Shire of RoebourneLocal Planning Strategy

Evidential Analysis Paper Main Economic Drivers

September 2013

Executive Summary The Shire of Roebourne is one of the four local government areas that make up the Pilbara region of Western Australia along with the Shire of Ashburton, Shire of East Pilbara and Town of Port Hedland. The Shire of Roebourne had a Headline Gross Regional Product of $18b in 2012 which ranks the municipality second to the City of Perth out of 139 LGAs in WA and nationally 6th after the cities of Brisbane, Sydney, Melbourne, Perth and Gold Coast. The Shire of Roebourne is a significant component of the Pilbara Region. The Pilbara is often described as the engine room of the nation because of its significant contribution to the national wealth. Its immense reserves of natural resources provide massive direct export sales and also fuel a thriving economy of support services. In 2011/12, the Pilbara contributed 57% of WA's minerals & petroleum worth an estimated $60b to the WA economy. Economic Base There are three major resource companies operating in the Shire (Rio Tinto, Woodside Energy Ltd and Citic Pacific Mining). Each company is currently operating or rolling out mining and energy extraction infrastructure investments worth an estimated $69 billion (Table 9). The most significant include the Woodside operated North West Shelf Venture, Woodside’s Pluto project, Rio Tinto’s expansion of Dampier Port, Cape Lambert Port and CP Mining plans for Cape Preston. A total of more than 22,000 construction jobs and 4,000 permanent jobs are to be created from these projects. The Shire contains a very high proportion of the Pilbara economy – around 33 % of all employment and between 30% and 60% of most services. It has only 19% of all Pilbara employees in the mining sector. The economy of the Shire is heavily dependent on the minerals and energy sector. The mining sector accounts for $12.25 billion of the $17.8 billion total value added (69% of total) in the Shire (2011 /12 estimates) and the oil and gas and iron ore mining make up 63% and 34% respectively of value added in the Shire from the mining sector1. Construction, the next largest sector measured by value added and the largest employment sector, is overwhelmingly directly related to mining and resources projects. The resources sector is the only one in the Shire selling outside of the Pilbara region in significant volume. It is this which drives wealth into the region. However, the resources sector is highly capital intensive, not labour intensive2, and this is likely to become more marked over time. Extensions of technological applications will serve to subdue or even reduce regional labour demand from resources projects, even as the volume and value-added measures increase. This will serve to dampen regional population growth generally. The nature of economic activity in the Shire of Roebourne is different to many mining communities: it has few iron ore mines and none within commuting distance of the main settlement areas. In addition to construction, economic activities driving employment around the main settlement areas are regional services and administration, LNG production, port and port-related transport operations and salt mining.

1 http://economy.id.com.au/roebourne/value-add-by-industry 2 The relative capital intensity varies between sectors: oil and gas projects are highly capital intensive; iron ore projects are less so. These still have significant mine, rail and port operations and magnetite projects require processing to produce a concentrate.

The Shire is net importer of many services, including many that service the local economy and local community. Most of these services would be sourced from major administrative and commercial centres, principally Perth, but also other Australian major centres (Sydney, Melbourne, Canberra) and overseas. This points to an area of expansion as the community expands and diversifies. It would also increase as the role of Karratha as the principal service centre for eh Pilbara region expanded. An objective would be for the Shire to be a net exporter of services such as health, education, professional and administrative services and knowledge industries in general to the wider Pilbara region. The base economic activity for the region is strong. Expansion projects in advanced planning include

infrastructure that will strengthen the capacity of the Pilbara region overall. These include the Anketell

Port project and the Pilbara Fabrication & Services Common Use Facility planned to be based at Point

Lumsden in Port Hedland. The latter, in particular, will provide infrastructure to service the oil and gas,

resources, defence, housing and construction industries. It could provide the capability for the region to

play a significant role in newer on-shore and off-shore gas and other resources projects and will have

spin-off activity for Karratha businesses.

