Manager - not meddler!

Presentation on 15 August !995

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Dr Des KellyDr Des Kelly, as the Chief Executive Officer of the Department of Resources Development (DRD) was the guest speaker at the eighth CIP seminar sponsored by Shedden Pacific.

The focus of the presentation were the factors contributing to the high level of investment in WA. With some $2.9bn projects under construction or committed, Dr Kelly said this represented more projects than he could remember. Notable is the $0.9bn direct reduced iron (DRI) plant by BHP to produce 2 million tonnes of iron that increases its value more than six-fold.

Included as chemical related projects are $0.3bn by SCM for titanium dioxide, $0.2bn by BP Oil for oil refining and $0.1bn by Westralian Sands for synthetic rutile. Smaller projects are $0.08bn by Cockburn for lime, $0.06bn by CSBP for ammonium nitrate, $0.03bn by Tiwest for titanium dioxide and $0.02bn by Greenbushes for lithium carbonate.

Three features were seen by Dr Kelly having promoted this surge in investment:

bullethalving of the price of gas by deregulation of the gas market. This deregulation included the disaggregation of the SECWA gas contract with the NW Shelf Joint Venture and the splitting of SECWA into gas and electricity utilities;
bulletnew applicable technologies, especially for DRI; and
bulletincreasing competitiveness from lower development costs and increasing use of existing infrastructure.

In this context, DRD is helping industry by the following:

bulletpolicy advice to facilitate (and not discriminate against) development;
bulletpromoting a conducive economic climate with project security;
bulletcoordinated planning for infrastructure to support major industry; and
bulletencouragement and facilitation of private sector investment. The Government could support project-specific infrastructure (such as upgrading the Esperance railway to promote the reopening of Koolyanobbing iron ore mine and provision of roads to support nickel projects at Leinster and Mt Keith). Regional infrastructure was also promoted by encouraging non-discriminatory third party access to the Goldfield gas line even though privately owned.
bulletpromoting opportunities locally and overseas with targeted incentives.
bulletcoordinating the approvals process to expedite decision making.

To achieve these aims, Dr Kelly had restructured DRD with emphasis to policy, planning, promotion and coordination.

In this context, Dr Kelly addressed the bigger picture for Government with aims that should include:

bulletsecure land tenure.
bulletrealistic royalty system.
bulletsecurity and certainty (transblank rules, investment certainty and political stability).
bulletpotential for high returns.
bulleta special department (ie. DRD).
bulletlow taxes.
bulletlong term contracts under Agreements Acts.
bulletlow Local Government rating system.
bulletresponsible environmental requirements.

A round of applause confirmed a professional presentation from the department managing the economic core of Western Australia.

In the end it was clear that direct intervention by Government in the market place was out of the question for WA. This was also reinforced by the answers to two questions.

Though South Australia has been stripping off the ethane and reinjecting it for later use (400Pj reserves now the subject of a pipeline to Botany), the WA Government had no such plans. The matter would be for the market place.

Also, whilst the WA Government has funded project-specific infrastructure, this did not extend to discriminating between users. Any adjustment to the Dampier-Bunbury pipeline overhead (reportedly around $1.20/Gj), would have to be considered against the benefits to the State derived from that project.

Clearly, we now have a Government that focuses on regional competitiveness that is integral with an international environment.

 

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Created: Thursday, 14 December 1995, 8:54:32 PM Last Updated: Thursday, 14 December 1995, 8:54:32 PM
 

 


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