ANNUAL REPORT 2011-12 · As the financial year progressed, our task was further complicated by uncertainty in global economic conditions and slackening commodity prices. Director

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Department of State Development Annual Report 2011-2012 1

Government of Western AustraliaDepartment of State Development

ANNUAL REPORT

2011-12



The report is published in electronic format, complete and in sections, with limited use of images to reduce the download time. The online version is available on our website at www.dsd.wa.gov.au

If a printed copy is required, the department encourages the use of recycled paper. If this is a printed copy and you have finished reading and no longer wish to retain it, please give it to other interested readers, or dispose of it in your recycled paper waste.

Front-page Captions

Cover photos (left to right):

•Lithium mine, Greenbushes. Photo: Talison Lithium.•Iron ore extraction at the Mesa A Mine, part of the

Robe River project. Photo: Rio Tinto.•The first LPG shipment from the Pluto project leaves

Karratha for Japan. Photo: Woodside.

About this report



Statement of Compliance < 5

Section 1 - oVeRVieW < 7

Director General’s review < 7

Introducing the Department of State Development < 10

Who we are < 10

The business we do < 10

The way we do business < 10

Values < 11

Organisational structure < 12

Executive teams < 13

Key legislation < 14

Performance Management Framework < 15

Strategic Plan < 15

Shared responsibilities with other agencies < 16

Section 2 - PeRFoRMAnce < 19

Summary < 19

Report of Operations < 20

Lead Agency overview < 20

Variations Agreements < 20

Major resource projects < 21

Strategic Heavy Use Industrial Land < 24

Infrastructure and Services Planning < 25

International trade and investment activities < 26

Significant issues < 28

Performance overview < 31

Key performance indicators < 31

Effectiveness indicators < 32

Efficiency indicators < 33

Financial performance < 34

Our people < 36

Senior staff changes < 36

Workforce management planning < 36

Comparative FTE allocation by category < 37

Industrial relations < 37

Employee performance and review < 37

Career development < 38

Youth employment initiatives < 38

Substantive equality < 39

Disability access and Inclusion Plan outcomes < 39

Occupational safety, health and injury management < 39

Injury management < 40

Compliance with Public Sector standards and ethical codes < 41

Ethical standards < 41

Governance < 41

Record-keeping < 41

Capital projects < 42

Advertising < 42

Section 3 – DiScLoSUReS AnD LeGAL coMPLiAnce < 44

Auditor’s opinion < 44

Certification of financial statements < 48

Financial statements and notes < 49

Certification of Key Performance Indicators < 108

CONTENTS



CONTENTSAPPenDiceS < 110

Appendix 1: Legislation and changes to Legislation - Acts and State Agreement Acts (major resources projects) <110

Statutes administered by the department < 110

Agreement Acts administered by the department < 110

New Agreement Acts ratified < 112

New Statutes < 112

Variations < 112

Agreements terminated < 112

Agreement Acts repealed < 112

Appendix 2: Key staff < 113



Statement of Compliance

In accordance with Section 61 of the Financial Management Act 2006, the Annual Report of the Department of State Development for the financial year ended 30 June 2012 is submitted.

This Annual Report has been prepared in accordance with the provisions of the Financial Management Act 2006.

Stephen Wood Director General DEPARTMENT OF STATE DEVELOPMENT

11 September 2012

Iron ore, Port Hedland. Photo: BHP.





With private new capital expenditure at levels previously unseen, industry demand straining existing infrastructure and a growing list of potential new projects, Western Australia’s lead economic development agency began the 2011-2012 financial year under considerable, but welcome, pressure.

To fulfil our role in leading responsible development, the Department of State Development worked to secure major new investment and promote the interests of Western Australia, and of the communities affected by these projects.

Additionally, responsible development requires preparation for the future, by providing new land and infrastructure for industry, strengthening government policy, building international relationships, and supporting Western Australian industry in developing new and expanded export markets and sources of investment.

As the financial year progressed, our task was further complicated by uncertainty in global economic conditions and slackening commodity prices.

Director General’s review

OVERVIEW

Propane sphere, Pluto Liquid Natural gas onshore gas plant, Karratha. Photo: Woodside

This Annual Report outlines significant achievements on behalf of Western Australia across all the department’s responsibilities, including those of a public sector agency in prudent administration and appropriate staff development.

Among these was the establishment of the Ashburton North Strategic Industrial Area (ANSIA) as the State’s newest natural gas processing precinct and port, with construction underway of both BHP Billiton’s $1.5 billion Macedon natural gas plant and Chevron’s massive $29 billion Wheatstone LNG and natural gas plant.

As well as securing thousands of jobs, new exports and important new supplies of domestic gas for Western Australia, negotiations led by the department ensured that major new investment in social infrastructure will prepare the nearby town of Onslow for the growth that is happening.

The department also had an important role in assisting the expansion of the State’s major export earner, the iron ore industry, through State Agreement approvals.


Department of State Development Annual Report 2011-2012 8Propane sphere, Pluto Liquid Natural gas onshore gas plant, Karratha. Photo: Woodside

OVERVIEW

These new project investments are worth more than $15 billion. Additionally the department, in concert with the Department of Mines and Petroleum, negotiated an increase in the royalty rate to 7.5 per cent for iron ore.

Perhaps less spectacularly, but no less importantly for Western Australia’s future, the department worked to secure necessary approvals under relevant, planning, environmental and Indigenous land and heritage processes, for major new industrial land developments and associated infrastructure.

These include new port and industrial land developments at Oakajee in the Mid-West, Anketell in the Pilbara and the Browse LNG Precinct in the Kimberley.

State Development also worked with industry organisations and State and Federal government agencies to secure funding for and assist the development of other key industrial land, transport, water and energy infrastructure.

In co-ordinating the delivery of the Commonwealth-funded $195 million East Kimberley Development Package, the

department played a key role in a successful demonstration of inter-government cooperation.

Fourteen state and federal agencies are working cooperatively, to deliver 24 new educational, health, cultural and economic facilities for Kununurra, Wyndham and nearby Indigenous communities.

This major investment will help prepare the East Kimberley for the growth that will follow the major expansion underway of the Ord irrigation scheme.

The department continues to play a role in providing market analysis and policy advice to government on strategies for securing the State’s economic future.

Our overseas trade and investment offices are working hard to foster relationships to expand and increase investment in the State.



OVERVIEW

During 2011 the department also established a new trade and investment office in Singapore, as the State’s primary presence in South East Asia.

The department also successfully co-ordinated Western Australia’s participation in the Commonwealth Business Forum program associated with the 2011 Commonwealth Heads of Government Meeting held in Perth, providing information and support to more than 1100 delegates from 50 countries.

These achievements come from the coordinated efforts of a dedicated group of staff who enjoy leading responsible development. I thank them all for a job well done.

The department seeks to make a substantial and lasting contribution to Western Australia’s prosperity. With much of our work focussed on laying stronger foundations for Western

Australia’s future growth, we look forward to continuing this contribution in the coming year.

Stephen Wood Director-General



The Department of State Development was established under the Public Sector Management Act 1994 in 2009 and reports to the Premier and Minister for State Development, the Honourable Colin Barnett MEc, MLA.

Who we areWe are the State Government’s lead agency for promotion, coordination and facilitation of responsible development in Western Australia.

We work to achieve growth for Western Australia through developing strategic infrastructure and by leading and facilitating government and industry projects that create jobs and underpin Western Australia’s long-term development.

the business we doWe have a unique role in the Western Australian public sector. Our business is to deliver the Western Australian Government’s priorities for state development in projects of state significance throughout the State, and we assist project proponents to develop major resource and industry projects.

Introducing the Department of State Development

OVERVIEW

The Pilbara port of Cape Lambert, 40km north of Karratha. Photo: Rio Tinto.

We we advise and assist Western Australian businesses in global export opportunities, and attract investment to the State.

the way we do businessOur key roles are to:•Develop and coordinate significant State

projects.•Facilitate and lead the coordination of

approvals processes across Government for major resources and infrastructure projects.•Negotiate and manage agreements

between development proponents and the State Government.•Enable the development of strategic

industrial land and infrastructure to meet industry needs.•Assist the development of export markets.•Assist companies interested in investing in

the State.•Provide strategic policy advice on State

development issues.

