The eagerly awaited White Paper on developing northern Australia (comprising 40% of Australia’s land mass across Queensland, Northern Territory and Western Australia) was released on 18 June 2015. Click here to view the White Paper.
The White Paper identifies a range of infrastructure, agriculture and land administration reforms aimed at stimulating investment and growth in northern Australia to take advantage of the region’s proximity to Asia. The White Paper focusses on addressing the constraints that businesses and investors face which are preventing or delaying investment in the north. The White Paper offers pathways to address these constraints to be funded and facilitated by the Commonwealth over two, five, ten and twenty year timelines. Significantly, the White Paper reflects the Commonwealth’s recent budget commitment to provide $5bn in funding for major infrastructure projects across the region.
Land and Water
The ability of the private sector to invest in northern Australia has been significantly restricted by the various frameworks around land tenure and the inability or delay of access to land. The vast majority of land in the north is pastoral land subject to native title or other indigenous land developing rights. Businesses activities may be restricted by current pastoral leasehold tenures and the absence of town planning systems that provide directions to future land uses. The White Paper sets out the following pledges and solutions to these land related constraints, including:
- $10.6m in pilot reforms to broaden economic activity on land and demonstrate the benefits of reform to investors, Indigenous Australians and other stakeholders;
- $110m per year over the next four years to support the native title system with a view to finalising all existing native title claims within a decade;
- $20.4m to support native title holders in engaging with potential investors;
- $17m to support freehold/99 year leases for willing indigenous communities, including more township leases in the NT;
- finalising area mapping and cadastral surveys of land across the north;
- consulting on new models to manage native title funds for development;
- more efficient native title processes that create more certainty for investors and opportunities for native title claimants and holders and consultation on options to use exclusive native title rights for commercial purposes (through COAG);
- the provision of more business friendly information on the different land tenure arrangements to increase the appeal of investing in the north; and
- pursuing a set of principles and actions to improve the bankability and efficiency of pastoral land.
Over time, it is likely that these changes will expedite access to land and improve investment potential for businesses while also increasing opportunity for indigenous communities and existing holders of land rights.
In addition to the land related inclusions, the White Paper pledges $200m to build water infrastructure in the north and ties to developing secure, tradeable water rights as part of a new National Water Infrastructure Development Fund, beginning with:
- $15m to determine available water and best locations for water infrastructure in the Mitchell River catchment (QLD), West Kimberly (WA) and Darwin region (NT); and
- up to $5m each for feasibility studies into Nullinga Dam (QLD) and Ord Stage 3 (WA/NT).
Growth in the north has been hindered by critical infrastructure gaps. The nature of the northern economic landscape, characterised by low population density and smaller dispersed industry, presents potential barriers to investment. These barriers include the extensive road and rail network limited by capacity restrictions and requiring ongoing maintenance, a highly regulated shipping framework and an under developed aviation service.
To overcome these barriers, the White Paper outlines the following solutions:
- the establishment of a $5bn northern Australia infrastructure facility to provide concessional loans for the construction of major northern infrastructure projects, with private and jurisdiction involvement;
- in the next two years, the implementation of a $3.7m ‘infrastructure pipeline’ providing information on potential infrastructure development to the private sector and jurisdictions. The government will be open to investor’s bids for infrastructure projects, on the condition they are superior or more cost effective;
- over the next twenty years, improving the effective use of existing infrastructure, by the possible abolishment of overly restrictive regulations, adopting new technologies, or changes in operation and management (in particular through privatisation);
- the deregulation of the current shipping framework to ensure efficient and reliable coastal shipping services are part of the national transport system, with an additional focus on strengthening supply chains to Asia;
- invest $39.6m towards the development of aviation infrastructure to improve integration with ASEAN trading partners;
- a $600m injection in road networks for priority projects, seeking impacts within five years;
- funding an infrastructure Australia audit into the region’s infrastructure;
- the establishment of a $100m beef roads fund to improve cattle supply chains; and
- $5m investment towards feasibility analyses and developing future proposals for improving the freight rail system.
These plans of action will close the current gaps in the next five to ten years, and facilitate investment and increase accessibility to markets.
The Investment Environment
Given the constraints already identified, the Commonwealth has recognised that development of the north is best achieved through private sector investment and ingenuity.
With a view to improving the investment environment, the White Paper outlines actions, including:
- establishing a $2m ‘single point of entry’ office in Darwin to provide major investors a single contact for Commonwealth and Northern Territory approvals, and assist them through all other regulatory hurdles. Investments in excess of $50m will be targeted;
- through consultation with Indigenous groups, cut red tape around Indigenous cultural heritage through amendments to the Aboriginal and Torres Straight Island Heritage Protection Act 1984 (Cth);
- implementing a risk neutral framework for assessing the impact of northern development (while abandoning the risk adverse framework that currently exists);
- the Commonwealth remains committed to establishing a ‘one-stop shop’ for environment approvals. Click here to read more;
- establishing a $75m Cooperative Research Centre to provide necessary research and development, with an initial focus on agriculture; and
- hosting a major investment forum in Darwin in late 2015 to attract foreign investment and begin to establish the north as the gateway to Asia by growing strong relations with the booming Asia-Pacific region.
The Commonwealth has already reduced the cost of regulation by $2.45 billion since September 2013, and has pledged to ‘get out of the way of business’ and provide a supportive regulatory and economic environment for businesses to prosper in.
The White Paper points out the potential for the north to become an agricultural powerhouse. The reforms to land tenure arrangements and the investment in infrastructure to create roads are intended to contribute to the recognition of the north on a global scale as a leader in food production.
It is proposed that improved knowledge of water flows and reforms to water markets could see significant growth (up to five times) of the present area of the north under irrigation. The White Paper also lists beef production, aquaculture development and legislative reform, and irrigated cropping in its aspirations for food and agribusiness.
The White Paper notes that the agriculture sector is set to benefit from the recently concluded Free Trade Agreements with Australia’s leading export markets. Click here to read more.
Where to from here?
The Commonwealth has intentionally cast itself in the role of funder and facilitator of the White Paper reforms. Nevertheless, the impact of the various pledges and solutions contained in the White Paper relies on action – particularly by the governments of Western Australia, the Northern Territory and Queensland, but also by businesses, private investors and indigenous organisations – to make legislative reforms, to participate in discussions, to liaise with stakeholders and, ultimately, to invest and operate businesses in the north whether by way of the infrastructure fund or otherwise. The forum being hosted by the Commonwealth in Darwin later this year and the upcoming release of the Agricultural Competitive White Paper should help to keep the spotlight on these reforms and encourage the relevant stakeholders to act.