However, the economy of the Shire can be expected to change in the short and medium term. Until now regional economic growth is currently primarily driven by major projects in the minerals and energy sector. A recent report released by the Chamber of Minerals and Energy contains overall conclusions from forecast changes in activity in this sector for the Shire of Roebourne:

The Shire of Roebourne will see a decline in the overall workforce directly related to minerals

and energy projects. This decline will commence in 2014 and increase through to 2018;

A major driver of the decline is the large construction workforce already employed in the area in

2011. This workforce will decrease as the current set of projects is completed;

Although there will be a corresponding increase in the operations workforce, it will not be large

enough to offset the decline in construction personnel.

The expectation is therefore for some increase in operational workforce to 2020 (around 2,100 increase

over 2011), but for a very substantial decrease in construction workforce (up to 10,600 by 2020) as

projects are completed. This would only change if new projects not yet at a stage of preliminary

feasibility study were to arise before 2020 and if major infrastructure projects were to commence within

that time. If this were to occur it would likely extend the duration over which the construction FIFO

workforce was a significant factor in the economy of the Shire (for example extending demand period

for short stay and TWA accommodation), but the end outcome would be similar to that described here.

The prospects are for strong growth in operations expansion in for iron ore and other minerals in the

Pilbara and wider region. However, very few of these new projects are in the Shire. Opportunities will

therefore be in value chain goods and services to both construction and operational phases. Karratha

is already a centre for this, with a good number of small and medium enterprises marketing into the

resource sector value chain.

Similarly LNG generally shows very high growth prospects. However, the extent to which this will flow on to specifically to the Shire of Roebourne is uncertain. With a solid and expanding LNG industry the opportunities for businesses in the Shire are likely to be to use the existing skill base in LNG and offshore servicing to expand to other areas. However, it is noteworthy that the current preferred site for

a common user facility that might be a focus for the expansion of businesses servicing the off-shore industry is at Port Hedland. There is likely to be quite rapid increase in the level of knowledge of FLNG technology and capturing this in the Shire, possibly via some specialised research projects, to the extent it is possible will provide a knowledge base that can be applied elsewhere.

Expansion of the existing economic base is largely out of the direct control of the Shire. There are

many opportunities in servicing minerals and energy projects that can find competitive advantage in

proximity to the mining operation, for example:

Mining services;

Marine services;

Construction and fabrication;

Project administration.

There is already a strong base of these activities in Karratha, with a number of mining services

companies with substantial operations based in Karratha. The Shire can therefore help with facilitation

and seek to maximise local content, for example in

Fabrication;

Marine services;

Services (admin, food/catering).

It can achieve this by:

Ensuring there is sufficient zoned and serviced industry and commercial land;

Fostering the further development of SMEs in mining and resources support services and the

resources value chain;

Fostering incubation projects and support services, including small business incentives;

Fostering small business networking, clustering and skills development.

Diversification

The higher population scenarios intrinsic in the Pilbara Cities strategy are only feasible if supported by a significantly diversified economy. A number of opportunities for diversification have been identified. Principal ones are:

Minerals and energy downstream processing

Specialised agri-business;

Tourism;

Regional services;

Education services;

Health services;

Administration (private sector and public sector);

Knowledge industries, including research on regional specialties.

The highest proportion of services employment in the Pilbara is located in the Shire. However, a high proportion is imported from outside of the region. There is opportunity to increase the range and scale of services offered locally in all categories. Selected diversification areas stand out:

1 Non-mining export oriented industries: Possibilities include

Bio-fuels Project

Hi-Tech Greenhouse

Aquaculture fish farm

Fish processing factory

Algae Farm Note that each of these projects has relatively modest employment numbers. This points to the future for the Pilbara – it will be a large number of smaller projects, rather than the very large new projects that we have become used to in the past.

2 Education

The provision of high quality tertiary education is a critical requirement for the future of the Pilbara. There are a number of precedents for a substantial regional university in a town of the scale of Karratha and larger. One possible model for the establishment of a university in the Pilbara is the Geraldton Universities Centre. This is an independent, not-for-profit, incorporated body, supporting university courses in Geraldton on behalf of a range of universities. The impetus for the project was largely driven from within the local community. For the planned scale of the Pilbara region, this is an essential element. It might take some time to implement but must remain a key ambition for the region. Some short and medium term projects might provide building blocks to a broader tertiary education offering:

A potential UWA Pilbara post graduate/research presence;

Opportunities to expand the capabilities of Pilbara Institute and support their partnering with other Universities to offer appropriate courses for the region.

