Northern Australia Story – The Stadium Of Economic Hope And Hyper Corporatocracy

Northern Australia pioneered as leaders turn a sod of sacred soil in the nominal coliseum of the “Capital of North Queensland”

The federal, state and local intergovernmental leaders moved on Townsville bearing the greatest gift to the local people in decades, a “shovel turning” media event to mark the beginning of the construction phase of the North Queensland Stadium.

Coined during a Regionalisation Summit in Northern Australia, the media throng was on hand with three levels of Australia’s government to announce the start of construction of the new 25,000 seat North Queensland Stadium, and new North Queensland Cowboys home ground.

Although the event may seem insignificant to the contemporary observer looking back at the context of the colossal impacts of colonial settlement of Australia, in the context of Australia’s industrial, commercial and social pioneering ventures, the stadium is literally groundbreaking!

Leaders have been presiding over the past ten years of investments. So this event marks to the people the return of hope, of much-needed jobs and business stimulation. And to the representatives in attire turning the chrome-plated shovel, it is the beginning of beneficial trust created by design thanks to their political forebearers.

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Bring cash flowing again. Most publicly and poignant to the politicians, is the taking and staking of their immortality whilst claiming for their respective parties, the credit and spoils as the pioneers of Northern Australia’s future capital city district in Townsville.

Yet the idea of capital cities based on population and exclusive geography of a constitutionally recognised state or territory brings no credence for a political culture erring and wearing in light of the symbolic, cultural and socially equal and fair identify of minority rights.

In the name of a federal government inspired innovation in the Smart City Deal (SCD) and State government inspired capital of North Queensland proposal symbolising sustainable growth infrastructure in the CBD Revitalisation and Waterfront Priority Development Area (WPDA), the jobs-creating and confidence-boosting stadium project was announced with the fanfare it warranted.

Never mind about the 129 contributors out of 273 individuals and organisations in the Townsville community that had overwhelmingly supported an integrated cultural and entertainment solution in the form of an integrated stadium and entertainment centre, including convention centre for Townsville’s waterfront.

Instead, the mass media; television appeal and influence of the National Rugby League (NRL), who contributed $10 million to the project, coupled with the unyielding belief and sunken finances of the largest patriot investor in the CBD and leader of the NRL franchise in Townsville, it was seemingly inevitable that the lower economic impact stadium option for the City was chosen.

Moreover, representation of the local hard working community leaders, most of whom were absent from the sod turning ceremony, were in the majority of cases not acknowledged or unnoticed.

Thanks to the example of the actual immortal great leaders in history, this oversight of self-actualisation leadership cannot be understated. Because an observable measure of one’s effective leadership today is benchmarked. Getting things done without too much fuss or bravado, and where recognition is warranted, the team is usually credited with the honor and recognition first and foremost.

Yet in this instance, the team are intergovernmental politicians; the Mayor, Premier’s representative and Prime Minister’s representative with principal contractors on hand for comment. But hang on, where was Prime Minister Mr. Turnbull, or Premier M. Palszsuzus and the ceremonial head of state, Governor General Mr. Cosgrove?

After all, this symbolic region of Northern Australia is the capital of the “Townsvillean” territory and patriotic domain of the North Queenslander and NRL Premiership winning team of the North Queensland Cowboys.

So the only way to promote the achievements of political policy and decision making is to make sure every funding gift to the electorate counts, making all the hard work worthwhile and hopefully bringing about enough communication coverage to cause voters and consumers to bring repeat business or reelection.

Well, this will happen at the opening of course, but the pioneers are the ones remembered in the history books long after the grand opening, especially as the opening will be about sport not about the few pioneers who turned the original stone.  

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But what, when and by whom has the hard work being done to get the stadium job-stimulation project to the “sod turning” stage? Because none of the original pioneers of the capital of Northern Australia and the stadium investments were part of the sod turning dignitaries of the stadium project on the 20th August 2017.

As a long time NQ Cowboys fan and supporter, I stood loud and proud cheering in the grandstand at Olympic Park in Sydney when the boys won the 2015 grand final. It was one of the best days of my sporting experiences. I like the Cowboys. They are my team.

It would be fair for me to say, that Johnathan Thurston’s (JT) speech and his direct appeal for the stadium funding from the federal government was the greatest leadership moment that sealed the remaining $100 million funding deal. The hard work of the premiership team at the Cowboys that year was a major contributor. The power of winners, sport, the media and digital technology was an awesome combination.

Considering the broader community appeal of JT clearly documented in the recent Pure Projects Strategic Review, the stadium funding speech was just as influential as the Premiership itself. Not the least because of the mass attention it brought to North Queensland. But also for the fact the people have said JT is the “most inspirational leader” they know in Townsville.