For more information on the way we do business, refer to page 16 of our Strategic Plan, available online at www.dsd.wa.gov.au



OVERVIEW

ValuesThe Department of State Development’s Values support our corporate culture and are the principles we use to help serve the interests of the public and to produce positive results.

Working TogetherWe support each other in a team environment, treat others with fairness and respect, acknowledge innovation and effort and celebrate success.

LeadershipWe provide purpose and direction and empower and support our people to use their initiative to deliver effective outcomes.

IntegrityWe are ethical and accountable for our actions, deliver on our promises and share information appropriately.

TransparencyWe value two-way communication, providing appropriate feedback and using transparent processes.

Excellence in DeliveryWe produce high quality work to deliver value to the community, and we constantly seek to improve the way we operate.

Excellencein

Delivery

Working Togethe

r

Tran

sparency

Inte

grity

Lead

ership



OVERVIEW

organisational structureThe organisational structure consists of three operational divisions and two areas that provide services across the department:•Strategic Policy

•State Initiatives

•Resources and Industry Development

•Corporate Services

•Commercial and Legal

PremierMinister for State Development

colin Barnett

Director GeneralDepartment of State Development

Stephen Wood

Undertakes research and analysis and provides the Government with advice

which promotes responsible

development

Develops and leads the

successful delivery of key Government

resource, industry and infrastructure

initiatives

Leads and facilitates the

successful development

and expansion of Western Australia’s

resources and industry sectors along with the

management of 10 international

offices

Provides efficient and appropriate

corporate services to management and staff across the department

Provides specialist commercial

and legal advice across the

department

Deputy Director GeneralStrategic Policy

nicky cusworth

Deputy Director GeneralState Initiatives

Gail McGowan

Deputy Director GeneralResources and Industry

Development

Giles nunis

DirectorCorporate Services

Steve Melville

Principal Advisor and Coordinator

Commercial and Legal

Pamela Hass



OVERVIEW

executive teamsStrategic Corporate ExecutiveThis group comprises the Director General and the five division heads.

Stephen Wood, B.Psych, MPub Ad Director General

Steve was formally appointed as Director General in November 2011. Steve’s public service career started in 1979 and he has worked in both the Commonwealth and State public sector. He was previously a Commissioner of the Western Australian Industrial Relations Commission for 10 years.

Nicky Cusworth, BA (Hons), MA Deputy Director General Strategic Policy

Nicky has extensive experience in environmental policy development, including roles as the Chief Economist for the Chamber of Commerce and Industry of Western Australia and the Director of Macro-Economic Policy for the WA Department of Treasury and Finance.

Gail McGowan, BA, Grad.Dip. (Public Policy) Deputy Director General State Initiatives

Gail has extensive experience in senior government roles in occupational safety and health, employment and training, industrial relations, women’s interests and the environment.

Giles Nunis, BBus Deputy Director General Resources and Industry Development

Giles has an extensive commercial and government administration background, holding the position of Australian Managing Director of a multi-national consulting firm and managing key portfolios in the WA Departments of Justice and Lands.

Steve Melville, BBus, FCPA, GAICD Director Corporate Services

Steve joined the department in 2011 from the Forest Products Commission of WA. He has a range of financial, marketing and management experience in both the government and private sectors.

Pamela Hass, LLB (hons), LLM, BA Principal Counsel, Legal and Commercial Strategy

Pamela has a wealth of legal experience, particularly as an in-house counsel in private enterprise, universities and government. Pamela’s previous positions include University Secretary and Special Legal Counsel at the University of Western Australia and General Counsel at Curtin University of Western Australia.

Strategic Corporate Executive. (Seated) Steve Wood, Pamela Hass, (standing, from left) Nicky Cusworth, Steve Melville, Gail McGowan and Giles Nunis.



Corporate Executive.

OVERVIEW

Corporate ExecutiveThe Corporate Executive comprises the senior leadership of the department and includes members of the Strategic Corporate Executive, major project directors and communications staff.

Key legislationThe Department of State Development complies with all relevant legislation that governs its functions. The department also has responsibility for the administration of two Statutes and 63 State Agreements. These are listed in Appendix 1 on page 110.



Ord Irrigation Scheme. Photo: DSD.

OVERVIEW

Strategic PlanOur Strategic Plan outlines our goals, objectives and targets. The plan comprises five priority strategic objectives, critical in achieving our strategic role.

1. We understand the drivers of State development and how they affect our work.

2. Policies, principles and frameworks give staff clear guidance about how to facilitate responsible development.

3. Project management systems aligned with cultural commitment, support delivery of government priorities in agreed timeframes.

4. We share an understanding of the department’s role and communicate it consistently to stakeholders, who are confident we can deliver.

5. We are motivated, appropriately trained, happy and focused.

Performance Management Framework



OVERVIEW

Shared responsibilities with other agenciesOperating under the Lead Agency Framework, the department strives to achieve better cooperation and greater efficiency across Government for the delivery of projects that benefit the state. Formal governance arrangements and clear reporting frameworks assist in clarifying roles and responsibilities.

The following table provides a snapshot of initiatives, outcomes and the contributing agencies.

initiative Related outcome contributing agencies

Ord Irrigation Expansion project(State and Commonwealth funding)

Working with State and Federal Government agencies on key community and economic infrastructure to establish a sustainable community in the East Kimberley.Developing off-farm agriculture infrastructure, including construction of irrigation channels, roads, power and telecommunications to service the region’s future needs.

Department of Regional Development and Lands,Department of Environment and Conservation,Department of Sustainability, Environment, Water, Population and Communities (Federal),Department of Health (WA Country Health Services),Department of Transport,Department of Housing,Department of Training and Workforce Development,LandCorp,Department of Water,

Department of Agriculture and Food,Department of Indigenous Affairs,Department of Education,Department of Treasury,Department of Finance (Building Management and Works),State Solicitor’s Office,Department of Premier and Cabinet,Office of Northern Australia (Department of Regional Australia, Local Government, Arts and Sport).

Browse LNG project The establishment of an LNG precinct on the Kimberley coast.

Department of Transport, Department of the Premierand Cabinet, Department of Treasury, State Solicitor’s Office,LandCorp, Department of Planning, Broome Port Authority, Regional Development and Lands, Department of Environment and Conservation, Department of Indigenous Affairs,

Environmental Protection Authority, Department of Fisheries, Tourism WA, Main Roads WA, Department of Water, Department of Training and Workforce Development,Department of Commerce,Department of Health,Department of Local Government, WA Police.



OVERVIEW

initiative Related outcome contributing agencies

Oakajee Mid West Development

An integrated port, rail and industrial estate to support the development of Mid West resources and ensure the long term prosperity of the region.

Department of Planning, Geraldton Port Authority, LandCorp,

Department of Transport,Public Transport Authority,State Solicitor’s Office.

Ashburton North Strategic Industrial Area (Onslow)

A greenfields multi-user, deep-water port and associated industrial area near Onslow for processing and exporting natural gas.

Department of Planning, Dampier Port Authority,LandCorp, .

Department of Transport, Environmental Protection Authority, Department of Environment and Conservation,Department of Regional Development and Lands.

Anketell Multi-User Port

A greenfields multi-user, multi-commodity, deep-water port and associated industrial area at Anketell near Karratha.

Dampier Port Authority, Department of Planning, LandCorp, Department of Transport, Environmental Protection Authority, Department of Environment and Conservation, Main Roads WA,

Regional Development and Lands,WaterCorp, Department of Water, Department of Premier and Cabinet, Department of Treasury, Pilbara Development Commission.

Bunbury to Albany Natural Gas Pipeline Project

To deliver a secure, reliable and safe natural gas supply for the future economic and social growth of the region and address the gap in the provision of gas supplies in the South West and Great Southern regions.

Department of Regional Development and Lands,

Department of Treasury,Department of Finance.





PERFORMANCE

The department’s function is to support sustainable and responsible development and to promote Western Australia to prospective investors as a growing and dynamic economy in which to invest and operate.

This includes facilitating the export of resources, attracting investment assisting international trade and promoting industry.

