Strong Australia broadcast Toowoomba27 September 2018
Strong Australia broadcast Geelong
Event: Strong Australia Toowoomba
Speakers: Business Council of Australia chief executive Jennifer Westacott, EnergyAustralia managing director Catherine Tanna, WSP in Australia & New Zealand president & CEO Guy Templeton, Council of Small Business Organisations Australia CEO Peter Strong and Wagner Corporation director Denis Wagner, and Sky News host David Speers
David Speers, host: Good evening. Welcome to the programme. We're live from Toowoomba tonight, the garden city as it's called, to the west of Brisbane in Queensland, and we're here tonight to have a look at well, what's making this particular regional centre work? Yes, the drought is biting hard around here, you can see it everywhere in this part of Queensland, across New South Wales as well. But here in town in Toowoomba, there's certainly a high degree of optimism. Tonight we're going to look at why that is, what makes a regional centre work, and we're going to look at what the lessons after the national economy from here as well.
David: We're joined by terrific panel this evening, and are doing this of course in conjunction with the Business Council of Australia. Catherine Tanna is the CEO of EnergyAustralia, Peter Strong, the CEO of the Council Small Business Organisations. We have Jennifer Westacott of course, the head of the Business Council of Australia and Guy Templeton, who's the Australian CEO of WSP, an engineering firm, a global engineering firm. Welcome to you all. Good to be here. We spent today, we should point out, talking to a lot of the local business community here in Toowoomba over lunch and throughout the afternoon and it has been a really interesting. I said, there's this sense of optimism. I just want to get into why that is because you can't miss what's happening with the drought when you come here. Jennifer, you see that and clearly this is hurting farmers badly. Here in town they've got this new airport that the governments haven't been involved in building, it's been the Wagner family, this private small turned medium perhaps big business has put their hand in their pocket, built an airport. If you build it they will come because it seems to it now and today we see Qantas making an announcement to invest here as well.
Jennifer Westacott, Business Council of Australia: It's a great story. It's a great story of confidence, is a great story of big and small business working together, it's a great story of when you actually invest in something you get one of those big investments like the airport. You do get that kind of effect that, flow on effect to small business, you can sense around town today that optimism, that confidence from the Qantas announcement which is going to create further jobs, it's going to bring high technologies here.
David: This is their pilot training. It's the first one they've done.
Jennifer: Absolutely. So, you imagine all the high tech stuff that will come with that and then you've got around the area you've got the Surat Basin, in which of course is still big mining community, agriculture is still big here of course. But you really get the sense that airport and that decision by a family, by a business, a medium sized businesses had had this huge effect. Now being supported by a bigger business and that's the kind of message I guess in regional Australia, it's big and small working together to create optimism, confidence, and of course better jobs, better environment for people
David: I'm keen to just explore, because this is unusual, right, for a … It's a public airport, everyone can use it, Qantas, Virgin, they fly in and out and so on. But this has been, someone's put their hand in their pocket to build it, this doesn't happen in Australia normally, right? So just so people get an idea of what we're talking about, let's take a look at this quick … Well look at the Wellcamp Airport, as it's called, there in Toowoomba
[video package plays]
David: So, you get the point that I mean, this is, and Guy, you would have seen a lot of big infrastructure projects like this they can be transformative when it comes to something that allows Australian produce to be exported or flown out to the Asian market. And I think this airport has now one flight a week of cargo flight that's taking all sorts of Australian goods to Hong Kong, once a week. That can really transform a lot of industry in the region.
Guy Templeton, WSP in Australia & New Zealand: Absolutely. Transport infrastructure is critical to these regional centres developing. So here we've got high value perishable agricultural products going to Asia charging a premium price, without the airport it wouldn't have happened. I mean, of course now we're getting the Toowoomba range, second crossing link going in, which is a 41 kilometre road, inland rail, etcetera. You can see how this transportation infrastructure keeps connecting and building and almost the more it you have, the more of a network effect you have on the greater economic growth.
David: I mean, Catherine you might have a view on this, does that affect business decisions when people look at someone like here and go, okay, there's an airport there now and there's going to be an inland rail link there now, and this second crossing of the range and so on. Suddenly it does tip the scales to make an investment, a decent investment in a place like this.
Catherine Tanna, EnergyAustralia: I think access to markets is critical for people that are trade exposed and want to export, it's one consideration. The other thing that really struck me being back in Toowoomba today is just what a beautiful city it is, there's beautiful housing, fantastic schools, people are happy to live here and-
David: Even though it's very dry, I keep saying that, I know, but there's a lot of pride.