Afterall, JT is a great leader with a humble, dignified, self-accountable and never quit persona in the community and he yielded the Prime Minister’s commitment for the remaining $100 million.

Also, the long standing Chairman of the Cowboys, Lawrence Lancini must take the greatest credit for the successful funding campaign being involved at nearly every strategic stage of community leadership.

It was sad that neither Mr. Thurston or Mr. Lancini were present at the “sod turning” event, even though the Cowboys administration was represented. The other major contributor, not present was Anna Bligh, former Premier of Queensland and current CEO of the Australian Banker’s Association.

But the day was all about the intergovernmental initiative. Individual politicians representing their claim to the higher moral ground. Whilst the federal and local government continued to sell an innovation policy in the form of the Smart City Deal. The state government forwarded their campaign for infrastructure and sustainable economic growth policy across local government and planning, headlined by “more jobs, more contracts”.

Is this really what our political leaders are doing and does this reflect the desires and the active will of Townsville and North Queensland population?

Interestingly, the Queensland Department of Infrastructure, Local Government and Planning reported on 28th September 2015 in its Public Notification Submission Review Report into the WPDA that infrastructure and sustainability ranked as the two lowest priorities, while innovation didn’t rank anywhere.

So in the most robust and rigorous consultation undertaken in recent years of Townsville’s key strategies for economic growth, Transport, Culture & Entertainment and Vision were the top three subjects for priority consideration by the collective community leadership of Townsville in 2015.

And furthermore, the highly regarded Pure Projects Strategy Review in 2017, recommended both the CBD Revitalisation and Waterfront PDA was too narrow in scope and that the Strand, Radical Bay, Rowes Bay and Castle Hill should be included in the capital of northern Australia master plans.

Yet the inter-governmental representatives identified the stadium as a jobs growth generator due to the Smart City Deal and critical infrastructure, sustainability, local government and planning initiatives of the State government.

How can all levels of government in spite of the active and overwhelming majority of individuals and organisational leaders in Townsville, including local government, find themselves so far apart on priority and orderly economic stimulation and infrastructure developments?

The North Queensland stadium has been regarded as the signature project of the City. It defines the biggest amount of government expenditure on an individual project in local history. Equivalent to the funding announced for the duplication of the water pipeline to Ross River Dam from the Haughton River, which was committed to by the current Premier even before the Taskforce interim report was produced.  

As the North Queensland stadium takes shape, property investors will contemplate various certainties and uncertainties in the overall property market and economy of Townsville.

Unlike the macro economic factors such as cash interest rates, commodity prices, employment and business confidence, for which there is plenty of commentary already, TREN’s local network of investors and experts will lay out a series of articles on the context and cases of management and leadership that are impacting and causing sustainable growth.

Effective investors would agree, the management of governance as with the governance of corporations is the first and last line of defense against risk and first and the last opportunity for returns.

TREN will articulate the triggers and situations that have shaped the priorities for Townsville’s growth and recession, misjudgement and brilliance in recent history and describe how the current and future crop of “disadvantage or victim leadership” presents unfavourable certainty in striving for the sustainable property market of the future.

Image: Local, State and Federal Government Ministers and Stakeholders stand ready to turn the
first sod of soil on the new $250 million North Queensland Stadium Photo: State government

Becoming a technology driven global economic player is what Townsville is poised for but the intelligence and sensitivities of cultural identity leadership are by and large being imported or being cycled out through a rotating academic and political pipeline.

The concept of spatial experience could be illustrated this way. The economy is represented by a modern roller coaster going up and down, at speed, providing thrills in the good times and fear in the bad times, driven by free market conditions and technologies.

Meanwhile, the political leadership of the city and state, still riding a turn of the century carousel, is experiencing a less volatile environment. Still in motion but has an unrealistic feel of the gravity effect and unexpected twists and turns of an economy capable of more. But it is constrained by a mechanical instrument of a “central pivot” or “south-east Queensland-centric” power source.

Queensland and Townsville’s leaders are likely to repeat the cycle of scarcity thinking and quick returns based on election schedules, and an express mentality by leaders of self actualisation inspired more by social status and empowered by social infrastructure investment. It’s better to be lead the believed then it is to humbly lead the aggrieved.

As the 13th largest City in Australia, Townsville is one city that has a “boom and bust” story in its current generation. It resides in a developed democratic nation that has not experienced a recession in 25 years.

North Queensland pioneering a new territory, it is being dominated by a formula of progressive management of state and local governance, an addictive federal and state social infrastructure investment economy, and an authoritative academia leading the latest generation of corporatocracy organisations.

The apparatus of which is Townsville’s own unique brand of the corporatocracy, which is seeking to justify derivatives revenue independent from taxpayers, thereby attracting increasingly disruptive and even hostile influences to the eco-system of political power, profiteering and strategic advantage.