As the Western Australian Government’s lead agency for major resources, industry and infrastructure developments, the department oversees major investment projects, including:•Iron ore expansion projects of major, mid-

range and smaller producers.•Liquified Natural Gas projects, such as

Gorgon, Macdeon, Wheatsone and Browse.•The proposed mineral ports at Anketell and

Oakajee.

As well as facilitating private projects, the department manages the East Kimberley Development Package, involving development of social infrastructure in the State’s north.

The department is proposing the heavy Use Industrial Land Strategy, which is designed to progress targeted industrial estates towards

a ‘project-ready’ status that will be able to accommodate new heavy industry.

The department develops strategic policy and provides advice to government on issues including energy security policies, skills and local job-building, local content, port and rail infrastructure, foreign investment, regional planning and utility demand to meet the requirements of a growing economy.

The department negotiates, on behalf of the Government of Western Australia, State Agreement Acts for large, complex projects that require regulation and support beyond the usual regulatory framework (see appendix 1).

Each agreement outlines the rights, obligations, terms and conditions for the development of a project, and establishes a framework for the ongoing operation of the project and the relationship between the proponent and the State.

Summary

Part of the dewatering plant at the Sino Iron Ore project, Cape Preston. Photo: DSD.



PERFORMANCEReport of Operations

Lead Agency overview

The Lead Agency Framework was implemented by government to support project approvals processes for major resource projects. Under the Lead Agency Framework the department manages projects through planning, environmental, Aboriginal heritage and native title and other relevant approval processes and works closely with project proponents and approvals agencies to ensure that processes expedite and facilitate responsible development.

The department is lead agency for significant resource projects, including mine developments for a range of mineral commodities and petroleum and gas products, infrastructure projects including ports and rail operations and industrial lands.

These projects include:•State-sponsored infrastructure projects

that are nominated by the Government.•Major projects comprising new projects or

expansions of existing projects where the proposed investment is significant or of strategic significance to the State.

Variation AgreementsThe department negotiated and progressed the Iron Ore Agreements Legislation (Amendment, Termination and Repeals) Bill 2011 and the Iron Ore Agreements Legislation Amendment Bill 2011 that were passed by Parliament in November 2011. The two separate Bills varied six BHP Billiton (BHP) iron ore State Agreements and five Rio Tinto iron ore State Agreements, as well as repealed and terminated another three BHP Agreements.

The variations in both Agreements and similar variations under the Mining Act provided for increased royalty rates for iron ore fines, which are estimated to provide an additional $1.9 billion in State royalties. Several other amendments were passed to facilitate Rio Tinto’s and BHP’s Pilbara expansion programs.



PERFORMANCE

Major resource projectsWith the Lead Agency Framework firmly in place, this year the department continued to assist proponents with the development and expansion of major resource projects, including:

BHPKnown as the ‘Growth Master Plan’, BHP Billiton Iron Ore is planning to progressively expand the capacity of its Pilbara operations to 350 million tonnes per annum through a series of new mines, additional rail infrastructure and a new port infrastructure at Port Hedland.

The company submitted its project definition documentation in June 2011, which initiated the process for the department to facilitate governmental approvals for the Plan. The Premier has acknowledged the Plan is strategically important and significant to the development of the State.

GorgonWith the Final Investment Decision made in 2009, the Gorgon Project is now more than 40 per cent complete. The Project involves the construction of a three-train, 15 million tonnes per year Liquefied Natural Gas (LNG) facility and a 300 TJ per day domestic gas plant.

The arrival of the first gas processing module on Barrow Island will be among the key milestones for the Project in 2012.

The construction of the 2 km long Materials Offloading Facility and causeway is substantially completed and work is continuing on the 2.1 km LNG jetty for the delivery of gas to transport vessels.

Commitments from the Project have reached $16 billion for Australian industry and labour, with 92 per cent of these commitments ($15 billion) in Western Australia.

The project has created more than 7,000 jobs across Australia. Gorgon is working closely with Pilbara businesses to develop opportunities during the project’s operational phase, which is expected to last more than 40 years.

The Gorgon gas processing plant on Barrow Island. Photo: Chevron.



PERFORMANCE

Browse LNG PrecinctThe Browse Liquefied Natural Gas (LNG) Project provides for the establishment of a single LNG processing Precinct near James Price Point, located 60 kilometres north of Broome. The Precinct will accommodate at least two LNG processing facilities to commercialise natural gas from the Browse Basin.

Planning for the LNG Precinct aims to minimise the environmental footprint of gas processing facilities in the region, while maximising opportunities for local people and businesses to participate in, and benefit from, employment and business opportunities. It also seeks to minimise the impact on significant cultural and heritage sites.

Milestones included:•Notices of Intention To Take (NOITTS) were

issued in March 2012 for 3414 ha on the Dampier Peninsula. The NOITTS include land for LNG processing facilities, a port, related workforce accommodation, light industrial area, pipelines and roads.•The Proponent’s Response to Submissions

to the Browse LNG Precinct’s Strategic Assessment Report 2010, together with additional information requested by the

Environmental Protection Authority (EPA), were submitted to, and approved by, the EPA and the Commonwealth Department of Sustainability, Environment, Water, Population and Communities.

•Formation of a Precinct Management Committee (PMC) in December 2011 to oversee cultural heritage and environmental management, indigenous business development and contracting, cultural awareness training and land access within the precinct.

Oakajee Mid West DevelopmentThe department progressed planning and approvals for the Oakajee project, an integrated port, rail and industrial estate just north of Geraldton, to support the development and support of Mid West iron ore resources and ensure the long-term prosperity of the region.

The Environmental Protection Authority recommended the Minister for Environment approve the Port Terrestrial and Rail project proposals, while the Western Australian Planning Commission approved the Oakajee Industrial Estate Structure Plan.

Further notable achievements included: •Submitting the 12 Environment Management

Plans for the port. •Engagement with the National Development

Reform Commission of China and relevant companies in their assessment of the project. •Reviewed Oakajee Port and Rail Pty Ltd’s

plans for project delivery.•Development of a draft model that provides

for joint State and Commonwealth contribution to common-use infrastructure at the Oakajee Port.•Continued to work on a third-party access

regime for services provided within the boundary of the proposed Oakajee Port.

The coast at James Price Point. Photo: DSD.



PERFORMANCE

Perdaman fertiliser plantPerdaman Chemical and Fertilisers Pty Ltd (Perdaman) plans to build and operate a $3.5 billion coal to urea plant at the new Shotts Industrial Park, near Collie. The project involves the gasification of around 2.7 million tonnes per annum of coal to produce ammonia, which is then to be processed into approximately 2 million tonnes per annum of urea, primarily for export. Throughout the life of the project, the department has facilitated all necessary government approvals, including the creation of Shotts Industrial Park.

QR NationalThe department worked closely with QR National to seek to develop a State Agreement for QR National’s proposed Pilbara independent third-party railway. The company proposes to provide a heavy-haul rail service to Port Hedland port, particularly for miners with ‘stranded’ iron ore deposits. This project would open the Pilbara to those miners that have difficulty securing access to existing rail and port facilities necessary to develop their mines and to service sales contracts. QR National is working to develop contracts with foundation customers to secure access to the necessary port facilities at Port Hedland.

Anketell Multi-User PortThe department facilitated the Issue of Notices of Intention to Take (NOITTs) under the Land Administration Act 1997 (WA) to secure land for the port and associated strategic industrial area. There has been significant development of an Anketell Port’s Master Plan, with a review of the plan commissioned to ensure an optimum plan is achieved. The department is also negotiating native title for the project with the Ngarluma Aboriginal Corporation.

Ashburton North Strategic Industrial AreaChevron Australia Pty Ltd made its Final Investment Decision on the $29 billion Wheatstone LNG development in September 2011, following a range of State development approvals facilitated by the department. A Structure Plan and Development Plan were approved subsequently, as were several Development Applications to enable construction to commence.

The department also concluded a State Development Agreement with Chevron which covered the agreements and conditions for the Wheatstone project development.

Initial planning approval was obtained for the Ashburton North Strategic Industrial Area

(ANSIA) in which the Wheatstone LNG plant and associated port are to be located. Also in the ANSIA, BHP Billiton Pty Ltd obtained final planning approvals and commenced construction of the $1.5 billion Macedon domestic gas production facility.