3 Tourism

The growth of the tourism sector will be an important action for the region from around 2014 on as the construction phase of major projects winds down. Demand for informal FIFO accommodation has underpinned the viability of many of the short-stay establishments in the region, including those with facilities suitable for general tourist accommodation. There is likely to be capacity and need to change orientation to tourist demand to maintain business turnover. This will spill over to many other areas of economic activity including retail and food services in the same period.

The growth of diversification projects can be facilitated by:

Ensuring the needs of agri-business enterprises are accounted for in strategic planning. This is

particularly important for the algae farm which potentially is a very large land user;

Fostering the development of SMEs in agri-business support services;

Fostering incubation projects and support services;

Health: further expansion of the health campus and incorporation of areas of specialisation;

Education: actively promoting the establishment of full-service tertiary education facilities and

services in the Shire;

Promoting the expansion of aged care services and facilities in the Shire;

Formulating a digital strategy for the Shire to enable:

o Remote and tele-working

o Improved viability of basing regional services and administration in Karratha

o Further progress on the Smart Cities initiative.

Tourism: Formulate a comprehensive tourism strategy addressing:

o Product – attractions and activities

o Amenity

o Access

o Accommodation

o Marketing.

Economic Changes: Workforce and Population Effects In summary, the potential changes in the Shire’s economy include:

Decline in construction activity;

Increases in services activity with high increases in the retail, education services and health

services sectors;

Diversification of the economy.

This will change the composition of the workforce and these workforce changes will be accompanied by

demographic changes. The main labour force scenario is for:

Reduction in FIFO numbers as construction activity is completed;

Stabilisation of operational workforce;

Growth of service population (consumer services);

High increases in the retail, education services and health services sectors;

Possible growth of producer services; and

Some increase in knowledge intensive producer and consumer services.

This will likely be accompanied by changes in income patterns. Currently there are stark differences in income patterns between Pilbara communities, including the Shire of Roebourne, and other communities, with unusually proportions of individuals earning high income (above $1,500 per week and of that group more than two-thirds are earning above $2,000 per week). This is likely to moderate over time, especially in the Shire of Roebourne over time as the occupation mix changes. There would still be a high proportion of high income earners, but some growth in the proportion of lower and middle income earners. This will put pressure on housing affordability, with the need to provide moderately priced accommodation in greater numbers. This is a key point in the ability to achieve the Pilbara Cities outcomes – unless workers of moderate incomes can be accommodated in the Shire, in large numbers, the opportunities for economic

diversification that underpin the higher population scenarios will not be realised. There has been pressure on housing affordability for some time and all relevant agencies need to continue the focus on affordability and increasing interventions such as subsidised key worker accommodation. The alternative is a continuation of the current situation, with a larger than average proportion of very high income residents, but no real population growth or economic diversity. The ability to accommodate a much higher proportion of lower and moderate income workers is likely to be a key requirement to achieve the economic diversification necessary for the higher population scenarios for the Shire. Achieving the Vision To achieve the Pilbara Cities vision the Pilbara must contain a rich mix of elements to support its population in happiness and prosperity:

Education services at a high level to keep people in place longer: o better quality secondary school education; o More diversity, including private secondary schools: o Much upgraded tertiary education and development of research specialities.

Health services that meet all of the health needs of all the community;

A richer cultural life, with a wide variety of cultural activities;

Well supported and vibrant community groups;

An wide range of formal and informal sporting and recreation opportunities;

Places for people to meet – this means paying attention to the liveability of the major centres, particularly the Karratha town centre program;

Attending to cost issues – lowering the cost base for accommodation and key services. Specific measures to achieve this are:

Ensuring there is sufficient zoned and serviced industry and commercial land;

Fostering further development of SMEs in resources support services and the resources value chain.

Support to small business development programs o Fostering incubation projects and support services o Fostering clustering and SME incentives o Fostering the development of SMEs in agri-business support services

Ensuring the needs of agri-business enterprises are accounted for in strategic planning.

