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Brisbane Economic Series Issue 2

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Three respected industry leaders Mark Birrell, Chairman Infrastructure Partnerships Australia, Martin Stewart-Weeks, Senior Director (Public Sector), IBSG Cisco and Lance Hockridge, Managing Director …

Three respected industry leaders Mark Birrell, Chairman Infrastructure Partnerships Australia, Martin Stewart-Weeks, Senior Director (Public Sector), IBSG Cisco and Lance Hockridge, Managing Director and Chief Executive Officer, QR National, discuss the region’s burgeoning infrastructure program including the impact of the mining resources boom, innovative funding models and the future of digital infrastructure.

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  • 1. brisbaneeconomicseriesissue two: march 2012infrastructure
  • 2. foreword Welcome to the second edition of the Brisbane Economic Series, a bi-monthlypublication 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 whichfeatures three industry leaders from the rail, infrastructure funding and digitalinfrastructure industries. Business leaders Lance Hockridge, Mark Birrell and Martin Stewart-Weeksshare with us their forward-thinking visions for Brisbane. Learn first-hand how Brisbane will maximise its economic opportunity throughthe continued delivery of world-class infrastructure. With Brisbane’s population set to reach 3.9 million by 2056, I recogniseour infrastructure challenge is significant, but with continued and substantialinvestment 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 thisedition because it is an area which will ultimately underpin the resilience andsustainability of our economy. Our city’s success and the future prosperity of our residents and businesseslie in collaboration, informed planning and investment in the crucialinfrastructure sector. Recent successful projects that demonstrate Brisbane’s capability to delivermajor infrastructure include Legacy Way, Clem 7, and the Go Between Bridge. Through the delivery of these key infrastructure cornerstones, Brisbane is setto thrive.Graham QuirkLord Mayor of Brisbane2 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 3. contents Issue two 04 08 12 Brisbane and Queensland’s Smarter connected: our world The booming resources sector infrastructure challenge is is growing exponentially more lies at the heart of Brisbane’s significant. Strategies from digital and networked. Advances unprecedented growth the government at all levels in in infrastructure in the digital forecasts, and is driving partnership with the private economy will contribute to substantial investment in rail sector are vital for supporting building Brisbane’s economic infrastructure that will have future growth. resilience and sustainability. far reaching benefits. MARK BIRRELL Martin Stewart-Weeks L ance Hockridge Chairman, Infr a structure Senior Director (Public Sector), Managing Director and Chief Partnerships Austr alia IBSG, Cisco E xecutive Officer, QR National3 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE A C K N O W L E D G E M E N T S // C R E D I T S CONTENTS
  • 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. The vitally important reconstruction task in the wakeBrisbane and Queensland’s of last January’s floods understandably dominated Queensland’s infrastructure program last year.infrastructure challenge is But against this backdrop we saw significant progress onsignificant. Strategies from a number of major infrastructure projects, including the Sunshine Coast Hospital PPP, Gold Coast Rapid Transitthe government at all levels in and the ongoing construction of the Airportlink andpartnership with the private Legacy Way. As we head further into 2012, the Federal and Statesector are vital for supporting governments will engage in an open debate around the projects which will help the Sunshine State –future growth. and in particular Brisbane – maintain its economic competitiveness and help reverse the nationwideMARK BIRRELL fall in productivity.Chairman, Infr a structure Partnerships The infrastructure challenge remains significant.Austr alia Traffic congestion, hospital waiting queues and straining public transport networks are constant reminders of the infrastructure task facing Australia’s4 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 5. major cities, and Brisbane is not alone in having todeal with a number of challenges that come from Partnerships will be particularlybooming population growth. Brisbane is the engine room of the Queensland important because many of theeconomy. In 2011 its contribution was valued at $114 major projects needed in Brisbanebillion, accounting for 46.7 per cent of the entireState’s economy. The Federal Government’s State of and its surrounds are simply beyondAustralian Cities report, released last year, predicted the funding capacity for any singleBrisbane’s population would increase from 2.043million in 2010 to 2.725 million in 2027. The population government or industry alone.across wider South East Queensland is forecast toincrease from 2.99 million in 2010 to 4.39 million by2031 – by which time more than 15 per cent of allAustralians will live in South East Queensland. These projected growth patterns have attractedthe attention of policymakers, who are acutely awareof the inevitable strain on the city’s transport, utilitiesand social infrastructure networks. The focus movingforward will rightly be on innovative