Premier Colin Barnett (left) and Roy Krzywosinski, the Managing Director of Chevron, turn the first ground at the Wheatstone project. Photo: Chevron.



PERFORMANCE

Strategic Heavy Use industrial LandThe department progressed the State’s Heavy-use Industrial Land Strategy to develop project-ready, strategically-located industrial areas suitable for heavy industry. In 2011-12:•The Structure Plan for the Oakajee Industrial

Estate was adopted by both the Shire of Chapman Valley and the Western Australian Planning Commission and was finalised. The Oakajee Industrial Estate is now project-ready.•The Boodarie Structure Plan process has

continued this year, with the finalisation of the Phase One Concept Plan Report and commencement of Phase Two planning. The department’s key priority has been securing an unencumbered corridor to provide freight access between the Boodarie Estate and the Port Hedland Port. The corridor alignment is expected to be finalised in 2012/13.•The Draft Structure Plan for the Kemerton

Industrial Park, including an Environmental Management Plan, a Water Management Strategy and engineering studies has been completed. An application for the Structure Plan’s environmental clearance under the Commonwealth Government’s Environmental Protection and Biodiversity Conservation Act 1999 is in process.

Bulk iron ore carrier at Port Hedland. Photo: Port Hedland Port Authority.



PERFORMANCE

infrastructure and services planningOne of the department’s roles is to work with industry, other State agencies, Commonwealth and local Governments to plan the development of infrastructure and capitalise on opportunities for regional development.

The department established the Infrastructure Planning and Implementation Branch to guide the assessment of the impact of new projects and infrastructure.

The department is the lead agency for a number of major projects that potentially impact the local community. An example of this is at Ashburton North.

As part of the State Development Agreement for the Chevron Wheatstone project, a funding contribution of $66 million was secured for new and upgraded community infrastructure that will be developed by the Shire of Ashburton within the town of Onslow. This was supplemented by $10 million of Royalties for Regions funding. Chevron will also build a desalination plant and power station and is contributing a further $121 million for State Government agencies to upgrade a range of critical services infrastructure, which includes improved transport, wastewater, health,

education and emergency services to cater for a larger town population.

The department also renegotiated variations to the East Kimberley Development Package National Partnership Agreement to reflect the changing needs of the projects within the package. The department has also overseen the completion of the Wyndham Early Learning Centre and the Port upgrade, the Kimberley Training Institute expansion in both Wyndham and Kunnunurra and delivery of health service provider housing.

Two of the environmental management plans for the Ord Expansion project were finalised in cooperation with the Commonwealth. These plans will enable the release of 8,000 hectares of additional irrigated agricultural land. Some of this land was placed on the market during the financial year.

The town of Onslow. Photo: DSD.



PERFORMANCE

international trade investment activitiesThe department manages a number of international trade and investment offices in overseas locations which strengthen relationships with WA’s trade and investment partners. The department coordinated 232 international trade events to promote trade and investment to and from Western Australia.

Commonwealth Heads of Government (CHOGM) Business ForumThe International Trade and Investment Division (ITI) coordinated the CHOGM business program on behalf of the WA government and agencies under its “Think Big” promotion, developed specifically for the CHOGM business program. Industry sectors covered were resources, agrifood, education, regional development and the Perth Waterfront Development.

International Memoranda of UnderstandingThe department facilitated two memoranda of understanding (MoU) on behalf of the WA Government. The first, in September 2011, was for investment cooperation with the National Development and Reform Commission (NDRC), China’s peak body governing Chinese foreign investment decisions. The MoU reinforces formally the State’s relationship with China and provides a constructive bilateral mechanism to strengthen two-way investment, build understanding, enhance commercial and industrial linkages, and raise and address matters of interest or concern to both sides of government.

The second MoU was with the Japan Bank for International Cooperation (JBIC) in November 2011 to develop closer relations and increase collaboration between the WA Government and Japan. This was the first time JBIC has concluded such an agreement with a non-national government.

Singapore trade officeThe department opened a new Western Australian Trade and Investment Office in Singapore, recognising Singapore’s importance in promoting WA trade and investment to and from South East Asia.

Premier and Minister for State Development Colin Barnett at the opening of the Bank of Tokyo, Perth Branch.



PERFORMANCE

Australia China Natural Gas Technology Partnership FundThe Australia-China Natural Gas Technology Partnership Fund was established in 2003 as part of an historic agreement for Australia to supply liquefied natural gas to China. The Fund supports activities aimed at establishing long-term partnerships within the LNG sector that create positive economic and environmental outcomes and increase knowledge and skills. It also serves to enhance the relationship between Australia and China.

The Fund is a joint initiative of the Department of State Development, the Commonwealth Department of Resources, Energy and Tourism, and the North West Shelf Australia LNG Pty Ltd (Woodside, BP, Chevron, Shell, Mitsubishi-Mitsui, BHP).

International trade eventsThe department organised the Boao Conference in Perth in July 2011. The Boao Forum for Asia (BFA) headquartered in Hainan, China, is a high-level forum for engaging with China and Asia. More than 400 delegates from business, government and academic sectors from Australia and overseas attended.

The department also participated in the G’Day USA 2012 conference, showcasing major energy projects and investment opportunities in Western Australia.

The WA Trade and Investment Office in South Korea helped to establish a program to train South Korean energy and mineral resource engineers under a Memorandum of Understand (MoU) signed in 2011 between the University of Western Australia (UWA), Curtin University and 10 Korean universities which are members of the Korea Energy and Mineral Resources Engineering Program (KEMREP).

Chinese LNG managers during the Pilbara phase of their training. Photo: North West Shelf Australia LNG.



PERFORMANCE

Significant issuesEconomic conditionsThe volatility of global commodity prices, the uncertain economic conditions in Europe and the USA and the development of the Chinese economy are likely to be the key factors determining if Western Australia’s current level of economic growth can be sustained in the short to medium term. The slowed growth in China depressed most commodity prices this year.

High production costs, skills and labour shortages and a high exchange rate may continue to constrain the realisation of Western Australia’s pipeline of resources and economic infrastructure projects.

Despite these concerns, business investment in export-oriented resource projects is likely to continue driving Western Australia’s economic growth in the next few years, as the Gorgon gas project reaches peak investment and new projects, such as the Wheatstone LNG plant, are developed.

In the year to March 2012, Western Australia’s private new capital expenditure increased by 43.5 per cent to $49.5 billion, with mining investment accounting for 79.3 per cent of that investment.

In March 2012, resource-related projects in the pipeline include $167 billion of resource projects under construction or committed in Western Australia and a further $151 billion under consideration.

Developing the PilbaraThe Pilbara Region is growing rapidly, in particular the coastal centres of Port Hedland, the greater Karratha area and Onslow.

An example of the growth is associated with the Wheatstone Project and Ashburton North Strategic Industrial Area and port. This is expected to increase the population of Onslow from 700 to 2,200. The department is collaborating with other government agencies and the private sector to ensure infrastructure development is sufficient to meet growing demand; for example, by expanding Karratha’s water supply and coordinating Onslow’s social infrastructure development.

Geotechnical work being undertaken at Ashburton North. Photo: Chevron.



PERFORMANCE

Energy security A secure, affordable and reliable energy supply is important for development in Western Australia. The department works with energy project proponents to ensure domestic energy security.

In August 2011, the State Government released its response to the Legislative Assembly’s Economics and Industry Standing Committee’s Inquiry into Domestic Gas Prices. In its response, the State Government affirmed its commitment to the State’s domestic gas policy and outlined the department would work with industry stakeholders on the commerciality aspects of the policy.

In February 2012, the Premier opened the Devil Creek Gas Plant and Hub, owned by Apache Energy and Santos, 45km south-west of Dampier. The plant has a production capacity of 220 terajoules a day, which is equivalent to around 20 per cent of the State’s total domestic gas production capacity.

In 2011 the department finalised domestic gas negotiations with the major project proponents for the Wheatstone LNG project. The agreements require the Wheatstone proponents to make the equivalent of 15 per cent of LNG design capacity available to the domestic market.