Education: actively promoting the establishment of full-service tertiary education facilities and services in the Shire; promoting Karratha SHS as a centre of excellence

Health: further expansion of the health campus and incorporation of areas of specialisation;

Promoting the expansion of aged care services and facilities in the Shire; NGO support

Formulating a digital strategy for the Shire to enable: o Remote and tele-working o Improved viability of basing regional services and administration in Karratha o Improved e-health and e-education services o Further progress on the Smart Cities initiative.

Tourism: Formulate a comprehensive tourism strategy addressing: o Attractions, Amenity, Access, Accommodation, Activities o Product, Marketing

Promoting cultural activities and facilities.

Contents

1 Introduction: Economic Overview ...................................................................................... 11

1.1 Pilbara regional economy ....................................................................................................... 11 1.2 The Shire in the Pilbara Economy .......................................................................................... 12 1.3 Factors of economic growth in the Shire of Roebourne .......................................................... 16 1.4 Employment ........................................................................................................................... 19 1.5 Imports and Exports ............................................................................................................... 21

2 Growth Prospects ................................................................................................................ 24 2.1 The Global and Regional Context .......................................................................................... 24 2.2 Shire growth prospects – the minerals and energy sector ...................................................... 25

2.3 Shire growth prospects – diversification projects ................................................................... 28 2.4 Shire growth prospects – regional services ............................................................................ 32 2.4.1 Education Services ................................................................................................................ 32 2.4.2 Tourism .................................................................................................................................. 33 2.4.3 Administration, producer services, consumer services ........................................................... 35

3 Competitive Position............................................................................................................ 37 3.1.1 Institutions: ............................................................................................................................. 37

3.1.2 Infrastructure and Services .................................................................................................... 38 3.1.3 Macroeconomic Conditions .................................................................................................... 38 3.1.4 Human Capital ....................................................................................................................... 39 3.1.5 Labour Market Efficiency ........................................................................................................ 39 3.1.6 Technological Readiness: ...................................................................................................... 40

3.1.7 Business Sophistication ......................................................................................................... 40 3.1.8 Innovation ............................................................................................................................... 41 3.1.9 Economic Fundamentals ........................................................................................................ 41

3.1.10 Natural Resources ................................................................................................................. 41

4 Conclusions .......................................................................................................................... 43 4.1 Summary strategic assessment ............................................................................................. 43 4.2 Responding to opportunities - expansion of existing projects and additional resource projects

............................................................................................................................................... 44

4.3 Responding to opportunities – diversification of the economic base ...................................... 45 4.4 The Pilbara Cities ................................................................................................................... 46 4.5 Economic Changes: Workforce and population effects .......................................................... 47

5 Implementation Actions: ..................................................................................................... 49 5.1 Capitalising on Strengths – Realising Opportunities............................................................... 49

5.2 Overcoming weaknesses, defending against threats ....................................................... 52 5.3 Key Projects ......................................................................................................................... 53

5.4 Summary EDS Measures and Implications for the Local Planning Strategy .................. 53 Appendices Appendix 1: Effect of Shire growth scenarios

Reporting acronyms and abbreviations

ABS Australian Bureau of Statistics

BHPB BHP Billiton

DOP Department of Planning

FIFO Fly-in, fly-out

GFC Global financial crisis

m million

PICC Pilbara Industry Community Council

RDA Regional Development Australia

RTIO Rio Tinto Iron Ore

Settlement Refers to urban settlements in the study area i.e. Dampier, Wickham and Point

Samson

SIA Strategic industrial area

SOR Shire of Roebourne i.e. administrative and governance body

TAFE Technical and Further Education

The Pilbara The Pilbara region i.e. geographical region where the study area is located

The Shire Shire of Roebourne i.e. the geographical study area

Town centre “CBD” activity centres within the Shire

Township refers to the activity centres within the Shire i.e. Karratha and Roebourne