But the public connection and relationship between local incubators and leadership academies are being stifled by “groupthink” structures and command and control systems. The governance climate is cultivated by a low hanging fruit appetite of “wait and see, take what we can get” attitude now driving the “capital of Northern Australia” brand.

The Townsville City Council has recently restructured its organisation and is acquiring its senior executive capabilities under the leadership of CEO Adel Young, who is presiding over the largest reform of the local government authority. Two hundred management and support staff have exited the local government authority. However, the planned restructure and public announcement estimated 144 positions will be made redundant, impacting heavily on the compliance associated processes across it community engagement and infrastructure departments.

With a line of sight of leadership influence over the past decade, and a recalibrated local government administration slowly taking place that must operate under the reforms of the progressive Labor-centric local government reforms, this Story of Northern Australia – The Stadium of Economic Hope and Hyper Corportacy series should bring an insightful perspective on the Townsville property market, and perhaps, bring to light some of the factors that are constrained by the scarcity economics model.

More broadly, the economy, organisational and social structures impacting the dynamics of the market will come into sight, aiming with fortuitous intention to stimulate and build discussion from a unique insight of the atmosphere of the challenges and opportunities being faced by the “capital of Northern Australia”.

Of course, the intention is not to mask the positive outcomes that have been achieved across Townsville and North Queensland, nor to purposefully draw attention to negative perceptions as might be a factor of vested investors or operators in the property supply chain. Instead, the series aims to deliver candid, transparent and honest observations to the critical tenants of the collective interests in the region.

Be sure to subscribe to TREN eMagazine to get your TREN exclusive copy of “The Story of Northern Australia – The Stadium of Economic Hope and Hyper Corporatocracy”.

TREN will seek to publish further chapters over the coming months.

Subscribe here for your exclusive free copy and to take this opportunity to add to our research and share your own observations.

Further reading:

Kirwan – Top Price Property of the Week – 1 Crown Close – $655,000

Commercial property in Townsville found gasping for owner-occupiers

Hotel managers slam Townsville Council over Double Tree exclusive

Agricultural and water security boost for North Queensland; Hells Gayte Dam $2.2 million feasibility study 

Magnetic Island – Top Price Property Winner of the Week – 3-5 Endeavour Road – $520,000

Durie Is Out! Gay And Green Thumb Poster-Boy Snapped Duplicity Of Premier On Townsville Water Security

Guide to selling a luxury home

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Disclaimer

Commercial Property In Townsville Found Gasping For Owner-Occupiers

Commercial Property Report

Commercial property in Townsville is lingering at the bottom of the property cycle, leading property valuation firm Herron Todd White (HTW) has identified in its August 2017 property market review across the nation, finding Townsville and three other major centres are gasping for demand as owner-occupiers snatch up property discounts.

Of the 30 regions captured in the HTW August 2017 national review, Townsville, Perth, Wide Bay and Adelaide are the only four regions positioned at the bottom of the market.

But is being at the bottom of the market a blessing or curse?

Well, it depends on the whereabouts of the buyers and sellers in the property cycle. For buyers, these conditions could be a blessing because properties are primed for “value” acquisition. For sellers, it could be a blessing also as the slump can be exercised with discipline and prudence in the investor’s’ strategies.

However, in the context of the broader Townsville economy, it demonstrates an outcome of the region suffering from sustained negative growth, as the bottom of the market status has been a sustained petulant condition. It is true, the “slump” phase of the property cycle is usually the longest and Townsville has been lingering in this phase for a few years.

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Regions

What are the signs of the slump?

Townsville’s industrial property market is attracting owner-occupiers seeking excellent value under the $1 million price range. The occasional high-end acquisition is occurring also where strong cornerstone leases with banks, government institutions or high-end brands such Harvey Norman, etc. are in place.

Industrial rental prices have continued to decline to reach a point where the struggling market is slowly absorbing available supply. Landlords have offered customers incentives with rent-free periods to secure lease terms, which are settling at around 3 months of free rent.

Warehouse space mainly in the Garbutt area has reached $90 to $110 per square metre, mainly towards the lower end of this price range in the area of Townsville.

While better quality industrial property in Garbutt and Bohle is fetching prices in the middle of the $90-$110 rental price range, properties with larger office and hardstands are achieving up to $140 per square metre.

The industrial market in Townsville is still oversupplied based on current demand. HTW’s property report stated; “Overall rents are flat with the market continuing to exhibit a balance to an oversupply of property available relative to current demand.”

Downward pressure will remain on industrial rental prices until such time the market situation improves.

In terms of the HTW’s indicative property clock, Townsville’s commercial property market is persistently situated in the “bottom of the market” phase. The status of the economy is “flat” and rental vacancy trend is “steady”.