Other projects under construction or development that will deliver domestic gas are the BHP Billiton-operated Macedon domestic gas project and the Gorgon LNG project. The department is also negotiating with other emerging LNG suppliers to secure gas supply consistent with the State’s domestic gas policy.

The State’s other primary energy fuel is coal. At the end of 2011, Yancoal Australia completed its acquisition of Premier Coal, and the department worked closely with the new owners and the Foreign Investment Review Board to ensure the State’s energy security would be protected through the continuation of domestic supply commitments.

Devil Creek gas plant, west of Karratha and 45km south west of Dampier. Gas pumped to the plant from the Reindeer gas field, located 80km off the Pilbara coast, will supply 20 per cent of Western Australia’s domestic gas for the next 20 to 30 years. The plant was officially opened on 25 February 2012. Photo: Apache Energy.



Local Government Rates for Resource projects The department has worked with the Department of Local Government, industry and local government representatives to develop a policy standardising the application of local government rates to mining and petroleum projects.

The policy, released in November 2011, addresses the longstanding uncertainty on how rates applied to resource and petroleum projects, will enable local governments to have more certain rating processes and generate a more predictable revenue stream from resource developments within their areas. It sets out the types of project and infrastructure to be rated on a gross rental value basis, as well as on unimproved value.

The policy applies to all mining and petroleum projects, including those operating under State Agreements, and applies for a trial period of three years, after which recommendations will be made on longer-term arrangements.

Pilbara infrastructure needsThe department developed and forecasted population for the Pilbara to assist the planning divisions on energy, water and other infrastructure in North West towns.

PERFORMANCE

Pipes on the wharf at Dampier for loading LNG from the Woodside Pluto plant. Photo: DSD.



The department’s goal of driving responsible development makes a major contribution to the Government’s strategic objective State Building – Major Projects. We also make contributions to other State Government goals, particularly the Stronger Focus on the Regions and Social and Environmental Responsibility.

Key Performance indicatorsThrough the Outcome Based Management Framework the department measures its performance through agreed Key Performance Indicators (KPI). These agreed KPI’s have been used to measure the department’s performance since its establishment in 2009 and help evaluate our performance in achieving desired outcomes. The following is a summary of the department’s performance in those KPIs for 2011-12.

PERFORMANCEPerformance overview

State Government’s Strategic Goal: State Building – Major Projects

Build strategic infrastructure that will create jobs and underpin Western Australia’s long term economic growth

Agency-desired outcomes Service

Responsible industry development and resource investment

Industry development and investment facilitation

The Gorgon LNG Plant site on Barrow Island.



effectiveness indicators* Effectiveness indicators provide information regarding the effectiveness of the department in achieving its objectives. The department has two effectiveness indicators:

PERFORMANCE

effectiveness KPi #1 Actual 2010-11

target 2011-12

Actual 2011-12

Extent to which agreed milestones for projects where DSD is the lead agency are achieved within the reporting period

84% 85% 73%

This indicator measures the extent to which 22 agreed milestones across major projects where the department is the lead agency were achieved. The department achieved 73% of these milestones against a target of 85%. There are many external variables involved in achieving these milestones including the decision making progress of the various proponent companies associated with these projects. During 2011/12 a range of project proponents deferred or delayed their investment decisions thus leading to some departmental project milestones also not being achieved.

effectiveness KPi #2 Actual 2010-11

target 2011-12

Actual 2011-12

Extent to which State Agreement proponents comply with their reporting obligations and meet the agreement Objectives.

96% 95% 97%

This indicator measures the extent to which companies, subject to State Agreement Act reporting requirements, met their reporting obligations during 2011/12. The result of 97% against a target of 95% is pleasing in that the department ensures companies perform to their obligations under the various State Agreement Acts.

* Audited KPI:



efficiency indicators*The efficiency indicators measure the cost efficiency of the department in delivering the projects where it is the lead agency. The department has two effectiveness indicators.

The first indicator measures the average cost incurred by the department in facilitating major resource projects proposed by industry, with the second measuring the average cost incurred by the department in facilitating State-promoted resource development initiatives.

PERFORMANCE

efficiency KPi #1 Actual 2010-11

target 2011-12

Actual 2011-12

Average cost per project facilitated. $376,537 $479,000 $495,281

The increase in average cost per project facilitated when comparing actual to target is attributed to higher levels of spending on the development of Strategic Industrial Lands projects

The second indicator measures the average cost incurred by the department in facilitating the development of 5 major resource development initiatives where the State through the department is the proponent for the project. The five projects are:•Browse Liquefied Natural Gas Precinct•Oakajee Mid West Development•Ord East Kimberley Expansion•Anketell Port•Ashburton North Strategic Industrial Area

efficiency KPi #2 Actual 2010-11

target 2011-12

Actual 2011-12

Average cost per major State Initiative $4,579,800 $8,048,800 $5,667,400

The target for average cost per major State Initiative included initial estimated spending on the Onslow infrastructure project, which was subsequently delayed until 2012-13. Spending on other major initiatives also came in slightly under budget, resulting in a lower actual average cost per initiative. The increase between actual results for 2010-11 and 2011-12 was due significantly to increased Browse LNG funding and increased activity on the Ashburton North Strategic Industrial Area.* Audited efficiency indicator:



Financial performanceThe nature of the project-based environment in which the Department of State Development operates dictates financial results, as reflected in total cost of services, will not necessarily demonstrate consistency every year, due to timing and variation in funding for specific projects. Notwithstanding these overriding issues, the department carefully monitors its budget to ensure funds are appropriately allocated and controlled over the life of each project.

The scope, complexity and range of stakeholders involved with the projects in which the department accepts lead-agency status requires careful budget estimating, notably in respect to timing of milestones and related expenditures. While the overall funding to complete projects can be estimated at the start, the timing of related expenditure is not necessarily clear at the planning and approval stage. With complex deliverables and a divergent range of stakeholders, projected timelines may vary from original estimates, having a commensurate impact on the department’s financial result.

PERFORMANCE

The department receives funding from several sources for specifically designated purposes:(1) Core agency funding from State

Government to enable activity to continue on the general business of advancing significant resource, industry and infrastructure projects in Western Australia.

(2) Specific State Government funding to undergo work on major State initiatives that require an additional resource allocation over a finite period.

(3) Industry contributions for certain projects.

(4) Royalties for Regions funding (non-capital)

(5) Royalties for Regions funding (capital). The department’s participation is in relation to the Ord-East Kimberley Expansion Project. Most of the department’s Royalties for Regions infrastructure expenditure is capitalised in the financial statements.

(6) Administered funding in the form of State Government funds for specific non-discretionary purposes and Commonwealth funding for the Ord area. Administered funding and expenditure is not included in the body of the Financial Statements and is disclosed in brief in notes 39 to 40 to the Financial Statements.

This report relates to the department’s performance in its controlled non-capital cost of services, being items (1) to (4), above.

The department commenced the 2011-12 financial year with a total estimated cost of services budget of $194 million in its controlled fund. The budget included significant funding for major state projects in the makeup of the Agency’s cost estimate. For the purpose of the Cost of Services chart, two figures have been excluded from the original budget: (1) Impact of non-cash asset transfers in respect to the transfer of Ord Irrigation Scheme assets to their eventual owners ($71.1 million in original budget, but repositioned to later years due to project milestones); (2) Transfer to the Department of Premier and Cabinet of the balance of funding for the Regional Benefits Agreement Package in respect to the Browse LNG project ($57.8 million).



New significant expenditure limit approvals received impacting the 2011-12 budget included $7.2 million for the Browse LNG project, $8 million in relation to the Onslow Infrastructure package and $2.5 million in respect to a special legacy grant payable to BHP Direct Reduced Iron.