TWA Temporary worker accommodation

WAPC Western Australian Planning Commission

1 Introduction: Economic Overview

1.1 Pilbara regional economy

The Shire of Roebourne is one of the four local government areas that make up the Pilbara region of Western Australia along with the Shire of Ashburton, Shire of East Pilbara and Town of Port Hedland. The Shire of Roebourne had a Headline Gross Regional Product of $18b in 2012 which ranks the municipality second to the City of Perth out of 139 LGAs in WA and nationally 6th after the cities of Brisbane, Sydney, Melbourne, Perth and Gold Coast. The Shire of Roebourne is a significant component of the Pilbara Region. The Pilbara is often described as the engine room of the nation because of its significant contribution to the national wealth. Its immense reserves of natural resources provide massive direct export sales and also fuel a thriving economy of support services. Resource sector The Pilbara's economy is strongly dominated by the mining and petroleum industries and is considered to be the State's premier mining region. These industries are growing at a considerable rate. The largest export commodity in Australia is iron ore and approximately 95% of this is produced in the Pilbara. Demand for iron ore principally comes from Japan, China and other rapidly developing Asian nations. In 2010, approximately 400 million tonnes of iron ore were exported from the Pilbara, worth AU$46.5b. New projects are continually being proposed and developed in the region as extensive geological research is uncovering more resources. The region also produces 70% of Australia's natural gas. This is sourced from the Carnarvon Basin off-shore and is serviced and processed onshore from the Shire of Roebourne at Dampier. In addition to iron ore and natural gas, 85% of Australia's crude oil and condensate comes from the Pilbara. The Pilbara also produces a range of other minerals having a total 2011 value of AU$2.4b. This is led by:

Gold and silver at $1 billion;

Copper at $643 million;

Manganese and salt at $585 million; and

Other minerals at $131 million. While the Shire of Roebourne is only a small proportion of this, it is one of the region’s major service and extraction hubs where port, rail, government and industry intersect.

Value of Minerals and Energy by LGA region (2012 value)

Region Value ($)

East Pilbara 29,828,820,725

Ashburton 20,002,483,643

Roebourne 155,782,451

Port Hedland 753,742,294

Total 50,740,829,113

Offshore Petroleum 24,373,312,323

Source: Dept of Mines and Petroleum, Mineral and Petroleum Statistics Digest 2012

Other industries Other industries include manufacturing, tourism, sheep and cattle, fishing and aquaculture. All figure prominently in the economy of the region, providing a diversity of activity - and a range of business opportunities. A number of projects aimed at economic diversification are also currently being trialled, including solar energy production at Marble Bar and algae production for biofuel and protein.

1.2 The Shire in the Pilbara Economy

Major resource projects There are three major resource companies operating in the Shire (Rio Tinto, Woodside Energy Ltd and Citic Pacific Mining). Each company is currently operating or rolling out mining and energy extraction infrastructure investments worth an estimated $69 billion (Table 9). The most significant include the Woodside operated North West Shelf Venture, Woodside’s Pluto project, Rio Tinto’s expansion of Dampier Port, Cape Lambert Port and CP Mining plans for Cape Preston. A total of more than 22,000 construction jobs and 4,000 permanent jobs have been created from these projects. West Pilbara - Selected Recent Resource Infrastructure Projects

Project Capital

Investment Construction

Workforce Operational Workforce

Devil Creek Development Project Apache Energy/ Santo gas processing

$896m 200 20

Citic Pacific Mining Sino Iron Ore Project US$5.2b 4500 800

Chevron Gorgon Joint Venture offshore gas extraction $43b 3500 600

Woodside Pluto offshore gas extraction $12b 4000 300

Woodside joint venture gas project $7.9b - -

Total $69b 12,200+ 1,720+

(Data source: Prospect)

In addition to this, some $16.8 billion worth of investment is under consideration or at pre-feasibility stage. It is noteworthy from the table above that the total operational workforce generally represents only around 14% of the construction workforce.

Scale

The Shire contains a very high proportion of the Pilbara economy – around 33 % of all employment and between 30% and 60% of most services. It has only 19% of all Pilbara employees in the mining sector. It has a higher proportion than the Pilbara average of employment in the following sectors:

Electricity, Gas, Water and Waste Services;

Public Administration and Safety;

Construction;

Professional, Scientific and Technical Services;

Retail Trade;

Rental, Hiring and Real Estate Services;

Financial and Insurance Services;

Manufacturing;

Transport, Postal and Warehousing;

Information Media and Telecommunications;

Education and Training;

Wholesale Trade;

Health Care and Social Assistance;

Administrative and Support Services;

Other Services. This is illustrated in the following graph.