ways to fund therequired investments. The State Government’s Queensland InfrastructurePlan (QIP), released last year, identifies $134 billion Legacy Way (Artist’s Impression)FIGURE 1: BRISBANE GROSS REGIONAL PRODUCT ESTIMATE, 2011 worth of infrastructure investment for Brisbane and and by 2031, is expected to fall to 44.1 per cent. surrounding regions to 2031. The regionalisation of South East Queensland will Progress will be made on the new motorways, rail hasten the need for improved transport connections to BRISBANE networks and social assets through a joint effort from the and from Brisbane to burgeoning satellite centres such as $114b; 9% Commonwealth, the Queensland Government, Brisbane the Gold Coast and Sunshine Coast. City Council and the private sector. That’s why there has been a broader discussion around Partnerships will be particularly important because the funding models needed to deliver major infrastructurere st of qld many of the major projects needed in Brisbane and its across South East Queensland – and farsighted dialogue$102b; 8% surrounds are simply beyond the funding capacity for any about the projects needed over the long term to grow re st of austr alia single government or industry alone. Brisbane and regional centres. $1,029b; 80% And while the planned major transport projects in With the right planning, evaluation and delivery re st of SEQ $39b; 3% Brisbane gain the most national attention, consideration frameworks in place, government at all levels will be well will also be given to the regionalisation in South East placed to turn their attention to delivery of the projects Queensland. that Queensland needs. In 1986, nearly 47 per cent of Queenslanders lived in In the case of Brisbane, this must include investments the capital. That proportion eased to 45.4 per cent by 2006 that will deal with the city’s urban congestion, which costSource: Brisbane Economic Development Plan, 20125 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 6. Mechanical and electrical fit-out in Northern Busway tunnelthe city $1.8 billion last year and is expected to rise to$1.9 billion this year. By 2020, congestion costs will reachmore than $3 billion, creating further pressures on thecity’s productivity and efficiency. All political leaders agree that enhanced rail capacityis a first order issue for Brisbane and Queensland. An Environmental Impact Statement for theproposed Cross River Rail, released last September,stated that without additional network capacity, theexisting rail system in the inner city will reach capacitylater this decade. The proposed Cross River Rail project would see an18 kilometre rail line connecting Salisbury in the south The State has submitted a proposal to Infrastructurewith Bowen Hills in the north - including 10 kilometres Australia for stages 2b and 3 of the Eastern Busway,of underground tunnels, four new underground stations valued at $685 million and $140 million respectively, withand two new surface stations; and would substantially IA deeming it a ‘threshold’ project in its 2011 report to theincrease capacity across the metropolitan rail network. Council of Australian Governments (COAG).But the floods in January saw a revised timeline for the By addressing the limited access to high frequencyCRR, with completion now estimated as 2020. public transport in Brisbane’s eastern suburbs, the project The economic arguments for a mass transit solution is viewed as important in easing congestion and openingare solid. The EIS states that the CRR would deliver up opportunities for further urban consolidation. Themore than $9 billion in economic benefits to the region State said that the Eastern Busway also meets IA’s goal ofand would boost the number of trains through the CBD growing national productivity and transforming cities.from 84 trains per hour to 132 trains per hour at full The continued upgrade of the Bruce Highway iscapacity. No doubt the procurement of such a major another key infrastructure priority. A report by theproject would be guided by the lessons learned from the Australian Automobile Association (AAA), released inprocurement of the North West Rail Link in New South January, found that the 1700 kilometre highway is theWales –the largest and most complex public transport nation’s most dangerous road.project in Australia. All political leaders agree that An estimated $2.3 billion has been spent on upgrading And while more immediate term solutions – suchas track and signalling upgrades – would help deliver the Bruce Highway over the past five years, with the enhanced rail capacity is a first order Bruce Highway Upgrade Strategy (Brisbane to Cairns) putadditional capacity across the rail network, a decision will issue for Brisbane and Queensland. forward by Queensland to Infrastructure Australia as abe needed on the long-term heavy rail requirements for priority project last November.Brisbane’s CBD. A sustained investment in Queensland’s most crucial Of course the Cross River Rail – or a similar rail freight corridor will lead to safety improvements andsolution – will not be the panacea for the city’s congestion better connectivity to key gateways - and also driveconcerns. The Eastern Busway project is another of the Brisbane’s long-term productivity growth.State’s top infrastructure priorities. Stage one of the While progress is being made on these majordedicated bus-only roadway - between the University of projects others remain under consideration, withQueensland and Buranda - has already been completed decisions still to come on funding commitments fromand Stage 2a is under construction. the Federal or State Governments.6 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 7. One major project awaiting commitments fromAerial view of major Brisbane the State and Federal Governments is the upgrade ofinfrastructure under construction 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 { 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 There is strong community appetite Institute of Company Directors. Previously he was Minister for Major Projects and Government Upper House Leader for substantial reform and a similarly in Victoria, working on successful PPPs and capital works initiatives like CityLink and the Docklands. strong commitment from governments to engage in a rational debate around the critical reform pathways. 7 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 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 In Amsterdam a couple of years back, a few business, across the metropolitan regions of Amsterdam, all now government and community organisations got together to connected into a network that allows you to book onlineis growing exponentially more solve a problem that is pretty familiar to cities all around space to work, a room to meet or a telepresence screen the world. to collaborate virtually. And sometimes just to get somedigital and networked. Advances How could the city escape the congestion and work done over a cup of a coffee and a quick chat.in infrastructure in the digital inconvenience that were increasingly the hallmarks of From the initial pilot group of 7 centres, Amsterdam growth as people spent more and more wasted and now has a network of over 120. And interesting things areeconomy will contribute to building frustrating time getting from home to work and back happening. People are using the city differently as they findBrisbane’s economic resilience and again? And, into the bargain, how could Amsterdam more convenient, carbon-reducing and cost-saving ways drive towards some aggressive targets to reduce carbon to work. But the new shared workspaces are sparkingsustainability for the future. emissions and make the city greener and more efficient? unexpected connections as people, almost literally, bump The answer was a ‘smart work centre’. Think Qantas into other people with useful ideas and skills. Club, on steroids, in the suburbs. So what started with a focus on cost, carbon andMartin Stewart-Weeks, The idea is simple. You fit out a building to convenience has turned into an engine of ‘systematicSenior Director (Public Sector), IBSG, Cisco accommodate a wide range of work styles and needs serendipity’ that fires innovation and creativity. – individuals at a computer, informal meeting spaces In Seoul, the government has announced the intention over the coffee machine, meeting rooms large and to spread a network of 450 smart work centres. Not small. Throw in the best available broadband-enabled, surprising when you consider the population of Seoul is networked collaboration technologies, like high-end roughly the size of Australia. That’s what’s called taking it telepresence video. And make sure the centre is close to to scale. transport, shops and services, child care. Take another example. The United Nations Secretary- The result is the rapid growth of these centres General has started a program of inter-cultural dialogue8 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 9. and collaboration to make a contribution to reducing becoming ‘table stakes’ for cities and regions that want to tensions across political and cultural divides. succeed in a more open and connected world. One of the tools being developed is Dialogue Cafe Infrastructure is all about the future. (www.dialoguecafe.org). Basically, a Dialogue Cafe is It requires often massive investments whose size and a public space, like a cafe, that is easily accessed and focus say a lot about our collective future. If you look at informal, with a telepresence screen that allows people to the way a company, a city, a State or a whole country quickly and cheaply connect to other ‘Cafe’ spaces where invest in infrastructure, you’ll learn a lot about the they can talk with others around the world. What they imagination, values and aspirations from which it is, quite talk about can be pretty much anything – ideas for new literally, being built. In a very real sense, our collective social change programs, artists collaborating on a piece identity is made manifest in the decisions we take about of music, students swapping ideas and projects, social what, where and how to build the infrastructure assets entrepreneurs looking for great new ideas to help them in that sustain resilience. their work. Possibly the single most significant factor that has What’s the link between these two initiatives? changed the way we think about infrastructure in the past They are both powerful examples of the new 20 years is the increasingly central role that networked capabilities that cities need to create so people can digital technology now plays in defining our world and its get the most out of their engagement with the digital risks and possibilities. economy. And those capabilities - better communication, Our world is growing inexorably more digital and simple and effective collaboration and powerful new networked. connections – rely on a bunch of new infrastructure Just to put that in context, Cisco estimates that, after assets. Rising to these new infrastructure demands is 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 consumerIf you look at the way a company, traffic will be in the form of video.a city, a State or a whole country How well and how easily we can connect across theinvest in infrastructure, you’ll Internet or other digital platforms will make or break our aspirations for innovation, inclusion and sustainability.learn a lot about the imagination, And that is certainly true for Brisbane and Queensland.values and aspirations from which Rebuilding from last year’s floods and cyclone, there is an opportunity to match Queensland’s boundless visionit is, quite literally, being built. 