Transcript Prioritising and delivering infrastructure regionally to transform and

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Prioritising and delivering
infrastructure regionally to
transform and leverages
business activity locally
Strictly Private
and Confidential
July 2012
Scott Lennon, Partner, Economics and Policy
Agenda
Page
Regional Growth
• Population and employment growth
• Regional Growth Plans
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4
Approaches for analysis & forecasting
• Prioritising according to the needs
• Target investment in key projects
• Attracting new investment to regional areas
6
8
9
Case Studies
• Bendigo as a health precinct
• Intermodal terminals & relocating railyards from CBD
• New irrigation water pipelines
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Regional Growth
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Regional Growth
Population and employment growth
Australia has had moderate GDP growth since
GFC. Forecasted GDP growth in FY13 is 3%
Australia GDP and VIC State Final Demand (SFD)
Population – facilitate new housing, new business
activity and migrant settlements
drives growth in investment and employment
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19.0%
Source: ABS 2012
2011
•
0
2009
stimulates demand for housing, infra & services
20.0%
50,000
2007
•
100,000
2005
expands the community’s skills base
21.0%
2003
•
150,000
2000
increases the size of the economy,
22.0%
1998
•
200,000
1996
Population growth is beneficial to regional growth as it:
23.0%
250,000
1994
Encourage local population growth & at the same
time enhance infrastructure
24.0%
300,000
1992
Productivity – enhance road capacity, decrease red
tape, consult with local businesses to fix constraints
to expansion, enhance broadband speeds
350,000
1990
•
VIC SFD as proportion of
GDP (%)
1987
Participation – improve childcare, create working
opportunities for older citizens
25.0%
1985
•
400,000
GDP $ M
•
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VIC SFD as propotion of GDP
GDP growth is likely to be achieved by 3Ps:
Regional Growth
Population and employment growth
Historically, population growth rate in regional
centres has significant variability eg.......
•
2006-11 Latrobe population growth was 1.3%,
which is as four times growth 2001 to 2006.
•
Popn growth in Bendigo & Ballarat above Victoria
& national growth driven by new services &
infrastructure
Strong economic growth is achievable with
integrated strategy and plan
Examples include........
Greater Shepparton City Council initiated
Community Engagement Strategy with more involvement
in identifying areas best suited for growth & necessary
accompanying infrastructure
Latrobe City Council developed a Economic
Graph 2: Compound Annual Growth Rate (CAGR) Sustainability Strategy focused on continued job creation &
reducing unemployment rate, economic growth & a
of local population, VIC and Australia
smooth transition to a low carbon economy.
2.0%
1.5%
1.0%
0.5%
0.0%
CAGR 2001-2006
Source: Cat. No. 2003.0, ABS 2012
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CAGR 2006-2011
Latrobe Transition Committee recently identified
opportunities to help grow and diversify the region's
industry base and labour market. These include
encouraging greater participation in higher education &
infrastructure to support industry growth eg upgrades to
the La Trobe Airport & to Sale RAAF base , Gippsland
Logistics Precinct, Lurgi Heavy industry site, the Gippsland
Gateway at the Warragul Station Precinct, Sale Education
Precinct, redevelopment of the Latrobe Regional Hospital,
Macalister Irrigation District (MID) upgrade, extension of
the NBN rollout and port development options at Hastings
or other sites along the Gippsland coast
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Regional Growth
Population and employment growth
Regional Victoria to grow from 1.5m to 2.3m by 2051
(CAGR of 1.1%)
•
Popn > 60 growing faster in Mildura, Latrobe, Geelong,
Warrnambool, Shepparton, Bendigo & Ballarat
•
Working age popn drives regional economic growth
•
Ageing population will have significant influences on
infrastructure and services needs e.g. health facilities
Planners should target growth industries as they
invest in new facilities & employ
Consecutive strong growth is observed in
construction, retail trade and health care industry as
well as arts and professional services
•
Graph 4: Employment by industry
35,000
Graph 3: Forecasted population in key regional
centres by age groups
85 and over
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
Population 2011
Population Increase by 2031
1996
2001
2006
25,000
20,000
15,000
10,000
5,000
0
Source: Cat. No. 2003.0, ABS 2012
0
10,000
Source: Victoria in Future 2012
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30,000
20,000
30,000
40,000
50,000
60,000
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Regional Growth
Regional Growth Plans
Key initiatives:
• Comprehensive land use & urban planning including infrastructure to support regional population & jobs growth
• Assess the growth potential, land supply, employment precincts and housing needs
• Improving urban design and sustainability in growth areas consistent with Regional Strategic Plans
• Provide consistent approaches to address common issues across the region
Customise regional growth plans reflecting local strengths & competitive advantages. Ensure plans are..
