Event: Strong Australia Townsville panel interview with Ticky Fullerton
Speakers: Jennifer Westacott, Chief Executive, Business Council of Australia; Patricia O'Callaghan, Chief Executive Officer, Townsville Enterprise; Marnie Baker, Managing Director, Bendigo and Adelaide Bank; Mark Steinert, Managing Director and CEO, Stockland
Date: 14 July 2020
Topics: Regional economic recovery
Ticky Fullerton, business editor Sky News: Well hello and welcome to the Business Council of Australia's Strong Australia series. This time focussing on Townsville and let me introduce our panel. Business Council of Australia chief executive Jennifer Westacott, Patricia O'Callaghan chief executive of Townsville Enterprise, responsible for looking after all the growth and opportunity there, Marnie Baker MD of Bendigo and Adelaide Bank and chair of the BCA regional development economic working group, and Mark Steinert, managing director and CEO of Stockland. Welcome to you all. Jennifer, perhaps if I can start with you. This is your fourth focus on Townsville. Obviously, it's virtual at the moment but why is Townsville such an important opportunity for Australia?
Jennifer Westacott, chief executive Business Council of Australia: Well I think Townsville is emblematic of what we see across the country. Obviously at the moment a lot of challenges and a lot of hardship being experienced by people. But conversely huge opportunities and tremendous resilience from the community. And every time I go to Townsville and obviously today when we've been talking to the community; you're just struck by the opportunity. The diversification of the economy, the huge opportunity in mining, the opportunity in agribusiness, the opportunity in defence, the opportunity in skills, the opportunity that comes from having the stadium. And you just constantly think if we could around the country focus on, I don't know, 10 or 15 places that have got tremendous capability, opportunity and prioritise the infrastructure, and give a long term plan. We would unleash a lot of economic growth Ticky. Not just in Townsville but across the country. I think we just have got to do something like that. Particularly now post-COVID.
Ticky: Yeah, I mean is this bizarrely, we all know how much under the gun the economy is, is this the opportunity to really fast track certain things? Because I think Townsville is what five per cent of the Queensland economy isn't it?
Jennifer: Absolutely, I don't think there's any alternative but to fast track things. We've got to create a lot of jobs, a lot of jobs in Townsville, a lot of jobs across the country. Townsville is a great place in terms of if we get some serious economic activity it will also be a magnet for people wanting to relocate. We heard today terrific, brand new house prices, less than $400,000 and Mark can talk more about that. That's a great opportunity, fantastic weather, great lifestyle. So this is what we've got to do. We've got to double down on these places across Australia that have got so much potential, invest in them, plan with them and really unleash what's there because it will have a huge spinoff effect as we start to think about a post-COVID recovery, albeit we're stuck with this thing for a long time, and start to think about how do we get what I estimate will be around about two million jobs we've got to create in two years. That's a big task.
Ticky: Alright, well Trish, that's kind of your job isn't it? Where do you see the key sectors where the jobs will come from? 320 days of sunshine of course up there?
Patricia O'Callaghan, chief executive Townsville Enterprise: Absolutely and as we were saying earlier Ticky, we're not unknown to crisis here. It was only last year that this community felt the brunt of those unprecedented floods. Before that it was the mining downturn and we saw with the closure of Queensland nickel 800 jobs disappear overnight. And then in parallel to all of that we've been suffering the severe drought. But putting that aside, the economy of Townsville and north Queensland is exceptionally resilient and that's because no one sector represents more than 20 per cent of our GRP. And right now in Australia we can harness some of these traditional industries to really look at recovering. And when I look at that I look at our mining and resources sector. To the north west you have a sector that's worth six billion dollars to the economy, has been hiring through this process, supports 20,000 jobs but there's $680 billion known in the ground. I look at agriculture and the potential for dams and water here. With Hells Gate we can open up to 50,000 hectares of irrigated ag. I look at the tourism sector and in Queensland acknowledgement to the Prime Minister and the Premier for the way this health pandemic has been managed but we are opening up here in north Queensland and welcoming visitors, and with new products such as the Museum of Underwater Art. We are really going to cement our place in this visitor economy. So, I think we have huge potential. The Prime Minister's recent announcement around the $270 billion defence spend, we know that Lavarack Barracks will be a part of that. We know RAAF will. We know our training facilities will. But there's also huge potential for even the amphibious base and watercraft stations to be based here. And I think our strategic positioning into Asia will be key to that.
Ticky: Marnie, you've got obviously a very interesting window on the Townsville area through Bendigo and Adelaide, and I think Rural Bank uses you. How do you see the market out there and the current stress that I suppose business and mortgage holders are under?
Marnie Baker, Managing Director Bendigo and Adelaide Bank: Yeah, well, there is quite significant stress, particularly in certain industries. One of the things I think going for Townsville and the surrounding region there is the diversity of the industries and the sectors that do make up that region. If you think about defence and mining those types of industries in fact have kicked on through this period of time.