Catherine: An enormous amount of pride in the city and we had Denis Wagner at lunch today when you asked about welcoming immigrants, he said the more the merrier.
David: He did. I'll come back to that issue.
Guy: As long as they fly.
David: I'll come back to that issue because there's a real national debate going on at the moment about getting more migrants to settle in places like this and how you make that work, is something I'm going to get your thoughts on. But Peter, give us a small business perspective, you get to a lot of small towns and you see small business doing it tough, you see a lot of shops, desperation even in some. Do you since it's a different situation here and why is that? What's the secret ingredient?
Peter Strong, Council of Small Business Organisations Australia: Well, it is a different situation. I've done a lot of local economic development on that, Jennifer's done the same. You go into a town, you know straightaway. You say, something's right here and it's often a very good local council. If you've got a very good, open-minded constructive local council, you're going to get a lot more done and I would suggest in Toowoomba that's exactly what they've got here, because the airport happened very quickly. I mean Jennifer, that is something-
David: It was 18 months to build, is that it? When you take a look at what they're doing in Badgerys Creek, it's going to take a lot longer than that.
Peter: And you’ve got to look at the council and say congratulations. Obviously, there's a lot of people that can communicate really well here but the council is a good proactive council.
David: Well, and again I want to come back to this issue but the red type, the regulation concerns that can get in the way of things like this, but just to stick with what that's meant for this town, not every country town, regional centre, inland city, Jennifer, can have an airport, can have someone with pockets deep enough to actually say, “Okay, well, government's not helping us, I'll build it.” So not every town can do this, right? But what is the lesson for other centres?
Jennifer: I think the lesson is first of all, a bit of vision. And of course, it's not the same in every location, a lot of coordination that was the key message, there was a lot of coordination and cooperation amongst businesses. Instead of people competing, they were cooperating to get things done. But I think around the country, if we think around Australia, we spend a fortune on infrastructure really, I mean people complain about it. If you look at the amount of money that's going into infrastructure every year, it's a lot of money.The question is, are we putting it in the right place and are we putting it in a sequence that allows other things to happen? So, what we would like to see is this region development approach where you do have this hub and spoke model but you do prioritise places like Toowoomba, places like Busselton, places like Geelong, all across Australia.
David: Which gets us to a discussion around the inland rail, and this has been criticised by some and there are question marks and I think legitimate ones over whether the cost benefit stacks up and whether taxpayers are getting bang for buck. But I got to tell me when you come here you can see people are really keen on the idea of inland rail.
Jennifer: If you say, look, you wouldn't have built the Harbour Bridge if you've done a cost benefit analysis. You certainly wouldn't have built it as big as it is. You've got to have a bit of a vision. And I think the key with the inland rail is to make sure that it's coordinated, that it's staged and that you're putting in place behind it the kind of critical infrastructure and also you're creating these multi modal inter-modal terminals here in Toowoomba, at Parkes and that you're getting the spur lines and that you get a … And you can't he can't do it all at once obviously.
David: Guy, your company's involved in the inland rail and some of the design work for this. I mean, what's the key to its success do you think?
Guy: Yeah, I think the key is you've got to click to the right places as Jennifer is saying. And it's very easy to look at the economic case as just a railway, you connect to that with the Wellcamp airport, you connect to that with others throughout the way through Australia into the local centres. And the inter-modal terminals is about breaking freight up to get it out of the local areas and also taking say, produce and modelling products in and being able to bundle them up and rope them away.
David: So, a good example would be that someone growing fruit, nuts, food, whatever it is, or even meat, it can be transported on the inland rail ideally, then brought here into Toowoomba where there'll be a terminal, popped on a plane, straight off to Asia.
Guy: In a restaurant the next day. And people will pay a premium for that.
David: And what will that mean, do you think, for some of the well, farming and other food producing regions up and down the corridor?
Guy: I think it makes a wider range of areas valuable. And also you look at agriculture, a lot of it is not that sophisticated. So, we're talking today with somebody in Toowoomba about greenhouses, and if you invest in greenhouses you can get like 1000 times more out. Would you bother doing if you didn't think you'd get that high quality produce out fast? So, I think there's going to be a lot of additional investment enabled by inland rail.
David: Yeah, I might have been told the same, Peter you were at lunch because I was talking about greenhouses as well and they got a huge plan to develop this as well. But the inland rail, one of the concerns has been it's not actually funded, correct me if I'm wrong, to go all the way to the port in Brisbane, certainly would help here if it goes to the airport. But is it actually going to connect up where it needs to connect up on the current plan?
