17/12/2009 - 00:00

Historical parallels in Pilbara City debate

17/12/2009 - 00:00

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Some tough political decisions will have to be made as resources sector growth continues.

AS debate on the proposed ‘Pilbara City’ progresses, it is worthwhile revisiting Captain James Stirling’s reasons for advocating a British settlement on the banks of the Swan River.

Emerging Indian and Chinese markets, a seemingly unpopulated region within a zone of increasing geo-political importance and proximity to important sea lines of communication are documented in Captain Stirling’s lobbying efforts for the establishment of the colony.

In fact, discussing the merits of a Pilbara City in 2009 resembles the internal 1820s discussions of the British Admiralty in relation to the founding of the Swan River colony where cost, competitors, and political manoeuvring were key determinants.

The underlying strategic drivers Captain Stirling used to push for Swan River to become the primary site of settlement are even more relevant today than in the 1820s.

At the heart of this issue is deciding on an optimal framework for population dispersal and levels for Western Australia within a rapidly changing global environment.

Population

With the worst effects of the Global Financial Crisis now in the past – and as investors start to consider further exploitation of the energy and mineral reserves of the north of Western Australia – the Pilbara City concept is likely to gain more traction.

This discussion has, in fact, been facilitated by the federal government.

The pending and third instalment of Treasury’s Intergenerational Report (IGR3), by foreshadowing that Australia could have 35 million residents by 2050, has put population growth and major infrastructure expansion at the forefront of policy makers’ minds.

IGR3 will be as much about population growth as it will be about ageing. Population strategies will not longer be taboo and will be more about practicalities.

With these forward projections, the range of growth forecasts to 2050 for Perth has caused many voters to reconsider the merits of a city doubling in size.

Future options

There are many ways to deal with the prospect of a large, urban conglomeration in its south-west corner, which is disconnected from the rest of WA.

In a broader economic and societal context, a society’s strategic centre of gravity will constantly move according to the realities of the day.

Why do current governments not consider the option of moving, and actually shaping the economic and strategic environment they govern?

The answer includes short-term fiscal cost, negative public opinion, inertia, and logistical difficulties in undertaking such an enormous project.

This does not mean it cannot be done, just that there are often a number of other more pressing issues of governance.

Global challenges

It is likely that, during the coming decades, we will witness intensifying competition for resources, major global population movement and resettlement, significant global population increases and then, around mid-century, a potential population correction.

These forces will impact on Australia, even if it chooses to become a more isolationist power.

In WA, the impact of the mining boom has proportionally shifted the population further south and economic activity further north.

The end result of cost pressures, labour shortages and new technology is creating a major physical separation between the site of wealth creation (Pilbara and the north of the state) and settlement (Perth and the south-west).

As long as global conditions are relatively peaceful, this does not pose a problem.

However, in the medium to long term, expanding empires may see the unpopulated land as empty, or the existing inhabitants of the north may have no common interests with the southern residents, leading to a de facto separation. (Captain Stirling raised similar concerns in terms of potential French incursion and overall British claim to the continent.)

The other, more immediate, problem of a disconnect between population (and consequentially voters) and economic activity is that wealth generation activities become forgotten and viewed as unimportant by an ever-increasing section of society.

This could result in a limited connection with mining activity, or even a lack of recognition of its importance and a desire not to disturb the natural environment.

Political capitals

An option to deal with the potential fracturing of a common, unifying WA view of the future is to move the political capital, or key parts of government, of WA north, closer to where the economic activity is taking place.

In theory, it would make decision makers more aware of the actual drivers of state wealth.

This would also draw parts of the Western Australian population north and, from a broader section of the population at least, there would be a greater stake in the trajectory of economic activity.

It would also consolidate the population’s control over the state and its destiny.

Small first steps in shifting the political centre of gravity north would include encouraging key state departments and commercial functions to move to northern centres.

This has happened in limited cases already with the head office of government owned-Horizon Power nominally located in Karratha.

For new functions of governments there could be a requirement for justification of not locating above the 26th parallel.

Payroll relief for small business in northern zones is another option.

Return to the past?

While WA basks in the re-emergence of a commodities boom, it would be worth reviewing some of the cases of CY O’Connor, the engineer of the Perth-Kalgoorlie water pipeline, and former premier Sir Charles Court, who was responsible for laying the foundation of the current boom.

In terms of the Kalgoorlie water pipeline, it was infrastructure responding to the impact of population movements from a mining boom.

With respect to the Dampier-to-Bunbury gas pipeline, it was infrastructure that was leveraged to facilitate exports and ensure greater fuel diversity.

Both infrastructure projects continue to contribute to the material and economic welfare of Western Australians and do not represent the end of major energy and water infrastructure developments.

Reference to these projects should not serve as homage to a mythical golden age, which Western Australians constantly crave, but as a framework for building on earlier successes.

It is true that water, energy and infrastructure needs will continue and, despite desires of the anti-growth movement, per capita consumption of energy, water and use of physical infrastructure will increase.

However, the associated financing, ownership, building and administration may change radically.

Also, the technological options, and the accelerating convergence of water, energy and communications infrastructure, can reduce capital and transaction costs associated with new projects as well as facilitate new business models.

Perhaps one of the most significant changes to infrastructure since the time of CY O’Connor has been the emergence of large mining operators, which themselves address water and energy issues.

For example, CITIC Pacific’s Pilbara Sino Iron project includes a planned 51-gigalitre desalination plant and port facility, as well as a 450-megawatt combined cycle gas fired power.

While much commentary will focus on the potential uses of any surplus electricity or water CITIC Pacific will produce, the main point is the scale and size of this project and the potential for integrated essential services to overcome the limitations of existing infrastructure.

It also points to the option for governments to consider private companies owning and running critical services, as private water companies have in France for the past 150 years.

Leadership

The question remains whether someone will emerge from today’s political system capable of making unpopular decisions, such as shifting WA’s political centre of gravity north.

A mooted Pilbara City is one step in this process.

Far broader changes to WA’s governance and population placement could unlock greater mineral and energy supplies, as well as facilitate development in other sectors of the economy.

In fact, reviewing Captain Stirling’s correspondence would be a very useful starting point for those considering future development of WA.

It was during this period that the foundations of the Swan River colony were conceived and the Westminster system of governance was applied to administer the western third of Australia.

A Pilbara City is part of the overall transformation of WA into a much more strategically self-sufficient and important component of the federation and broader Indian Ocean region.

This debate should now focus on an overall WA population strategy and the optimal population levels and dispersals, including that of a new northern city.

n Andrew Pickford works in the field of policy and strategy and has contributed to and authored a range of reports on the future of the nation

 

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