socio-economic impact of the australia-singapore military training initiative · 2017-07-10 · the...

Socio-Economic Impact of the Australia-Singapore Military Training Initiative

A report for the Department of Defence

June 2017

kpmg.com.au

Socio-Economic Impact of the Australia Singapore Military Training Initiative A report for the Department of Defence – June 2017

Disclaimer Inherent Limitations

This report has been prepared as outlined in the Scope section. The services provided in connection with this engagement comprise an advisory engagement, which is not subject to assurance or other standards issued by the Australian Auditing and Assurance Standards Board and, consequently, no opinions or conclusions intended to convey assurance have been expressed.

No warranty of completeness, accuracy or reliability is given in relation to the statements and representations made by, and the information and documentation provided by the Department of Defence and other stakeholders consulted as part of the process.

KPMG has indicated within this report the sources of the information provided. We have not sought to independently verify those sources unless otherwise noted within this report.

KPMG is under no obligation in any circumstance to update this report, in either oral or written form, for events occurring after the report has been issued in final form.

The findings in this report have been formed on the above basis.

Third Party Reliance

This report is solely for the purpose set out in the Scope section and for the information of the Department of Defence, and is not to be used for any other purpose or distributed to any other party without KPMG’s prior written consent. In that regard, we note that KPMG has consented to the public release of the deliverable by the Department of Defence.

This report has been prepared at the request of the Department of Defence in accordance with the Official Order dated 15 December 2016. Other than our responsibility to the Department of Defence, neither KPMG nor any member or employee of KPMG undertakes responsibility arising in any way from reliance placed by a third party on this report. Any reliance placed is that party’s sole responsibility.


Contents

1.1 Scope 2 1.2 Economic Measures 3 1.3 Report Structure 3

2.1 Overview 4 2.2 Regional Economic Profile 5

3.1 Economic Context 10 3.2 Construction Capacity 11 3.3 Major Infrastructure Projects 13

4.1 The Agriculture Sector 14 4.2 Fitzroy – Land Quality and Cattle Numbers 15 4.3 Townsville – Land Quality and Cattle Numbers 16

5.1 Training Area Upgrade / Enhancements 17

6.1 Direct Impacts 20 6.2 Economy-wide Impacts 21

7.1 Overview 29 7.2 Methodology and Approach 30 7.3 Impact Areas 31 7.4 Summary of key findings 31

8.1 Local Sourcing (Construction Services) 39 8.2 Agricultural Industry 41

© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.


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© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Liability limited by a scheme approved under Professional Standards Legislation.

Executive Summary

Background The Governments of Australia and Singapore formalised their defence relationship on 10 February 1988. In June 2015, the two Governments made a joint declaration to enter into a Comprehensive Strategic Partnership (CSP). The CSP contains five defence and security-related elements. The Australia Singapore Military Training Initiative (ASMTI) is the first of these and relates to “increased access to, and joint development of, military training areas and facilities in Australia”.1

In particular, as part of the CSP, the Australian Government agreed to increase Singapore Armed Forces (SAF) access to Australian military training areas via a Memorandum of Understanding (MOU) signed in October 2016.2 The MOU identifies that, under the Australian Singapore Military Training Initiative (the “ASMTI”), up to AUD$2.25 billion will be invested in the training areas around the Townsville and Rockhampton (hereafter referred by its electoral name of Fitzroy) regions. This investment in enhanced training facilities will provide for more Australian Defence Force (ADF) and SAF unilateral training activities in the two regions each year. 3

This is in addition to the existing Defence activity and investment in the region. For example, in 2015-16, the Townsville Field Training Area (TFTA), Cowley Training Area and Tully Training Area together spent over $4.6 million on wages and salaries, almost $4 million on supplies to support the operation of the facilities, and $2.6 million on capital and equipment for the facilities. In the same year, another $1.5 million was spent on wages and salaries at the Shoalwater Bay Training Area (SWBTA), almost $4 million on supplies to support the operation of the facilities, and $821,000 on capital for the facilities.4 A proportion of this current expenditure will be spent in the local region, helping support local businesses and jobs.

Further, according to the latest available census data (2011)5, there were almost 4,000 people employed in the Defence sector in the Townsville region and another 150 people in the Fitzroy region.

KPMG was engaged by the Department of Defence (Defence) to undertake a socio-economic impact assessment of the Australian Singapore Military Training Initiative (the “ASMTI”) in Central and North Queensland. Specifically, this report is designed to provide Defence with a better understanding of the potential socio-economic impacts of the development of training areas (including any purchases of land) to support extended ADF and SAF training rotations in the Fitzroy and Townsville regions.6

Methodology The socio-economic assessment has been presented in two distinct parts.

1. Economic Impact Assessment

A quantitative (measured) assessment of the potential impact of the proposed training area development (including any purchase of land/industry displacement) and the additional training rotations – including (but not limited to): total gross regional and state product (GRP/GSP) and employment in the affected regions and the State as a whole; and industry-specific activity.

2. Social Impact Assessment

The social impact assessment presented in this report is an adaptation of the standard model presented by the Queensland Government.7 This approach was modified to better represent the specific nature of this project and the information available to date. Thus the qualitative (descriptive) assessment of the social impacts presented in this report include the areas of: agriculture, employment & training, industry & participation, health & community, and Singapore relationship. It is noted that this social assessment is based on qualitative research, and thus no quantitative conclusions can be drawn. Findings are based on the perceptions of interviewees, focus group participants, and views expressed through written submissions and (often anonymously) on social media.

In particular, to inform the social impact assessment, a comprehensive stakeholder consultation process was conducted through January to early March 2017. This included: 13 interviews with opinion leaders and community representatives in

1 http://defence.gov.au/Initiatives/SingaporeTraining/ 2 https://www.minister.defence.gov.au/minister/marise-payne/media-releases/minister-payne-signs-military-training-agreement-singapore 3 http://defence.gov.au/Initiatives/SingaporeTraining/ 4 Source: Chief Finance Officer Group – Defence Expenditure by Electorate. 5 Australian Bureau of Statistics. (2011). Census of Population and Housing. 6 These regions are defined at the Australian Bureau of Statistics SA4 level –Townsville SA4 region includes Hinchinbrook, Townsville, Burdekin and Charters Towers; and Fitzroy SA4 region includes Livingstone (Marlborough and Stanage Bay), Central Highlands, Rockhampton, Banana and Gladstone. 7 http://www.statedevelopment.qld.gov.au/resources/guideline/social-impact-assessment-guideline.pdf

Executive Summary

https://www.minister.defence.gov.au/minister/marise-payne/media-releases/minister-payne-signs-military-training-agreement-singapore

http://defence.gov.au/Initiatives/SingaporeTraining/


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Townsville, Rockhampton, Yeppoon, and Marlborough; ten focus group discussions held in Townsville, Rockhampton, Charters Towers, Yeppoon and Gladstone; social media analysis tracking influential posts over the period May 2016 - February 2017; and review of all 18 written submissions provided to KPMG via the public submission process.8

The remainder of this section provides results of the full socio-economic impact assessment by:

• summarising the potential economic impacts of the ASMTI; 9

• discussing the possible social impacts associated with the ASMTI; and

• examining ways in which the potential economic benefits might be maximised.

Potential Economic Impacts To estimate the potential impact of Defence expanding the land used for training in the Fitzroy region and the Townsville (TVL) region, KPMG has examined a number of different settings / sensitivities. These have been used to develop a range of results for the potential impacts of the ASMTI during both the development and operational phases.

Table A: Direct impacts (shocks) by region ($ million)

Lost agricultural production Investment Impact (2019-26) Increased training expenditure

Phases Fitzroy TVL Total Fitzroy TVL Total Fitzroy TVL Total

Development phase $5.8m -$8.3m

$4.2m -$6.8m

$10.0m -$15.1m

$143m $143m $286m - - -

Operational phase $5.8m -$8.3m

$4.2m -$6.8m

$10.0m -$15.1m

- - - $36.4m $36.2m $72.6m

Source: KPMG estimates based on Defence data and assumptions

In developing the final results:

• It is assumed that the development expenditure (investment impact) is equally shared across each region.10

• For the increased training expenditure, the estimates assume that any additional Air Force training assets will be located at the SWBTA, while Army training activities will be shared across the two regions. The increased training expenditure in the table above also include an estimate of the potential additional expenditure in the region for the permanent SAF staff.

To estimate the potential economic impacts of the proposed ASMTI, KPMG has used a Computable General Equilibrium (CGE) model. 11 This type of model is well suited to analyse impacts across entire economies, and has been used in many studies to examine the economy-wide implications of economic events. 12 It is also a widely accepted method of undertaking economic impact analysis – for example, this type of modelling is used by the Commonwealth Government and the Productivity Commission for policy analysis.

The development phase is the seven years of development activity to enhance the training areas in each region, expected to commence from 2019. Higher State investment of $286 million ($143 million in each region as shown in Table A) in each year is expected to lead to an increase in development activity, stimulating additional local demand for the output of key industries such as construction, trade and professional services. This activity is offset to some extent by the reduction in agriculture and it’s supporting industry activities.

8 Information on the study was published in a number of local papers and on the Defence website, which invited interested parties to make written submissions to KPMG through a dedicated email address (open from 11 January to 6 March 2017). 9 Two key assumptions under the Basecase are: (1) the current local industry sourcing rates apply to any new development and expenditure; and (2) when land is transferred from Agricultural use to Defence use, there is no additional use of the transferred land by the agricultural sector. 10 $1 billion each spread over seven years = $143 million. 11 CGE models are necessary to quantify impacts across the entire economy. Models without general equilibrium linkages can miss feedback effects that occur from economic agents such as businesses, households and government. Moreover, input-output multipliers over-estimate impacts by ignoring relevant economic constraints such as prices and limited quantities of inputs. 12 For example, KPMG has used this modelling in numerous studies including examining the impact of a policy change (for example, KPMG’s tax policy work for the Commonwealth Treasury), and major infrastructure developments.


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Overall, taking into account the impacts mentioned above, it is estimated that during the development phase there could be around $150 million of extra sales by Queensland businesses, contributing up to $50.3 million in additional annual Gross State Product (GSP).13 Of this, up to $15.9 million is in Gross Regional Product (GRP) for the Fitzroy region and up to $26.3 million is in the Townsville region – the two regions receiving more than 80 per cent of the total GSP.

Each year, there could be up to 591 additional jobs in the state, on average, during the development phase, compared to a baseline without the ASMTI. Of these extra jobs, up to 219 jobs could be in the Fitzroy region and 264 jobs in the Townsville region.

Figure A: Net annual impact on GSP/GRP (top) and employment (bottom), change from baseline

Source: KPMG estimates Notes: Each bar shows a potential range of results, or upper and lower bounds. 2. Total Queensland includes Fitzroy, Townsville and rest of Queensland impacts. 3. Jobs include both full-time and part-time.

The operational phase is defined as the period commencing once the enhanced training facilities are finished and in full use under the ASMTI, expected to commence from 2026. Higher spending of $72.6 million (approximately $36 million in each region as shown in Table A) in each year of the operational phase is expected to lead to an increase in sales from industries supplying goods and services to the Singapore training activities and to the additional permanent staff in the region.14 This activity is offset to some extent by the reduction in agriculture and its supporting industries.

Overall, taking into account the impacts mentioned above, it is estimated that once fully operational there could be around $35 million in extra sales by businesses in the State economy, contributing up to $20.5 million in additional annual GSP. Of this, up to $7.3 million is in GRP for the Fitzroy region and up to $10.7 million is in the Townsville region – with the two regions receiving up to 87 per cent of the total GSP.

There could be up to 147 more jobs in the State, on average each year, during the operational phase compared to a baseline without the ASMTI. Of these extra jobs, up to 68 jobs are estimated to be created in the Fitzroy region and up to 74 in the Townsville region.

13 Gross State/Regional Product (GSP/GRP) is the Output of a region or State less the goods and services inputs used in producing that output. That is, it is effectively region’s income (or its return on labour and capital). 14 It is assumed that the net additional training expenditure is $31.4 in the Fitzroy region – which is the new Air Force training expenditure and half of the new Army training activities (thus is net of the current expenditure in the region for these activities) plus an estimated 50 additional permanent staff living in the region; and $31.2 in the Townsville region – which is half of the additional Army training activities plus an estimated 50 additional permanent staff living in the region. 15 It is assumed that the net additional training expenditure is $31.4 in the Fitzroy region – which is the new Air Force training expenditure and half of the new Army training activities (thus is net of the current expenditure in the region for these activities) plus an estimated 50 additional permanent staff living in the region; and $31.2 in the Townsville region – which is half of the additional Army training activities plus an estimated 50 additional permanent staff living in the region.

$14.4 m

$4.8 m

$24.8 m

$7.6 m

$47.3 m

$14.8 m

$15.9 m

$7.3 m

$26.3 m

$10.7 m

$50.3 m

$20.5 m

Development Operational Development Operational Development Operational

Fitzroy Townsville Total QLD

213 jobs

55 jobs

258 jobs

61 jobs

579 jobs

120 jobs

219 jobs

68 jobs

264 jobs

74 jobs

591 jobs

147 jobs

Development Operational Development Operational Development Operational


Lower bounds

Upper bounds

Lower bounds

Upper bounds


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Community Consultation

This analysis included detailed consultation with stakeholders to better understand the potential social impacts of the ASMTI. This included face-to-face interviews with opinion leaders and community representatives, focus group discussions, social media analysis (tracking influential posts over the period May 2016 - February 2017) and review of all written submissions provided to KPMG. Much of this community consultation occurred during the period January to early March 2017. During this period there was significant community interest and negative sentiment about land acquisition and KPMG notes the Government’s announcement on 7 February 2017 that there would be no forced acquisition of land.

Overall, the community appears to recognise that there are potential opportunities for the region from the ASMTI. However, there is concern that a disproportionate price might be paid by particular groups in the community, as well as concern regarding barriers that might inhibit realisation of the full range of benefits.

It should be noted that, while the Federal Government announced during the consultation phase that it would not forcibly acquire any properties to support the initiative, community representatives continued to express concern about potential negative social impacts associated with any purchases of land, most particularly impacts on farmers and the supply chains the farms support.

The greatest concern is at the individual level, with affected landholders, their local communities (for example, Marlborough and Charters Towers) and agricultural supply chains likely to feel the greatest direct impact. For these individuals, the perceived negative impacts are considered significant, with little evident benefit. In these cases, locals consider that the ASMTI could put at risk the livelihoods and sustainability of businesses and local towns.

Those based in larger regional hubs more readily identify the potential benefits of the ASMTI. In Rockhampton, there were concerns in relation to the impact on the agricultural supply chain (both beef and fisheries) and the flow-on effects for businesses that support these industries. Both regions sought greater comfort as to how benefits would be ensured for the local community (for example, how local business would be supported to participate in Departmental procurement processes).

In general, there appears to be mixed feelings associated with the ASMTI. While many recognise the potential for benefits from the ASMTI, there is also individual and group concerns around directly impacted properties or businesses along the agricultural supply chain. It is also noted there was a distinct difference in tone of commentary on social media, where stories or posts which clearly did not support any purchase of land gained significant traction.

Table B provides a summary, listed alphabetically, of the community sentiment captured during the thirteen interviews, from analysis of social media and from the participants in the eight local focus groups.

Table B: Community Sentiment - Summary by Region

Charters Towers Concern as to the economic impact to the town and supporting services to the agriculture industry. Doubt that any benefit would be gained locally.

Gladstone Significant recognition and enthusiasm of the opportunities that may arise to utilise the infrastructure already invested in and arrest a challenging economic environment.

Marlborough Marlborough is expected to bear the costs of agriculture industry reduction and a number of businesses are concerned about economic viability if significant numbers of properties are removed from the local economy.

Rockhampton Rockhampton is considered likely to be impacted by the loss of agriculture, but there is strong recognition of the economic benefits that may also flow to the city.

Townsville Strong recognition of the benefits that may be available, with minimal concerns raised.

Yeppoon & Livingstone Shire

There is recognition of the potential benefits that could arise, combined with scepticism that they will be fully realised and concern that local services could be impacted with little benefit received.


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Maximising Potential Benefits

The economic impact assessment indicates that the ASMTI presents an opportunity for additional economic activity in regions that have experienced recent economic slow-down. It is estimated that, at the broader regional and state levels, there is likely to be a substantial net benefit from the ASMTI.

The industry distribution of impacts, combined with sentiment identified under the social impact assessment, indicates that there are likely to be variations in costs and benefits across the sub-regions. Specifically, the sub-regions that are more dependent on agriculture are likely to bear more of the costs associated with the ASMTI, while the larger townships that supply construction and other supplies are likely to see more of the benefits.

Further, the final impacts achieved in each region will be heavily dependent on a number of factors. The following looks at some of these factors and discusses ways by which potential benefits for each region might be maximised.

Local Supply

The regions appear generally well equipped to provide local sub-contractor support to major development contracts. The Minister for Defence has confirmed that, under the terms of the Memorandum of Understanding (MoU) governing the ASMTI, priority will be given to local businesses in Townsville and Rockhampton to deliver the investment under the initiative.

Clearly, the more local businesses that secure supply contracts for the development of the extended training facilities, the greater will be the economic benefit for the regions.

The results indicate that one way to maximise the benefits from the ASMTI could be to work with the community to identify ways to help maximise the involvement of local businesses to secure supply contracts for the development of the enhanced training facilities.

Figure B: Net GRP/GSP impacts under alternative sourcing assumptions (development phase)

Source: KPMG estimates Note: Results shown are for sensitivites to the Basecase under the upper bound, the lower bound results exhibit similar patterns.