Guy: Look, I've seen some controversy around both the Melbourne and the Brisbane links. I think what the reason is good progress in the central sections and 1700 kilometres of railway line's going to take a while, I think the estimated completion is 2025 and I'm sure there's still a few final bumps in the alignment to sort through.
Jennifer: The objective here is access to markets for value. You've got to make sure it actually joins up and gets to the point of embarkation.
David: Especially if we as taxpayers are putting billions into this thing.
Jennifer: Yeah, that seems like a fundamental that has to be got right.
David: You don't want, exactly, a railway going to nowhere.
Jennifer: But you got to plan for that and you got to take that long 20 years view and you've got to say, okay, now we've got to make sure that the spur lines into Brisbane port, the spur lines around multimodal ports along the way, that's the big nation building project. So you can't leave it half done. But you also can't have this endless stuff that we have in Australia, where no one starts anything because not everything is solved, but you obviously have to join it up. But that's the point of having a long term project. And then you've going to make sure that there's certainty in that we don't have chopping and changing between political parties, that we get behind it, and then you'll see the investment come.
Catherine: Yeah, but this is really important. So you talk about vision. If you go back a decade on what brought economic prosperity, new economic prosperity here was the resource sector and that only got up here because there was bipartisan support and there were people that had the courage in politics to take the heat in their party to support a new sector. And it's something that we pine for, we pine for the days when ministers worked with their opposition to do the right thing.
Peter: Or lasting more than a year in a job. So the other thing is not sold probably as well as it should be is the fact that this isn't just about the big infrastructure, it's about the pharmacy, it's about the restaurants, about the milk bars, it's about the average normal business in the community. You can see here in Toowoomba it's very … You can see they've very confident and it looks good and that's because lots of people who in theory aren’t connected to the airport or whatever, are making a good living, they've employed people who are happy and it's all connected from the big infrastructure. And we got to remember that's the gain that we get, is it a lot of other areas, it's like the head of the comet, in the of the comet all these jobs and businesses.
David: Well, this gets to the link, doesn't it, between big business and small business. Often pitted against each other and certainly the tax debate that we've just been having for the last year or so, just I mean, tell me about how that relationship works between small and big business, the codependency I suppose, as you put it.
Peter: Well yeah, there's some business, small businesses who will only sell their product, whatever it is, to big businesses. There's some big businesses whose customers are all the small businesses. So we need each other situations, when we are a supplier to a big business, some of the negotiations can become quite willing and-
David: You're not always a fan of big business when it comes to some of those issues.
Peter: Well, talk about the big landlords, I could be here for an hour talking about them. And we've had problems with Coles and Woollies in the past. But things have changed over the last couple of years in contract law, competition law. And Coles and Woolworths is an example of really working hard with their supply chain because they didn't get it, that there was real problem out there and they're working hard with them. You can't ask for more than that. We've got a big problem coming into Australia which is Amazon, they don't pay tax, they didn't want to pay GST, they don't employee a lot of people, they pay lousy wages and their business model is for a small business point of view, flawed. So we've got other things that we will work on together.
David: But how much of an impact will Amazon have on small business in a town like this, in a town that most people are familiar with?
Peter: Well, if they're basically in Australia, they won't have much impact that they have to follow the same rules that we do. They'll come up with some good things to do and that's good, but the impact will be limited. But if the international company is allowed to come back in, they don't pay tax, at whole range it seems they will have an impact. And there's no doubt, we've seen the impact overseas in America and in Europe, where Amazon has come in and destroyed local communities through promising something they couldn't deliver.
David: Just coming back though to this discussion around how this inland rail is going to be a great thing for many of the growers and food producers and others, they have to actually have something to sell and at the moment, wherever you go, it comes back to this question around the drought and how … What more can be done about this? I mean, Jennifer, you talk about big picture vision. I think a lot of the drought response so far has been more short term, and fair enough, immediate assistance, household assistance, getting the hay through to them, keeping the stock alive, all of that. But where is the big picture in this discussion around the drought and how to get more water onto these properties?
Jennifer: Absolutely. So, we don't have I think a big vision for irrigated agriculture and agriculture more broadly. And as a result we don't have a sense of the big infrastructure projects that are actually going to … You can't be in drought proof but you could be more resilient. And we seem to have these crises every time this happens and it happens in Australia reasonably predictably, it's not like unheard of occurance.
David: And Guy, what do others do around the world? I mean, is your company involved in any infrastructure projects?