Building on strategic assets and competitive advantages to support and manage growth across the region
Integration with strategic land use and growth planning already done across the region
Identifying opportunities for enhancing regional infrastructure, to boost growth & sustain region
Close monitoring of the rate of development and land supply to facilitate sustainable regional growth
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Approaches to analyse & forecast
future infrastructure
requirements to inform
investment planning for new
Regional Growth Plans
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Approaches for analysis & forecasting
Prioritising according to the needs
Prioritise a growth strategy enables viable projects to be delivered with a focus on economic &
infrastructure capacity in regional areas most at risk from an undersupply of resources
1
Understand current service level and efficiency & identify infrastructure bottlenecks
2
Develop sustainable options meeting the challenges & future community needs to support
business development & regional collaboration
3
Test potential options through socio-economics impact modelling such as Cost Benefit Analysis
4
Assess affordability & develop funding plan culminate into developing regional growth plan
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Approaches for analysis & forecasting
Prioritising according to the needs
CBA is a socio-economics impact analysis determining the feasibility & justification of an
investment. It compares all the alternative options by evaluating the total life benefits vs cost
A hypothetical CBA
Country town A has experienced traffic congestion. A CBA is conducted on two feasible options relative to a base case
of no new infrastructure
•
Option 1: expanding the existing bridge from 2 to 4 lanes
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Option 2: constructing a new highway bypass town A
Impact
Bridge upgrade
Bypass
+20 jobs (construction)
+40 jobs (construction)
+5 jobs (on-going)
-30 jobs (on-going)
+5 jobs (on-going)
-10 jobs (on-going)
800,000 hrs ($10 m) p.a.
160,000 hrs ($20 m) p.a.
20 tonnes CO2 ($0.2 m) p.a.
50 tonnes CO2 ($0.5 m) p.a.
Vehicle operating costs
$1 m p.a.
$5 m p.a.
Construction costs
$30 m
(spread over 2 years of construction)
$60 m
(spread over 3 years of construction)
Benefit Cost Ratio
2.2
1.5
Economic Impact Analysis
Employment in town A
Employment in the region
CBA
Time savings
Pollution/ Noise reduction
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Options culminate in Tradeoff decision between retailer interests & regional road user travel times.
CBA & EIA assist in quantifying & evaluating this difficult tradeoff
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Approaches for analysis & forecasting
Target investment in key projects
Establish a robust evidence based investment planning approach for guiding capital allocation
•
Pursue major projects for regional growth e.g. mines, hospitals, IMT, hotels, business parks, warehouses etc
•
Streamlining and improving planning approvals & outcomes, building capabilities & lifting workplace productivity
•
Encourage innovative projects to achieve maximise outcomes and benefits local community & surrounding regions
Form strategic partnership with 3 levels of government & private sectors, for the benefits of:
•
Develop regional prospectus to explain strengths & growth outlook
•
Support investment and infrastructure delivery via private ownership and operation
•
Create economies of scale in the management of different funding sources
Delivery significant gains locally and transform into municipalities
•
Create employment opportunities by enhancing labour mobility into your region
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Provides improved services and increases work participation opportunities
•
Develop sustainable services and integrated infrastructure linking communities into your region
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Attracting new investment to regional areas
To achieve regional economic growth requires detailed analysis of a regions key attributes, industry
and employment base and key advantages for SMEs considering a new base
Local solutions to local problem – For example.........10 Big Ideas in NSW Central West (NSW Business Chamber)
Idea
Problem
Recommendations
Foster small
business growth
The region needs redevelopment and
improvement in amenity infrastructure
planning and implementation
•
•
Support and improve efficiency in SMEs sector
Support the regeneration of the retail sector
through upgrades to local infrastructure
Develop a
regional tourism
and marketing
plan
Consumer awareness of attractions
beyond well recognised tourist icons is
low
•
•
Develop and market a list of attractions
Facilitate greater cooperation and
communication between tourism operator
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Approaches for analysis & forecasting
Attracting new investment to regional areas
Embed this evidence into Regional Growth Plans setting out economic, environmental & social
vision for the region including:
•
articulating the drivers of change