Budget reductions for the year included $57.8 million transferred to the Department

PERFORMANCE

of Premier and Cabinet for the Browse LNG Regional Benefits Agreement and the repositioning of $71.1 million in non-cash Ord Irrigation Scheme asset transfers to later years. A total of $11.8 million, across a number of the department’s major projects, was repositioned out of 2011-12 funding into the 2012-13 budget to align expenditure with revised project timelines and to ensure

Original Budget

Revised Budget

Actual Result

Browse

LNG

Browse

Regional Benefits

Oakajee Rail &

Port

Ord Ir

rigatio

n Area

Ashburto

n North

Onslow In

frastr

ucture

Package

Anketell Rail a

nd Port

Industrial L

ands

Royalti

es for R

egions (non-c

apital)

Australia

China Natu

ral G

as Fund

Special G

rant P

aid

Overs

eas Offi

ces

Agency Core

Operatio

ns

30

25

20

15

10

5

-

Mill

ions

accuracy in respect to the department’s contribution towards State’s Whole of Government estimates.

After new funding, repositioning actions and budget transfers, the department’s cost of services estimate reduced from $194 million to $70.9 million for 2011-12. Actual cost of services for 2011-12 was $60 million, yielding a variance of $10.9 million against the revised budget. A significant contributor to the underspend was the Onslow Social Infrastructure Package, originally anticipated to begin in 2011-12 with the Onslow Airport redevelopment, now in the final design phase and will commence in 2012-13. General agency spending was under target due to staff numbers being below approved levels throughout the year and the push back on certain project timelines also impacting general financial throughout.

The actual outcome for the year was surplus of $8.5 million. The surplus was determined after including income of $15 million received in advance for the Onslow Infrastructure Project (to be spent over the next five years), and $9.7 million in payments that were unfunded by Treasury in 2011-12.

DSD Cost of Services by major project 2011-12



Senior staff changesDuring the 2011-12 the most notable change was that of the permanent appointment of Director General Stephen Wood on 29th Nov 2011 for five years. Steve Melville was appointed as Director of Corporate Services.

PERFORMANCE

Workforce management planningWith a buoyant labour market it has been difficult to attract and retain skilled staff, especially those with skills high in demand in the resources sector. The department acknowledges its staff are critical to its success, so this year significant effort was invested in recruitment to ensure our capacity to allow it to meet its organisation goals. During the past 12 months the department advertised 67 permanent positions and fixed-term vacancies.

During 2011-2012, the department reviewed its Workforce Plan and incorporated diversity and its Equal Employment Opportunity reporting requirements. The Workforce and Diversity Plan 2012-2015, is a step in ongoing development towards better people-management strategies. It is a working document that will be reported on quarterly, with progress towards achievements monitored, and options for further improvement identified annually. The Plan has five key objectives aligned to the “Strategic Directions for the Public Sector Workforce”.

•We attract suitably skilled and motivated people.•We value and retain our people.•Build the capacity of the department.•Providing strategic leadership.•Ensuring an efficient and flexible agency.

Our people



PERFORMANCE

employment Status 2010/11 (ceiling 175)

2011/12 * (ceiling 182)

Permanent Full-time 125 136.5

Contract Full-time 25 20

Part-time – permanent & contract 8.3 11.9

Seconded In 5 3

Seconded Out 4 0

total 167.3 171.4

*Actual Paid FTE

comparative Fte allocation by categoryThe department managed its resourcing requirements within the constraints of the full-time equivalent (FTE) ceiling (182) during the year. The FTE was increased in this financial year to recruit people with specialist skills to manage aspects of large projects such as the Anketell Port and Ashburton North Strategic Industrial estates. Due to a buoyant labour market, the department has not been able to fill to capacity, despite an intensive 12 months of recruitment.

industrial relationsMost departmental staff are employed under the Public Sector and Government Officers General Agreement 2011, with two staff employed under the Salaries and Allowances Tribunal Act 1975.

The department’s payroll services are delivered by the Department of Mines and Petroleum under a Service-Level Agreement.

There were no significant industrial relations issues during 2011-12.

employee performance and reviewThe department is committed to managing and developing its people through a performance management system, known as Employee Development Plans. The plans underpin the department’s approach to individual learning and career development, which are aligned to strategic and operational objectives. Almost three quarters of department staff have a current performance plan.



PERFORMANCE

career developmentThe department is committed to developing the capacity and capability of staff. As a lead agency dealing with large and complex projects, employees need to have highly-developed leadership skills and the ability to manage these projects methodically and with discipline.

In 2011-12 the department has continued its Leadership Development Strategy, established to enhance the skills and competencies of our leaders and future leaders. The department also continued to provide staff with Prince 2 project-management training.

Staff are encouraged to participate in Public Sector Commission courses, such as Pathways to and Foundations of Leadership and the Public Sector Management Course. In 2011-12, five staff participated in PSC Courses.

Another exciting initiative is the department’s Career Development Support Scheme, which provides financial assistance to staff to undertake a development activity, or undertake a higher-education course in line with career development aspirations identified within their Employee Development Plan. Selection is merit-based and supported with consideration of benefits for both the agency and the individual.

Youth employment initiativesThrough youth employment initiatives the Graduate and Business Traineeship Programs, the department supported three indigenous trainees, and six recent university graduates. Participants of the Business Traineeship complement study with on-the-job practical learning and

Director-General Stephen Wood with participants in the 2012 Graduate Program.

at the completion attain a qualification in Certificate 2, 3 or 4 in Business. The 18-month Graduate Program offers participants the opportunity to work across three government agencies, to build their skills and knowledge, establish networks and relationships that are vital for a successful public service career.



PERFORMANCE

Substantive equalityThe department is committed to the principles of Substantive Equality and is implementing the framework with the assistance of the Equal Opportunity Commission. Although we do not deliver services directly to indigenous or minority groups in our community, there is interaction with Indigenous people through consultation and forums, where community members are invited to give feedback on proposed and existing State projects.

Disability access and inclusion Plan outcomesThe department is committed to ensuring that people with disabilities, their families and carers are able to fully access our services and facilities (both in-house and contracted) and provide them with the same opportunities, rights and responsibilities that are enjoyed by all people in the community.

As required by the Disability Services Act 1993, the department has a Disability Access and Inclusion Plan (DAIP) that provides it with the framework for improving access and inclusion for people with disabilities.

valuable role in hazard management and a mechanism for staff consultation on OSH. The formal consultative mechanism is the OSH Committee. Meetings are held bi-monthly.

During 2011-12, department representatives conducted regular workplace inspections to ensure the workplace is hazard-free. Facilities management staff work closely with OSH representatives and safety coordinator to resolve OSH matters.

This year an agency Safety Management Strategic plan was established. The plan followed a review of the department’s OSH System against the WorkSafe Plan and Code of Practice Occupational Safety and Health in the WA Public Sector. The plan includes a commitment to audit OSH training needs, a review of role and responsibilities for safety across the department and review of the OSH manual and policies.

The department has trained first aid officers and first responders to provide first aid to staff if necessary. In 2011-12, winter ‘flu vaccinations, and skin screening were offered to all staff. Staff and immediate-families also have access to an Employee Assistance Program, providing confidential and critical-incident counselling.

occupational Safety, Health and injury managementThe department reports information on Occupational Safety and Health (OSH) in accordance with the requirements of the recently released Public Sector Commissioner’s Circular 2012-01: Annual Reporting and the Annual Reporting Framework 2011-12; the Code of Practice: Occupational Safety and Health in the Western Australian Public Sector and in support of the Western Australian Government commitment to the goals of the National Occupational Health and Safety (OHS) Strategy 2002-2012.

The executive is committed to developing a culture of safety awareness at all levels of the organisation. The department works to support the work of managers, employees and other stakeholders in identifying and managing safety and health issues in the workplace.

Department staff are encouraged to be proactive and identify and report hazards, as well as suggest improvements to practices and procedures. All OSH-related information is readily available to staff and all new employees are given this information at induction.

As required under the Occupational Safety and Health Act 1984, the department safety and health representatives are elected to provide a



PERFORMANCE

injury managementThe department complies with the Workers Compensation and Injury Management Act 1981 with a focus on the officer being able to return safely to meaningful work, following illness or injury. Departmental policy outlines the steps to be taken to assist an officer impacted by these circumstances and this includes the completion of individual return to work plans.