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 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 10. A recent study for the UK Government estimated thatspurring an additional investment of £15 billion in the UK’sICT infrastructure would create approximately 700,000 In the digital and distributed future,UK jobs. They also estimated that over half of these jobswould be in small businesses. whether we are trying to make our In the US, a 2007 study looked at the economic cities and towns easier to live in,multiplier effects (increases in GDP, jobs, tax revenues)that can be calculated from broadband investment. to start new businesses and createIt found the increase in local GDP is more than ten-fold new jobs, or to keep our waterthe value of the investments in broadband infrastructure The OECD published a report a couple of years clean and our energy sustainable,back pointing out that broadband networks increase we’ll be ‘smarter, connected’.the impact and efficiency of other public and privateinvestments. “Broadband is needed as a complementaryinvestment to other infrastructure,” the reportsuggested, “such as buildings, roads, transportationsystems, health and electricity grids, allowing them to care of a collaboration of family, medical experts andbe ‘smart’ and save energy, assist the aging, improve community support teams, they need to find people,safety and adapt to new ideas.” connect and talk with them easily and often work together A 2009 study (http://reason.org/news/show/gridlock- across large distances and over long periods of time.and-growth-the-effect) found that reducing congestion The ability to connect – what you might call ‘soft’and increasing travel speeds enough to improve access infrastructure, becomes crucial.by 10 percent to key employment, retail, education, and In the digital and distributed future, whether we arepopulation centers within a region increases production trying to make our cities and towns easier to live in, toof goods and services by one percent. The study reported start new businesses and create new jobs, or to keepthat achieving “free-flow traffic conditions” (that is, our water clean and our energy sustainable, we’ll bereducing congestion) around key urban and suburban ‘smarter, connected’.destinations in eight U.S. cities–Atlanta, Charlotte, Dallas, Brisbane’s aspiration to be Australia’s ‘new world city’Denver, Detroit, Salt Lake City, the San Francisco Bay tells us a lot about its sense of the future. And that meansArea, and Seattle–could boost the economies in those we know something of the city’s infrastructure prioritiescities alone by $135.7 billion and generate close to $9 and investments on which that future depends.billion in new tax revenues. Some big ideas and bigger ambitions are at stake. This is all important grist to the infrastructure How does the city provision new models of working,investment mill. Roads, bridges, schools, hospitals, mobility, innovation and creativity? What are the newports, big public transport systems, new housing – all of assets and capabilities that business, large small, need tothese traditional assets are still important. invest, create jobs and develop competitive products and But when an entrepreneur is looking for investors services? How does Brisbane create thriving places andor partners to develop a great new product or service, lively communities that are inclusive, accountable andwhen a teacher wants to connect her students to experts resilient, places where people want to make their homeson the other wide of the world or in the next town, when and make their mark?someone needs access to specialist health care or the Creativity, inclusion, innovation, sustainability – these10 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 11. are increasingly the hallmarks of successful cities andcommunities into the future. And reaching for the risingstandards they imply will increasingly be a function ofthe confidence with which the city and its citizens masterthe new demands of the digital economy. Connecting,communicating and collaborating are the new enginesof progress. And that means investing in the necessaryinfrastructure assets, capabilities and culture. This is Connecting, communicating andnow the stuff of leadership in the digital economy. collaborating are the new engines of For Brisbane and Queensland, the task is howto achieve economic resilience in a connected and progress. And that means investingcompetitive world, make a transition to a low-carbon in the necessary infrastructureeconomy and lifestyle and make communities safe,creative, clever and inclusive places to live. assets, capabilities and culture. This That means investing in the digital fabric of the new is now the stuff of leadership in theeconomy whose technology assets