Ticky: And they're big in the region, aren't they? Those two, yeah.
Marnie: They are, very big in the region. But industries like retail, of course, have been very hard hit. Tourism, Queensland itself has been hit, especially by the closing down of international borders. So, it does differ between industries and between sectors, and especially in areas like north Queensland.
Ticky: So Marnie, what do you think? We've had Graham Turner from Flight Centre this week talk about we need to open, keep the state borders open because we've got all this dollar that Australians normally spend on going abroad. You'd think that Townsville would be, Magnetic Island and beyond, but would be pretty central casting for that?
Marnie: Yeah. And this is the tough job that the government has because they're trying to manage through a health crisis that's having significant economic impact. But if we do look at regions and some regions like north Queensland, there's an opportunity here. They haven't had the COVID cases that you've seen in the higher density areas. It has exposed or highlighted the exposure that we have with 40 per cent of our population being in two cities. So there's a huge opportunity here to look to the regions, to be unlocking the economic activity. They're not in the same sort of lockdown that you do see in some of those more high-density areas. And we should be actually playing to that.
Ticky: Yeah. Mark Steinert. You of course have got a slightly different window. You're the main retail hub, I guess, in town. But what is your footprint, Stockland's footprint in Townsville? And how have you seen people, shop owners or renters travel through the last few months?
Mark Steinert, Managing Director and CEO Stockland: Yeah, thanks Ticky. So we own Stockland Townsville with AMP Capital. It's a $366 million exposure. And also we've got Stockland North Shore, which is a billion dollar, 2,000 home community development. And so of course through the peak of the crisis in the April/May period, we saw only 50 to 60 per cent of our retailers open in Stockland Townsville. Fortunately that's now back to a hundred per cent. And under the code, we've obviously helped the small or medium enterprise retailers in our centre to get to the other side of the crisis. On the housing side, we've seen a really big response in Townsville and across the nation to HomeBuilder. So, HomeBuilder combined with state grants gets a first home buyer a $45,000 contribution in Townsville.
Ticky: Interesting Jennifer is talking about $400,000 houses.
Mark: Well, in fact, a three bedroom in Stockland Townsville is $310,000. So the grants are more than 15 per cent of the value. So we're seeing a 600 per cent increase from historic lows in the last eight weeks.
Ticky: Yeah. So what needs to be done? I mean, where is the opportunity to actually unlock some of this potential? Perhaps back to Jennifer in terms of infrastructure?
Jennifer: Look, I think it is Ticky. I think it's a few things. It's not just one. Infrastructure is hugely important. I think if we're going to come out of this terrible crisis, whether it's in Townsville or the rest of the country, we've got to do a number of things. We've obviously got to stay the course and manage the health situation and make sure we can stay the course on opening the economy. But we've got to get activity going. We have got to get activity going. And the best way of doing that is obviously get companies investing. But we've also got to do that big public interest infrastructure. Because things that Trish's talking about, the Hells Gate Dam, the train line from Mt Isa, these are not just local projects. These are massively significant national projects.
Ticky: The standard of the rail at the moment sounds ridiculous.
Jennifer: We shouldn't let these things fall into disrepair in the first place. But having said that, now is the opportunity to say, well, let's get that prioritised list of projects out for 30 years. Let's prioritise the funding of it. Let's look at the things that the private sector might fund and government might fund. And let's show people that this is going to be a fantastic place, not just to invest, but to your point about life and housing price, a place for people to go and live.
Ticky: Yeah. Look, Trish let me ask you a bit more about what's wrong with the rail line? What does it need? Because you really do in the north west minerals province, which I think you've taken a thousand kilometre trip around recently. There's real potential there is there not?
Patricia: Yeah, there most definitely is. And I think you know, I can give you some examples to talk about the fundamental problems we have an infrastructure up here. When you've got our resources company, putting commodities onto trucks rather than rail because it's cheaper and more efficient, there is a problem. When we have one of the most rich, valuable mineral precincts out to the north west. As I said, $680 billion of known commodities in the ground it's an industry contributing six billion dollars annually and supporting 20,000 jobs. But it's one of the only industrialised precincts in the country that's not connected to the national electricity market. There's a problem there. And that's where projects, nationally significant projects, like Copper String can play a real role. This is a thousand kilometre transmission line that will not just support existing resources companies, but also open up renewable energy projects along that corridor. We've got just on our back doorstep, a billion dollar wind and solar project that's currently on hold because they don't have access to that national electricity market. So between rail and energy, and they're looking at the opportunities around water, I spoke of those floods, and so heartbreaking to see that after nearly 10 years of drought, we saw thousands of mega litres of water just washing into the coral sea and not setting us up for the next round. I think, you know, we do need to change this and we can see the north do the heavy lifting in the COVID recovery process. Not because we have to, but because we want to, and the clear facts are there that we can.