Shire of Roebourne – Proportion of Pilbara Total: Employment

Data Source: PDC / REMPLAN

Interestingly it has a lower than average employment in arts and recreation services. This is an area that will need to be supported to provide the lifestyle values that will be expected by new residents if the population is to expand to those anticipated in the higher level scenarios. Note also that the proportion of workers in the construction industry is likely to decline from 2014 unless major new projects are announced.

Mining activities in the Shire produce over $12 bn of value add3, but this is only 23% of the Pilbara total. The Shire provides 40% – 50 % of value add in the region as a whole in a large number of service categories, with the highest proportions in:

Electricity, Gas, Water and Waste Services;

Manufacturing;

Construction;

Public Administration and Safety;

Professional, Scientific and Technical Services;

Retail Trade;

Rental, Hiring and Real Estate Services;

Financial and Insurance Services;

3 http://economy.id.com.au/roebourne/value-add-by-industry

Transport, Postal and Warehousing;

Information Media and Telecommunications;

Education and Training;

Wholesale Trade;

Tourism;

Health Care and Social Assistance. These generally mirror the employment data and indicate the strengths of the Shire in a regional context. Shire of Roebourne – Value Add

Data Source: PDC / REMPLAN

Tourism Tourism is a category of economic development that would have an expansion objective and requires separate analysis. The Tourism category is an amalgam of activities across various industry sectors such as retail, accommodation, cafes and restaurants, cultural and recreational services. The tourism industry sector services the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited.

It currently employs 750 people in the Shire of Roebourne and accounts for 5.1% of total employment in the Shire. This is a much lower proportion than in tourist-oriented localities such as the Shire of Augusta-Margaret River where one sub-category of tourism employment (accommodation and food services) accounts for over 13% of Shire employment. Tourism Employment in the Pilbara

Source: Australian Bureau of Statistics National Accounts Tourism Satellite Account.

1.3 Factors of economic growth in the Shire of Roebourne The Shire contains a very high proportion of the Pilbara economy – around 33 % of all employment and between 30% and 60% of most services. It has only 19% of all Pilbara employees in the mining sector. The economy of the Shire is heavily dependent on the minerals and energy sector. The mining sector accounts for $12.25 billion of the $17.8 billion total value added (69% of total) in the Shire (2011 /12 estimates) and the oil and gas and iron ore mining make up 63% and 34% respectively of value added in the Shire from the mining sector4. Construction, the next largest sector measured by value added and the largest employment sector, is overwhelmingly directly related to mining and resources projects.

4 http://economy.id.com.au/roebourne/value-add-by-industry

Value added by industry sector – Constant Prices, Shire of Roebourne Modelled data

