problems with infrastructure renewal is that everybody wants it but no one wants to pay for it. Any continuing development of Australia’s infrastructure has stalled. Appropriate investment, whether it’s public or private, has also dried up, mainly because of competing political agendas. There’s an argument that four-year terms will assist this process and stop pork barrelling and the corruption of initiatives like the Regional Partnerships Program. Yep, we’re operating with antiquated systems that were fabulous in the 50s and 60s but are collapsing now “ we know that already. And it’s pointless to start sledging the Howard Government because any significant spending on infrastructure was also ad hoc and minimal under the Hawke/Keating Governments. They’re both as bad as each other. We do need a national approach – that’s a no brainer – but given how testy the federal state relationships have become it’s not likely to happen anytime soon.
Dalrymple Bay – loading docks |
One thing I do find incredible is when I read comments by politicians and business leaders alike that say: ‘No one could have foreseen the extent of the demand for resources from China and India.’ Do you think this might be code for: ‘Gee, we didn’t really plan for that very well did we, let’s blame it on someone or something else!’ For over ten years analysts have been telling us that China and India’s need for resources was going to sky-rocket. The smart players had already moved in to set up contacts, offices and trade routes in the major business cities of Hong Kong and Shanghai. If we didn’t know or couldn’t predict that this spike in demand was coming “ why the hell not?
Meanwhile the queues at Port Waratah and Dalrymple Bay show no signs of easing any time in the immediate future. Prime Infrastructure should be actively courting investment because, if their website is to be believed, they have long-term contracts with three of the biggest coal producers: Xstrata, Rio Tinto and Anglo Coal. All of them want to sell their coal as fast as they can rip it out of the ground so they’re fairly good clients, I would have thought. The Beattie Government seems to have come to the table (albeit just as they were serving the coffee and cheese) with some funding and half a plan; but if Costello doesn’t want another poor trade report card he needs to find some cash to swing towards infrastructure in the area as well. The QCA for its part has refused to defend itself from constant attacks over their tardiness but they will finally release a definitive report within weeks. QCA Chairman, the affable Dr Darryl McDonough, says the report will also answer much of the criticism that’s been levelled at his organisation. McDonough is a straight-talking man so it will no doubt make some interesting reading.
Whilst the coal barons are racking up millions keeping their ships waiting for cargo, I’m not sure they deserve too much sympathy. Perhaps they shouldn’t have ordered so many of them when they knew what the loading capacity was. The queues started last July so why didn’t they delay the shipping rotation? The cynical side of me keeps thinking that the millions they’re spending in demurrage costs will be money well spent if they can fire up governments to start spending billions on measures from which they will directly benefit. Those cargo ships stacked up in the small confines of Dalrymple Bay are an awesome sight, for all the worst reasons. Surely that’s not part of any concerted strategy “ is it? It’s a win-win for the coal miners. They either won’t have to pay as much for access to handling facilities or the prices won’t rise beyond what they are now; and they’re going to get new infrastructure to boot, without having to outlay a cent until it’s completed and even then they’ll be able to pass on the costs to their customers. Sounds like a cracker of a deal to me.
As for the Infrastructure Taskforce, Max Moore Wilton will find some quick fix measures for his Prime Minister, to be sure. They’ll be the kind that can be endorsed and acted upon almost immediately but I’ll be looking for the ‘Infrastructure Summit’, the bringing together of Federal and State politicians and departments, big business leaders, academics and just about anyone else who might look good in the team photo. Nothing like a good old gabfest to get the country back on the right path.