•
identifying strengths, weaknesses and opportunities
•
listing priorities for action
Riverina regional action plan – developed based on communities participation on “Have your say” website
Vision
•
•
•
Prosperous and diverse economy
Coordinated and effective service delivery
Quality infrastructure
Local
Priorities
•
•
•
•
Support economic growth
Increase community participation and employment opportunities
Integrated and coordinated human service delivery
Improving regional infrastructure and securing water supplies
•
•
•
•
•
Facilitate additional growth in key and value adding industries
Support the establishment and expansion of businesses
Reducing red tape
Develop a regional logistics strategy
Upgrade priority infrastructure and road to complete links with rail freight
Priority
Action
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Case Studies
• Bendigo as a health precinct
• An intermodal terminal in regional Victoria
• New irrigation water pipelines
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Bendigo as a health precinct
•
Bendigo provides access to progressive health services & collocated Uni / medical training in Loddon-Mallee region
•
A investment of $630 million to redevelop the Bendigo Hospital in a public-private partnership (PPP)
•
The construction will commence around December 2012 and expect to be completed by 2016
The direct and indirect benefit to communities:
•
Able to treat an extra 10,000 patients p.a. (double its current capacity)
•
First class health/medical teaching & university facilities
•
New staff accommodation, ambulance facility, new mental health facility including a Youth Care Service
•
New GP Super clinic & collaborations between government, private & NGO health service providers
•
Require 735 direct construction jobs and approximate 2,000 jobs in total attracting new residents
•
Additional 600+ FTE hospital jobs after commissioned (current hospital has over 3,000 jobs)
•
Reduce the needs of travelling to Melbourne for treatment
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Create investment opportunities both during and post construction
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Source: Newbendigohospital.org.au
Intermodal terminals & relocating railyards away from
town centres
•
An IMT is a location for efficient and cost effective transfer of freight between road, rail and sea
•
The demand for an IMT infrastructure in regional Victoria is driven by increasing rail’s share of the freight demand
and reducing congestion on roads
•
The Department of Transport partnership with local government and private sectors are planning IMTs at Dooen,
Gippsland, Shepparton and West Warrnambool
•
Railyards in town centres can demarcate CBD & retard development. Level crossings create congestion & delays
The direct and indirect benefit to communities:
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Increase supply chain productivity and freight efficiency
•
Support local government to achieve economic and social objectives
•
Provide a central location for freight handling facilities & improve service delivery to regional export industry
•
Deliver potential safety and environmental benefits by shifting freight from road to rail e.g. decrease in accident
rate, road congestion & track noise
•
Improved CBD amenity & connectivity leading
to more investor & tenant interest in commercial
office developments
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New irrigation water pipelines
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Wimmera Mallee Pipeline (WMPP) was funded by the Government partnership with Grampians WM Water
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The total cost was estimated at $688 million.
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Substantial private landholder investment has followed justified by reduced risk from better water security
•
WMPP enables long-term sustainable management of water resource in Western Victoria
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The project commenced in Nov 2006 and completed in Apr 2010 within budget and on time
The direct and indirect social benefit to communities:
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>85% of water was being lost through evaporation and leakage.
•
Improved current farm practices & increased tourism activity, recreational opportunities
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Enables new business and industry investment in the WM, such as intensive animal enterprises and food packaging
•
Strengthening the regional economic base and encourage diversification of agriculture, grain and oilseed processing
•
Potential environmental benefits from pipeline water saving for regional river systems, landscape
•
Enhance regional sustainability from improved standard of living supporting move to higher value agriculture
eg biofuel, lambs, beef feedlot, nuts, herbs, flowers, olives etc
Source: GWM Water
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Questions?
Scott Lennon
Partner – PwC Economics & Policy
[email protected]
(02) 8286 2765
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