2011/12 2006/07 Change

Industry $m % W A % $m % W A % 2006/07 to

2011/12

Agriculture, Forestry, Fishing 6.0 0.0 1.8 5.8 0.0 1.8 +0.2

Mining 12,251.4 69.0 36.5 12,104.9 88.4 37.3 +146.5

Manufacturing 139.0 0.8 5.5 60.4 0.4 5.8 +78.5

Electricity, Gas, Water, Waste

Services 286.5 1.6 2.5 93.6 0.7 2.2 +192.9

Construction 3,923.9 22.1 14.3 787.2 5.7 13.0 +3,136.7

Wholesale Trade 70.4 0.4 4.0 49.4 0.4 3.9 +21.0

Retail Trade 60.5 0.3 3.8 44.8 0.3 3.7 +15.7

Accommodation and Food

Services 73.1 0.4 1.3 30.5 0.2 1.4 +42.6

Transport, Postal, Warehousing 372.2 2.1 5.4 212.3 1.6 5.3 +159.8

Information Media and

Telecommunications 32.1 0.2 1.5 12.7 0.1 1.4 +19.5

Financial and Insurance Services 26.5 0.1 4.0 28.1 0.2 4.5 -1.6

Rental, Hiring and Real Estate

Services 44.5 0.3 1.4 24.0 0.2 1.4 +20.5

Professional, Scientific and

Technical Services 137.0 0.8 5.4 37.8 0.3 4.5 +99.2

Administrative and Support

Services 91.7 0.5 1.8 43.1 0.3 1.9 +48.6

Public Administration and Safety 81.2 0.5 2.8 51.2 0.4 3.1 +30.0

Education and Training 52.2 0.3 2.6 49.0 0.4 3.1 +3.2

Health Care and Social

Assistance 48.8 0.3 3.7 30.3 0.2 3.6 +18.5

Arts and Recreation Services 5.6 0.0 0.5 5.7 0.0 0.5 -0.2

Other Services 56.8 0.3 1.4 26.1 0.2 1.6 +30.7

Total Industries 17,759.4 100.0 100.0 13,697.1 100.0 100.0 +4,062.2

• Source: National Institute of Economic and Industry Research (NIEIR) ©2013. Compiled and presented in economy.id by .id

The resources sector is the only one in the Shire selling outside of the Pilbara region in significant volume. It is this which drives wealth into the region. However, the resources sector is highly capital intensive, not labour intensive5, and this is likely to become more marked over time. However, the resources sector is highly capital intensive, not labour intensive, and this is likely to become more marked over time. Major companies with capital intensive operations will seek to continually reduce on-site labour costs – remote mining technology is one of the main areas of research for the mining majors. Much research and technical development is directed towards improving on-site labour productivity and increasing the ability to undertake parts of operations remotely. This technology is under development and is being steadily implemented by the major resource companies. This will serve to dampen regional population growth generally. Some of this is already in place: a current example is the remote control (from Perth) of haul trains.

5 The relative capital intensity varies between sectors: oil and gas projects are highly capital intensive; iron ore projects are less so. These still have significant mine, rail and port operations and magnetite projects require processing to produce a concentrate.

Further extensions of technological applications will serve to subdue or even reduce regional labour demand from resources projects, even as the volume and value-added measures increase. This will serve to dampen regional population growth generally. Australia is currently positioned at the point of a major transformation in the world’s economic weight from west to east. The rapid industrialisation of structurally large Asian economies, predominantly China, has driven world economic growth over recent times and changed the dynamics of key international resource, product and capital markets. For Australia, this has translated to strong demand and elevated prices for energy and mineral resources, and is underpinning massive investments by the minerals and oil and gas industry in new capacity. The economic advancement in Australia’s region is overwhelmingly positive for Australia, playing to comparative advantages as a secure and reliable energy exporter. The oil and gas industry currently represents around 2.0% of gross domestic product, with direct and flow-on value added of approximately $28.3 billion in 2010-11 (based on total sales of $29.7 billion). Moreover, the industry’s systemic significance is continuing to grow on the back of large LNG export investments, mainly in Western Australia, Queensland and the Northern Territory.

Separately, these represent some of the biggest projects ever undertaken in Australia; and collectively, they account for around 35.4% of all business investment. Further, if all oil and gas investments are realised, they will comprise over 64% of all committed investment.

LNG output is expected to grow by around 250% over the next seven years, with a projected value of over $35 billion in 2017-18.

Importantly, the industry’s economic linkages are broad and deep. Of total industry value added, about $4.3 billion is generated by supplying industries across the economy — including the resource support services, maintenance and construction and professional services sectors. These linkages are particularly visible in the thriving resource service hubs which have emerged in Brisbane and Perth, but also in the supply sectors of resource communities such as in the Shire of Roebourne. Building on these linkages, robust export performance by Australia’s oil and gas industry, and other resource producers more broadly, has provided important income and employment support over the course of the global downturn. This has played a key role in Australia withstanding the more dramatic economic declines which confronted other developed economies.

1.4 Employment Thus while the mining sector is an important employer, it is not currently the main one. The dominance

of the construction sector as an employer in the Shire is illustrated in the following table and graph:

Employment by Industry Shire of Roebourne 2006, 2011 and 2012 (Persons Employed)