As discussed in Figure B above under the Basecase, if the new Defence training facilities development sources the same mix of local and non-local construction services as is currently observed across the whole industry in each region (basecase sourcing16), there is a clear economic benefit to both regions – estimated at up to $15.9 million in higher annual GRP in Fitzroy and up to $26.3 million in higher annual GRP in Townsville in each of the seven years of development. The impact is higher in

16 The Basecase assumes the current local supply shares in construction hold - that is, Fitzroy sources around 55 per cent of its construction services from the local region, while Townsville sources around 88 per cent locally. The remainder is predominately sourced from within the state.

$1.8m

$15.9m

$24.2m

$2.1m

$26.3m $26.7m $27.2m

$50.3m $52.1m

No localsourcing

Basecaselocal

sourcing

High caselocal

sourcing

No localsourcing

Basecaselocal

sourcing

High caselocal

sourcing

No localsourcing

Basecaselocal

sourcing

High caselocal

sourcing



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Townsville because there is a larger proportion of regional construction work currently awarded to local Townsville firms than to local Fitzroy firms - and this is assumed to be the same under the ASMTI development.

If local construction businesses are able to access a greater/ increased share of the construction contracts, say 75 per cent by value, in the Fitzroy region (High case) the overall benefits to the local economy could be even greater – estimated up to $24.2 million in higher GRP in Fitzroy in each of the seven years of development.

At the other extreme, if all of the construction services for the training site developments were sourced from businesses outside of the two regions (No local sourcing case), there is still expected to be some additional demand along the local supply chain, almost completely offsetting the impact of the reduced agricultural activity, and meaning any additional training area development has very little real net economic impact on the regions.

A similar pattern can be seen in the employment impacts, with the more local sourcing, the more employment opportunities in each of the regions.

Figure C: Net employment impacts under alternative sourcing assumptions (development phase)

Source: KPMG estimates Note: Results shown are for sensitivites to the Baseline under the upper bound, the lower bound results exhibit similar patterns.

Agriculture Industry

The ASMTI may involve the purchase of agricultural land from willing sellers to enhance the training areas. Thus, the additional economic activity that will be associated with the SAF’s enhanced access to Australian training areas may be effectively replacing current economic activity associated with the current agricultural use of that land. To the extent that the agricultural loss can be minimised – through, for example, the choice of land or leasing options – this will maximise the economic benefits associated with the ASMTI.

The results indicate that another way to maximise the benefits from the ASMTI could be to work with the community to identify ways to help minimise the reduction in agriculture activity.

If the agricultural loss can be minimised (say by 10 per cent - as in the illustrative “lower agriculture loss” scenario in Figure C), then the overall benefits to the Queensland economy are even greater – estimated at up to $21.6 million higher annual GRP across the state when the enhanced training areas are fully operational. There are also additional benefits at the regional level, with the GRP impact increasing from $7.3 million to up to $7.8 million in the Fitzroy region and from $10.7 million to up to $11.2 million in the Townsville region.

32 jobs

219 jobs

329 jobs

21 jobs

264 jobs 268 jobs

364 jobs

591 jobs 613 jobs

No localsourcing

Basecaselocal

sourcing

High caselocal

sourcing

No localsourcing

Basecaselocal

sourcing

High caselocal

sourcing

No localsourcing

Basecaselocal

sourcing

High caselocal

sourcing



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Figure D: Net GRP/GSP Impacts under alternative agriculture assumptions (operational phase)

Source: KPMG estimates Note: Results shown are for sensitivites to the Basecase under the upper bound, the lower bound results exhibit similar patterns. Total

Queensland includes Fitzroy, Townsville and rest of Queensland impacts.

Figure E: Net employment impacts under alternative agriculture assumptions (operational phase)

Source: KPMG estimates Note: Results shown are for sensitivites to the Baseline under the upper bound, the lower bound results exhibit similar patterns. Total

Queensland includes Fitzroy, Townsville and rest of Queensland impacts.

Public Infrastructure

Key to the development of any region is access to infrastructure. Better roads, communication networks and utilities can all contribute to increased productivity in a region. A scenario with additional public infrastructure has not been modelled in this analysis, but could present an additional economic benefit if it is part of the regional investment.

Additional benefits could also be achieved from the ASMTI through working with the community to identify ways to develop local infrastructure that supports the community.

$7.3 m$7.8 m

$10.7 m $11.2 m

$20.5 m$21.6 m

Basecase Scenario -net impact

under loweragriculture loss






68 jobs 73 jobs 74 jobs78 jobs

147 jobs154 jobs









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Introduction

The Australian Defence Force (ADF) requires different training areas to exercise and generate different capabilities. The largest training areas are called ‘Category 1’ training areas and include the Shoalwater Bay Training Area (SWBTA). Category 1 training areas are typically used for the highest and most complex levels of ADF training. The most complex activities involve the Navy, Army and Air Force training together to practise the live-fire integration of discrete capabilities. Category 2 training areas, including the Townsville Field Training Area (TFTA) have a primary function to support the conduct of single Service collective training and have the potential for joint or combined training, with sufficient manoeuvre space for land, air or sea forces.

The communities around Townsville and Rockhampton have co-existed with two Defence training facilities – the TFTA and SWBTA – for many years.

• The TFTA covers over 200,000 hectares of land, approximately 60 kilometres southwest of Townsville in North Queensland. The training area includes a number of weapons ranges and is generally used for aircraft and personnel training activities.

• The SWBTA covers 290,000 hectares of land and 165,000 hectares of maritime area, within the Livingstone Shire, north of Rockhampton in Central Queensland. In addition to ADF training needs, the SWBTA is currently host to foreign military personnel training exercises. Specific to this report, the SWTBA currently hosts Singapore Armed Forces (SAF) for up to 45 days between August and December to conduct the unilateral Exercise Wallaby.

The Australian-Singapore Defence partnership has a long history. The Governments of Australia and Singapore formalised their defence relationship on 10 February 1988. In June 2015, the Prime Ministers of Australia and Singapore made a joint declaration to enter into a Comprehensive Strategic Partnership (CSP). As part of the CSP, the Australian Government agreed to increase SAF access to Australian military training areas via a Memorandum of Understanding (MOU) signed in October 2016.17

In particular, the MOU identifies that, under the Australian-Singapore Military Training Initiative (the “ASMTI”), up to AUD$2.25 billion will be invested in the Townsville and Rockhampton regions. This investment in enhanced training facilities will provide for more ADF and SAF training activities in the two regions each year. 18

Development activities to enhance the training areas are expected to commence from 2019.

KPMG was engaged by the Department of Defence (Defence) to undertake a socio-economic impact assessment of the ASMTI in Central and North Queensland. Specifically, this report is designed to provide Defence with a better understanding of the potential socio-economic impacts of the development of training areas (including any purchase of land) to support extended ADF and SAF training rotations in the Fitzroy and Townsville regions.

The economic analysis examines a number of different settings / sensitivities to develop a range of results for the potential impacts of the ASMTI during both the development and operational phases. The development phase is the seven years of development activity to enhance the training areas in each region, expected to commence from 2019. The operational phase is defined as the period commencing once the extended training facilities are finished and in full use under the ASMTI, expected to commence from 2026.

The actual impacts of the ASMTI will ultimately depend on the options Defence pursues in enhancing the training areas including the type and amount of land to be purchased and the development of additional facilities.

17 https://www.minister.defence.gov.au/minister/marise-payne/media-releases/minister-payne-signs-military-training-agreement-singapore 18 http://defence.gov.au/Initiatives/SingaporeTraining/

1. Introduction


http://defence.gov.au/Initiatives/SingaporeTraining/


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1.1 Scope

This engagement involved an independent assessment of the socio-economic impacts (both the costs and benefits) of the additional training site development and training numbers and rotations. This analysis includes the following:

An understanding of the current economic profile of the Queensland regions and the proposed development (including any purchase of land) and training activity

Specifically, the proposed training site development falls across two statistical areas in Queensland. These are the Townsville region - which includes Hinchinbrook, Townsville, Burdekin and Charters Towers and the TFTA - and the Fitzroy region - which includes Livingstone Marlborough, Stanage Bay, Kunwarara, Central Highlands, Rockhampton, Banana Gladstone and the SWBTA.

Stakeholder consultation

KPMG met with local councils, community representatives and focus groups to build a comprehensive picture of stakeholder views. Information on the study was also published in a number of local newspapers and on the Defence website. These published notices invited interested parties to make written submissions to KPMG through a dedicated email address (open from 11 January to 6 March 2017). Social media posts were also analysed over the period May 2016 - February 2017. These interviews, written submissions and social media posts all informed this report.

Socio-economic assessment

The socio-economic assessment has been presented in two distinct parts.


A quantitative assessment of the potential impact of the proposed training area development (including any purchase of land/industry displacement) and the additional training rotations – including (but not limited to): total Gross Regional and State product (GRP/GSP), output, consumption and employment in the affected regions and the State as a whole; and industry specific impacts.


A qualitative assessment of potential impacts including: community and personal impacts, workforce impacts, property impacts, industry considerations (such as displacement of existing industry), and additional training rotation activities. It is noted that this social assessment is based on qualitative research, and thus no quantitative conclusions can be drawn. Findings are based on the perceptions of interviewees, focus group participants, and views expressed (often anonymously) on social media.

The socio-economic impact assessment is limited to the joint military training aspect of the Comprehensive Strategic Partnership (CSP) between Singapore and Australia. The CSP is a much broader trade deal; aiming to deepen collaboration in all areas of bilateral relations and enhance the integration of Singapore and Australian economies19. As a consequence, this assessment provides a partial view of the overall impacts and opportunities arising from the CSP and is not representative of the initiative in its entirety.

19 http://dfat.gov.au/geo/singapore/pages/joint-announcement-australia-singapore-comprehensive-strategic-partnership.aspx


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1.2 Economic Measures

Key terms which are used throughout this report include:

• Sales / Output is total production/sales by a sector.

• Value-added (factor income) by sector captures the return to a sector’s labour and capital and other fixed factors and is therefore the sector contribution to GRP/GSP (except for indirect tax payments). Value-added is output less goods and services inputs from other sectors and imports. Thus, value-added avoids double counting as it does not include the value-added from other sectors.

• Gross Regional Product / Gross State Product (GRP/GSP) is a measure of the total value-added of a sector in the region/state plus indirect tax income to government. GRP/GSP is a measure of production in the economy, but does not account for the destination or nationality of those accruing income.

• Employment refers to the total number of people employed (full time and part time). The estimates jobs reported show the number of additional jobs, on average in each year, during the development or operation of the ASMTI compared to the number of jobs that would be in the regions without the ASMTI. These jobs are not cumulative.

1.3 Report Structure The remainder of this report is structured as follows:

• Section 2 begins by providing the economic backdrop in the areas of interest and establishing the economic foundations on which further analyses can be based.

• Section 3 examines the current economic climate and capabilities in the construction industry in the regions.

• Section 4 discusses the agricultural capacity of the regions with a focus on land quality, cattle numbers and carrying capacity.

• Section 5 focuses on troop rotation and the training activity profile of current and proposed military involvement in the areas.

• Section 6 presents the results from the economic analyses including the direct economic effects and the modelled flow-on impacts.

• Section 7 presents an assessment of the potential social impacts of the ASMTI on local communities.

• Section 8 examines ways in which Defence might work with the community to maximise the benefits from the ASMTI.


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Economic Backdrop

To develop an understanding of the potential socio-economic impacts of the proposed extended ASMTI development and activities, it is essential first to provide the context regarding the current state of economic affairs in the relevant areas. The purpose of this section is to lay the groundwork and provide the foundations on which further economic analyses can be based. This includes identification of current labour market trends, resident population and industry composition in Queensland and the relevant regions.

2.1 Overview

Queensland is the second largest state in Australia by land area and third largest by economic output. In June 2015, Queensland’s resident population was an estimated 4.8 million - reflecting an increase of 58,900 people (or 1.2 per cent) over the year. 20 In 2015-16, Queensland’s Gross State Product (GSP) was $316 billion, contributing 19.1 per cent of Australian Gross Domestic Product (GDP).21 The state of Queensland also accounts for the employment of 2.3 million people.22

The training site development is likely to fall across two separate statistical areas 23 in Queensland. These are the Fitzroy region – which includes Livingstone (Marlborough and Stanage Bay), Central Highlands, Rockhampton, Banana, Gladstone and the SWBTA and the Townsville region – which includes Hinchinbrook, Townsville, Burdekin, Charters Towers and TFTA as illustrated in Figure 2-1 below.

Figure 2-1: Fitzroy and Townsville geographic area

20 ABS 1379.0 Regional Statistics by Australian Statistical Geography Standard ASGS, 2010-2014, Annual (2009-10 to 2013-14). 21 ABS 5220.0 Australian National Accounts: State Accounts, Australia, 2015-16. 22 ABS 6202.0 Labour Force, Australia, December 2016. 23 SA4’s as defined by the Australian Bureau of Statistics in the 2011 Census of Population and Housing. The ABS indicates that - “The SA4 regions are the largest sub-State regions in the Main Structure of the ASGS. They are designed for the output of labour force data and reflect labour markets within each State and Territory within the population limits imposed by the Labour Force Survey sample. SA4s provide the best sub-state socio-economic breakdown in the ASGS.” (Extract from 1270.0.55.001 - (ASGS): Volume 1)

2. Economic Backdrop


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2.2 Regional Economic Profile

To assess the potential socio-economic impacts from the proposed development of the training areas, it is pertinent first to examine the current economic activity in the area. This section provides an insight into existing labour market trends, including employment activity and industry mix. The following impacted areas have been identified. These regions are defined under the Australian Bureau of Statistics (ABS) Statistical Area 4 (SA4) and contain the following Local Government Areas (as also defined by the ABS).

Fitzroy Region

- Livingstone Local Government Area (LGA) – including Marlborough and Stanage Bay townships;

- Rockhampton LGA; and

- Gladstone LGA.

Townsville Region

- Charters Towers LGA; and

- Townsville City LGA.

As a result of both data availability and economic scale, the economic analysis throughout this report is necessarily developed at this SA4 economic region level and thus shows the net impact across the Townsville and Fitzroy regions. It should be noted that there are likely to be different impacts at the local levels within these regions.

As background to understanding the potential local impacts, the following sub-section provides an insight into economic conditions in both the SA4 regions and the sub-regions that are likely to be impacted by the extended training development and activity. 24

24 This includes Shires and Townships.


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Fitzroy (SA4) & Shoalwater Bay Training Area (SWBTA)

Townsville (SA4) & Townsville Field Training Area (TFTA)

Fitzroy (SA4) has an estimated resident population of 235,785 with a median age of 35.1 years. The region’s land area is approximately 117,812 kilometres2 and includes the SA3 regions of Central Highlands (Queensland), Gladstone – Biloela and Rockhampton.

The SWBTA lies within the Rockhampton (SA3) region and is approximately 600 kilometres north-west of Brisbane and 70 kilometres north of Rockhampton. The SWBTA encompasses 290,000 hectares of land near the coast and 165,000 hectares of maritime area, allowing the use of live ammunition and amphibious training.

The core industries in Fitzroy (SA4) are Health and Social Services, Retail Trade, and Education and Training. These sectors account for 30 per cent of total regional employment. The median household income in Fitzroy (SA4) is $1,380 per week – for comparison, the Queensland median income at $1,227.

The region has an estimated GRP of $16.4 billion and employs around 117,000 people or approximately 5 per cent of total Queensland employment. The unemployment rate in the Fitzroy region is currently around 6.3 per cent. 25

Townsville (SA4) has an estimated resident population of 238,233 with a median age of 34.7 years. The region’s land area is 80,250 kilometres2 and includes the Townsville (SA3) and the Charters Towers – Ayr – Ingham (SA3) region.26

The TFTA falls within the Townsville (SA4) region and is located approximately 60 kilometres south-west of Townsville. The TFTA covers over 200,000 hectares of land and is managed by the Department of Defence.

The primary industries (by employment) in Townsville (SA4) are Health and Social Services, Retail Trade, and Education and Training. These industries account for over 35 per cent of total employment in the region. The median household income is $1,278 per week – for comparison, the Queensland medium income at $1,227.

Townsville (SA4) has an estimated GRP of $15.6 billion and employs around 112,000 people, accounting for 4.8 per cent of total Queensland employment. At the time of writing, the unemployment rate in the Townsville region was the highest in Queensland at approximately 11.4 per cent.27

More detailed information on resident population, income and labour trends at the SA4-level for Fitzroy and Townsville are provided in Appendix A.

25 Australian Government Department of Employment, Unemployment Rate by Labour Force Region, 12 month average, Jan 2017. 26 For comparison, the estimated resident population in Queensland is 4,778,854 and the median age is 36.9 years. 27 Australian Government Department of Employment, Unemployment Rate by Labour Force Region, 12 month average, Jan 2017.


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Gladstone LGA (Fitzroy Region)Gladstone is a large industrial region within the broader Fitzroy area. While the region does not currently experience much economic impact from the existing SWBTA and associated activities, the development activities associated with an expansion of the SWBTA could provide opportunities for Gladstone businesses.

In 2016, Gladstone’s GRP was an estimated $4.2 billion and the region represented over one-quarter of Fitzroy’s GRP (of $16.0 billion). 28 The estimated resident population in Gladstone was 66,097 and the region also has a sizeable non-resident population (fly-in-fly-out and drive-in-drive-out). 29 As at June 2016, this group represented approximately 1,540 people.30

In terms of employment, as at September 2016, the region’s unemployment rate was around 5.7 per cent and the total number of people in the labour force was estimated at 36,542.31 Median total personal income in 2013 was $66,996 per annum.32

Main industries by employment:

• Construction (13.8%);

• Manufacturing (17%);

• Retail Trade (9.5%); and

• Transport, Postal & Warehousing (7.7%).