Safety & Health Statistics target 2010/11 2011/12

Number of fatalities Zero (0) 0.0 0.0

Loss time injury/disease (LTI/D) incident rate

Zero (0) or 10 per cent improvement on the previous three (3) years

1 1.6

Loss time injury severity rate Zero (0) or 10 per cent improvement on the previous three (3) years

100 per cent 0.0

Percentage of injured workers returned to work within (i) 13 weeks; and (ii) 26 weeks

Greater than or equal to 80 per cent return to work within 26 weeks

n/an/a

100 per centn/a

Percentage of managers and supervisors trained in occupational safety, health and injury management responsibilities

Greater than or equal to 50 per cent

75 per cent 50 per cent



PERFORMANCE

ethical standardsThe department is committed to creating and maintaining a work environment that supports ethical behaviours and actively discourages potentially corrupt acts and deals promptly and fairly with instances of misconduct.

All departmental policies are readily available to employees. Employees are aware through the Code of Conduct that there is an obligation to disclose interests that could reasonably create a perception of bias, or an actual conflict of interest. All new employees commencing with the department are required to complete a conflict of interest declaration form.

All new employees are fully inducted and information covers the expectation of high ethical behaviour, declarations of conflict of interest and responsibility for reporting suspected unethical behaviours or actions.

In accordance with Public Interest Disclosure Act 2003, the department has duly appointed Public Interest Disclosure Officers and has published internal policies and procedures related to its obligations. No public interest disclosures were received during the 2011-12 reporting year.

Compliance with Public Sector standards and ethical codes

GovernanceFollowing the assessment conducted in 2009-10 of the department’s performance against the OPSSC “Good Governance Principles”, the department commenced action plans to address areas for improvements in two principles: Communications and Risk Management.

•During 2010 an external auditor was contracted to review all existing risk management processes. This work progressed through 2011-12.•A communication strategy is progressing

which will establish clear guidelines and direction for communicating internal and external information. In support of this, there is an established Communications Agreement between the department and the Minister’s office. Staff also attended monthly information forums, where a broad variety of topics were covered during the year by both internal and external speakers, including guests from other agencies and industry.

Record-keepingThe department’s Interim Record Keeping Plan was approved by the State Records Commission in December 2009, subject to the update of the Retention and Disposal Schedule. Work has progressed on the final draft of the Retention and Disposal Schedule and the Record Keeping Plan, including the Schedule.

A Records Improvement Program, which commenced last year, involved in part evaluating the management of file transfer between agencies, together with classifying and standardising terminology. The department’s record-keeping induction has progressed and an enhanced process implemented.



PERFORMANCE

capital projectsThe department has funding responsibility for the State Government’s Royalties for Regions initiative for the Ord River Project. The project is to build economic infrastructure, including irrigation and roads and to provide education, health and community infrastructure. The project is scheduled for completion in the 2011-12 year. The estimated cost is $301 million, of which $101.6 million had been expended by June 30, 2012.

AdvertisingThe department incurred the following expenditure in advertising, market research, polling, direct mail and media advertising.

type of spend Amount

Media advertisingRoxby MediaDNA IndiaThe Indian Express LtdAdcorp

250046362372

11,176

Market research Nil

Polling Nil

Direct mail Nil

total expenditure 20,684





DISCLOSURES AND LEGAL COMPLIANCE Auditor General

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7th Floor Albert Facey House 469 Wellington Street Perth MAIL TO: Perth BC PO Box 8489 PERTH WA 6849 Tel: 08 6557 7500 Fax: 08 6557 7600

INDEPENDENT AUDITOR’S REPORT To the Parliament of Western Australia DEPARTMENT OF STATE DEVELOPMENT Report on the Financial Statements I have audited the accounts and financial statements of the Department of State Development. The financial statements comprise the Statement of Financial Position as at 30 June 2012, the Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows, Schedule of Income and Expenses by Service, Schedule of Assets and Liabilities by Service, and Summary of Consolidated Account Appropriations and Income Estimates for the year then ended, and Notes comprising a summary of significant accounting policies and other explanatory information, including Administered transactions and balances. Director General’s Responsibility for the Financial Statements The Director General is responsible for keeping proper accounts, and the preparation and fair presentation of the financial statements in accordance with Australian Accounting Standards and the Treasurer’s Instructions, and for such internal control as the Director General determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility As required by the Auditor General Act 2006, my responsibility is to express an opinion on the financial statements based on my audit. The audit was conducted in accordance with Australian Auditing Standards. Those Standards require compliance with relevant ethical requirements relating to audit engagements and that the audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Department’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Director General, as well as evaluating the overall presentation of the financial statements.

Auditor General

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7th Floor Albert Facey House 469 Wellington Street Perth MAIL TO: Perth BC PO Box 8489 PERTH WA 6849 Tel: 08 6557 7500 Fax: 08 6557 7600

INDEPENDENT AUDITOR’S REPORT To the Parliament of Western Australia DEPARTMENT OF STATE DEVELOPMENT Report on the Financial Statements I have audited the accounts and financial statements of the Department of State Development. The financial statements comprise the Statement of Financial Position as at 30 June 2012, the Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows, Schedule of Income and Expenses by Service, Schedule of Assets and Liabilities by Service, and Summary of Consolidated Account Appropriations and Income Estimates for the year then ended, and Notes comprising a summary of significant accounting policies and other explanatory information, including Administered transactions and balances. Director General’s Responsibility for the Financial Statements The Director General is responsible for keeping proper accounts, and the preparation and fair presentation of the financial statements in accordance with Australian Accounting Standards and the Treasurer’s Instructions, and for such internal control as the Director General determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility As required by the Auditor General Act 2006, my responsibility is to express an opinion on the financial statements based on my audit. The audit was conducted in accordance with Australian Auditing Standards. Those Standards require compliance with relevant ethical requirements relating to audit engagements and that the audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Department’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Director General, as well as evaluating the overall presentation of the financial statements.

Auditor’s opinion



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I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements are based on proper accounts and present fairly, in all material respects, the financial position of the Department of State Development at 30 June 2012 and its financial performance and cash flows for the year then ended. They are in accordance with Australian Accounting Standards and the Treasurer’s Instructions. Report on Controls I have audited the controls exercised by the Department of State Development during the year ended 30 June 2012. Controls exercised by the Department of State Development are those policies and procedures established by the Director General to ensure that the receipt, expenditure and investment of money, the acquisition and disposal of property, and the incurring of liabilities have been in accordance with legislative provisions. Director General’s Responsibility for Controls The Director General is responsible for maintaining an adequate system of internal control to ensure that the receipt, expenditure and investment of money, the acquisition and disposal of public and other property, and the incurring of liabilities are in accordance with the Financial Management Act 2006 and the Treasurer’s Instructions, and other relevant written law. Auditor’s Responsibility As required by the Auditor General Act 2006, my responsibility is to express an opinion on the controls exercised by the Department of State Development based on my audit conducted in accordance with Australian Auditing and Assurance Standards. An audit involves performing procedures to obtain audit evidence about the adequacy of controls to ensure that the Department complies with the legislative provisions. The procedures selected depend on the auditor’s judgement and include an evaluation of the design and implementation of relevant controls. I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the controls exercised by the Department of State Development are sufficiently adequate to provide reasonable assurance that the receipt, expenditure and investment of money, the acquisition and disposal of property, and the incurring of liabilities have been in accordance with legislative provisions during the year ended 30 June 2012.

DISCLOSURES AND LEGAL COMPLIANCE



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Report on the Key Performance Indicators I have audited the key performance indicators of the Department of State Development for the year ended 30 June 2012. The key performance indicators are the key effectiveness indicators and the key efficiency indicators that provide information on outcome achievement and service provision. Director General’s Responsibility for the Key Performance Indicators The Director General is responsible for the preparation and fair presentation of the key performance indicators in accordance with the Financial Management Act 2006 and the Treasurer’s Instructions and for such controls as the Director General determines necessary to ensure that the key performance indicators fairly represent indicated performance. Auditor’s Responsibility As required by the Auditor General Act 2006, my responsibility is to express an opinion on the key performance indicators based on my audit conducted in accordance with Australian Auditing and Assurance Standards. An audit involves performing procedures to obtain audit evidence about the key performance indicators. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the key performance indicators. In making these risk assessments the auditor considers internal control relevant to the Director General’s preparation and fair presentation of the key performance indicators in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the relevance and appropriateness of the key performance indicators for measuring the extent of outcome achievement and service provision. I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the key performance indicators of the Department of State Development are relevant and appropriate to assist users to assess the Department’s performance and fairly represent indicated performance for the year ended 30 June 2012. Independence In conducting this audit, I have complied with the independence requirements of the Auditor General Act 2006 and Australian Auditing and Assurance Standards, and other relevant ethical requirements.