But what are the signs of a recovery?

Three main signs of a property recovery are: sale prices rising, rental prices rising and the time on the market to sell properties reduces. With respect to commercial property, new construction activity can also be an indicator.

The residential market has moved to the recovery phase in the property cycle as a shift has occurred in the sector across houses and units associated with accommodation demand increasing due to employment stimulation from minor and major projects.

Further reading:

Agricultural and water security boost for North Queensland; Hells Gayte Dam $2.2 million feasibility study 

Magnetic Island – Top Price Property Winner of the Week – 3-5 Endeavour Road – $520,000

Durie Is Out! Gay And Green Thumb Poster-Boy Snapped Duplicity Of Premier On Townsville Water Security

Veteran Diggers Fall Victim To National Housing Scheme Spruiker

First home buyers grant “pitted” by the Queensland Treasurer

Townsville sold out by PM Turnbull Smart City Deal

Guide to selling a luxury home

Free Subscription Offer

You’re fired! The best summer. Bugger – Go Digital. Join TREN. It’s Free. Explore more..
Click on image above to Join TREN

How to stay up-to-date

Do you have an opinion about the commercial property market?

The TREN community wants to hear your story.

Become a subscriber to TREN eMagazine and be the first to receive local breaking stories, analysis and opinions on the Townsville real estate market.

Disclaimer

Major Projects Feasibility Ranking: $22 Billion Investments In Townsville North Queensland

Major Projects in the Adani Coal Mine, Singapore Army Training Initiative and Magnus Resources Consortium Battery Gigafactory are proposed to impact the Townsville property market in 2017 and ongoing over the next 50 years.

The certainty of the projects are being influenced by events and policies from graziers, lenders, fund managers, politicians, protect group’s, competitors, foreign governments, supply chain disruption and even natural disasters such as cyclones and even military conflict.

Introduction

The economic impact of industry, and especially large industry investment, in Townsville North Queensland is critical to understand for many stakeholders. The information and knowledge of the predictable causes and consequences of opportunities and risks are the determining factors in which people and companies plan and review purpose, progress and pull out decisions.

These factors are occurring in the property market as we speak, creating residual exposure if you are already in the market or targeted scenario of exposure if one is considering to acquire property assets in the market.

As a small property investor or business decision maker, these scenarios and conditions are viewed as either favourable or unfavourable, setting a guide for decision makers to get an early indication of whether a market is worthy of further research and development investment.

Gauging as a reader, an expert local opinion of the three largest private capital projects forecast to transform and project massive population growth, the market is being critiqued every day and discussed with market players, some of the speculation, some diligent analysis and some of it guess work at best.

How does one know who to listen to; which brand, builder, real estate agent, bank or financial planner, friend or relative to believe or trust? Well, it is very difficult!

So I thought, how can this information be shared succinctly, make the local knowledge meaningful and valuable to remote observers and local interests in the Townsville marketplace?

So we went ahead and compiled this review and drawn a qualified assumption of the data and arrived at a ranking of whether the projects and individual events are likely or unlikely to proceed on a scale of 1 to 10, ten being probable and therefore has more certainty of proceeding as planned based on the company’s own disclosed economic impacts. On the other end of the ranking scale, 1 is improbable and has intolerable uncertainty in the opinion of the review.

This is the qualitative ranking system applied;

Probable (10)

Highly Likely (7.5)

Likely (5)

Highly Unlikely (2.5)

Improbable (0)

You will notice these rankings have been selected against each aspect of the project scenarios discussed here. Based on the timely available information, these rankings must move up or down like a barometer measuring the air pressure in the atmosphere. It is simply an indication or gauges only.

The feasibility rankings aim to add value. Do you find the information useful? So your comments and feedback, and of course, any professional and investor insights are most welcome.

Current Status: Completion Likelihood Rankings Card – 4th August 2017

Project	Ranking	Trend
Adani Coal Mine:	7.5	Down
Headquarters	10	Steady
FIFO Hub	2.5	Steady
NAIF railway loan (private ownership)	2.5	Steady
Singapore Army Training Initiative	4.0	Down
Magnus Resources Battery Gigafactory	7.5	Up

Townsville and districts economic context

The Townsville North Queensland area generates 14.1 billion in economic activity per annum based on the Townsville Enterprise submission to the 2017-2018 federal budget. The broader Townsville and North West districts contribute approximately $18 billion per annum. $11 billion worth of goods, materials and commodities are traded through Townsville Port each year.

The projected pipeline of private and public investment projects that are yet to be funded is estimated to be worth $22.2 billion over the next 25 years.