Top employment group by occupation:

• Technicians & Trades Workers (22.4%); • Machinery Operators & Drivers (13.7%); • Labourers (12.9%); and • Professionals (12.7%).

In comparison to the state average, Gladstone has a heavy focus on manufacturing and construction.33 The region is overrepresented in manufacturing but suffers from a deficit in the health care space.34

Gladstone is a major industrial hub. One of the core activities in this region is the production of Liquefied Natural Gas (LNG). The recent development of three LNG plants in the Gladstone harbour has brought employment and industry opportunities into the region, but has also altered the economic composition of the area. With the recent completion of the LNG plants, there is concern that the slowdown in construction and the decline in economic activity have spread to other industries within the region.35

These recent developments have meant that Gladstone now has a well-established construction and supporting industry, and significant assets – such as Queensland’s largest multi-commodity port – that could potentially facilitate and support extended Defence activities, regenerating economic activity in the region.

Livingstone LGA (Fitzroy Region) The SWBTA lies within the Livingstone Shire, under the broader Fitzroy Statistical Area. Livingstone has an estimated resident population of 36,378.36 As at September 2016, the Shire’s labour force was 16,678 and the unemployment rate stood at 5.1 per cent – considerably lower than the state level. 37 In 2013, the area had a median total personal income of $53,089 per annum.38

The Shire’s top employment groups by occupation are: • Clerical & Administrative Workers (12.9%); • Managers (12.2%); • Professionals (15.5%); and • Technicians & Trades Workers (17.9%).

The Shire’s main areas of commerce are in the industries of construction, healthcare and retail trade. Agricultural production is also significant with the total value of the shire’s gross agriculture product estimated at $72 million.39

28 Gladstone Regional Council, Economic Profile. 29 Ibid. 30 Ibid. 31 Department of Employment, Small Area Labour Markets, September 2016. 32 ABS Regional Statistics by ASGS, 2010-2014, Annual (2009-10 to 2013-14). 33 Queensland Treasury, Queensland Government Statistician’s Office.

The Shire’s main industries by employment are: • Construction (10.7%); • Education & Training (9.7%); • Health Care & Social Assistance (10.2%); and • Retail Trade (10.4%).

The Agriculture, Forestry and Fishing industry comprises approximately 19 per cent of total businesses in Livingstone Shire.40

Based on land size, the existing SWBTA currently occupies over one-quarter (290 thousand ha) of the total land area in the Livingstone LGA (1,175 thousand ha). In contrast to land utilised for other purposes, the Livingstone Shire receives no rates on this land. Thus, any additional land acquired to extend the Defence training facility could mean a reduction in rates for the Shire.

34 Stakeholder consultation. 35 Stakeholder consultation. 36 ABS Regional Statistics by LGA, 2010-2014, Annual. 37 Queensland Treasury, Queensland Government Statistician’s Office. 38 ABS Regional Statistics by LGA, 2010-2014, Annual. 39 Central Queensland and Regional Organisation of Councils: http://cqroc.org.au/files/2015/06/Livingstone-2015-Economic-Profile.pdf 40 Ibid.


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Marlborough Town

Marlborough Town is a small, rural town that lies within the Livingstone LGA. This township and surrounding region are likely to be the most directly affected by any expansion of the SWBTA.

The town’s primary areas of business are in agriculture and the services that support it. Surrounded by

predominately cattle-raising industry, Marlborough’s other businesses comprise a post office, hotel, caravan park, convenience store and service station.

The estimated resident population of Marlborough Town is 355, with just under 40 pupils currently attending the local primary school. 41

Stanage Bay Town

Also within the Livingstone LGA sits the township of Stanage Bay. 42 Stanage Bay is a small fishing and camping town with a growing seafood industry. This industry is estimated to have a primary value of $1.2 million.43

A number of businesses in the township – for example the Plumtree Store and the Crab Pot Bar – serve both residents and visitors and are owned by long-time residents of the area. The town also attracts visitors during the annual Shirley Grimm fishing competition.

Stanage Bay Road is one of the four key road routes that service the SWBTA. This road is also the sole access to Stanage Bay township and a number of surrounding properties and businesses in the cattle, seafood, horticultural and tourism sectors. The road is currently only partly sealed, and the council identifies it as “subject to severe degradation during defence force manoeuvres”.44 The council is concerned about safety issues regarding this road.

Rockhampton LGA (Fitzroy Region)

The Rockhampton LGA falls within the larger Fitzroy (SA4) statistical division. In 2015, Rockhampton’s GRP was estimated at $5 billion and represented almost one third of Fitzroy’s GRP (of $16 billion). 45 In 2014, the estimated resident population in Rockhampton was 83,43946 and, in 2013, the area had a median total personal income of $50,367 per annum.47

As at September 2016, Rockhampton had an unemployment rate of 7.5 per cent and the total number of people in the labour force was 43,039.48 The region’s largest employment industry was in health care and social assistance. 49

Main industries by employment: • Health Care & Social Assistance (15.6%); • Education & Training (10.3%); • Retail Trade (9.7%); and • Public Administration & Safety (9.5%).

Top employment group by occupation: • Professionals (18.6%); • Clerical & Administrative Workers (16.5%); • Technicians & Trades Workers (15.8%); and • Community & Personal Services (10.7%).

The Rockhampton region hosts visiting military troops on various training activities and exercises during the year. Recent stakeholder consultation indicates a positive impact of these activities on the local economy – driven by the motivation of foreign troops (including the SAF) to ‘buy locally’. In addition to the uptake in sales and services during foreign military training windows, there is also year-round hire of facilities and landing fees at the Rockhampton airport – where locals are often engaged to maintain the equipment

41 Stakeholder consultation. 42 The township of Stanage consists of three mini-suburbs: Alligator Bay, Happy Valley and Stanage Bay. 43 Livingstone Shire Council (https://www.livingstone.qld.gov.au/DocumentCenter/Home/View/3508). 44 Ibid

45 http://economy.id.com.au/rockhampton/gross-regional-product?Indkey=23014. 46 ABS 2011 Census of Population and Housing. 47 ABS Regional Statistics by ASGS, 2010-2014, Annual (2009-10 to 2013-14). 48 Department of Employment, Small Area Labour Markets, Sept 2016. 49 Queensland Treasury, Queensland Government Statistician’s Office.


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Charters Towers LGA (Townsville Region)

The TFTA) lies within the Charters Towers LGA, under the broader Townsville Statistical Area.

In 2014, Charters Towers had an estimated resident population of 12,517 and, in 2013, a median total personal income of $47,906 per annum.50 As at September 2016, the region had a relatively high unemployment rate of 12.7 per cent and a labour force population of 5,055.51


• Agriculture, Forestry & Fishing (11.1%); • Education & Training (11.5%); • Mining (13.7%); and • Retail Trade (10.2%).

Top employment groups by occupation:

• Labourers (14.5%); • Machine Operators & Drivers (14.6%); • Managers (14.6%); and • Technicians & Trades Workers (16.1%).

The Charters Towers regional economy relies on the contribution of three industries: mining, education and agriculture. Beef production is a major economic activity and the Charters Towers Regional Council is currently working on a Meat Processing Facility project that will have the potential for new job creation.52

It is estimated that agricultural production contributes $5.1 million in value-added to the region, with livestock slaughtering comprising the most significant share – with gross value of $4.9 million.53

Townsville City (LGA) (Townsville Region)

In 2014, the City of Townsville LGA had an estimated resident population of 192,000 and, in 2013, a median total personal income of $52,308 per annum.54 As at September 2016, the unemployment rate in the Townsville City LGA stood at 9.6 per cent – lower than the broader Townsville SA4 region unemployment rate discussed earlier 11.4 per cent, but still significantly higher than the state average. In the same period, Townsville LGA had a labour force population of 92,449.


• Construction (9.9%); • Health Care & Social Assistance (12.5%); • Public Administration & Safety (11.9%); and • Retail Trade (10.7%).

Top employment group by occupation:

• Clerical & Administrative Workers (14.3%); • Community & Personal Service Workers (12.2%);

• Professionals (17.3%); and

• Technicians & Trades Workers (16.7%).

While there has been a recent dip in the economic climate in the region, there is acknowledgment that business conditions have improved from six months ago. The two largest industries in Townsville are Health Care and Social Assistance and Public Administration and Safety.

Townsville has reported increased economic activity as a result of Defence training exercises when visiting personnel are in the township. Anecdotal evidence suggests that, while in the township, Defence personnel spend on haircuts, bus trips and food, amongst others.55

This section was designed to provide context to the current economic situation in the regions and the sub-regions of Townsville and Fitzroy where the existing and proposed training developments are based. This included a depiction of existing labour profiles, population trends and industry mix. Building on this economic backdrop, the next section will identify major infrastructure projects that could potentially compete for resources in these regions.

50 ABS Regional Statistics by LGA, 2010-2014, Annual (2009-10 to 2013-14). 51 Department of Employment, Small Area Labour Markets, September 2016. 52 Charters Towers Regional Council: http://www.charterstowers.qld.gov.au/beef-cattle-industry

53 ABS Regional Statistics by ASGS, 2010-2014, Annual (2009-10 to 2013-14). 54 ABS Regional Statistics by LGA, 2010-2014, Annual (2009-10 to 2013-14). 55 Stakeholder consultation.


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Construction Sector Capacity

In this section, we build on the economic backdrop and assess the current state of the construction industry in the Fitzroy and Townsville regions. The primary purpose of this section is to identify the capacity of the local construction industry to support the ASMTI. We also identify the major infrastructure projects in the region that could potentially be in competition for regional resources such as labour and machinery/equipment.

3.1 Economic Context

Over the past five years, construction has contributed to just under ten per cent of total employment in both the Townsville and Fitzroy economies. In the Fitzroy region, construction employment peaked in 2012-13 at 16,100 employees or almost 15 per cent of total employment in the region.

More recently, employment in the construction industry across the two regions has been trending downwards and is showing no signs of a swift recovery. Both regions have seen a fall in construction activity recently, with this sector currently only accounting for around 7.5 per cent of each regions’ total employment.

Within the Fitzroy region, the completion of the construction of three significant LNG projects in late 2015 - early 2016 in the Gladstone area has had a major impact on this sector. The Townsville region is feeling the effect of the mining downturn, reflected in an almost 25 per cent decline in building approvals in the region.

Uncertainty regarding future global economic and geopolitical conditions is also affecting business sentiment and investment across both regions. As the construction industry is a significant input into investment, this will likely flow through to limit growth in this industry in the near term.

As Figure 3-1 illustrates, total employment in the construction industry has dropped by almost 35 per cent in the Townsville regions and over 45 per cent in the Fitzroy region since 2012-13.

Figure 3-1 Construction Industry Employment

Source: ABS Labour Force Survey (cat no. 6291.0.55.003)

In line with the decline in economic activity discussed above, the total value of building approvals has also declined significantly in both regions. This was most pronounced over 2013-14 where the value of building approvals in Fitzroy fell by almost 60 percent. In Townsville, the decline over the same period was lower but still substantial at almost 30 percent. These trends can be observed in Figure 3-2.

0

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3. Construction Sector Capacity


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Figure 3-2 Value of Building Approvals ($m)

Source: ABS Regional Statistics (cat no. 1379.0.55.001)

3.2 Construction Capacity Reduced demand for construction services appears to have affected the total number of businesses in the construction industry across the two regions. In Fitzroy, the total number of businesses in the construction industry fell from 3,119 in 2011 to 3,014 in 2014.56 In Townsville, a similar trend is observed, with the total number of construction businesses falling from 3,448 in 2011 to 3,236 in 2014.57

While there has been a reduction in business numbers in response to reduced construction opportunities, there are still over 3,000 construction businesses and around 8,000 construction employees in each region.

Figure 3-3 Construction Industry - Total Number of Businesses

Source: ABS Regional Statistics (cat no. 1379.0.55.001)

56 ABS Regional Statistics by ASGS, 2010-2014, Annual (2009-10 to 2013-14). 57 Ibid.

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Examining the size of the construction businesses within Fitzroy and Townsville between 2014 and 2016 provides an indicator of the capacity and ability of local businesses to provide additional services to the proposed ASMTI.

The majority of construction businesses in each region are small businesses, with the regions’ local businesses predominately either non-employing (sole traders) or employing 1-4 workers.

Figure 3-4 Regional distribution of employment in Construction, 2014-2016

Source: ABS Counts of Australian Businesses (cat no. 8165.0)

Given the nature of the developments and the structure of the local construction industry in these regions, it is likely that the lead contract for Defence training site development or maintenance would be provided by a larger firm (potentially from outside the region) which may then sub-contract a proportion of the work to different sub-contractors. Defence has indicated that “Principal contractors are likely to run advertisements or information sessions to raise awareness of subcontract opportunities.”58

The MOU between Australia and Singapore prioritises local content. Defence has advised that it is committed to supporting the engagement of local organisations during the construction and operational phase of the initiative, with the Minister of Defence reiterating in a recent press release that under the MoU “priority will be given to local businesses in the Townsville and Rockhampton regions to deliver the investment.”59

Initial planning activities have commenced for the construction works. More detailed planning including design activities are expected to commence in 2018 in advance of construction starting later in 2019. Services and goods needed by Defence over the planning phase and into construction will include:

• Professional services such as architecture, engineering, survey, environmental services, project management, cost estimation, and planning and programming.

• Construction services such as construction management, a wide variety of trades, and supply of various construction materials.

The construction of these facilities and infrastructure is likely to include the development of buildings, roads and bridges, and telecommunication and power networks. Procurement data from recent Defence construction projects show high levels of content from local suppliers and subcontractors, indicating significant local capacity and capability to support the construction works under the ASMTI. Based on data provided by Defence for recent projects in the Townsville area, over 85% of the value of construction work has been performed by local contractors. Through these local contractors, the Defence construction work also provided opportunity to grow the local skilled workforce with a recent project example at Lavarack Barracks citing around 65,000 hours of training including apprentices, cadets and indigenous employees.

58 http://www.defence.gov.au/Initiatives/SingaporeTraining/FAQ-business.asp 59 https://www.minister.defence.gov.au/minister/marise-payne/media-releases/master-planning-finalised-enhanced-training-area.

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http://www.defence.gov.au/Initiatives/SingaporeTraining/FAQ-business.asp

https://www.minister.defence.gov.au/minister/marise-payne/media-releases/master-planning-finalised-enhanced-training-area


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3.3 Major Infrastructure Projects

This final section provides an ‘awareness’ of other current and impending construction projects in the region. These projects could possibly be in contention for limited resources such as workers from the construction sector and relevant machinery and equipment. On the other hand, some of these projects (such as road developments) could help facilitate a smoother transition of the proposed enhanced training areas. The list of major infrastructure projects in this section includes both government funded (Commonwealth and State) and private sector initiatives. This list also contains current project commitments and those under consideration.

Table 1 Fitzroy (SA4) and Townsville (SA4) (major projects > ~$100 million)

Project Location Status Indicative Timeline

Estimated Cost

Rockhampton Hospital Redevelopment60

Under Construction 2008 to 2017 $100 - $250 million

South Styx Coal61 Livingstone Environmental Impact Statement (EIS)

Process

2018 to 2038 $250 million

Fitzroy Road Network (Queensland Transport and Roads Investment Program)62

Banana; Central Highlands; Gladstone;

Livingstone; Rockhampton; Woorabinda.

Under Construction 2015 to 2020 $270 million

Lower Fitzroy River Infrastructure Project 63

Rockhampton EIS Approved with Conditions

No details $495 million

Capricorn Integrated Resort 64

Livingstone EIS Process 2017 to 2037 $600 million

Great Keppel Island Resort 65

Livingstone EIS Approved 2014 to 2024 $600 million (Stage 1)

Arrow Bowen Pipeline Moranbah to Gladstone

EIS Approved 2018 $1,000 million

ADANI Carmichael Coal Mine and Rail Project66

Rockhampton EIS Approved 2017 $16,500 million

Townsville Hospital Redevelopment67

Townsville Under Construction 2014 to 2017 $100 - $250 million

Townsville Ring Road Stage Four68

Townsville Under Construction 2014 to 2017 $100 - $250 million

Integrated Entertainment Centre (North Queensland Stadium)69

Townsville Expression of Interest for Managing Contractor

2017 to 2020 $250 million

Townsville Port Expansion70 Townsville EIS process 2017 to 2032 $1,600 million

Hell’s Gate Dam71 Townsville Feasibility $500 million

60 National Infrastructure Construction Schedule (NCIS), Department of Infrastructure and Regional Development. 61 http://epbcnotices.environment.gov.au/_entity/annotation/51517647-08c8-e611-9a9c-005056ba00a7/a71d58ad-4cba-48b6-8dab-f3091fc31cd5?t=1483488000333 62 https://publications.qld.gov.au/dataset/06739006-5b6a-470a-81fd-4d3cf6ca6111/resource/66a3617e-e3e1-48d7-b28f-e8bf1f87b8ea/download/qtrip-2016-17-to-2019-20---11-fitzroy.pdf 63 https://www.statedevelopment.qld.gov.au/assessments-and-approvals/lower-fitzroy-river-infrastructure-project.html 64 http://statedevelopment.qld.gov.au/assessments-and-approvals/capricorn-integrated-resort.html 65 http://statements.qld.gov.au/Statement/2013/3/2/proposed-great-keppel-island-ecotourism-resort-project-approved 66 http://statedevelopment.qld.gov.au/assessments-and-approvals/carmichael-coal-mine-and-rail-project.html 67 National Infrastructure Construction Schedule (NCIS), Department of Infrastructure and Regional Development. htmlhttp://statedevelopment.qld.gov.au/assessments-and-approvals/current-eis-projects.html 68 Ibid. 69 https://www.statedevelopment.qld.gov.au/major-projects/north-queensland-stadium. 70 http://eisdocs.dsdip.qld.gov.au/Townsville%20Port%20Expansion/AEIS/chapter-02-project-description.pdf 71 http://www.townsvillebulletin.com.au/news/support-builds-for-new-dam-near-townsville/news-story/3f722ea8ff855f42ab7e8000452ae926

https://www.statedevelopment.qld.gov.au/major-projects/north-queensland-stadium


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Agricultural Capacity

This section provides an assessment of agricultural production in the broader Fitzroy and Townsville regions, with an emphasis on cattle production. To provide context, we begin with an overview of agricultural capacity in Queensland, and then discuss the specifics of land quality and cattle numbers in the Fitzroy and Townsville regions.