Ticky: Yeah. Marnie Baker, one of the things discussed in the webinar was this issue of red tape. And of course red tape goes over so many people's heads, but really given that we are in this crisis now, some people call it the burning platform. Do you think the government state and federal are listening to specific requests around too much regulation?
Marnie: Yeah. Look, we were in an economic crisis at the moment. We've seen the government go from talking about a surplus and having 30 years of uninterrupted growth to now being in a recession. Of course, the government is keen to understand what it can do to ensure that it's generating better economic activity to ensure that we actually do come out of this. And it's going to take some years to come out of that. So, absolutely I believe there ears are open to this. The fact that we saw the collaboration, especially the early days, but continuing through with the national cabinet. The fact that we had all of the states coming together. This is the opportune time to be raising the issues, the red tape, the things that are actually the impediments that are holding us back from really kicking on in regional Australia. And Townsville's a great example of that. And there's some great examples around where that red type exists.
Ticky: Mark, we're obviously going to be hearing from the Treasurer next week, perhaps even some feedback on energy and the Liveris review. What are your hopes for that? And indeed the potential to open up the north?
Mark: To echo what's been said the copper wire project hopefully will feature in that and the combination of sustainable energy sources is battery storage, is a key part of obviously being able to tie into a national grid and understand total production and demand. Of course, we're putting a lot of solar into town centre rooftops and into our communities more broadly. And energy costs are a great opportunity and also a great impediment if they can't be controlled and maintained at competitive rates. So I think there is this tremendous opportunity with gas resources to the north, as well as sustainable sources of energy and renewable energy. So there is a bright opportunity there that needs to be grasped. And certainly the planning around that and the concept of red tape, the things that need to be put to one side and focus on how do identify the synergies and extract the valuable contribution to the economy and creating jobs.
Ticky: Yes, Trish, how important is the defence force, the ADF, the RAAF indeed to Townsville? And is that, you'd think that would be growing at the moment?
Patricia: Yeah, and it is a significant contributor. And I'll go to say, one we are very proud of as a Garrison city. So with the defence force and their dependents, they contribute to about 15,000 people into our population. It's about eight per cent of our population. They put up about $1.5 billion approximately into our economy. But also there are some exciting opportunities ahead. We know the Prime Minister did his 2020 update on the defence strategy. And there will be upgrades to Lavarack Barracks, the RAAF, our training facilities here. But we also have the Australian-Singapore comprehensive strategic partnership. And that's where we will be seeing Singaporean troops train here. And $1.1 billion of infrastructure being built to support those facilities. We also know that in the Prime Minister's announcements recently, he spoke about an army watercraft base. And the potential for that being in northern Australia and Townsville's strategic positioning gives us huge potential for this. And this is up to a four billion dollar spend. So, this part of our economy is significant. It is spending, there is potential for huge growth and it underpins an economy that has been hurt. There has been challenges, but goodness, some great optimism in front of us as well.
Ticky: You're going to be a busy lady. Finally, Jennifer got to ask you about skills because this is such an important part of it, isn't it? There's a university there, how does the BCA see that all coming together.
Jennifer: Well, we've really got to get now very focussed on the skills task. We've really got to understand the skills make up, if you will, of people who've just gone on to JobSeeker or people who are on JobKeeper. We've got to prioritise those people. And we've got to give them access to really fast track learning. And asking people who've got, say, poor digital skills to go back and do a three computer science degree is just not going to work. So we've got to get those micro-credentials, those short courses of modules. We've got to allow people to pick and choose between TAFE and universities. We've got to allow them to work with their employers to say, how do I get upskilled? So I've got the best chance I can to get into the labour market because that's got to be the focus Ticky. I'd love to see the skills system completely restructured as you and I've talked about before. But at the moment there are 1.4 million people on JobSeeker. Many of those people will not have the requisite skills to participate in a modern economy. Particularly in the digital space. Let's prioritise that.
Ticky: Do you think Jennifer, that this is the burning platform that will drive the restructuring of TAFE?
Jennifer: I hope it is because it's not just TAFE. I think it's just, we've been talking about regulation, energy. I think we've never had a more important burning platform then having to find two million jobs extra in really a couple of years. And also to make sure that people don't continue to lose their jobs. There cannot be a more important burning platform for this country to make sure that people have got a good job, a secure job, a well paid job, and the sense of dignity and purpose that comes from employment. That's got to be our national focus and we've got to pull out all stops to make sure we don't let Australians down in this.
Ticky: Jennifer, Trish, Marnie, Mark. Thank you so much for joining us. Everybody has got to take a trip to Townsville pretty soon. Thank you very much.
Jennifer: Absolutely. Thanks very much.