This includes the Adani coal mine, Magnus Resources battery gigafactory and the Singapore Army’s training initiative. All three of these projects combined are forecast to contribute over 95% of the total funding pool to the Townsville region over the next five years.

Nearly 90% of the projects are based on the local government area (LGA) of Townsville not including Charters Towers, Burdekin, Palm Island and Hinchinbrook. However, three-quarters of the funding pipeline is being allocated outside of the Townsville LGA such as Adani and the Singapore Army training initiative which is located in the Charters Towers district.

A senior economist from BIS Oxford economics reported recently that $1.4 billion in infrastructure and projects funding would be allocated this year in the Townsville North Queensland region. The majority of which are construction projects in residential housing and existing public infrastructure extensions in the Townsville LGA.

Scope of major projects

Real estate, rentals, and hiring, mining, public administration and manufacturing are the top four categories contributing to the broader Townsville economy with an impact of 38.4% collectively out of the $18 billion gross contributions. Mining contributes approximately 13 per cent.

However, mining, which includes smelting and processing, in the Townsville LGA contributes just 2.5% to the economy. The Adani coal mine, which is located in the southwest towards the Bowen Basin, is not included in the scope of the Townsville LGA and its claimable economic impact.

For example, Clive Palmer’s North Queensland Nickel refinery shed 800 employees in 2015 which had a significant impact on mining outcomes in the Townsville LGA, trigger a significant increase in unemployment and small to medium size business failures.

Adani coal mine (Galilee Basin)

Highly Likely (7.5)

The Adani coal mine and Abbott rail projects are without a doubt the largest investment in Queensland over the next 50 years.

Of the three significant private investment projects potentially to impact the Townsville economy and downstream property market in the foreseeable future, the Adani project by far is the largest at $18.5 billion.

The Adani mine is located in the Galilee Basin which incorporates 13 local government areas, 14 townships and less than 20,000 population in central and northern Queensland. Townsville is not one of the local government areas.

Adani headquarters

Probable (10)

However, Adani’s regional headquarters is based in Townsville with a medium term plan to employee 200-500 people. Reports suggest eighty people have been employed so far since the office opened in June 2017.

These jobs are mostly defined as “private administration and other services”, a category of economic gross domestic output that contributes approximately 2.5% or 5000 administration workers to Townsville’s economy. Be mindful, this does not include administration jobs in federal, state and local government.

The 500 white collar workers of Adani, once the full contingent is employed, are estimated to contribute less than 1% to the gross administration output of the city. To many observers, this is a rather insignificant amount in the context of the total productive labour force of the City.

Fly-in Fly-out (FIFO) Hub

Highly Unlikely (2.5)

The forecast placement of the longer term Adani FIFO hub has not been determined. The company claims that 4000 jobs will be created in the construction phase of the mine and 1400 jobs will be needed ongoing. The 3000 jobs for the rail line construction are in addition to the construction jobs and are unlikely to affect Townsville.

Rockhampton, Mackay and Townsville have been identified as potential passenger hubs. Rockhampton and Townsville are receiving the most attention as the Mackay region has been absent with an active bidding campaign.

Premier Anastasia Palaszczuk with Adani Chairmen and 

Photo: The Australian

Media speculation is suggesting the FIFO hub would be an exclusive arrangement with one city. This might be possible but very unlikely because the actual number of on-site workers needing to fly would be more like 1000-1500 over a 2 year period. These are rough estimates it must be said because Adani has not qualified these estimates directly.

Based on Adani’s direct and indirect employment impact assessment, 4000 jobs is the total labour force capacity forecast to be employed during construction. These are not just in jobs at the mine site. They include some of the 80 white collar workers in their Townsville headquarters, and positions advertised for Brisbane, Sydney and Melbourne, that have already been appointed or being recruited.

Therefore, the logistical constraints and probable disruption risks to the airports and Adani’s labour supply during severe weather, emergencies or even protest disruption would determine that the exclusive FIFO hub strategy would be unfavourable in the scope of Adani’s enterprise risk statement to the Board.

The State political agenda would also favour a diversified FIFO hub. Of course, Townsville’s economic, political and media interests would disagree. But it serves Adani’s interests more prudently, and it fits with spatial considerations for Downer EDI, who has been awarded the contract to build and operate the mine. Downer EDI’s existing infrastructure network is incumbent in central Queensland.

Queensland political stakeholders will seek to spread the “jobs” payoff leading up to the 2018 State election. Adani will accommodate because the company relies heavily on State Labor support and positive statewide public opinion. Knowing these sensitivities, it would be harmful to Adani to erode any of the political capital it has gained in Queensland, especially as the Premier comes under increasing pressure to state a policy position to counter One Nation’s policy for the government to build, own and manage the Abbott Point to Galilee Basin railway network.