As purchases of land for the proposed ASMTI have not yet been finalised, this section examines a range (or upper and lower bounds) of agricultural revenues that may be foregone if land is repurposed. This section indicates that the ASMTI could lead to a reduction in agriculture activity within the regions. It is estimated that annual agricultural activity in the Fitzroy region could be up to $8.3 million lower under the ASMTI – equivalent to around 1 per cent of the current livestock value in that region. Similarly, it is estimated that annual agricultural activity in the Townsville region could be up to $6.8 million lower under the ASMTI – equivalent to around 2 per cent of the current livestock value in that region. 72

These estimates are discussed in more detail below. It should also be noted that the estimates provided in this section use a measure of carrying capacity sourced from the Queensland Department of Agriculture and Fisheries. This measure of carrying capacity relates to long-term sustainable stocking rates. That is, they reflect a long-term average carrying capacity that is designed to maintain the long-term sustainability of the grazing land. The actual cattle numbers at any point in time may be higher or lower than this long-term, sustainable carrying capacity number.

4.1 The Agriculture Sector Of the states and territories, Queensland has the highest proportion of agricultural land with 79 per cent (136 million hectares) of the state’s land used for agriculture.73 Within Queensland, the Fitzroy (SA4) region occupies 9.7 million hectares of agricultural land and the Townsville (SA4) region utilises 6.8 million hectares of land for agricultural purposes.

In 2014-15, Queensland’s contribution to total agricultural production was approximately $12 billion (or 22 per cent) of Australia’s total agricultural production.74 The Fitzroy (SA4) region contributed approximately $1.3 billion and the Townsville (SA4) region contributed $968 million of gross value to total agricultural commodities in Australia.

Within agricultural production, farm production contributes the most to the gross value at the national level – contributing approximately $27 billion each through crops and livestock. 75 In Queensland, livestock contributed $6 billion in gross value, with Fitzroy (SA4) accounting for 16 per cent ($965 million) and Townsville (SA4) 5 per cent ($317 million).76

In 2014-15, Queensland had 11.3 million head of cattle comprising 41 per cent of the nation’s 27.4 million head.77 The Fitzroy (SA4) region had just over 2.1 million head of cattle and the Townsville (SA4) region had around 685,000. According to the Queensland Department of Agriculture and Fisheries (DAF), the principal regions where cattle are produced are:

• Darling Downs; • Fitzroy;

72 ABS 7503.0 Value of Agricultural Commodities Produced, Australia, 2014-15. 73 ABS 7121.0 Agricultural Commodities, Australia, 2014-15. 74 ABS 7503.0 Value of Agricultural Commodities Produced, Australia, 2014-15. 75 Ibid. 76 Ibid. 77 ABS 7121.0 Agricultural Commodities, Australia, 2014-15.

• Northern Gulf; and • Western outback including the north west of the state.

4. Agricultural Capacity


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Australian agriculture has a strong export base with over 70 per cent of the gross value of farm production typically exported. The export value of Queensland agricultural commodities has continued to grow over time. Over the last five years, Queensland agribusiness has, on average, contributed approximately 12 per cent of the state’s total exports. 78 Earnings from farm exports were around $45 billion (2015-16) and this is forecasted to rise to $47.5 billion in 2016-17.79

With this background in mind, the following sections examine the land quality and carrying capacity of the Fitzroy and Townsville regions. The land quality for cattle grazing is of primary importance as it affects the carrying capacity, number of cattle the area produces and, ultimately, overall revenue. This information assists in the estimation of the likely economic impacts on the Agriculture sector under the ASMTI, as well as influencing the ability of landholders to find comparative sites if they wished to move (which may affect their likelihood of staying in the industry - see Section 7.3).

4.2 Fitzroy – Land Quality and Cattle Numbers

Agricultural land in the Fitzroy region varies considerably in terms of its grazing capacity – ranging from breeding country through to high-quality finishing country.

Finishing country, for instance, is quality grazing land with a mixture of bluegum flats, brigalows and softwood scrubs. This type of land can carry one head to five hectares. Marine Plains land is top quality productive country that can carry one head to four hectares. Slightly less productive is breeding country, which has a carry rate of one head to nine hectares. This is summarised in Table 2 and Table 3 below:

Table 2: Approximate Cattle Carrying Capacity - Fitzroy

Land Type Approximate Carrying Capacity of Land

Land Use

Alluvia Brigalow -> Softwood Scrub One Head to 5 Hectares Growing-Finishing

Coastal Eucalypt -> Spotted Gum Ridges One Head to 9 Hectares Breeding

Marine Plains One Head to 4 Hectares Finishing

Source: QLD Department of Agriculture and Fisheries

Looking at the different area and land types in this region, the average annual revenue from cattle sales can be estimated. Based on data and information sourced from the Department of Defence and the Queensland Department of Agriculture and Fisheries, the following average annual range of revenue that may be foregone if land is repurposed has been assessed for the Fitzroy region.

Table 3: Cattle Count and Value - Fitzroy

Area Average Turnoff 80 (sales) (%)

Average Sale Price 81 ($)

Average Annual Revenue ($m)

Share of Annual Production in Region

(2014-15)

SWBTA 33 1,154 5.8 – 8.3 0.08%

Source: KPMG estimates based on data from Defence, Meat and Livestock Australia, and QLD Department of Agriculture and Fisheries

78 Queensland Department of Agriculture and Fisheries Annual Report 2014-15. 79 ABARES Agricultural Commodities, vol. 6 no. 4, December 2016. 80 Ibid 81 KPMG estimate based on data from Meat and Livestock Australia


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4.3 Townsville – Land Quality and Cattle Numbers

Agricultural land in the Townsville region also varies in terms of grazing quality, ranging from top quality grazing land through to marginal grazing land.

The top-quality grazing land in the Townville region includes alluvial soils along the Burdekin River and other major watercourses that can carry one head to four hectares. In contrast, the range country is marginal grazing land and will only carry one head to 15 hectares. Further to the west is land that is generally deemed to be less productive for cattle grazing. It is estimated that this land has a carrying capacity of one head to 20 acres. Table 4below identifies the approximate carrying capacity of the land.

Table 4: Approximate Carrying Capacity - Townsville

Land Type Approx. Carrying Capacity of Land Land Use

Brigalow -> Softwood Scrub (cleared) One Head to 4 Hectares Finishing

Downs Country -> Box Country One Head to 20 Hectares Breeding - Growing

Goldfields One Head to 4 Hectares Growing - Finishing

Ironbark -> Jump Ups One Head to 20 Hectares Breeding

Narrow-leaved Ironbark to Lancewood One Head to 8 Hectares Breeding

Source: QLD Department of Agriculture and Fisheries

Based on data and information sourced from the Department of Defence and the Department of Agriculture and Fisheries, the following average annual range of revenue that may be foregone if land is repurposed has been assessed for the Townsville region.

Table 5: Land Statistics, Cattle Count and Value - Townsville

Area Average Turnoff82 (sales) (%)

Average Sale Price 83 ($)

Average Annual Revenue ($m)

Share of Annual Production in Region

(2014-15)

TFTA 33 979 4.26 – 6.86 2.1%

Source: KPMG estimates based on data from Defence, Meat and Livestock Australia, and QLD Department of Agriculture and Fisheries

The average annual revenue ranges estimated in this section will be used to estimate the potential overall economic impact of the ASMTI presented in Section 6.

82 Ibid 83 KPMG estimate based on data from Meat and Livestock Australia


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Training Activity Profile

This study examines the potential impacts of extended Australian Defence Force (ADF) and Singapore Armed Forces (SAF) training in both the Townsville and Shoalwater Bay regions. To do this, it is important to gain an understanding of what the ASMTI involves in terms of both additional troop numbers and additional expenditure in the region.

With this aim in mind, this section presents the key aspects of the current and proposed Defence training activity profile in the Fitzroy and Townsville training areas. This section also presents an understanding of the total current and expected future expenditure on ADF-SAF training in these areas.

This section focuses on both the existing and proposed extended training activities at the SWBTA and the TFTA including:

• additional expenditure on the upgrade of facilities at the training areas; and • the location/ timing of rotations of training personnel and associated support staff and equipment.

5.1 Training Area Upgrade / Enhancements

To help facilitate the proposed increase in activity at the SWBTA and TFTA, the Singapore Government will provide funding for enhancing the current training areas. Specifically, the Minister for Defence announced on 12 October 2016 that “about $2 billion will be invested in the Townsville and Rockhampton regions…”.84

While the exact nature of the developments are yet to be finalised, this study examines the impact of a $1 billion investment in each region over seven years (assuming the development commences around 2019). The extent to which the development will be performed by local firms is yet to be determined, although the Minister has confirmed her commitment to priority being given to local firms. The modelling of the regional impact assessment in Section 6 discusses this further.

The table below shows the assumed annual average investment expenditure from the proposed enhancement of the training areas over the period 2019-26. This additional investment is also used as an input to estimate the potential overall economic impact of the ASMTI presented in Section 6.

Table 6: Additional average annual SAF investment expenditure by region ($ million, 2019-26)

Fitzroy Townsville

Additional average annual investment ($million) 143 143

Source: KPMG estimates based on data from DefenceTraining Activity

84 https://www.minister.defence.gov.au/minister/marise-payne/media-releases/minister-payne-signs-military-training-agreement-singapore

5. Training Activity Profile


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5.1.1 Current Training Activity

The SWBTA is of significant importance to the ADF as it is as a large-scale training area with joint amphibious training capacity.

At present, the SWBTA is being used by the ADF (Navy, Army and Air Force) to conduct military training and live firing exercises. In addition, the SWBTA is utilised at different times of the year by foreign military personnel. The SAF, for example, utilises the training area for up to 45 days between August and December to conduct Exercise Wallaby. The facility is also used for bilateral and trilateral joint-military training including Exercise Talisman Sabre (Australia-United States), Exercise Trident (Australia-Singapore) and Exercise Southern Jackaroo (Australia-United States-Japan).

The tables below provide an understanding of the current direct economic contribution of each training area.

• Overall, in 2015-16, the TFTA, Cowley Training Area and Tully Training Area together spent over $4.6 million on employee wages and salaries, almost $4 million on supplies used in operating the facilities, and $2.6 million on capital and equipment for the facilities.

• In the same year, another $1.5 million was spent on employee wages and salaries at the SWBTA, almost $4 million on supplies used in operating the facilities, and $821,000 on capital and equipment for the facilities.

• Further, according to the latest available census data (2011), there were almost 4,000 people employed in the Defence sector in the Townsville region and another 150 in the Fitzroy region.85

A proportion of this current expenditure will be spent in the local region, helping support local businesses and jobs, while the employees stationed in the region contribute to the local community through both their expenditure and their involvement in community (for example through family schooling and through social and sporting club participation).

Table 7: Training Areas 2015-16 expenditure

Military wages & salaries

$’000

Civilian wages & salaries

$’000

Capital for

Facilities $’000

Operating supplies for

Facilities $’000

Grants $’000

Major Capital Equip’t $’000

Supplier Expenses

$’000 Total $’000

SWBTA 1,315 146 821 1,002 0 0 2,951 6,235

Townsville Field, Cowley,

and Tully Training

Areas

4,339 223 2,616 2,027 50 28 1,921 11,204

Source: Defence Expenditure by Electorate, Chief Finance Officer Group – Department of Defence. Note: The data for the TFTA, Cowley Training Area and Tully Training Area was provided at this broad grouping.

5.1.2 Proposed Extended Training Activity

As one of the Defence initiatives under the 2015 Comprehensive Strategic Partnership (CSP), the Government of Australia and the Government of Singapore have agreed to increase the training period from six weeks once a year to nine consecutive weeks twice a year. 86

• It is proposed that the utilised training area would now include both the SWBTA and the TFTA. It is worth noting that the SAF have been training in the Rockhampton region for several decades, but this is the first time they will be training regularly in the Townsville region.

• Both ADF and SAF officials have agreed on a limited number of land training activities in the Training Areas. Each training activity will not exceed a consecutive three-week period.

85 Australian Bureau of Statistics. (2011). Census of Population and Housing. 86 https://www.minister.defence.gov.au/minister/marise-payne/media-releases/minister-payne-signs-military-training-agreement-singapore



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The Australian Government has also agreed to increase the number of Singaporean troops that can train in the Training Areas, as well as to increase the vehicle and equipment numbers that can be used.87 Specifically, it is proposed that:

• SAF personnel will increase from up to 6,600 progressing to up to 14,000 SAF personnel in total each calendar year (this is inclusive of both personnel supporting and participating in the unilateral land training activities);

• Vehicle and equipment numbers will increase; and

• There may be additional SAF permanent staff and dependants based across the two regions for the duration of the ASMTI.

With the extension of the training sites, there is also potential for increased ADF training activity. The development of the enhanced facilities in support of the ASMTI in both regions will also be of benefit to the ADF, likely providing capacity for additional ADF joint amphibious and military training exercises, improving the capability of the ADF to respond to future challenges.

5.1.3 Direct Economic Impact of Extended Training Activity

KPMG has examined detailed expenditure and other data relating to the current ADF and SAF training activity and the proposed enhanced activity under the ASMTI. By extrapolating the current levels of expenditure by the proposed extension of the ADF and SAF training activities, 88 we have estimated the following level of additional annual expenditure as a result of the proposed ASMTI. This expenditure also includes an estimate of spending by servicemen on their educational tour days in the region.

The table below shows the net impact on expenditure from the proposed increased activities – that is, the additional expenditure from the ASMTI above what is currently spent. These estimates assume that any additional Air Force training assets will be located at the SWBTA, while Army training activities will be shared across the two regions. The table below also includes an estimate of the potential additional expenditure in the region for the permanent SAF staff. These expenditure estimates are the final inputs used to estimate the potential overall economic impact of the ASMTI presented in Section 6.

Table 8: Additional average annual expenditure by region ($ million)

Fitzroy Townsville

Additional average annual training expenditure ($million)

31.4 31.2

Additional permanent staff annual expenditure ($million)

5 5

Source: KPMG estimates based on data from Defence

It should be noted that the analysis of the impact of the ASMTI relates to the full implementation of the initiative. Thus the results in the table above and the following sections are once the training sites are hosting the full increase in training rotations.

87 https://www.minister.defence.gov.au/minister/marise-payne/media-releases/minister-payne-signs-military-training-agreement-singapore 88 Noting that costs can be fixed, driven by troop numbers, and/or driven by the duration of the training activities.




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Economic Impact Assessment

The previous sections have developed an understanding of the potential impacts of extended training facility/rotations in the Townsville (TVL) and Fitzroy regions. This section brings all this information together to identify the overall potential direct impacts of the ASMTI. These direct impacts are also used in sub-section 6.2 to estimate the flow-on implications on the regional and state economies.

6.1 Direct Impacts This section reports the direct economic impacts of the ASMTI on the Townsville (SA4) and Fitzroy (SA4) regions.

There are two phases to consider for the impacts of the ASMTI to the local economies.

• Development phase – the period where the development of the new infrastructure is occurring. That is, the development phase captures the construction activities associated with the construction and upgrading of facilities.

• Operational phase – once the new facilities are operational and the full level of the proposed increased troop training is taking place.

The table below shows the three key types of direct economic of impacts considered in the analysis.

• Increased construction activity created from the new investment (as estimated in sub-section 5.1).

• Increased spending on troop training activities (as estimated in sub-section 5.2).

• Decreased agricultural production due to land previously used for cattle production instead repurposed for training grounds (as discussed in Section 4).

These direct impacts are estimated based on the examination of a number of different settings / sensitivities. The impacts are summarised in the table below. These direct impacts have been used in the following sections to estimate the potential range of flow-on or supply chain / economy-wide effects of the ASMTI.

Table 6-1: Direct impacts (shocks) by region ($ million)

Lost agricultural production Investment Impact (2019-26) Increased training expenditure

Scenarios Fitzroy TVL Total Fitzroy TVL Total Fitzroy TVL Total

Development phase $5.8m -$8.3m

$4.2m -$6.8m

$10.0m -$15.1m $143m $143m $286m - - -

Operational phase $5.8m -$8.3m

$4.2m -$6.8m

$10.0m -$15.1m

- - - $36.4m $36.2m $72.6m

Source: KPMG estimates based on Defence data and assumptions



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6.2 Economy-wide Impacts

This section contains an analysis of the economic contribution of the ASMTI to the Townsville (SA4), Fitzroy (SA4) and Queensland economies.

KPMG has used a Computable General Equilibrium (CGE) model to estimate the economic contributions of the ASMTI. The simulations contained in this report are run using the KPMG-SD model – a special-purpose CGE model in KPMG’s suite of CGE models that divide the Australian economy into the statistical regions of relevance. (The KPMG-SD model is described in more detail in Appendix C).

The direct economic impacts identified in the previous section are used to “shock” the regional economies in the KPMG SD-CGE model. The results under the development and operational scenarios are then compared back to the baseline model to identify the potential impact of the ASMTI on the regional economies and on different industries within these economies – effectively capturing the flow-on impacts of the ASMTI up and down the supply chains in the economy.