Guy: We recently just released cities index where we look at preparedness and one aspect is water, interest being in parts of China, massive, massive investments in water infrastructure related to this, orchestrated, well funded.
David: What sort of infrastructure are we talking about there?
Guy: It's partly around storage and it's also around pumps and pipes and articulation. And New York's a great example, you got the Catskill Mountains and you're supplying New York which a huge growing city, and the engineering around maintaining that security of water we think are two of the best examples on the world and Australia could learn a lot from those.
David: I mean, we have a far more sparse population, you look at the centre like this, in fact many parts of Queensland, what would be the couple of ideas you'd put on the table to get more water to those farmers?
Guy: Ultimately you got to invest in storage with climate change, the extremes are getting greater. So you may end up with longer periods with too much water or too little water and that means you go invest in infrastructure. So, you got to have the dams, you've got to outlast the drought. It's interesting though, with the diesel plants, as soon as they were built, it started raining and there was a lot of criticism of that. Nobody's criticising them now. And I think we're just going to have a narrative in Australia where we understand the cycles are long, but if you want a sustainable community we've got to put the bucks and we've got to understand we're playing about a 50 year game here, not a three or four year game.
David: We want to take a quick break. After that, I want to get into this immigration debate because right now the government is formulating a way to encourage more migrants, have them settle in places like this. How do you make that happen? Is it about forcing them or is it the stick or the carrot? What is it going to take to encourage more migrants to come and stay in places like this? Don't go away.
David: Welcome back to the programme, we're coming to you live from Toowoomba this evening. Now, we know the government is having quite a debate at the moment amongst themselves about the immigration level. And it's been a pretty heated debate amongst many Australians as well. Is the immigration rate too high? We've heard Scott Morrison certainly when he was Treasurer argue very much that we should not be cutting it, but should we look at how to actually encourage migrants to not so much end up in Sydney and Melbourne, to come to regional centres like this one. And you got to say, we're been talking about the optimism in this place, it's the place where there would be some demand, I suppose, Guy, I mean, what's your impression of it? Do you think-
Guy: I think immigration has been a huge positive for the country and I think Australians are very accommodating, providing we have the infrastructure that keeps up to be able to be able to keep the roads uncongested.
David: And that's been a problem in Sydney.
Guy: That's been the problem in Sydney and Melbourne. I think you're getting a bit of bleed across. But in an area like this, it's growing, people are after employees and we can take the Toowoomba section range crossing project, 5000 people worked on that project, it's still going, 5000 people. You need skilled labour.
David: And there just isn't enough locally?
Guy: There's certainly a good amount locally but I think Australia has benefited from bringing the right people in. So what we need is sophisticated, we need greater sophistication the way you bring people in, these rules need to really make sure that we get the people we absolutely need, then spend some moves in that direction. But the tough thing is most people settle in Sydney and Melbourne. Yet you ou get regions like Toowoomba that would benefit from having a lot of those migrants as well, but how would they know to come?
David: Yeah, well, Jennifer, you're doing this much thought out, how could you change the current system to make it work for places like this?
Jennifer: Yeah, I think some of it is about making sure that you do have the sense of a set of a set of priority areas across the country in which would give that migration status to so people can see there's an incentive that this is a fast track to permanent residency. Of course the issue is always how you police these things and people moving back and so forth.
David: You'd have to come here for two or three years too then be fast tracked into a permanent residency visa.
Jennifer: But I think most people, I think the issue is, do we have the right skills as Guy says, and are we putting people in the right places? But I think you just can't cast people out across the country. You do have to have a sense of these priority centres where you are going to invest in infrastructure, you're going to make sure that the TAFEs are working well, that skill development iss working well, that there's support around people. I think people should worry less about people than wanting to go back to Sydney and Melbourne because if you're here, median house price around 360,000 Sydney median house price up around 700, closer to a million. Good schools, great place to bring up your kids. Once you're in a place and you're working, and you got a job and you got a sense of purpose and commitment, I think the sense that everyone really wants to go back to Sydney and Melbourne, I'm sure it's a bit I overstated.
David: But you do see it in the any annual stats, the number who do settle in Sydney and Melbourne.
Jennifer: That's their first place of settling.
David: We need to get them to come here first. I mean Catherine, this isn't a new debase, this has been going on for a long, long time. How do we get more migrants to centres like this? What do you think? Are there easy access to this one?