are becoming morevisual, virtual, social and mobile. digital economy. More smart work centres and Dialogue Cafes, for{example? n 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 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 12. Growth will be sustained and opportunities will emerge if we continue reform in areas of labour, productivity and infrastructure. It’s little more than a year since QR National made itsThe booming resources sector debut on the ASX – a momentous day for our Brisbane-lies at the heart of Brisbane’s headquartered company with over nine thousand employees across Australia. While the $4.6 billion float inunprecedented growth forecasts, November 2010 was the biggest IPO in Australia in more than a decade, equally it marked new beginnings for thisand is driving significant iconic Queensland company with a 145-year history.investment in rail infrastructure Like many in 2011, we were confronted by the Queensland floods. Our operations fortunately withstoodthat will have far reaching benefits. the onslaught remarkably well, and we start 2012 with renewed optimism and determination to deliver on theL ance Hockridge changes needed for our company to support the rapid growth forecast for the region.Managing Director and Chief E xecutiveOfficer, QR National 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 competitive12 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 13. and connect with regional communities. Brisbane has a great balance of dynamism, energy and the right The transport and logistics opportunities to help us realise our aspirations for the region’s infrastructure development. Its world-class industry in Australia should liveability and increasingly sophisticated social and be a world-class enabler of cultural scenes provide an ideal platform for a company like QR National to breathe and grow. competitive advantage for local Home-grown enterprises and a range of leading companies and industry. Rail can national and multi-national companies now call ‘Australia’s new world city’ home. There’s a burgeoning make a genuine and sustaining industry of IT excellence invigorating the business contribution to the next wave of landscape. QR National, with its national footprint is very much at home in this city. It serves as the perfect productivity for the Brisbane and hub from which to connect with other states, South- Queensland economies. 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-locationadvantage for local companies and industry. Rail can make allows us to remain engaged and in touch. We also sharea genuine and sustaining contribution to the next wave of a large regional employment presence and a connectionproductivity for the Brisbane and Queensland economies. with regional communities. From a long, proud history in Queensland’s economic Like others, an emerging challenge for QR Nationaland social development, QR National has grown to has been the fierce competition to attract and retainbecome the country’s largest rail freight company. talented people – both at the executive management levelThe network carries more than $50 billion worth of and in engineering and trades. Brisbane, with its vibrancyAustralian exports each year. And now the move to a and energy, provides a positive context in which to facepublicly-listed company will help accelerate the changes these challenges. The ‘lifestyle capital’ of Australia is nowrequired to sharpen our performance and customer matched by unprecedented migration rates and careerservice, delivering better commercial outcomes for opportunities. That I could take a CEO role in Brisbane,industries that rely on rail freight. Continued investment in was a driving factor for me in repatriating with my familygrowth projects will be a critical driver for future success from the U.S. in 2007. I know my experience is sharedfor both our organisation and the region’s economy. by many executives now residing in Brisbane and the Our business covers coal on the eastern seaboard, iron Sunshine State.ore in Western Australia, intermodal freight and a range In terms of infrastructure investment and growth,of rail-related products such as heavy-engineering and Queensland’s capital IS in the box seat.track maintenance and construction. The Deloitte Access Economics Investment Monitor QR National’s heritage and heartland are in released in February identifies planned or committedQueensland, so Brisbane is the logical HQ for the projects in Australia totalling more than $900 billion.company. From here, we can efficiently and effectively Unsurprisingly, mining accounts for almost half ofrun our operations, stay in touch with major customers investment activity. Around 40 % of these projects are13 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 14. 