6.2.1 Development Phase

As described in the direct impacts section (sub-section 6.1), the results show a range for the potential economic impacts under the ASMTI development phase.

• The range represents the estimated upper and lower bound for the losses to agricultural production.

• The range is based on an assumption of $143 million investment in each region per year for seven years (a total of $1 billion investment in each region), as discussed in sub-section 5.1.

6.2.1.1 State Impacts Higher state investment based on around $286 million ($143 million in each region) in each year of the seven year development phase is expected to lead to an increase in development activity, stimulating additional local demand for the output of key industries such as construction, trade and professional services.

Some of these goods and services will be provided by local suppliers, while some will be sourced from outside the region. The results here assume the current local supply shares in construction hold (that is, Fitzroy sources around 55 per cent of its construction services from the local region, while Townsville currently sources around 88 per cent locally). The remainder is predominately sourced from within the state. The sensitivity of this assumption is tested in Section 8.

During the development phase, it is estimated that the ASMTI could provide up to $50.3 million of additional annual GSP for the Queensland economy and support an average of up to 591 more jobs in each year.

Figure 6-1: Queensland – main economic impacts (change compared to baseline)

Source: KPMG estimates

Lower bounds

Upper bounds


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The additional development activity is estimated to stimulate additional annual sales across industries such as construction, trade and professional services. These positive impacts will be offset to some extent by the reduction in agriculture production in the two regions. This also flows through to other industries supplying agriculture, with a reduction in sales from industries such as manufacturing (which includes abattoirs), construction and trade services in Queensland.

Overall, during the development phase there is around $150 million in additional output produced in the Queensland economy, contributing up to $50.3 million in additional annual GSP. There is also up to 591 additional jobs in each year, on average, during the development phase compared to a baseline without the ASMTI.

Given the increased investment and change in agricultural activity both directly occur in the Fitzroy and Townsville regions, a significant proportion of these aggregate state impacts will likely be felt in these regions. The shares of the state impacts across the two regions are now examined in turn.

6.2.1.2 Fitzroy Impacts Under the ASMTI, it is assumed that Fitzroy receives $143 million of additional investment expenditure in each year of the seven year development phase. As discussed in the state impacts section, this additional development activity stimulates additional local demand for the output of key industries such as construction, manufacturing and professional services. The impacts for Fitzroy (discussed below) take into account both this increased investment activity and lost agricultural activity as a result of the repurposing of land.

Figure 6-2: Fitzroy – impact on industry value-added (change compared to baseline)


As discussed above, the results here assume the current local supply shares in construction hold. That is, it is assumed that Fitzroy sources around 55 per cent of its construction services from the local region. Under this assumption, the impact from the additional investment expenditure provides annual income (value-added) of around $13.1 million to the local construction industry.

These impacts will be offset to some extent by a reduction in agricultural activity as a result of the repurposing of land. This loss in agricultural activity will also impact the local agriculture supply chain, with a resulting reduction in sales from industries like manufacturing (which includes abattoirs), construction and trade services. The loss in agriculture sales is estimated at up to $3.6 million in industry income (value-added). The potential economic and


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social impacts of this loss in agriculture are likely to be felt greatest in the Marlborough area and are discussed in more detail in Section 7 and Appendix B.

The net impact of the additional development activity and the reduced agriculture activity leads to a net increase in sales of trade services and manufactured goods equivalent to up to $1.9 million of income (industry value-added). This will likely benefit those subregions that support these industries, such as the townships of Rockhampton and Gladstone, while the regional areas (such as Stanage Bay) also see potential opportunities for their businesses (see Section 7 and Appendix B for more details).

Overall, the net impact of the ASMTI is higher GRP in the Fitzroy region of up to $15.9 million each year during the development phase (as shown in Figure 6-3).89 There is also expected to be up to 219 more jobs in the Fitzroy region during development, on average each year, compared to a baseline without the ASMTI.

Figure 6-3: Fitzroy – impact on regional economic aggregates (change compared to baseline)


89 As discussed in sub-section 1.2, GRP may not necessarily equate to value-added due to indirect tax payments.

Lower bounds

Upper bounds


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6.2.1.3 Townsville Impacts Under the ASMTI, it is assumed that the Townsville region also receives $143 million additional investment expenditure in each year of the seven-year development phase. As discussed in the state impacts section, this additional development activity stimulates additional local demand for the output of key industries such as construction, manufacturing and professional services. As with Fitzroy, the impacts for Townsville (discussed below) take into account both this increased investment activity and lost agricultural activity as a result of the repurposing of land.

Figure 6-4: Townsville – impact on industry value-added (change compared to baseline)


As discussed prior, the results here assume the current local supply shares in construction hold. That is, it is assumed that the Townsville region sources around 88 per cent of its construction services from the local region. This translates to an additional annual income (value-added) of around $23.3 million to the local construction industry.

These impacts will offset some of the reduction in agricultural activity as a result of the repurposing of land. This loss in agricultural activity will also impact the local agriculture supply chain, with a resulting reduction in sales from industries like manufacturing (which includes abattoirs), construction and trade services. The loss in agriculture sales is estimated at up to $3 million in industry income (value-added). The potential economic and social impacts of this loss in agriculture are likely to be felt greatest in the Charters Towers area and are discussed in more detail in Section 7 and Appendix B.

The net impact of the additional development activity and the reduced agriculture activity leads to a net increase in sales of trade services and manufactured goods equivalent to up to $2.3 million of income (industry value-added). This will likely benefit the subregions that support these industries, such as Townsville City (see Section 7 and Appendix B for more details).


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Overall, the net impact of the ASMTI is higher GRP in the Townsville region of up to $26.3 million each year during the development phase (as shown in Figure 6-5).90 There is also expected to be up to 264 more jobs in the Townsville region during development, on average each year, compared to a baseline without the ASMTI.

Figure 6-5: Townsville – impact on regional economic aggregates (change compared to baseline)


90 As discussed in sub-section 1.2, GRP may not necessarily equate to value-added due to indirect tax payments.

Lower bounds

Upper bounds


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6.2.2 Operational Phase

As described in the direct impacts section (sub-section 6.1), the results also show a range for the potential economic impacts under the ASMTI operational phase (that is, once the additional ASMTI training activities are occurring).

• The range represents the estimated upper and lower bound for the losses to agricultural production.

• There is $31.4 million in additional training expenditure in Fitzroy and $31.2 million in Townsville, plus an assumption of an additional $5 million expenditure associated with up to 50 additional permanent staff and their dependents in each region (as discussed in sub-section 5.2.3).91

6.2.2.1 State Impacts The higher expenditure of $72.4 million (approx. $36 million in each region) in each year of the operational phase is expected to lead to an increase in demand for the output of industries supplying good and services to the training activities and to the additional permanent staff in the region. Some of these goods and services will be provided by local suppliers, while some will be sourced from outside the region. The results here again assume the current local supply shares hold.

Overall, once fully operational, it is estimated that there will be around $35 million in additional sales in the Queensland economy.

This provides additional annual GSP of up to $20.5 million to the state. There is also up to 147 additional jobs across the state, on average each year, during the operational phase compared to a baseline without the ASMTI.

Figure 6-6: Queensland – main economic impacts (change compared to baseline)


The additional demand driven by the operational phase is expected to stimulate additional annual sales across industries such as manufacturing, transport, utilities, construction and other services. Again, the positive impacts under the operational phase will be partially offset by the reduction in agricultural activity in the two regions.

The shares of the state impacts across the two regions are now examined in turn.

91 As discussed in sub section 5.2.3, the slight differences are because it is assumed that any additional Air Force training assets will be located at the SWBTA, while Army training activities will be shared across the two regions.

Lower bounds

Upper bounds


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6.2.2.2 Fitzroy Impacts Under the ASMTI, it is assumed that the extended training in the Fitzroy region involves an expenditure of around $31.4 million in each year of the operational phase. This is expected to lead to an increase in demand for the output of industries supplying goods and services to the training activities and to the additional permanent staff in the region.

Figure 6-7: Fitzroy – impact on industry value-added (change compared to baseline)


The additional demand is expected to stimulate additional annual sales across industries in the Fitzroy region such as manufacturing, transport, utilities and other services. This will be offset to some extent by lost agricultural activity and additional lost activity along the local agriculture supply chain such as a reduction in sales from industries like manufacturing (which includes abattoirs), construction and trade services.

Overall, it is estimated that the ASMTI could provide up to $7.3 million in additional annual GRP for the Fitzroy regional economy and up to 68 additional jobs, on average each year, during the operational phase compared to a baseline without the ASMTI.

Figure 6-8: Fitzroy – main economic impacts (change compared to baseline)


Lower bound

Upper bound


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6.2.2.3 Townsville Impacts Under the ASMTI, it is assumed that the extended training in the Townsville region costs around $31.2 million in each year of the operational phase. This is expected to lead to an increase in demand for the output of industries supplying goods and services to the training activities and to the additional permanent staff in the region.

Figure 6-9: Townsville – impact on industry value-added (change compared to baseline)

Source: KPMG estimates.

The additional demand is expected to stimulate additional annual output across industries in the Townsville region such as manufacturing, transport, construction, utilities and other services. This will be offset to some extent by lost agricultural activity and additional lost activity along the local agriculture supply chain such as a reduction in sales from industries like manufacturing (which includes abattoirs), construction and trade services.

Overall, it is estimated that the ASMTI could provide up to $10.7 million in additional annual GRP for the Townsville regional economy and up to 74 additional jobs, on average each year, during the operational phase compared to a baseline without the ASMTI.

Figure 6-10: Townsville – main economic impacts (change compared to baseline)


Lower bound

Upper bound


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Social Impact Assessment

This section presents an assessment of the potential social impacts and opportunities for local communities that may arise as a consequence of the ASMTI. This includes community and personal impacts, workforce impacts, property impacts, and industry considerations (such as displacement of existing industry). As with the rest of this assessment, the discussion on impacts and benefits are limited to the ASMTI and not the broader opportunities expected from the Comprehensive Strategic Partnership (CSP) with Singapore.

7.1 Overview

The Shoalwater Bay and Townsville training area enhancements have transformative potential for local communities in Queensland. The communities around Townsville and Rockhampton have co-existed with the existing training facilities for many years. Local communities understand the benefits and challenges that a Defence presence brings, as well as its strategic importance to Australia’s international relations. The ASMTI will amplify this presence and the training facilities footprint in these local areas.

As discussed in the previous section, the ASMTI has the potential to attract significant investment in the local region, bringing new and diversified opportunities for local communities and a range of associated social benefits, such as job creation and a boost for regional economies.

In addition to economic benefits, decision makers should also consider the social impact of the enhancement of the training facilities, including the short-term impacts from land sales as well as the changed quantum of activities occurring over the longer term.

The breadth of change proposed by the ASMTI affects a number of disparate communities across Central and North Queensland, ranging from those in the city centres of Townsville and Rockhampton, through to the regional and rural communities surrounding these hubs, and through to individual land owners.

7.1.1 Central and North Queensland

Central and North Queensland’s communities are critical to the character and economy of the state, with both Townsville and Rockhampton being well-established hubs for agriculture, resources and tourism. These cities provide critical services to surrounding communities and local industry supply chains.

However, over the last decade, macro challenges to the Australian economy (for example, the changing nature of the mining sector) have impacted these areas, resulting in a period of transition for regional Queensland. Communities are facing deep social challenges associated with pressures on local business and high rates of unemployment in certain areas. This has led to a focus by local community leaders on seeking to establish a sustainable industry base for their future. There is an appetite to enhance and diversify existing industry and to leverage the deep experience of hosting major development projects in the region.

To justify and realise the benefits of disruption, the community expects to be engaged in the process and will require tangible contributions to offset any actual or perceived costs and disruptions to existing economic and social infrastructure.


Socio-Economic Impact of the Australia Singapore Military Training Initiative A report for the Department of Defence - June 2017

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7.2 Methodology and Approach

7.2.1 Approach

The approach employed for this social impact assessment is an adaptation of the standard model presented by the Queensland Government92. A modified approach was applied to cater for the specific nature of this initiative and the data currently available.

In line with standard assessments, the approach considers the following core components:

• Community and stakeholder engagement

• Workforce management

• Housing and accommodation

• Local business and industry content

• Health and community wellbeing

Given the qualitative nature of social impact research, no quantitative conclusions can be drawn from this impact assessment. Findings are based on the perceptions of interviewees, focus group participants, and views expressed (often anonymously) on social media. Where appropriate, potential social impacts identified as part of the economic analysis have also been incorporated into this discussion.

7.2.2 Context It is important to understand the context surrounding the social impact assessment.

There were several limitations throughout the course of the assessment:

• With extensive public interest in the ASMTI, the Department requested this activity be conducted early in their military planning process.

• In particular, the Minister of Defence announced in early February 2017 that the Department of Defence would only consider purchasing land from willing sellers. This means that there will be no forced land acquisition in support of the ASMTI. As this announcement was made at the start of the stakeholder consultation, some views expressed during the consultations were still focussed on issues associated with forced acquisitions.

Further, the social assessment in this section is focussed only on those aspects that could be examined given the limited information available around the acquisition of land and the construction of assets. Thus, while the economic impact assessment was able to adapt to changing assumptions, the social impacts assessment was confined to those the impacts that could be examined given the current data availability – and stakeholder sentiment was significantly influenced by the absence of information on the initiative.

7.2.3 Approach to community consultation To determine the social impacts raised by the ASMTI, a comprehensive stakeholder consultation process was conducted through January to early March 2017. This included:

• Thirteen face-to-face interviews with opinion leaders and community representatives in Townsville, Rockhampton, Yeppoon, and Marlborough. Further information on these interviews is contained in Appendix B.

• Focus group discussions held in Townsville, Rockhampton, Charters Towers, Yeppoon and Gladstone. Two focus groups were held in each location, for two hours each. The participants were randomly selected and invited to participate in a focus group, and represented a mixed set of gender and age (25 to 60 years).

• Social media analysis tracking influential posts over the period May 2016 - February 2017. In this period, 111 posts that had more than 10 comments were analysed, along with more than 500 of the related comments.

• Review of all written submissions provided to KPMG via the public submission process. Information on the study was published in a number of local papers and on the Defence website, which invited interested parties to make written submissions to KPMG through a dedicated email address (open from 11 January to 6 March 2017).

92 http://www.statedevelopment.qld.gov.au/resources/guideline/social-impact-assessment-guideline.pdf


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7.3 Impact Areas

In assessing the feedback from these processes, a number of impact areas emerged. The nature of the ASMTI meant that the impact areas for this initiative vary from the standard impacts outlined in the Queensland Government’s guidelines.

The following impact areas have been used in this assessment, which are broadly based on the Queensland Government’s guidelines93, with variations to better represent the case at hand.

• Agriculture (Local business and industry content): a qualitative assessment of the capacity and potential impact on the agricultural sector; a key stakeholder industry in the area of interest.

• Employment and Training (Workforce management): a qualitative assessment of the capacity and potential impact on the local/state workforce.

• Industry and Participation (Local business and industry content; and Housing and accommodation): a qualitative assessment of capacity and potential impact on business/ industry activity. This includes businesses that provide accommodation services to visiting military personnel.

• Health and community (Health and community wellbeing): This includes a qualitative analysis of Community Facilities and Services, Education, Community Viability, Social Cohesion, Mental Health and Environment.

• Singapore relationship (Community and stakeholder engagement): Unique to this social impact assessment, a qualitative assessment of the perceived benefits and or disadvantages of improving Australia’s relationship with Singapore. Noting that this is with respect only to the joint military training initiative, not the CSP in its entirety.

7.4 Summary of key findings Stakeholder feedback can be summarised into two broad categories.

• Short term transitional challenges, such as structural labour effects and local population changes were the predominant issues raised by locals. Those reliant on agriculture were particularly concerned about the ASMTI, citing loss of income, identity and community as possible impacts.

• Opportunities for growth and investment were welcomed by some stakeholders, who recognised a longer-term positive economic contribution arising from increased troop rotations (duration and size) and greater infrastructure spending. Improved relationships with Singapore was seen as being positive for Australia.

93 http://www.statedevelopment.qld.gov.au/resources/guideline/social-impact-assessment-guideline.pdf


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7.4.1 Agriculture

The expanded training area capacity under the ASMTI may involve the acquisition of agricultural land. The agricultural value of this land is related to the proximity to elements of the agricultural supply chain (e.g. abattoirs) and favourable geographic features such as soil quality and rainfall (see Section 4). There is community concern within the Fitzroy and Townsville regions around the potential impacts on current agricultural activities. There is also community concern that if land is repurposed for Defence activities it will be unsuitable to be

returned to agricultural purposes in the future.

ASMTI Impacts The perceived social impacts with regard to agriculture include:

• Impact on property values: The reduction of available quality farming land in the region could affect the potential supply, demand and pricing of remaining properties. In the short term, there is a perception that this may result in an unusual level of demand while farming families seek properties suitable for local relocation, or in the longer term, diminish land values as a result of the increased military presence. There is a strong perception amongst most community representatives that it is landholders who will pay the price of the training facility expansion, without benefiting from the opportunities that may arise.

• Adaptability to change: There may be a loss of identity and connection for individuals who have been committed to the land and local agricultural community and industry for generations. This raises risks in terms of the individual’s ability to adapt to change, as well as the loss of the value they may have brought to the local community (e.g. skills, networks, regional and historical knowledge etc.).

• Impact on the farming community: The opportunities to pursue farming are diminishing in Australia as macro-economic factors impact the viability of many farming regions in the country. If a significant proportion of landholders leave this industry, this puts at risk the passing on of skills and availability of opportunities for future generations and interested parties to learn from those who have come before.