Catherine: I'm unashamedly biassed here because my grandparents came from Lebanon and came to here in Toowoomba. So they came here in the 30s, they had eight children, they came with absolutely nothing. My grandmother walked the streets here in Toowoomba, looking for work, cleaning and ironing for people. And they built an amazing family and a wonderful family owned business out here in the Western Downs. And I despair in a way at the way the conversation is portrayed as if coming to a beautiful region like this is somehow a hardship posting, as if we have to penalise people or somehow forced them to stay here where there's almost chicken and egg challenge. People come for jobs and the jobs come because the people come. So as Jennifer says, we just have to have a plan and it's an attractive thing to do.
David: You're absolutely right because I mean, we can go through the benefits of a place like this and there are so many in regional Australia. This has got wonderful climate, it's got obviously job opportunities and house prices are half of there in Sydney, and on and on it goes. So, do we need to be careful about how we debate this issue? The idea is, you say, of forcing people to come and stay here for certain number of years, are we getting it the wrong way around?
Catherine: Yeah, I think there's two parts to immigration. The first is the humanitarian aspect. And we absolutely should of immigration for humanitarian reasons, because we are lucky we live in this wonderful country, it's huge and we have a very small population for the size of the country. But then for the skilled migrants, we just have to define what skills we need and then encourage as much immediate migration into the regions and people will fall in love with the regions.
David: Are we getting it right though at the moment do you think?
Catherine: No, because we're using this language of how can we force people into the regions, how can we penalise them if they don't stay?
David: So the idea you would tie a certain number of years in a regional area before you can get a permanent visa, you think that's the wrong approach?
Catherine: I just think if people come to the regions and they see all of the things you already spoke about, but as well the fantastic schools, the standard of education is really high, there's great healthcare, this is not a hardship posting.
David: It's more about promoting the value.
Jennifer: And that's the prospect of permanent migration, it's an incentive not a penalty. So it's saying to people, we want you to come here. We want you to come and build our country, like we did with the snowy scheme and the Murrumbidgee irrigation scheme. I think people forget also that people say, there's not enough jobs, look, this is chicken and eggs stuff. There is some sense in which people create economic activity, they create demand for services in a services economy and then you've got places like this and if we could get this around the country, where big investment create more jobs, 5000 workers. One stage Olympic Dam in South Australia, they estimated was about 10,000 people I think, to actually do the first bit of construction. So, it's that coordination but we should be marketing these places.
Peter: The history of migration is also a lot of them opening up businesses. You still see the names of Greek, Italian migrants, Chinese, Vietnamese, etcetera, etcetera, and more of them open up up businesses as a percentage than Australians open up businesses. And they, just to building upon what Jennifer was just saying, is you've got this new company that's a greengrocer, classic, classic behaviour but the way they do it, they create more jobs, they create another little business over there for their daughter or son and they do these sort of-
David: Again, a skilled migrant coming in today open their own business or they come in to actually work for an Australian business. Well, I mean they might down the track.
Peter: Again, the experience that we've seen in the past, they'll work for someone but they'll quickly move to their business. And if you put a business in Toowoomba, you're not going to lose. It's successful, you're going to stay here.
David: And I think one of the other issues, I mean just to throw a bit of reality on the table here is that they may also want people from their home country around them, relatives or people who have the same language and so that's going to attract them back to a bigger centre like Sydney or Melbourne. The job opportunities, even if it is their own business to grow it, they may want to move back to Sydney or Brisbane or Melbourne.
Peter: Well, people do congregate but they start to move out. So they congregate just to feel safe, but they start to move out. I think we saw that with the Greeks, with the Italians, with all sorts of migrants is they come together then they start to move out. If someone's had a successful business in Goulburn, then someone else says, “Well, I'm going to do the same thing in Wagga Wagga.” And that's where we see that happen in all the waves of migrants which come in.
David: So I guess it's also about promoting not just the wonderful lifestyle and so on but the business and employment opportunities.
Jennifer: Absolutely. And the living opportunities, and you think about … I'm not putting Sydney down, I live there, it's a wonderful place but it's hard for people. It's got a lot of congestion, it's very difficult for people, particularly people on middle and low incomes.
David: And expensive, the tolls
Jennifer: The tolls, just a huge cost of living there. You come to a place like this, you can get a very high quality house, you can get your kids into good schools, you can get work and there will be worth following the Qantas announcement today that will have that big flow on effect. It's not like they come into a stagnant place. We've got to make this exciting as Cath says, make it exciting, make it interesting, to change the conversation that this is not punishment, this is a great opportunity for you to be part of these terrific regional communities. Of course, people like to be with the people that they know. But to Peter's point, people will do that in regional communities as much as they'll do that in Western Sydney.