As it is, the Labor left and Green movement pose too great of a risk in the political and reputation steaks for Adani. The Green campaigners such as Get up and the Conservation Foundation in Australia have made it clear they will disrupt the mine until it is shut down. This means Adani’s most public supply chain assets such the FIFO hub will be the target of continual protest campaigns.

If the exclusive hub strategy is adopted, Adani, Townsville Airport management, and Police must factor in contingencies for high-intensity security measures that aim to mitigate the disruption consequence that could cause unacceptable safety, security, general passenger reputation, and if continuous, the financial and assets risks to the Adani supply chain. Confronting concentrations of anti-Adani blockades, lock outs, picketing at the FIFO hub is a probable scenario.

Nearly 100% of the mine site construction and operational labour force will be supplied and managed by Downer EDI. One hundred percent of the mine site is outside the Townsville LGA. Only 5 percent of the company’s workforce is secured with Adani’s headquarters in Townsville, and not all of these have been gazetted.

Therefore, Townsville’s prospects of having more than 1000 white and blue collar workers based in the City, permanent and FIFO, during the mine operations would be a very favourable outcome indeed for the economy. This scenario, however, is becoming even more optimistic considering the current political and supply-chain exposures.

Although Townsville has high unemployment of just under 10 percent, the city is struggling to find personnel with technical trade and machinery skills within the LGA as it is, because these capabilities have moved out of the area in 2015-2016 while local housing construction and government investment in 2017 are consuming available resources.

Townsville’s desire for a directive from Adani on an exclusive FIFO hub in Townsville is likely to be lost due to political pressure, and the fact the local Labor members in Coralee O’Rourke, Cathy O’Toole, and Aaron Harber are constituents in the conservation and socialist union agenda, Townsville’s fight for exclusivity sits on the outer rim of persuasive influence.

Hence the exclusive FIFO hub is ranked 2.5 being highly unlikely.

Adani private ownership of railway

Highly Unlikely (2.5)

The politics around this issue over government ownership has recently developed since Pauline Hanson declared it is the policy of the One Nation Party (ONP), which holds nearly 20 percent of the Queensland vote and the balance of power with one Independent and two KAP members from northern Queensland.

The Adani private ownership model seeking a loan of $ 900 million from the federal government has driven a wedge in the State Labor government cabinet. The ONP’s policy for government ownership is likely to expose even further division in the Labor movement as it clashes ideologically with the Left anti-industry agenda.

At the last election, Labor won power on an aggressive “no assets, no sale” campaign against the Newman LNP government.

The ONP and the Katter Australian Party (KAP) are vying for votes as well. Their government ownership policy will help these “minor parties” to regain the balance of power in the Queensland parliament at the 2018 State election.

ONP has said in a stated policy that they will demand that the Queensland government build and own the “below rail”  railway network.

The Queensland government already owns the South east Citytrain network, “great northern railway” network and some western passenger service routes. The Queensland Treasury pays in excess of $300-400 million per annum to Queensland Rail (QR) Limited in Community Service Obligation (CSO) grants to maintain and manage the infrastructure. The coal network in central Queensland does not need such subsidies as they are profitable networks.

Furthermore, government asset ownership is the Labor party’s policy mantra across all portfolios including energy, investments, roads, rail, etc. The Australian Competition and Consumer Commission’s (ACCC) is investing the energy market now and are in Townsville next week conducting their investigations.

Adani has stated they are an energy logistics company and not a mining company, so ownership of the railway and the port at Abbott Point, which Adani owns already, could have a catastrophic material consequence for Adani’s business model. Supply chain control for Adani is strategically critical also to secure capital funding.

In this context, it is highly likely the NAIF loan, which Queensland must handle and process, could trigger further internal dissent within Labor ranks and put the brakes on this critical loan proceeding before Adani’s own December 2017 timeframe.

Jackie Trad’s Labor left faction is an ardent “Stop Adani” campaigner. The Deputy Premier said Labor will not facilitate any funding for Adani. It is, in fact, Labor policy that was reinforced at the party’s State Labor conference last weekend in Townsville.

Both asset ownership and the “dirty” coal industry are the two decisive issues for the Premier. Issuing Adani a mining lease and supporting the procedural role of the State to handle the NAIF loan has already created an internal revolt. Out of the back of this revolt, the Labor Premier has stated a zero carbon emissions target by 2050, while announcing the largest electrical motor vehicle charging network on the east coast from Port Douglas to Coolangatta.

And now, asset ownership is inadvertently empowering the Labor left. Desperately competing for minority primary votes with the ONP and KAP, even more so now, as the downfall of Adani is Ms. Trad’s number one target, securing inner-city votes and green preferences.