• Inability to relocate: In the event that willing sellers wish to relocate to alternative properties, there may be potential difficulty in finding suitable, affordable local properties to relocate their farming businesses. In the absence of being able to transfer locally with minimal net cost to the family, they may need either to move further afield to find appropriate land (potentially many hours away), or leave the farming industry.

The findings here are consistent with the results from the economic analysis, which indicate that while there are expected to be net benefits across both regions as a result of the ASMTI, it is those in the agriculture sector and its supply chain that are likely to bear greater costs.

Recommendations 1. Alternative sites: Negative impacts could be mitigated by selecting alternative land sites for military training

area that are less productive by agricultural measures. The Minister for Defence has already indicated that land will only be purchased from willing sellers and that alternative land sites near Townsville are being considered.

AGRICULTURE


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7.4.2 Employment and Training Sustained employment is a key focus in the Central and North Queensland region. The local employment rates have been significantly impacted by the changes to the resources sector and are sensitive to the economic impact of extreme climate events, such as cyclones and drought events. At the time of writing, the unemployment rate in the Townsville region was the highest in Queensland at approximately 11.4 per cent94, compared to 3.5 per cent for Brisbane and 5.7 per cent nationally. 95

ASMTI Impacts The perceived social impacts with regard to employment and training include:

• Singapore Military Personnel Education Training Program: The development and provision of these programs to the Singapore Armed Forces (SAF) is considered an opportunity for enhanced participation by the community. There is the perception that much of the education and training opportunity for visiting Singaporean Defence members is currently being coordinated interstate.

• Employment Impacts: The economic impact assessment identified that the ASMTI is likely to create additional opportunities for employment in the construction, business services and trade sectors as a result of the additional development and training rotations. However, there will be some industries that observe reductions in employment – in particular the agriculture sector and those along the agriculture supply chain.

• Society: There is local recognition of the social problems that have occurred as a result of the recent increases in unemployment, including perceptions of increased instances of crime, substance abuse, and family violence. This puts additional strain on local councils and service providers. Any increase in unemployment could exacerbate this, while any new employment opportunities could help alleviate some of these problems.

• Re-skilling: Communities identified potential difficulties for those displaced by the ASMTI to find alternative local employment. This includes not only the families residing on properties, but also employees and workers on the properties and in related businesses. The community is also concerned that the potential purchase of properties may impact access to certain coastal areas, which could impede current commercial fishing operations requiring water access (specifically in the Fitzroy region).

• Opportunities for Cadets, Trainees and Apprentices: The scale and duration of the ASMTI means that it will likely provide further opportunity to grow the local skilled workforce with businesses able to take on additional cadets/trainees/apprentices. For example, it is understood that the Defence construction work at Lavarack Barracks provided 65,000 hours of training including apprentices, cadets and indigenous employees.

• Indigenous Employment Opportunities: The Department of Defence has a requirement to support indigenous operations under its Indigenous Procurement Policy (IPP). Thus, it is envisaged the ASMTI will provide additional opportunities for Defence to stimulate indigenous businesses.

Recommendations 2. Employment Programs: Opportunities exist to establish strong employment programs under the ASMTI.

These could be via a structured approach to job creation (including re-training, apprenticeships etc.) through both the capital build phase and ongoing service supply to the training facility. Done well, this may provide a long-term capability uplift to the local community.

3. Singapore Military Personnel Education Training Program: Greater local participation in this program would strengthen community engagement with the ASMTI as well as potentially supporting transition to more tourism-based employment opportunities in the region.

94 Australian Government Department of Employment, Unemployment Rate by Labour Force Region, 12 month average, Jan 2017. Townsville 11.4% Queensland - Outback 11.6% 95 Australian Bureau of Statistics, 6202.0 - Labour Force, Australia, Jan 2017

EMPLOYMENT & TRAINING


KPMG | 34



7.4.3 Health and Community The current and proposed expansion to the training facilities affects a number of local communities. Communities have expressed both optimism and pessimism; predominantly around coping with structural challenges resulting from the ASMTI. Concerns around social cohesion and mental health were raised by community stakeholders during this consultation.

ASMTI Impacts The perceived social impacts with regard to health and community include:

• Infrastructure and Services: Local communities believe there is considerable opportunity for the ASMTI to contribute to the quality of life and amenity of local communities by targeted support of local infrastructure upgrades across the region.

o For example, they suggested that upgrades of the road to Stanage Bay would be used by Defence vehicles, but also provide additional access for tourism and agricultural use as well as provide risk mitigation to that region being cut off due to poor roads during cyclones and inclement weather. This would provide an uplift both to the local community as well as to the visiting users of the region

o The development of additional infrastructure could be used to support new training activities and ensure local towns have a role as arrival and transport hubs.

• Education Facilities: Local schools with low enrolment numbers may be put at risk if there is a decrease in the number of local families, along with supporting infrastructure such as bus services (examples provided were the primary school in Marlborough and boarding schools in Charters Towers). If schools close, remaining families would need to consider alternatives that may include boarding school, School of the Air, home-schooling or relocation.

• Local funding base: Concerns were expressed as to the impact on local councils of a smaller rates base if properties are repurposed. There are concerns in the community that if alternative revenue is not secured, either rates will increase, or services will decrease. Community representatives suggested that provision of local swimming pools, horse riding clubs and showgrounds could close if families leave the local community, which could compound the numbers of families that leave over time.

• Community viability: There is a risk to the viability of local towns if a number of properties and businesses are removed from the agricultural supply chain. Combined with already high unemployment, these towns may not to be able to further absorb a material loss of local economic activity. These communities do not have the flexibility of diverse economies that larger towns and cities do; hence there are concerns that benefits arising from ASMTI will flow to the larger cities of Townsville and Rockhampton.

• Social cohesion: Social cohesion issues may arise with the loss of farm families from local communities, some of these families may be multi-generational locals and deeply involved in the local community.

• Mental health: Communities also raised the potential risk of mental health consequences for locals – both those who leave and those remaining – as they work through stress, anxiety and fear associated with a significant change to their communities and livelihoods. This risk applies to both children and adults. This would also potentially affect local councils and other service providers as they provide support to affected individuals.

• Opportunities to return land: Local community members believe that there are areas of the current SWBTA that are not fully utilised for Defence training nor are they of strategic importance, but would potentially be of benefit if they were returned to community use. They have suggested that some of these areas may be able to be developed as eco-tourism initiatives, for example.

• Defence is generally seen as a good custodian of the land it manages. Typically there are many constraints that limit the amount of land that can be used for training including terrain, water-courses, climate and seasonal weather, environmental fragility, heritage, cultural, public infrastructure, safety and other limiting factors. As responsible environmental stewards, Defence seeks to train sustainably, and regenerate vegetation and soil in training areas. Regeneration requires a reduction in the frequency with which the same portions of land are repeatedly used for military training (rest periods).

• Environment: There is some concern that there may be negative environmental impacts associated with an increase in military presence. Stakeholder speculation ranged from the potential impacts of weapons or chemicals used in training, to the impact of exercises on wildlife habitats and waterways, with the suggestion by some representatives that there is unique flora and fauna in the training areas. Stakeholders expressed concern that two conservation parks within the Shoalwater Bay Region (Shoalwater Bay

HEALTH & COMMUNITY


KPMG | 35



Conservation Park and Bukkulla Conservation Park) may be isolated, and a third in Townsville (Dalrymple National Park) could border on the new training area.

Recommendations 4. Clarity around ASMTI: Stakeholders advised that the absence of reliable information regarding the

magnitude and location of the ASMTI created uncertainty that played a significant factor in their concerns. This highlights the necessity for the Department of Defence to continue to expand communication associated with this initiative. This would help the community to seek insights and better understand the potential social impacts and opportunities associated with the ASMTI.

5. Use of land: We understand the Department of Defence has sophisticated systems in play for managing its environmental obligations which include the rotation of training areas to permit habitat regeneration. The opportunity exists for the Department to continue to engage with local communities on environmental and land management obligations including Defence’s land rotation policies.

6. Participate/volunteer services in the local community: Defence could look at opportunities to play a more active role in local communities and supporting local development.


KPMG | 36



7.4.4 Industry and Participation

With the challenging employment environment in Central and North Queensland, there is significant benefit seen in sustained diversification of local capability. At the same time, concerns exist about what this initiative would mean for the region’s primary industry participants.

With the recent reductions in construction and development activity across the mining sector, the regions have had a reduction in industry opportunities. The regions thus have the skills, capacity and existing infrastructure to supply

construction and development services to assist in the set-up and maintenance of the training area enhancements. This is reflected in the earlier economic analysis, which indicates that there are likely to be opportunities for construction and other business service / trade industries as a result of the ASMTI.

ASMTI Impacts The perceived social impacts with regard to industry and participation include:

• Participation constraints: There is a concern that local small businesses and individuals will be unable to participate in the available employment opportunities through the ASMTI, due to a procurement process that is perceived to favour larger entities – and thus bring in workers from South-East Queensland or interstate to deliver work rather than source labour locally.

It should be noted that the MOU governing the initiative includes a commitment that local businesses will be prioritised to deliver the ASMTI. This commitment was reinforced by the Minister of Defence stating that “priority will be given to local businesses in the Townsville and Rockhampton regions to deliver this investment.”96 To the extent that local sourcing is maximised, there should be additional local employment opportunities.

• Definition of ‘local’: While the MoU includes an intention to contract and engage with ‘locals’ in the regions, whether this policy would translate into benefits for local business or workers was consistently questioned. Both Rockhampton and Townsville stakeholders noted that a wide definition of ‘local’ (for instance, to encompass the broader Queensland region) would not benefit local contractors. There is the impression that larger entities in South East Queensland would be more competitive in terms of capacity and cost. Additionally, there is concern that even if contracts are struck with local suppliers, sub-contracting arrangements may result in much of the benefits going outside the region.

• Industry transformation: With the likely reduction in local primary agricultural industries (principally cattle and fisheries), there are both risks and opportunities available in terms of moving parts of the local community towards new industry opportunities. There have been consistent suggestions across the region that tourism opportunities may be significant as a result of the enhancement, which would also enable leverage of other infrastructure already available in port and city centres.

• Local fisheries: There is concern that the local fishing industry in Fitzroy will be adversely affected by an expansion of Defence training activities in the region. Local businesses believe that under the ASMTI, up to 20 fishermen could be affected by any additional or extended closures of areas of the Bay. Anecdotally, it is estimated that 15-20 per cent of revenue is currently lost per year due to bay closures associated with the current defence training activities. There is concern that this could double as a result of extended training activities – which, as a guide, could cost the local industry around $200,000 per year.

• The impact on the wider supply chain: Whilst there will be an impact on the agricultural industry from any direct sale of properties, there is also the potential of material flow-on effects to the local agricultural supply chain. Local farms provide a significant amount of business to other regional entities, including abattoirs and providers of transport, feed, vaccinations, farm supplies, machinery etc. A material reduction in the client base of these businesses will likely affect their long-term viability, with the potential of exacerbating the issues raised prior around business closing, unemployment and local community members leaving the region (as an example, one business in Charters Towers relies on 23 farms to generate 80 per cent of its income). There is concern from businesses in this supply chain that there has been no discussion of compensation for the direct impact they might experience as result of any land sales.

96 https://www.minister.defence.gov.au/minister/marise-payne/media-releases/master-planning-finalised-enhanced-training-area

INDUSTRY & PARTICIPATION



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• Investment in local communities: There have been a number of substantial investments in terms of shipping and logistics infrastructure in the region, including in Townsville and Gladstone. Defence use of these facilities may increase local economic benefits and potentially support business cases for expansion.

• Consistency of training program: There is an understanding in the community that there may be a gap in the Singaporean training program meaning that there may not be SAF training in each region every year. Local business would need to diversify their customer base to accommodate this variability in demand.

Recommendations 7. Definition of ‘local’: The opportunity exists for the Department of Defence to more clearly define ‘local’ for

the purposes of the ASMTI, and ensure this is embedded in appropriate procurement processes. The Department of Defence may also consider developing metrics to measure and communicate local participation across the initiative, which could include a more consistent approach to collecting data on the involvement of local suppliers/contractors.

8. Local sourcing benefits: There is a clear economic benefit to the regions if local business are engaged to support the ASMTI. Section 8.1 looks at the potential economic benefits if different levels of local sourcing are achieved. The results show that it will be important for Defence to work with communities to ensure the potential local benefits are maximised.

Community representatives considered that for successful local participation, significant attention would be required in this area, either to adjust the process or to support local businesses in up skilling to meet the requirements. Leveraging local councils familiar with the capability of local contractors and idiosyncrasies of infrastructure work in the local environment was raised as a way to manage works packages so local participation is maximised.

9. Coastal commercial operations: When the training area enhancements are determined, especially in and around SWBTA, the opportunity exists for the Department of Defence to engage with commercial fishing operators to minimise impact on, and maximise access by them to coastal areas.


KPMG | 38



7.4.5 Singapore Relationship

The ASMTI is a critical part of the Australian-Singapore bilateral relationship and one of the key planks of ongoing cooperative efforts. The strategic importance of this relationship is recognised at the local level. Local community stakeholders generally acknowledge that existing Defence activities have had a positive social impact, even if opinion varies widely as to the extent.

ASMTI Impacts The social considerations with regard to national interests include:

• Opportunities to engage directly with Singapore: A number of local representatives would like to see the development of a more direct relationship between local councils and the Singaporean government and people. This is believed to further support the ease of trade between the two countries, and the opportunities for investment in local property that may arise.

• Singapore relationships: The current SAF training rotations are seen as a significant part of the community. The SAF engage with the community and organise events to build relationships and cohesion. For example, last year the Rockhampton Council and the SAF organised a showcase to celebrate “25 years of friendship,” and thereby further strengthen community relationships and awareness.

o Most local councils and organisations are supportive of Australia having closer ties with Singapore, and recognise the value of having Singapore as a strategic alliance partner. Local councils in particular are seeking opportunities to strengthen ties directly with the Singaporean Government and their Defence forces to ensure local benefit - through greater participation in procurement processes, tourism and real estate opportunities, for instance.

o Almost no concerns were raised in the consultations about the presence of Australian and foreign Defence personnel (other than on social media) with most understanding the benefit for the nation overall in having close ties, despite some scepticism that benefits previously promised have been realised.

o There was a persistent concern expressed in social media about foreign ownership, utilisation of Australian land by Singapore for training and a view that Singapore may be a military threat to Australia. This concern is driven by a misconception that the ASMTI involves the sale of land to the Singaporean Government.

Recommendations 10. Enhance relationships and public relations: The positive impact of improved relationships with

Singaporean troops could be enhanced by hosting more showcase events that promote community relationships and awareness. Encouraging Singaporean troops to spend their leisure time in surrounding communities could create positive social and beneficial economic bonds.

11. Better access to information and quicker responsiveness to community questions: Defence should implement a comprehensive public communications strategy (which may include a number of various engagement strategies with stakeholders).

SINGAPORE RELATIONS


KPMG | 39



Maximising the Benefits The potential economic and social impacts discussed in the previous sections indicate that the ASMTI presents an opportunity for additional economic activity in regions that have experienced recent economic slow-down. It is estimated that, at the broader regional and state levels, there is likely to be a substantial net benefit from the ASMTI.

The industry distribution of impacts estimated in the economic impact assessment, combined with sentiment identified under the social impact assessment, indicates that there are likely to be variations in costs and benefits across the sub-regions. Specifically, the sub-regions that are more dependent on agriculture are likely to bear more of the costs associated with the expansion, while the larger townships that supply construction and other supplies could see more of the benefits.

Further, the final impacts achieved in each region will be heavily dependent on a number of factors. The following looks at some of these factors and discusses ways by which potential benefits for each region might be maximised.

8.1 Local Sourcing (Construction Services)

The results in the previous sections (the “Basecase” results) assumed the current local supply shares in construction hold (that is, Fitzroy sources around 55 per cent of its construction services from the local region, while Townsville currently sources around 88 per cent locally). The remainder is predominately sourced from within the state. Under alternative local construction sourcing arrangements, it may be possible to generate greater economy-wide benefits (or vice-versa). In this section, the sensitivity of the results to two alternative sourcing assumptions have been tested:

• No local firms provide construction services directly to the ASMTI; and

• Fitzroy sources around 75 per cent of its construction services from the local region, while Townsville currently sources around 90 per cent locally.

Figure 8-1 and Figure 8-2 indicate that the ability of local firms to provide construction services for the development of the ASMTI has a significant impact on the economic benefits achieved in the region.

• If no local firms are contracted to provide construction services to the development, there is little benefit to each region, with a slightly positive impact on annual GRP and a very modest positive impact on jobs.

• If a higher number of local firms are contracted to provide construction services to the development, the benefits increase in the Fitzroy region, with the $15.9 million boost to Fitzroy’s annual GRP increasing to a $24.2 million annual boost, and almost 110 more jobs on top of the 219 job increase under the Basecase local supply assumptions. There is only a modest additional benefit for Townsville as there is not as much capacity to increase the share of local supply (as the average share used in the Basecase is relatively high).

The results of this sensitivity analysis demonstrate the potential to maximise the benefits of the ASMTI to the local regions by maximising local sourcing of construction services. This demonstrates that it will be important for Defence to work with communities to provide guidance to local businesses when navigating the Defence procurement processes.