Guy: I think the related point is importance that you also want people to stay. So to me, the way you have migrants settle still comes down to you've got to have a centre that's got some sort of economic base to it. You've got to have tourism, you got to have a port, you got to have agriculture, you got to have mining. And then you're building a sustainable community ramp with the right investments. So the same reason somebody will come from overseas and settle, is the same reason that a 18 year old will be educated there, get a job there and they'll still be there through their life, raising a family and adding to that centre. It all comes back to me, you got to get work.
David: But there will be a lot of people watching and thinking, well of course businesses are going to say they want more migrants, they want more population, to help the bottom line and so on and so forth. But, they're not the ones who are going to have to live with some of the social cohesion issues that can emerge when it comes to big migrant intake. Do you accept there is a resentment, a concern amongst many when it comes to pilot migration?
Peter: There always has been, at the beginning, and I read the story about the Irish Catholics coming into Australia, and they were seen as very difficult and people didn't want to live with them. So we've always had that as part of what happens and it's up to the leaders of their community to get out there and say, “This is good, this is fine. Don't be worried. This is going to be a good resolve for everybody.” And that brings me back to something Jennifer and I've talked about a few times, is judging if a council or a state government is good for business, or if they're not, because we're seeing a good local government here. But I know other places you wouldn't even think of doing anything because they'd just put a stopper on it. And I think if we can go out and say it's not just business who wants this, it's good local government that wants this as well, because they know it's good for society.
Jennifer: I think there is a community sentiment and you do have to acknowledge it. But again, it comes back to people wanting to make sure that people aren't taking their jobs. We have one of the lowest unemployment rates we've had for so long, they want to be confident that their community character stays intact and I understand and I'm sympathetic to that. But that's about people having confidence that we've got this under control, that we're getting the right skilled people and that we do have a plan to make sure that we spread that around the country and that people just don't end up in Sydney and Melbourne and then to Guy's point, making sure that people feel confident that those big populations, we've got a plan for infrastructure. We've got those big projects, and they're not going to change every three years when you get a change of government. That's what I think people get frustrated with, that they don't feel there's a sense of purpose and planning and things change all the time. And they feel very frustrated by that. But you come out to places like Toowoomba, when you and I were in Townsville, they say, “Please, can we have more people? We want more people. We'll make them incredibly welcome.”
David: And do you think that's beyond just the business owners in those communities? Do you think at a town like here, the locals feel the same way?
Catherine: I do, because I think that the locals want the kids in their school. They want quality of healthcare to be available, and the more people, the more specialists that can be supported in a community. The smaller and smaller a community gets, the less local services there are, the further people have to travel. And it provides a better quality of life for everybody.
David: It's a good point, whether it's a medical specialist, whether it's IT or business expertise that you can draw on the bigger the pool of talent there of course that's going to help everyone.
Catherine: The more demand, the higher the quality of service will be to meet that demand.
David: So, the clear message is keep the immigration rate where it is but, if it can be a way to encourage people to come to the regions like this with that parish of permanent residency, should they do so? I mean, that sounds like what they're heading towards Jennifer?
Jennifer: I think so. I think always with these things you've got to do these things incredibly carefully. But that's what we should try and do because if you just take the economics, our economic growth is being driven a lot by population growth. And if we certainly make a big correction to that and we don't have the productivity growth coming in behind it, we might find ourselves with some challenging economic circumstances. So that's just the economic facts of it. But you do have to accept that the community's frustrated about the kind of concentration in Sydney and Melbourne, the lack of planning that was not done today, it was down 10 years ago, the lack of planning. Now we're playing catch up. But let's say, let's get the right people. Let's get the right locations for people and let's invest in those locations to make sure the housing is here, the jobs are there, the infrastructure is there, the skill development is there and really stay at that for a long time, not keep chopping and changing.
David: Well, speaking of jumping and changing, we're going to take a quick break. I want to come back to where the government's also going to land on. Well, some other pretty important issues for many parts of Australia, one is tax rates and the competitiveness of businesses but also energy policy as well. Stay with us.
David: Welcome back. We're live from Toowoomba this evening and we're talking to Catherine Tanna, the head of EnergyAustralia, Peter Strong from the Council of small Business, Jennifer Westacott from the Business Council of Australia and Guy Templeton, the head of WSP Australia. Look, I want to get into the energy debate because the government has killed off the National Energy guarantee, and it says it's taking a big stick now to the power companies, Catherine Tanna, and it says this will drop down power prices. Will the government's current approach drive down prices?