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Matters Relating to the Electronic Publication of the Audited Financial Statements and Key Performance Indicators This auditor’s report relates to the financial statements and key performance indicators of the Department of State Development for the year ended 30 June 2012 included on the Department’s website. The Department’s management are responsible for the integrity of the Department’s website. This audit does not provide assurance on the integrity of the Department’s website. The auditor’s report refers only to the financial statements and key performance indicators described above. It does not provide an opinion on any other information which may have been hyperlinked to/from these financial statements or key performance indicators. If users of the financial statements and key performance indicators are concerned with the inherent risks arising from publication on a website, they are advised to refer to the hard copy of the audited financial statements and key performance indicators to confirm the information contained in this website version of the financial statements and key performance indicators.

COLIN MURPHY AUDITOR GENERAL FOR WESTERN AUSTRALIA Perth, Western Australia 11 September 2012




Certification of financial statements




Financial statements and notes























































































































Certification of Key Performance Indicators






APPENDICES

The department administers two Statutes and 63 State Agreements on behalf of the

Western Australian Government. As part of this responsibility, we also negotiate new

agreements, variations, terminations and repeals of State Agreement Acts as required.

This list outlines the Acts and Agreement Acts, by commodity, as at the end of the 2011-2012 reporting year:

Statutes administered by the department•Government Agreements Act 1979•Nuclear Activities Regulation Act 1978

Appendix 1: Legislation and changes to Legislation – Acts and State Agreement Acts (major resources projects)

Agreement Acts administered by the departmentAlumina•Alumina Refinery Agreement Act 1961•Alumina Refinery (Mitchell Plateau)

Agreement Act 1971•Alumina Refinery (Pinjarra) Agreement

Act 1969•Alumina Refinery (Wagerup) Agreement and

Acts Amendment Act 1978•Alumina Refinery (Worsley) Agreement

Act 1973

Charcoal Iron and Steel•Wundowie Charcoal Iron Industry Sale

Agreement Act 1974

Coal•Collie Coal (Griffin) Agreement Act 1979•Collie Coal (Western Collieries) Agreement

Act 1979

Copper•Western Mining Corporation Limited

(Throssell Range) Agreement Act 1985

Diamonds•Diamond (Argyle Diamond Mines Joint

Venture) Agreement Act 1981

Energy•Goldfields Gas Pipeline Agreement Act 1994•Pilbara Energy Project Agreement Act 1994•Ord River Hydro Energy Project Agreement

Act 1994

Forest Products•Albany Hardwood Plantation Agreement

Act 1993•Bunbury Treefarm Project Agreement

Act 1995•Collie Hardwood Plantation Agreement

Act 1995•Dardanup Pine Log Sawmill Agreement

Act 1992•Paper Mill Agreement Act 1960 •Wood Processing (WESFI) Agreement

Act 2000•Wood Processing (Wesbeam) Agreement

Act 2002



APPENDICES

Gas•North West Gas Development (Woodside)

Agreement Act 1979•Barrow Island Act 2003 (which incorporates

the Gorgon Gas Processing and Infrastructure Project Agreement)

Gold•Tailings Treatment (Kalgoorlie) Agreement

Act 1988

Iron Ore and Steel•BHP Billiton (Termination of Agreements)

Agreement Act 2006•Iron Ore (Channar Joint Venture) Agreement

Act 1987•Iron Ore (FMG Chichester Pty Ltd) Agreement

Act 2006•Iron Ore (Goldsworthy-Nimingarra)

Agreement Act 1972•Iron Ore (Hamersley Range) Agreement

Act 1963•Iron Ore (Hamersley Range) Agreement Act

Amendment Act 1968•Iron Ore (Hope Downs) Agreement Act 1992•Iron Ore (McCamey’s Monster) Agreement

Authorization Act 1972

•Iron Ore (Marillana Creek) Agreement Act 1991•Iron Ore (Mount Bruce) Agreement Act 1972•Iron Ore (Mount Goldsworthy) Agreement

Act 1964•Iron Ore (Mount Newman) Agreement

Act 1964•Iron Ore (Murchison) Agreement Authorization

Act 1973•Iron Ore (Rhodes Ridge) Agreement

Authorisation Act 1972•Iron Ore (Robe River) Agreement Act 1964•Iron Ore (Wittenoom) Agreement Act 1972•Iron Ore (Yandicoogina) Agreement Act 1996•Iron Ore Processing (Mineralogy Pty Ltd)

Agreement Act 2002

Mineral Sands•Mineral Sands (Eneabba) Agreement Act 1975•Mineral Sands (Cooljarloo) Mining and

Processing Agreement Act 1988•Mineral Sands (Beenup) Agreement Act 1995

Nickel•Nickel (Agnew) Agreement Act 1974•Poseidon Nickel Agreement Act 1971

Oil•Oil Refinery (Kwinana) Agreement Act 1952

Salt•Dampier Solar Salt Industry Agreement

Act 1967•Evaporites (Lake MacLeod) Agreement

Act 1967•Leslie Solar Salt Industry Agreement Act 1966•Onslow Solar Salt Agreement Act 1992•Shark Bay Solar Salt Industry Agreement

Act 1983

Uranium•Uranium (Yeelirrie) Agreement Act 1978



APPENDICES

Miscellaneous•Cement Works (Cockburn Cement Limited)

Agreement Act 1971•Industrial Lands (CSBP & Farmers Limited)

Agreement Act 1976•Industrial Lands (Kwinana) Agreement

Act 1964•Pigment Factory (Australind) Agreement

Act 1986 •Silicon (Kemerton) Agreement Act 1987•Railway (Roy Hill Infrastructure Pty Ltd)

Agreement Act 2010•Railway and Port (The Pilbara Infrastructure

Pty Ltd) Agreement Act 2004•The Commonwealth Oil Refineries, Limited

(Private) Act, 1940•Texas Company (Australasia) Limited (Private)

Act 1928

new Agreement Acts ratified•Iron Ore Agreements Legislation (Amendment,

Termination and Repeals) Act 2011

New StatutesNil

Variations•Iron Ore Agreements Legislation (Amendment,

Termination and Repeals) Act 2011•Iron Ore Agreements Legislation Amendment

Act 2011

Agreements terminatedNil

Agreement Acts Repealed•Iron Ore Beneficiation (BHP) Agreement

Act 1996•Iron Ore Direct Reduced Iron (BHP)

Agreement Act 1996•Iron Ore Processing (BHP Minerals)

Agreement Act 1994



APPENDICES

office of the Director General Stephen WoodDirector-General

Strategic PolicyNicky CusworthDeputy Director General

State initiativesGail McGowanDeputy Director General

Brett SadlerExecutive Director, Oakajee

Tim FraserExecutive Director Infrastructure Planning and Implementation

Jenness GardnerA/Executive Director, Browse

Peter BaldwinDirector, Project Approvals Strategy

Appendix 2: Key staff

Resources and industry DevelopmentGiles NunisDeputy Director General

Joe OstojichExecutive Director, Strategic Projects

Milka KlobucarExecutive Director, Project Facilitation

Chris ClarkExecutive Director, Strategic Infrastructure

Gary SimmonsExecutive Director, Strategic Infrastructure

Roger DeanDirector, Industry Developments & Evaluation

Sonia GrinceriA/Director, International Trade and Investment

corporate ServicesSteve MelvilleDirector, Corporate Services

Legal and commercial StrategyPamela HassPrincipal Counsel



Government of Western AustraliaDepartment of State Development

1 Adelaide terrace, east PerthWestern Australia 6004

tel: + 61 8 9222 0555Fax: +61 8 9222 0505

Web: www.dsd.wa.gov.au

DMPJUL12_2016

Documents

ANNUAL REPORT 2011-12 · As the financial year progressed, our task was further complicated by uncertainty in global economic conditions and slackening commodity prices. Director