This is in line with the commitment referred to by the Minister of Defence in a recent press release:

“As part of the Memorandum of Understanding with Singapore, priority will be given to local businesses in the Townsville and Rockhampton regions to deliver this investment.”97


Maximising the Benefits 8



KPMG | 40



With higher local sourcing during the development of the ASMTI, GRP is higher by $8.3 million ($24.2m-$15.8m) in Fitzroy and $0.4 million ($26.7m-$26.3m) in Townsville, and there are an average of 110 (329-219) additional jobs in Fitzroy and 4 (268-264) additional jobs in Townsville.

Figure 8-1: Fitzroy and Townsville – annual GRP impacts under alternative sourcing assumptions

Source: KPMG estimates Note: The results presented for this chart are in relation to the upper bound. Sensitivities for the lower bound exhibit a smiliar pattern.

Figure 8-2: Fitzroy and Townsville – employment impacts under alternative sourcing assumptions

Source: KPMG estimates Note: The results presented for this chart are in relation to the upper bound. Sensitivities for the lower bound exhibit a smiliar pattern.

$1.8 m

$15.9 m

$24.2 m

$2.1 m

$26.3 m $26.7 m $27.2 m

$50.3 m$52.1 m

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KPMG | 41



8.2 Agricultural Industry Another avenue by which benefits may be maximised is through alternative agricultural arrangements. The results presented in the economic impact assessment section (the “Basecase” results) assume that once the agricultural land is repurposed for Defence training, it can no longer be used for agricultural activity. It may be possible for alternative arrangements to be made, which lessen the disruption to Agriculture production.

To the extent that the agricultural loss can be minimised – through particular land sales, lease-back options etc. – this will maximise the economic benefits associated with the ASMTI.

As discussed previously, if agriculture land is purchased by Defence, combined with extra training expenditure in the region under the ASMTI, there is a modest economic benefit to both regions – estimated at up to $7.3 million in higher annual GRP in Fitzroy and $10.7 million in higher annual GRP in Townsville. Overall, under this Basecase scenario, average annual Queensland GSP is expected to be higher by up to $20.5 million under the ASMTI.

If it is possible to, for example, lease back land to the agricultural sector when not in use for training purposes, then these benefits could be larger. As an illustrative example, the chart below examines the case if the agricultural loss could be reduced by around 10 per cent in each region.98

If the agricultural loss can be minimised by this amount, then the overall benefits to the local economy are greater – estimated at around $21.6 million in higher annual GSP across the state when the enhanced training areas are fully operational. Most of this impact is from higher GRP in the regions, with the boost to annual Fitzroy GRP estimated to move from up to $7.3 million to $7.8 million, and the boost to annual GRP in Townsville to move from $10.7 million to $11.2 million as a result of the reduced agriculture loss.

If Defence works with the local communities to assess any options for reducing the disruption to agriculture, the regional benefits from the ASMTI could increase.

98 Note that this is illustrative only, and the results would vary depending on the land that was made available and agriculture’s ability to fully utilise that land.

This is also in line with the sentiment expressed by the Minister of Defence in a recent press release. “Importantly, as a result of the master planning process Defence has significantly reduced the scope of the training area expansion that is needed to meet the Australian Defence Force’s training requirements.”99

Figure 8-3: Alternative agriculture assumptions, GRP/GSP (top) and employment (bottom) impacts

Source: KPMG estimates Note: Results are presented for the upper bound. Sensitivities for the lower bound exhibit a smiliar pattern. Total Queensland includes Fitzroy, Townsville and rest of Queensland impacts.


$7.3 m$7.8 m

$10.7 m $11.2 m

$20.5 m$21.6 m








68 jobs 73 jobs 74 jobs78 jobs

147 jobs154 jobs











KPMG | 42



Appendices


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Appendix A: Detailed Regional Data A.1 Population Trends

The Estimated Resident Population (ERP) figure is the official population statistic, and represents the best possible estimate of the population. As at 30 June 2015, the ERP of Townsville (SA4), Fitzroy (SA4) and Queensland were 238,233, 235,784 and 4,778,854 respectively. 100 As a proportion of the total Queensland population, both the Townsville (SA4) and Fitzroy (SA4) regions account for approximately 5 per cent each.

Over the past decade, the two regions have had moderate resident population growth. In the Townsville (SA4) region, the compounded annual growth rate over the years 2005-2015 was approximately 1.8 per cent. Over the same period, the compounded annual growth rate in the Fitzroy (SA4) region was 1.9 per cent – albeit more volatile. Both regions have reflected a growth rate slightly below the average Queensland resident population growth rate of 2 per cent. Figure A-1 below illustrates this trend.

Figure A-1: Estimated Resident Population - Growth Rates

Source: ABS Regional Population Growth (cat no. 3218.0)

100 ABS 3218.0 Regional Population Growth, Australia, 2014-15.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

% C

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Fitzroy Townsville Qld


KPMG | 44



The distribution of the population by age displays similar characteristics across the regions (Figure A-2). The highest proportion of people, within a single bracket range, falls between the years of 0 and 14. This group accounts for 22 per cent of total resident population in Fitzroy (SA4) and 21 per cent in Townsville (SA4). The proportion of the Queensland population in this age bracket (0-14 years) is 20 per cent.

The ‘working-age population’ (proportion of the population aged between 15 and 64 years) was 66 per cent in the Fitzroy (SA4) region and 67 per cent in the Townsville (SA4) region and. Both these regions exhibited a marginally higher ‘working-age population’ than Queensland (66 per cent). The proportion of the population then tapers off at the higher age brackets, 65 years and over (population ageing, however, will see this proportion increase over time).

In 2015, the median age of the resident population in Townsville (SA4) was 34.7 years. This was just over two years lower than the median age in Queensland (36.9 years). In the Fitzroy (SA4) region, the median age of the resident population was 35.1 years, also approximately 2 years lower than the Queensland median age.101 Figure A-2 presents these distributions.

Figure A-2: Estimated Resident Population by Age

Source: ABS Regional Statistics by ASGS (cat no. 1379.0)

In terms of population density, the Townsville (SA4) region has a population density of 2.8 (i.e. 2.8 persons per kilometre2). This is almost on par with the population density of Queensland (2.7).102 The Fitzroy (SA4) region, on the other hand, has a much lower population density of 2.0. For comparison, the population density in Rockhampton (SA3) is 6.5, and in the more populous regions such as the Gold Coast (SA4) and Brisbane Inner City (SA4) the population density is 301.9 and 3088.6 respectively. 103

The demographic composition of the Townsville (SA4) and Fitzroy (SA4) regions are largely representative of the Queensland composition. In the Townsville (SA4) and Fitzroy (SA4) regions respectively, approximately 18.6 per cent and 17.6 per cent of the population were born overseas. In Townsville (SA4), the most common overseas countries by birth were North-West Europe (4.2 per cent), Oceania and Antarctica (excluding Australia) (3 per cent) and South-East Asia (1.2 per cent) and Southern and Eastern Europe (1.1 per cent). In Fitzroy (SA4), this

101 ABS 1379.0 Regional Statistics by ASGS, 2010-2014, Annual (2009-10 to 2013-14). 102 Note that this is for 2014, which is the most current data available. ABS 1379.0 Regional Statistics by ASGS, 2010-2014, Annual (2009-10 to 2013-14). 103 ABS 1379.0 Regional Statistics by ASGS, 2010-2014, Annual (2009-10 to 2013-14).

0%

5%

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20%

25%

0-14

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KPMG | 45



was North-West Europe (3.2 per cent), Oceania and Antarctica (excluding Australia) (2.9 per cent), South-East Asia (1.2 per cent), and Sub-Saharan Africa (1 per cent).104 Table A-1 details this.

Table A-1: Overseas Born Population (as % of Total Population)


Born in Oceania and Antarctica (excluding Australia) 2.9

3.0 5.3

Born in North-West Europe 3.2 4.2 6.5

Born in Southern and Eastern Europe 0.3 1.1 1.3

Born in North Africa and Middle East 0.1 0.2 0.5

Born in South-East Asia 1.2 1.2 1.9

Born in North-East Asia 0.3 0.4 1.6

Born in Southern and Central Asia 0.6 0.6 1.1

Born in Americas 0.6 0.7 1.0

Born in Sub-Saharan Africa 1.0 0.9 1.3

Total Born Overseas 17.6 18.6 26.3

Source: ABS 2011 Census of Population and Housing.

A.2 Households and Income

Household characteristics are an important indicator of the social construct of a country. In 2012-13, there were 1.8 million households in Queensland. Just under 74 per cent were family households, 23 per cent were lone person households, and 3 per cent were group households.105 Queensland is expected to experience the fastest household growth of the states and territories, increasing by between 68 per cent and 75 per cent over the years 2006 to 2031. 106

According to 2011 Census data, there were 76,540 households in the Townsville (SA4) region and 72,298 households in the Fitzroy (SA4) region.107 The average family size in the Townsville (SA4) region was 3.0 and the average family size in the Fitzroy (SA4) region was 2.6 – equivalent to the Queensland average. In accordance with state characteristics, ‘Family Households’ constituted the largest proportion of ‘Total Households’ in both the Townsville (72.6 per cent) and Fitzroy (72.3 per cent) regions. Table A-2 illustrates this.

Table A-2: Household Composition


Lone Person Households 16,229 17,364 353,509

Group Households 2,492 3,577 72,966

Family Households 53,577 55,540 1,120,829

Total Households 72,298 76,540 1,547,304

Source: ABS 2011 Census of Population and Housing.

The Townsville (SA4) and Fitzroy (SA4) regions are relatively wealthy in comparison to the state of Queensland as a whole. In Townsville (SA4), the estimated median annual personal employee income was $50,892. Higher levels are observed in the Fitzroy (SA4) region where the median annual personal employee income was $55,640. By contrast, the median annual personal employee income in Queensland was of $47,567.108

104 ABS 2011 Census of Population and Housing. This is the most recent published data available - the 2016 Census data will be released progressively during 2017. 105 ABS 4442.0 Family Characteristics and Transitions, Australia, 2013-14. 106 ABS 3236.0 Household and Family Projections, Australia, 2006 to 2031. 107 This is the most recent published data available for the regions. The 2016 Census data will be released progressively during 2017. 108 ABS 1379.0 Regional Statistics by ASGS, 2010-2014, Annual (2009-10 to 2013-14).


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With reference to household income, the median total household weekly income in Townsville (SA4) was $1,278 and $1,380 in Fitzroy (SA4). In Queensland, this figure was $1,227.101F109 Figure A-3 presents the distribution of household weekly income between the regions.

Figure A-3: Household Total Weekly Income

Source: ABS Labour Force, Australia (cat no. 6291.0.55.003)

A.3 Labour Force and Industry Structure

Labour force indicators such as the participation rate, number of people employed, and the unemployment rate provide useful information on the state of the labour market. As at January 2017, the state of Queensland accounted for the employment of approximately 2.3 million people. The share of employment was roughly split between males (53 per cent) and females (47 per cent). The 12 month average participation rate was 65 per cent and the 12 month average unemployment rate was 6.2 per cent.110

In Townsville (SA4), the region had a working-age population (aged 15-64 years) of 159,000 and had roughly 112,000 people in employment, as at January 2017. The 12 month average participation rate was 58.8 per cent and the 12 month average unemployment rate was 11.4 per cent. 111 This is significantly above (and below for the participation rate) the national 112 and state unemployment rate, possible reflecting the structural shift currently being observed in the economy.

In Fitzroy (SA4), the region had a ‘working-age population’ of 149,600 and had approximately 117,000 people in employment.113 As at January 2017, the 12 month average participation rate (69.4 per cent) and unemployment rate (6.3 per cent) were both higher than the 12 month Queensland average rates (participation rate of 64.4 per cent and unemployment rate of 5.7 per cent). 114

A further socio-economic indicator is ‘Youth Unemployment’. 115 Youth unemployment rates have been rising since the Global Financial Crisis in 2008 as this group tends to be more susceptible to economic cycles. In Townsville (SA4), the youth unemployment rate stands at 18.3 per cent and in the Fitzroy (SA4) region this rate is

109 ABS 2011 Census of Population and Housing. 110 ABS Labour Force, Australia, 2017 (cat no. 6202). 111 Australian Government Department of Employment, Unemployment Rate by Labour Force Region, 12 month average, Jan 2017. 112 As at January 2017, the 12 month average unemployment rate in Australia was 5.7 per cent and the participation rate was 64.4 per cent. 113 ABS 1379.0 Regional Statistics by ASGS, 2010-2014, Annual (2009-10 to 2013-14). 114 ABS 6202.0 Labour Force, Australia, Dec 2016. 115 ‘Youth Unemployment’ refers to the number of people aged 15-24 who are unemployed.

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9.8 per cent. The Queensland youth unemployment rate stands at 13.5 per cent – lower than the rate in Townsville (SA4) but higher than the rate in Fitzroy (SA4).

Townsville’s economy has the highest share of employment in Health and Social Services (16.3 per cent), Retail Trade (10.6 per cent), and Education and Training (9.5 per cent). These three sectors account for approximately 36 per cent of total employment in the region. The same three sectors are also the largest employers in Fitzroy (SA4), accounting for roughly 30 per cent of the regions total employment. In Queensland, the three largest sectors by employment are Health and Social Services, Retail Trade, and Construction. These sectors account for 33 per cent of total Queensland employment.116 Figure A-4 reflects this:

Figure A-4: Proportion of Employment by Industry


Over time (2011 to 2016), the share of employment between the sectors in the regions have evolved. In the Townsville (SA4) region, the broad trend over the past five years has been a sweeping drop in employment numbers across the majority of sectors. Large declines can be seen in the Agriculture, Mining, Construction, and Retail Trade sectors. Agriculture and Mining, for instance, have had reductions of 70 per cent and 53 per cent respectively. The Transport and Hotel and Food sectors have helped moderate this decline.

The situation is slightly different in the Fitzroy (SA4) region. Agriculture has seen a significant pick-up in employee numbers (approximately 76 per cent increase from 2011 to 2016). This is followed by the Utilities (59 per cent) and Health and Social Services (34 per cent) sectors. Leading the declines are Financial Services (74 per cent), Rental and Real Estate (38 per cent), and Wholesale Trade (28 per cent). Figure A-5 presents these trends.

116 ABS Labour Force Survey 2016.

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Figure A-5: Employment by Industry, 2011-2016, No. of People



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The employment distribution (Figure A-6) by occupation highlights the fact that the Fitzroy (SA4) and Townsville (SA4) regions have a greater share of Labourers, and Technicians and Trades Workers in comparison with Queensland. Fitzroy (SA4) also has a large proportion of Machinery Operators and Drivers reflecting the related industry profile of the region.

Figure A-6: Employment Distribution by Occupation (%)


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Appendix B: Community Consultation To inform the socio-economic impact assessment, a comprehensive stakeholder consultation process was conducted through January to early March 2017. This included: 13 interviews with opinion leaders and community representatives in Townsville, Rockhampton, Yeppoon, and Marlborough; ten focus group discussions (77 participants) held in Townsville, Rockhampton, Charters Towers, Yeppoon and Gladstone; social media analysis tracking influential posts over the period May 2016 - February 2017; and review of all 18 written submissions provided to KPMG via the public submission process.

All consultations were conducted and submissions accepted with the understanding that the individual views of respondents/participants would be protected.

As discussed in Section 7, it is important to understand the context in which this analysis was undertaken.

• The social impact assessment is limited to the joint military training aspect of the Comprehensive Strategic Partnership (CSP) between Singapore and Australia. Thus, the views expressed are focussed on the impacts and opportunities arising from the CSP and is not representative of the initiative in its entirety.

• The consultation for this assessment commenced prior to the completion of the Australian Defence Force master planning activity. With extensive public interest in the ASMTI, the Department requested this activity be conducted early to expedite the timeframes,

• In light of stakeholder opinion, the Minister of Defence announced that the Department of Defence would only consider purchasing land from willing sellers; that is there would be no forced land acquisition in support of the ASMTI (this announcement was made at the start of the stakeholder consultation, and thus some views expressed during the consultations were still focussed on issues associated with forced acquisitions).

Thus the social impacts assessment was confined to those the impacts that could be examined given the current data availability.

B.1 Stakeholder consultations

Thirteen face-to-face interviews were conducted with opinion leaders and community representatives in Brisbane, Townsville, Rockhampton, Yeppoon, and Marlborough.

Table B-1: Consultation Register

Region Attendee Description Date

Fitzroy Region Regional economic group 09 February 2017

Fitzroy Region Community representative group 09 February 2017

Fitzroy Region Regional Council 10 February 2017 Fitzroy Region Regional Council 10 February 2017 Townsville Region Regional Council 15 February 2017

Townsville Region Regional economic group 15 February 2017 Townsville Region Regional economic group 16 February 2017

Townsville Region Government-owned corporation 16 February 2017

Fitzroy Region Community Group Representative 16 February 2017

Fitzroy Region Shire Council 16 February 2017

Brisbane Government Department 16 February 2017

Brisbane Agforce 16 February 2017

Brisbane Industry representative body 27 February 2017


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B.2 Focus Groups

A total of ten face to face focus group discussions were conducted across five locations, from the 13th to the 16th February, 2017. Two focus groups were conducted in each of Townsville, Rockhampton, Charters Towers, Yeppoon and Gladstone. Each discussion lasted up to two hours in duration. Group participants were of mixed gender, and in each location an older (55+ years) and younger (25 to 60 year) age group was conducted. A total of 10 to 18 people participated in the group discussions in each location (77 participants overall).

Participants were recruited on the basis of their interest in local issues (a score of 3 to 9 on a 10 point scale). Consistent with our focus group methodology, those who were ‘extremely’ interested (rating 10, likely to be strongly opinionated), or who had ‘little to no interest’ (rating 1-2) were excluded from the research.