Catherine: Well David I'd say to the government, you can put the big stick away. They don't need the big stick. We're as interested in fixing this as anybody and the positive thing is it can be fixed. There are so many recommendations out there already, some of them are being worked on, some aren't but probably the three things I might focus on, the first thing is the transparency in the market for customers. Everybody's willing to work on that as an important market reform, it's just nuts that a customer can't tell whether 45% off is better or worse than 10% off, so we're going to fix transparency in the market. And in the wholesale market there's a lot to do. There's a lot to do to invest to smooth the transition.
David: And I'll come back to that. The big stick is, well in your case I suppose it's setting a default price in the market they've said they want to do. And even potentially force you to divest certain assets, sell a coal fired power station rather than shutting it down, it's pretty agitated obviously about the AGL decision to shut down I love to Liddell coal fired power plant. Is that the big stick that you reckon they can put away, that sort of niches?
Catherine: Well, I think there's different big sticks, we hear about big sticks all the time.
David: What do you think of those two ideas?
Catherine: Well, the default rate is good idea because it will give the transparency in the market so that customers know exactly what the discount is off what, but it's got to be an industry reform.
David: So just to explain, that's kind of like a ceiling, is it? That's how it'll be in the market, that here's the price that you shouldn't pay any more than?
Catherine: So Rod Sims has said it's not price regulation, and it's what he's not recommending is a ceiling, he's recommending like a reference rate or a benchmark rate so that when a customer is trying to compare one retailer's offer with another retailer's offer, it's off the same number. And so it's to get that transparency, so there's less confusion-
David: You wouldn't be able to charge more than that default price, would you? Because customers would go, “Hang on.”
Catherine: Well it depends why, there may be a possibility that there's a higher price if there comes some value add. There would have to be some compelling proposition for the customer why you would pay a different price. But the intention behind there being a benchmark rate or a reference rate is a positive intention and it's clear what problem we're trying to solve for.
David: So that's okay. But the idea that you would be forced to divest certain assets, what do you think about that?
Catherine: It's another form of government intervention. And I don't think government intervention, which is ultimately passing risk onto taxpayers, is the right way to go. A positive thing is that the industry knows what all the pieces of the jigsaw puzzle are when it comes to what we need to do to solve for the integration of all the renewables into the market. We're at the vanguard in Australia, this is leading edge in terms of trying to integrate this volume of renewables into our market. We know what the solutions are, we just need the confidence to be able to make the investments in-
David: Well just in simple terms, because I know it's not simple, but what are the solutions that we're not doing at the moment to integrate and get prices down?
Catherine: Yeah, so integration requires planning. So, it's one thing to rush out and build a whole lot of new wind farms and solar farms, and that's what's happening here.
David: It's what's happening here where we are, right? There's wind farms and solar farms going up everywhere.
Catherine: And the reason that's happening is because it's the only policy right now that's got bipartisan support.
David: The renewable energy target.
Catherine: And that has led to all of those renewable fields that have to be integrated into the system and the grid has to be strengthened to enable them to dispatch and they need to be firmed. And so-
David: And they're not at the moment, are they?
Catherine: No, they're not. And firmed means backed up with some gas or something so that they can still pump out power when the sun's not shining and wind's not blowing?
Catherine: Exactly. And so that-
David: How do we do that?
Catherine: Well that's what we're working on. We're working on solutions and solutions include storage, pumped hydro and included new gas fired power stations that are fast start that can be on when they're needed.
David: All right. But, without some sort of national energy guarantee framework reliability requirement on you guys, you're just doing this off your own bags, is that where it's at or you're required to do this?
Catherine: Well we do it because we want to do it for our customers. So at the end of the day we just exist to serve our customers, it's pretty simple, we make power and we sell it. And we want to be able to have that power for our customers when they need it. And there would be more investment and there'd be more solutions if the policy was clear. And I know everybody's sick of talking about the policy-
David: No, I know. I know that's true. But just to be clear on this, your main message is, we don't have policy certainty now and this talk of a big stick is actually potentially going to drive prices up.
Catherine: Well, it's just not helpful and it's not needed because the industry wants to solve the problems. Everybody's clear what the problems are, everybody knows what the solutions are, what we should be focusing on is not threats but solving for customers.
David: Well, some say that in a state like Queensland where we are Guy, a coal fired power station would be the way to go. I mean, has your company, global company had much to do with that industry and what do you think about the arguments for a coal fired power station?