It could even mean a leadership spill with Premier Annastacia Palaszczuk. It puts the Left agenda in the middle of the Cabinet debate, and the election win or lose strategy weighing in favour of a minority government for both Labor and the LNP, and therefore, the critical numbers on the floor of State parliament and power to ONP and KAP.

Although the Labor left don’t want the railway line built because they are “anti-coal” and anti-carbon industry, it could serve their agenda in the short term of stifling the Adani’s NAIF loan application and threaten their core business strategy, bothering the Adani Board and their financial backers in the meantime.

Remember, Adani must contract the construction and operation of the mine to Downer EDI. They are not a mining company, They are an energy logistics company, and know for well that owning the network is where the money is produced and financial leverage is achieved.

The federal government has no such liability and are unlikely to meddle in an exclusive Queensland infrastructure development apart from the existing Northern Australia Infrastructure Facility (NAIF) loan of $900 million.

However, it does pose a serious question and that is; does a highly profitable below railway infrastructure asset that by circumstance attracts multiple mining operators as its customers, themselves seeking fair and safe access to their rolling stock, could justify direct national infrastructure funding in the best interests of the Commonwealth, States and people?

The answer is yes!

And all of the above rail operators, over 10 in number mining in the Bowen and Galilee Basins, who do not want to compete with Adani on mining, rail access and freight charges, would be in favour of a government ownership model to ensure the network is fairly and safely managed in their interests for the next 50-70 years too.

Pauline Hanson has certainly thrown a cat amongst the pigeons. Considering all of these prevailing factors, the Adani private ownership model is ranked highly unlikely.

Singapore Army (Charter Towers LGA)

Likely to Highly Unlikely (4)

The other major project in the pipeline and also unsecured with suitable land access is the Singapore Army Training Initiative being brokered by the Australian Defence Force (ADF). The Singapore Army is expected to invest $2.2 billion over 25 years.

It is estimated that if the land can be secured with cattle farmers in the Charters Towers LGA, the contract would equate to $50 million per annum in gross contribution to the greater Townsville economy.

Twenty-three landowners in the area of the High Range facility have objected with legal representation to the ADF that planned to acquire another 120,000 hectares. Kennedy MP Bob Katter said, “Townsville will not be able to expand.” Mr. Katter identified an area west of Penland as a suitable location but sufficient land owners have not reached a deal with the ADF.

Image: Aussie Digger preparing for deployment to Iraq Photo: Australian Army

If the Singapore Army, however, is unsuccessful in securing the land, this economic impact will be lost to southern districts such as Rockhampton.

Based on anecdotal findings, the proximity of the final training area is likely to see the $50 million per annum economic impact reduce substantially.

Townsville’s role, if the training area is successful in the North Queensland region, would purely be a transport and logistics function adding to the port and airport traffic volumes.

Under such arrangements, Townsville would see negligible indirect flow-on effects from the Singapore Army, apart from drawing workers out of town to access construction opportunities west or north of Charters Towers.

Land owners on the eastern fringe of Charters Towers at Hervey’s Range have already made their positions clear. They do not want to give up their grazing land for the Australian Defence Force (ADF) or the Singapore Army, and the Commonwealth government has no plan to exercise a firm hand and expropriate the land.

The grazing land is producing 15,000 head a cattle per annum. The beef is then transported to the Townsville abattoir and exported via the Townsville port supporting 500 jobs. The landowners are concerned the acquisition would impact on the Hells Gate dam development on the Burdekin River, which is expected to provide significant agricultural opportunities for the land owners.

This project is gaining less traction every week, and the longer a deal with land owners drags on, the more likely the Commonwealth government will provide certainty to the Singapore government at the existing Shoalwater Military Training area near Rockhampton.

The heightened security risks for Australia and Singapore from Islamic Terrorists embedded in the Philippines, the North Korean missile crisis and growing tensions in the South China Sea between the United States and China, will force the Australian government’s hand.

The prospect of a straddle or time share arrangement with the Australian Defence Force at the Townsville Field Training Area at High Range, which is a live fire facility covering 2300 sq kilometres, has not been publically disclosed. The Singapore Army would use the facility for 18 weeks in the year.

However, considering Australia’s existing and future defense commitments across the world, a timeshare strategy is highly unlikely to improbable.

Therefore, the likelihood of the Singapore Army securing land assets within economic reach of Townsville as originally planned is likely to highly likely.

Magnus Resources (Townsville LGA)

Highly Likely (7.5)

The third significant project and the only project that would see construction and operational economic impacts remain within the Townsville LGA is the Magnus Resources battery gigafactory.

Magnus Resources’ battery gigafactory is forecasting a $2 billion investment in the Townsville LGA at Woodstock, 40 kilometres west of Townsville port.