Table B-1: Group discussion structure

Focus Group Matrix 25 to 60 year olds 55+ year olds TOTAL

Townsville 1 1 2 groups

Rockhampton 1 1 2 groups

Charters Towers 1 1 2 groups

Yeppoon 1 1 2 groups

Gladstone 1 1 2 groups

TOTAL 5 5 10 groups

Note: Qualitative research is exploratory in nature, and so the findings within this report are indicative only and are not necessarily fully representative of the entire population, which only quantitative research can confirm.

B.3 Social Media

As part of KPMG’s Socio-Economic Impact Study, KPMG’s Social Media Research team provided an overview of public commentary on the Initiative from (its announcement in) May 2016 - February 2017.

Top line findings follow:

• Facebook was the primary platform for discussion in relation to the Commonwealth Government purchase of land near Shoalwater Bay.

• 111 posts about the issue were detected on Facebook that were determined by KPMG to be significantly influential on the discussion, by virtue of the fact that they had 10 or more likes. Of the 111 posts identified, 502 comments were thematically coded based on meeting minimum criteria for importance, these comments were weighted according to their ‘likes’, for deeper analysis. The reporting period ended on Friday 10 February 2017.

• Four categories of groups and individuals were identified as being key participants in the discussion: o ‘Politicians and Political Parties’ had a limited reach and impact on Facebook and although a number of

politicians posted regularly regarding the proposal, discussion was largely facilitated by the ‘Media’ and ‘Community Groups/ People.’

o ‘Community Groups/ People’ and ‘Interested Groups/ People’ had the largest impact upon the discussion, posting 80 of the 111 posts.

• Following the announcement by Michelle Landry MP and Singaporean Defence Minister, Ng Eng Hen, there was a low level of social media commentary until 30 November 2016, when an organised protest by local farmers in the area was promoted on social media. This protest invigorated social media discussion until it peaked following the Commonwealth Government’s announcement that the forced land sales would not proceed.

• 42% of the 111 posts identified were submitted by local voices of the region. • 97% of the weighted commentary data set opposed the policy. This was true amongst local and non-local

contributors and also by users from across the political spectrum. 20 themes of conversation were coded from 502 comments that met the criteria. The largest topic of discussion was ‘Politicians/ Government Criticism’ (35%) followed by users issues with ‘Land Selection’ (25%).


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B.4 Regional Views

The table below alphabetically summarises the key perceived impacts raised by local community representatives in each geographic location and provides an indication of the overall attitude towards the ASMTI as identified through the consultation process.

Charters Towers

Overview Concern as to the economic impact to the town and supporting services to the agricultural industry. Doubt that any benefit would be gained locally.

Perceived Impacts

o Enthusiasm surrounding the priority allocated to Australian enterprises, which will likely result in local socio-economic benefits.

o Potential for Defence to support local infrastructure upgrades (in particular for infrastructure directly impacted by an increased military presence).

o Potential for Federal Government / Department contributions to the local government to offset a reduction in rates received from properties.

o Mental health consequences such as anxiety and fear, associated with the pressures of uncertainty (for both adults and children).

o A loss of identity and connection for a group of people who have been dedicated to the land and the local agricultural industry for generations.

o An impact on social cohesion amongst families and friends who may be under pressure to sell or to retain their property.

o Concern that any increase in rates to offset a reduction in local ratepayers will impact the community.

o Concern that an increase in military presence would result in costly infrastructure maintenance.

o Housing pressures due to local property market changes, with either unusually high demand for a limited supply of local properties, or diminishing land values due to an increased military presence and uncertain future.

o A loss of investment, income and livelihood for landowners, people employed at stations and on properties.

o Concern that financial benefits of the Initiative would fail to ‘trickle down’ to Charters Towers, give the geographical proximity and offerings of larger cities.

o Concerns for the sustainability of local businesses and the security of employed workers in Charters Towers, given that significant reliance is placed upon the presence of the 23 impacted farming properties and their inhabitants.

o Concerns for the ongoing viability of the $2.2 million Hells Gate project.


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Gladstone

Overview Significant recognition and enthusiasm of the opportunities that may arise to utilise the infrastructure already invested in and arrest a challenging economic environment.

Perceived Impacts

o Enthusiasm surrounding the potential for existing (i.e. post-mining) infrastructure to support military needs (for example, industry training facilities and transit infrastructure).

o Potential for increased training opportunities to support former mining workers, as well as apprenticeships and jobs for young people.

o Potential for small business to benefit from increased trade opportunities.

o Potential for a sustainable income base for the region.

o Potential to bring sustainable employment opportunities to the community through jobs and apprenticeships and leveraging the deep-water port, which requires little infrastructure spend in order to accommodate the Defence ships.

o Potential for increased tourism and leverage of the facilities and capacity being built for the increase in military and cruising vessels scheduled for 2018.

o Concern that contracts will not benefit local businesses and workers.

o Concern that the National Park in the Byfield area could be adversely affected.

o Concern that increased traffic will impact local road infrastructure.

o Concern that initiative will harm the environment (for example, the potential for impacts to the National Park in the Byfield area).


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Marlborough

Overview Marlborough is expected to bear the costs of agriculture industry reduction and a number of businesses are concerned about economic viability if significant numbers of properties are removed from the local economy.

Perceived Impacts

o Stakeholders were able to recognise the benefits of the Initiative in a policy sense at the national and regional level.

o Mental health consequences such as anxiety and fear, associated with the pressures of uncertainty (for both adults and children).

o A loss of identity and connection for a group of people who may have been dedicated to the land and the local agricultural industry for generations.

o An impact on social cohesion amongst families and friends who may be under pressure to sell or to retain their property.

o Concern that there may be an increase in rates to offset a reduction in the number of local ratepayers.

o Housing pressures due to local property market changes, with either unusually high demand for a limited supply of local properties, or diminishing land values due to an increased military presence and uncertain future.

o A loss of investment, income and livelihood for landowners, people employed at stations and on properties, and commercial fishing operations requiring water access.

o Impacts on the livelihood and stability of local businesses that rely on the Marlborough farming community as their customer base.

o Impacts to local community infrastructure with closures of facilities such as the local swimming pool, pony club and the showgrounds.

o Concern that land options have not been fully considered (such as the significant amounts of unused and overgrown land already held by the ADF).


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Rockhampton

Overview Rockhampton is considered likely to be impacted by the loss of agriculture, but there is strong recognition of the economic benefits that may also flow to the city.

Perceived Impacts

o Increased construction work for local businesses and employees.

o Potential to provide Rockhampton with alternative industry sources (diversifying beyond agriculture).

o Potential for local businesses such as supermarkets, motels and the transport industry to service an expanded customer base.

o Concern that changes to the status quo (for instance, a reduction in the annual rotation of SAF troops through the area) could impact local businesses that have been built for purpose.

o Concern that if Defence establishes its own airfield and storage facilities as part of the initiative, any consequential reduction in landing or rental fees could impact Rockhampton Regional Council’s budget.

o Concern that local disruption could create gaps in the cattle industry supply chain, which could result in impacts to local business’ (for example, for transport, livestock feed companies and abattoirs) profitability and increased rates of unemployment for the Rockhampton area.

o Concern of negative impacts on commercial fisheries, if exclusion zones are increased and access to Stanage Bay reduced.

o Concern that existing community infrastructure would require costly improvements to support the initiative.

o Mental health consequences, for those facing the threat of small business challenges or job insecurity as a result of a changing local industry and demographics.

o Concern that initiative will harm existing eco-systems.


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Townsville

Overview Strong recognition of the benefits that may be available, with minimal concerns raised.

Perceived Impacts

o Potential for local business and workers to benefit from increased capital development contracts, ongoing maintenance and tourism trade opportunities.

o Potential for Defence to support local infrastructure upgrades (in particular for infrastructure directly impacted by an increased military presence).

o Potential for Townsville’s role as an arrival and transit hub, with the possibilities of port expansions and direct flights to Singapore from Townsville in the future.

o Optimism amongst stakeholders such as the Port of Townsville in relation to opportunities to further promote and service the SAF’s Education Training Program.

o Concern that without change to Defence procurement processes, the financial impact would be minimal for local businesses in Townsville.

o With local power and water supplies already at their limits with water restrictions in place, there is concern for many that an increase in military numbers (and any associated construction activity) would result in more pressure on Townsville’s resources and utilities.

o Concerns over loss of land for generational farmers.


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Yeppoon & Livingstone Shire

Overview There is recognition of the potential benefits that could arise, combined with scepticism that they will be fully realised and that local services would be impacted with little benefit received.

Perceived Impacts

o A 25-year commitment would support communities in the long-term and would be positive for Australia’s regional alliances.

o Increased construction work for local businesses and employees.

o The potential for an enhanced airport.

o The potential for the community to work together with Defence to improve local infrastructure (particularly those directly impacted by Defence use, such as roads and sewage plants), and invest in areas which support diversification of local industry – such as a new road to Stanage Bay which would support the agriculture industry and open up tourism opportunities.

o Recognition that the training element of the Initiative falls within a broader free trade agreement with the Singapore Government.

o Recognition of the potential for Defence to inject funding into a local community that is suffering since the mining downturn, which would go towards supporting social services for locals.

o Concern that council rates will rise to offset a reduction in ratepayers, if the Government acquires privately-held land.

o Scepticism surrounding the real potential for a community-Defence partnership and commitment in the area.

o Concern that while the regional alliance and free trade objectives of the Initiative may be met, the focus on benefits to the local community may fall by the wayside or be absorbed by the larger cities.

o Concern that an increase in military presence would result in noise, traffic and telecommunications disruptions in the area.

o The potential for negative impacts on commercial fisheries, if exclusion zones are increased and access to Stanage Bay reduced.


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Appendix C: Modelling Framework KPMG-SD is a computable general equilibrium model of the Australian economy that identifies statistical divisions within Australia’s state and territories. A computable general equilibrium model represents the economy as a system of simultaneous equations that represent the supply and demand for commodities and factors of production. Commodities include goods and services used by firms, households, governments and foreigners. Factors of production include land, labour and capital used by firms. Income from factors of production accrue to households.

The regional detail in KPMG-SD facilitates economic impact analysis within particular sub-state areas. Nevertheless, KPMG-SD also captures the economic effects on areas peripheral to the main area of interest, including a complete representation of all Australian regions.

The regional detail in KPMG-SD is aligned to the Statistical Areas Level 4 (SA4) and Greater Capital City Statistical Areas of the Australian Statistical Geography Standard (AGSG). These statistical divisions are designed to best capture labour markets, by representing regions where people typically both live and work.117 This consideration is important when modelling regional labour markets in a general equilibrium framework.

A key data input used by KPMG-SD is an input-output table that quantifies the flows of goods and services across producers and various users (e.g., intermediate inputs to other producers, inputs to capital creators, households, governments and foreigners) and the flows associated with primary factor inputs (i.e., labour, capital and land). 118 Regional detail is provided by the state accounts, labour force survey and census data published by the Australian Bureau of Statistics. 119

KPMG-SD applies standard neoclassical theory of profit-maximising firms and utility-maximising consumers operating in competitive markets. 120 Economic theory specifies the behaviour and market interactions of economic agents, including consumers, investors, producers and governments operating in domestic and foreign goods, capital and labour markets. Defining features of the theoretical structure of KPMG-SD include:

• Optimising behaviour by households and firms in the context of competitive markets with explicit resource constraints and budget constraints;

• The price mechanism operates to clear markets for goods and factors of production (i.e., prices adjust so that supply equals demand); and

• At the margin, costs are equal to revenues in all economic activities.

117 Australian Bureau of Statistics (2016), Australian Statistical Geography Standard (ASGS): Volume 1 - Main Structure and Greater Capital City Statistical Areas, July 2016, cat. no. 1270.0.55.001, Canberra. 118 Australian Bureau of Statistics (2015), Australian National Accounts: Input-Output Tables, 2012-13, cat. no. 5209.0.55.001, Canberra. 119 Australian Bureau of Statistics (2016), Australian National Accounts: State Accounts, cat. no. 5220.0, Canberra. Australian Bureau of Statistics (2016), Labour Force, cat. no. 6202.0, Canberra. 120 The theoretical structure of KPMG-SD is similar to the TERM model, as described in Horridge, J.M., Madden, J.R. and Wittwer, G. (2005), "The impact of the 2002-03 drought on Australia", Journal of Policy Modelling, vol 27, issue 3, pp. 285-308.


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Why use a CGE model?

The theory described above is necessary to quantify the effects of a project or policy across the entire economy. Models without general equilibrium linkages ignore feedback effects across different parts of the economy (i.e., economic agents). Input-output models are a popular example of a model without general equilibrium linkages. Thus, input-output models are often criticised for providing overly-optimistic economic impact assessments of projects and policies. The Australian Bureau of Statistics summarises the limitations of input-output models as follows: 121

• Lack of supply–side constraints: it is assumed that extra output can be produced in one area without taking resources away from other activities, thus overstating economic impacts.

• Fixed prices: Prices are assumed to be unaffected by policy and any crowding out effects are not captured.

• Fixed ratios for intermediate inputs and production: it is assumed that there is a fixed input structure in each industry and fixed ratios for production.

• No allowance for purchasers’ marginal responses to change: it is assumed that households consume goods and services in exact proportions to their initial budget shares. This equally applies to industrial consumption of intermediate inputs and factors of production.

• Absence of budget constraints: it is assumed that household and government consumption is not subject to budget constraints.

121 Australian Bureau of Statistics (2016), Australian National Accounts: Input-Output Tables, 2012-13, cat. no. 5209.0.55.001, ‘Input output multipliers’, Canberra.


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Appendix D: References • Australian Bureau of Statistics. (2016). Labour Force Survey (cat no. 6202.0)

• Australian Bureau of Statistics. (2016). National Accounts: State Accounts (cat no. 5220.0)

• Australian Bureau of Statistics. (2009-10 to 2013-14). Regional Statistics, 2010-2014, Annual (cat no. 1379.0).

• Australian Bureau of Statistics. (2017). Counts of Australian Businesses, Jun 2012 to 2016 (cat no. 8165.0).

• Australian Bureau of Statistics. (2011). Census of Population and Housing. Retrieved from http://www.abs.gov.au/websitedbs/censushome.nsf/home/census?opendocument&navpos=10

• Australian Bureau of Statistics. (2016). Agricultural Commodities, Australia, 2014-15 (cat no. 7121.0)

• Australian Bureau of Statistics. (2011). Australian Statistical Geography Standard (ASGS): Volume 1: Main Structure and Greater Capital City Statistical Areas, July 2011 (cat no. 1270.0)

• Australian Bureau of Statistics. (2016). Value of Agricultural Commodities Produced, Australia, 2014-15 (cat no. 7503.0)

• ABARES Agricultural Commodities. (2016). vol. 6 no. 4, December 2016.

• Charters Towers Regional Council. (2017) Beef Cattle Industry. Retrieved from http://www.charterstowers.qld.gov.au/beef-cattle-industry

• Central Queensland and Regional Organisation of Councils. (2015) Economic Profile Livingstone Shire. Retrieved from http://cqroc.org.au/files/2015/06/Livingstone-2015-Economic-Profile.pdf

• Department of Defence. (2017) special request, training facilities data.

• Department of Defence. Annual Reports (various). Retrieved from http://www.defence.gov.au/AnnualReports/

• Department of Defence. (2016). 2016 Defence White Paper. Retrieved from http://www.defence.gov.au/whitepaper/

• Department of Defence. (2017) Minister of Defence media release. Retrieved from https://www.minister.defence.gov.au/minister/marise-payne/media-releases/master-planning-finalised-enhanced-training-area

• Department of Employment (2017). Labour Market Information Portal. Retrieved from http://lmip.gov.au/maps.aspx#layer=EmploymentRegions

• Department of Infrastructure and Regional Development. (2017). National Infrastructure Construction Schedule (NCIS). Retrieved from http://statedevelopment.qld.gov.au/assessments-and-approvals/current-eis-projects.html

• Gladstone Regional Council, Economic Profile. Retrieved from http://www.economicprofile.com.au/gladstone

• Linesight. (2016) List of Tier 1, 2 & 3 Contractors. Retrieved from http://www.linesight.com/knowledge/2016/australia-new-zealand/list-of-tier-1-2-3-contractors

• Livingstone Shire Council (2014). Shoalwater Bay Training Area Access Routes Development Proposal. Retrieved from https://www.livingstone.qld.gov.au/DocumentCenter/Home/View/3508

• Meat & Livestock Australia. (2017) Market Reports & Prices. Retrieved from https://www.mla.com.au/prices-markets/market-reports-prices/

• Queensland Treasury. (2016). Regional Employment Projections Data Tables, 2010-11 to 2040-41. Retrieved from http://www.qgso.qld.gov.au/products/tables/reg-employment-proj/index.php

• Rockhampton Regional Council. Economic profile. Retrieved from http://economy.id.com.au/rockhampton/gross-regional-product?Indkey=23014

http://www.abs.gov.au/websitedbs/censushome.nsf/home/census?opendocument&navpos=10

http://www.charterstowers.qld.gov.au/beef-cattle-industry

http://cqroc.org.au/files/2015/06/Livingstone-2015-Economic-Profile.pdf

http://www.defence.gov.au/AnnualReports/

http://www.defence.gov.au/whitepaper/



http://lmip.gov.au/maps.aspx#layer=EmploymentRegions

http://statedevelopment.qld.gov.au/assessments-and-approvals/current-eis-projects.html

http://statedevelopment.qld.gov.au/assessments-and-approvals/current-eis-projects.html

http://www.economicprofile.com.au/gladstone

https://www.livingstone.qld.gov.au/DocumentCenter/Home/View/3508

http://www.qgso.qld.gov.au/products/tables/reg-employment-proj/index.php

http://economy.id.com.au/rockhampton/gross-regional-product?Indkey=23014

www.kpmg.com.au

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