Guy: Certainly, the whole world needs to migrate towards renewable, it's all a matter of pace. And so the current coal fired power station is required to provide reliable baseline. There's arguments about whether or not there's any more of that, in some parts of the world there are, a lot of parts of the world are not. Nuclear also has had problems after Fukushima and many countries have shut down their nuclear programmes which is really accelerating movement to wind and solar. A lot of it comes down to economics as well and the price of solar is dropping incredibly fast. What it does need though is taxes of heavier [inaudible 00:50:25] from the networker.
David: Which at the moment the best bang for buck is gas, right, the firm, the solar plan?
Guy: Yeah, it's one. And I'm not sure that there's a best because it depends on each country on what the energy mix is. But when the wind stops blowing or a cloud comes over your solar farm, the powered rocks and the lights go out and if you haven't got anything to back that up, you kind of come on fast enough. So it needs some sophistication in there and it needs an investment and I think that's where the policy certainly is required in Australia.
Jennifer: Over 60% of power is still coal fired power generated. And the average life of those plants is 27 years. So, one of the top priorities is to make sure that people continue to invest in keeping those open. And that's where, to Catherine's point, the lack of certainty, and it's not just normal certainty, we're talking about stability of policy here, we're talking about if I want to upgrade my existing coal fired power station to keep it going past that 27 years then I've going to spend for argument's sake, a billion dollars.
David: What would it take to give it a few more years [crosstalk 00:51:32]?
Jennifer: Well, first of all I have no idea how the carbon side will be treated. I can't price that. So I can price if I own a company, I can hedge currency, I can price risk because I'm working in a normal framework that's predictable. This is like completely unstable. And so I want to make that investment, I don't even know how carbon will be treated in 2036 let alone what the price will be. So that's why we do need to make sure we solve for affordability, reliability, security and our mission's obligations so that companies can see how that will be treated. That brings on the investment, that brings on the firm in. Even if I want to do gas, I don't know how the emissions from that would be.
David: What would you say to the argument we should get out of Paris therefore we wouldn't have any obligation, we wouldn't have to worry about that at all?
Catherine: I think Australians really want to transition to a cleaner energy future. I don't know anybody that doesn't want to do that. I think we all want to leave the country in a better state than we found it. And it's not a question of, should we transition, it's already happening. So the transition to a cleaner energy future is a reality, the challenge is how we make that smooth. How do we make it smooth for customers so it's not volatile? Volatile is no good for us as power companies.
David: And I get that, isn't the reality that if Labour were to win the election, brought in something along those lines, you're still going to have the other side of politics opposing any sort of emissions, legislative emissions target? So this uncertainty is only going to continue.
Catherine: I think we get into these daft conversations around, should it be 26% or 45%? I say, make it 100%, it doesn't matter. It's, what's the plan to get there, what's the best plan to get for where we are today to where we're trying to get the problem definition nice and clear.
David: Was the national energy guarantee the best plan?
Catherine: It was certainly best plan we had. And I think people are despondent because we've had so many reviews and the governments of the day put the brightest minds in the country under these problems, we've had the Finkel review, we've had the ACCC 18 month inquiry, we've had the energy security board and they've all come up with all these recommendations. It's action that's needed.
David: Well, action is needed is a message on a whole lot of friends who've spoken about … We're actually out of time. So thank you all very much for taking part. Been great to be here in Toowoomba today with all of you and talking to some of the local business leaders as well, so I appreciate all of that.
Catherine: Thanks David.
David: Thanks for your company as well. We'll see you next time.
David: Alright, so before we wrap things up from here in Toowoomba and hand over to Paul Murray, just to recap what a day it's been here. We've spent the day with a lot of business leaders in this town to the west of Brisbane. And yes well, many of the farmers in this area like so much in Queensland and New South Wales are doing very tough. And you see just how dry it is when you're on the ground here. There's no doubt that here in town, it's a different vibe, things are going on. There is excitement, there is optimism, there's this new airport, there's a inland rail line coming and businesses thinking and planning and positioning itself with some bright investments going on. We saw that here just today with Qantas announcing its new pilot training school as well.
David: The business leaders here too want more migrants to come and live in a place like Toowoomba. It's a very different debate from the one you'll hear in places like Sydney and Melbourne. But just as we see in Sydney, Melbourne, Brisbane, all over Australia, they also want their power prices brought down as well. It's been interesting to hear tonight from Catherine Tanna, the head of one of our big energy companies, EnergyAustralia, urging the government to get back on track in fixing this problem. Anyway, we've got a lot more coming up tonight. We're going to hand over right now to Paul Murray live.