The construction phase of the project is scheduled to begin as early as 2018 if the final feasibility report and funding can be secured through its New York investment consortium.

The Townsville City Council has offered 60 hectares of industrial land as an exchange for an equity state in the consortium. One thousand direct jobs are expected to be created during construction and seven thousand jobs created in operations for all downstream and upstream supply chain entities.

Although the company says 80 percent of the workers would be trained on site at Woodstock, details about whether local construction and subcontractors would be engaged are unlikely to be stimulation as the majority of funding is being raised through private funds.

Image: Workers inspecting Battery Gigafactory Photo thanks: Green Tech Media

Of the three major projects, the battery gigafactory is more likely to present greater direct economic benefit to the Townsville LGA during construction – and in comparison, perhaps be equally impactful as the Adani coal mine during ongoing operations.

Magnus Resources has flagged the consortium’s intentions to expand the gigafactory as downstream technologies such as utility products could be manufactured on the 400-hectare industrial site offered by the Townsville City Council.

Similarly to the sensitivity risks of the Singapore Army, the battery gigafactory consortium is concerned about the trading war unfolding between the USA and China. Having the Australian-owned Magnus Resources supplying graphite from its mine in Tanzania to the Townsville gigafactory in Australia, allows the consortium to work around China and secure the essential commodities for battery manufacture.

The Townsville City Council has yet to finalise the “beneficial enterprise” company registration for the Woodstock land asset to be transferred to the consortium bid despite the announcement by the TCC that it had been done.

The Queensland Crime and Corruption Commission (QCCC) is investing the former Mayor of Ipswich City Council, Mr. Paul Pasquali alleging the Local government has been involved in corruption.

Sources inside the constituency of the ex-Labor member for Cairns turned Independent, Mr. Robert Pyne has revealed that he will be calling out another Council identify for alleged corruption under “parliamentary privilege”  next week. Mr. Pyne broke the case of the Ipswich Mayor, who has been arrested and charged with money laundering, under the same parliamentary procedures.

The Mayor of Townsville and her Council are enthusiastic supporters of the “beneficial enterprise” provisions in the local government Act stated it has been a 2015 election commitment. However, the previous administration at the TCC had advised the Council not to proceed with development in the corporation entity due to the legal and corruption risks to the ratepayers of the City.

The current executive and senior directors have no such concern despite the fact the Chief Information Officer quit after just 3 months in the position for family reasons. Now that the ex-Pricewaterhouse Coopers Chief Finance Officer has been appointed, the Council investment corporation is likely to be completed any day now.

Nevertheless, the likelihood of this project proceeding is not probable but highly likely.

Conclusion

This appraisal of the private capital investment pipeline proposed for Townsville demonstrates a complex web of interests and issues. Although not typically a real estate or property consideration for smaller non-commercial investors, the outcome of these projects anticipate a significant economic and pricing impact on the property market more broadly, including residential assets.

Therefore, the opinion I draw from my appraisals of the significant knowledge-base and expertise in the Townsville property market is what may be of value to the reader. Short of offering advice, direction or recommendations, the least of the analytical effort should yield guidance of the likelihood of these major projects proceeding or not be proceeding.

This appraisal, but with thorough observation and monitoring of the Townsville market over the past 10 years, such guidance might hold credible weighting but it must be checked and resulted by the reader independently.

So these projects have been placed a cyclical qualitative weighting based on the same enterprise risk management model applied by the Boards of private and government agencies.

It is a risk assessment model applied to rank the likelihood of a critical event occurring based on the content, scope, sensitivities, exposure, hazards and events.

Consequence and opportunity are not been factored except to assume that the full original statement of economic impact by the proponents of the promised projects is expected.

The ranking system is very simple as intended because it merely reflects an expert opinion at a specific time in space in which all of the available information has been collected and assessed.

This is the qualitative ranking system; Probable (10), Highly Likely (7.5), Likely (5), Highly Unlikely (2.5), Improbable (0). You will notice these ranking have been selected against each aspect of the scenarios discussed here. Based on available information, these ranking may move up or down like a barometer measuring the air pressure in the atmosphere. It is an indication or gauges only.

As I’m not able to talk with you directly, although you are welcome to comment or contact TREN directly, and our expert can answer or refer your questions, the aim is to define the aspect of value in the expert’s opinion that may be relevant to your interests in the Townsville real estate market and economy.

The expert opinion is in respect to these three projects only proceeding as planned or not. This is not advice. See our Disclaimer here.

Further reading:

Treasurer sparks free market concerns over Domain Central $6 million revamp

Townsville Smart City Deal Exposed as National Security Threat

Guide to selling a luxury home

Guide to 22 knockout marketing tips to sell a home

Mount Louisa – Top Price Property of the Week – 28 Kosciusko Way – $590,000

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