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.The challenge here for the transport QR National’s focus is on supporting a strong andand logistics infrastructure industry growing export market where Australian resources remain highly-competitive globally. We know thatis to align with the demand curve Australian resource supply chains are among the bestfor Australian resources and to in the world but the pressure is on for accelerated improvement. The challenge here for the transportcontinue to exploit all the benefits and logistics infrastructure industry is to align with thethat technology and operational demand curve for Australian resources and to continue to exploit all the benefits that technology and operationalexcellence offer. excellence offer. While Korea and Japan traditionally are the biggest consumers of Australian coal – about 54 per cent for FY 2011 - 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 will14 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 15. run to tens of billions of dollars. Obviously these The first component of the $1.1 billion GAP Expansion In terms of infrastructure investmentwill not all progress along the same approval and was opened to rail traffic in December 2011. Whencommissioning path, however it does underscore the completed in June 2012, the project will take to 50 million and growth, Queensland’s capitalscale of growth anticipated. tonnes, the annual capacity on the Newlands system to IS in the box seat. Here in Queensland, the current rail infrastructure Abbot Point Coal Terminal. It’s a project underwritten byand port capacity is in the order of 200 million tonnes five foundation customers - BMA, Rio Tinto Coal, QCoal,across QR National’s network and into ports at Macarthur Coal and Lake Vermont Resources.Gladstone, Mackay and Bowen. Our capital program Importantly, the project has been designed to allowis growing this network capacity in alignment with significant future expansion - from 50 to 100 to potentiallycustomer and industry needs and in a manner which is 200 million tonnes as customer demand dictates.operationally efficient and commercially sensible. Similarly, the $900 m Wiggins Island Rail Project, QR National is currently delivering a 30% step-change announced in September 2011, is leveraging our existingincrease in this system capacity with more than 70 infrastructure to deliver a 30 % boost to coal exports frommillion tonnes per annum being added from now through the southern end of the Bowen Basin to meet increasingto 2015. This will take total system capacity to around 300 demand from Asia and beyond.million tonnes. It will deliver 27 million tonnes of extra capacity per Major projects, comprising more than $2 billion of year through the proposed new terminal at Wigginsinvestment, include: Island, at the Port of Gladstone. Wiggins is being • Goonyella to Abbot Point Expansion developed by a consortium of eight mining companies (adding an extra 34mt) – the same companies with whom QR National struck a • Wiggins Island Rail Project (27mt extra) commercial agreement on the project’s rail component. • Hay Point Expansion (11mt extra)15 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 16. These companies are Xstrata Coal, Aquila Resources, As the ASX’s second largest Brisbane-based company, Bandanna Energy, Caledon Resources, Northern Energy QR National looks forward to continuing to invest and Corporation, Yancoal Australia, Wesfarmers Curragh and grow our business nationally, delivering benefits for Cockatoo Coal. customers, communities and the broader Brisbane and First railings are scheduled for mid-2014 with Queensland economies. n { completion by March 2015, subject to the project’s approval by the Queensland Competition Authority. Future expansions for Wiggins Island contemplate Lance Hockridge became Managing Director & CEO of QR construction of the Surat Basin Rail – or so-called National after its structural separation from QR Limited in ‘Southern Missing Link’ – to tap into Xstrata’s massive July 2010. Wandoan mine and others in the region. QR National Lance joined QR as Chief Executive Officer in November 2007 is part of the consortium for the Surat Basin Rail with with more than 30 years’ experience in transportation and heavy industrial sectors in Australia and the United States with Xstrata and ATEC. BHP and BlueScope Steel. The industry contemplates Wiggins Island terminal In QR, and now in QR National, he has led a transformation going to more than 80 million tonnes and our rail program aimed at delivering world-class safety, customer service excellence and superior commercial capability. network is well-positioned and capable of expanding to Lance played a leading role in QR National’s preparations for meet that future demand. We can use the existing 2,300 the IPO, overseeing structural separation and the company kilometre Central Queensland coal network to support through the transition from government to private ownership. 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 2014. 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.16 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS
  • 17. acknowledgmentsSPECIA L THANKSBrisbane Marketing is indebted to our special contributors for their generous involvementwith 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 CREDITSSmart work centre images: Matthijs Borghgraef - http://www.kwikzilver.nl/Airportlink images: Courtesy of Thiess John HollandCONTACTwww.investbrisbane.com.auLevel 8, Roy Harvey House, 157 Ann Street, Brisbane, Queensland, Australia, 4000PO Box 12260, George Street, Brisbane, Queensland, Australia, 4003Phone: +61 7 3006 6200 Fax: + 61 7 3006 6250 Email: invest@brisbanemarketing.com.auAs a wholly owned subsidiary of Brisbane City Council and the city’s economic development agency, BrisbaneMarketing 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’snew world city and as a destination for business investment, export, international students, conventions,tourism, major events, and CBD retail.PUBLISHED BYwww.investbrisbane.com.au17 BRISBA NE ECONOMIC SERIE S – IS SUE 2: INFR A S T RUCT URE CONTENTS

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