Industry sector (2006 ANZSIC) 2012 2011 2006

Agriculture, Forestry, Fishing 137 100 82

Mining 5,040 4,837 2,367

Manufacturing 950 743 515

Electricity, Water, Waste Services 423 505 252

Construction 5,246 5,017 2,332

Wholesale Trade 434 343 405

Retail Trade 1,209 906 790

Accommodation and Food Services 822 829 559

Transport, Postal, Warehousing 1,286 1,289 865

Information Media and Telecommunications 116 71 94

Financial and Insurance Services 107 65 109

Rental, Hiring and Real Estate Services 426 402 197

Professional, Scientific and Technical Services 1,019 911 506

Administrative and Support Services 743 694 397

Public Administration and Safety 1,431 1,196 609

Education and Training 931 845 634

Health Care and Social Assistance 994 751 422

Arts and Recreation Services 59 53 101

Other Services 610 544 293

Total industries 21,983 20,101 11,529

Source: National Institute of Economic and Industry Research (NIEIR) modelling and .id consultants

Roebourne Shire Employment 2006, 2011 and 2012

Source: National Institute of Economic and Industry Research (NIEIR) modelling and .id consultants

It shows a very substantial increase in construction-related employment over the period 2006 to 2011,

increasing by almost 2,700 over the period, while employment in the mining sector rose substantially,

but by 2,470 workers. It is also worth noting the relatively large increases in proportionate terms of

administrative categories and of professional, scientific and technical services.

The nature of economic activity in the Shire of Roebourne is different to many mining communities: it has few iron ore mines and none within commuting distance of the main settlement areas. In addition to construction, economic activities driving employment around the main settlement areas are regional services and administration, LNG production, port and port-related transport operations and salt mining.

While major centres in the Shire are not close to operational mines – some FIFO workers may use

Karratha, Roebourne and other settlements as a FIFO / DIDO residential base to work elsewhere in the

Pilbara. This may partly be the result of the indigenous employment program of Fortescue and Rio.

There is some evidence of this – the 2006 census shows in the two big employment sectors of mining

and manufacturing, employment self-containment of 85% and 81% respectively, with almost 500

workers in those two industries and almost 1,200 overall with their main residence in the Shire but their

place of employment elsewhere. These will have the reverse effect on demand for community facilities

to the incoming FIFO workers.

However information provided by Rio shows that the numbers of workers using Karratha as a

residential base is far eclipsed by other locations: amongst regional WA, Rio FIFO workers are far more

likely to have Busselton, Geraldton and Broome as a home base than Karratha. This is an area of

opportunity for the Shire.

Employment Self-Containment Shire of Roebourne 2006

Resident

employees Employed

in Shire

Employed outside Shire

Self-containme

nt %

Agriculture, Forestry and Fishing 31 13 18 41.9

Mining 1,889 1,602 287 84.8

Manufacturing 408 332 76 81.4

Electricity, Gas, Water and Waste Services 134 121 13 90.3

Construction 1,057 848 209 80.2

Wholesale Trade 218 201 17 92.2

Retail Trade 665 621 44 93.4

Accommodation and Food Services 376 334 42 88.8

Transport, Postal and Warehousing 464 392 72 84.5

Information Media and Telecommunications 48 39 9 81.3

Financial and Insurance Services 67 67 0 100

Rental, Hiring and Real Estate Services 206 190 16 92.2

Professional, Scientific and Technical Services 200 163 37 81.5

Administrative and Support Services 295 252 43 85.4

Public Administration and Safety 528 480 48 90.9

Education and Training 589 561 28 95.2

Health Care and Social Assistance 424 394 30 92.9

Arts and Recreation Services 30 30 0 100

Other Services 229 202 27 88.2

Inadequately described 278 109 169 39.2

Total industries 8,136 6,951 1185 85.4

Ref: id consultants and ABS

The potential effect of changes in the economy of the Shire over time on the employment mix in the Shire is shown in Appendix 1.

1.5 Imports and Exports

Regional Exports data represents the value ($) of goods and services exported outside of the defined region that have been generated by businesses / organisations in each of the industry sectors within the region. Another way of defining exports is as an inflow of money into the region, i.e. Motels have an inflow of money from people who live outside the region’s boundaries thus they are earning export dollars. No distinction is made between domestic and international exports. For instance, so exports of goods and services from Pilbara Region include sales to the rest of the region. Regional Imports data represents the value ($) of goods and services imported into the defined region by businesses / organisations in each of the industry sectors. Another way of defining imports is as an outflow of money from the region, i.e. a local business outsourcing accountancy services to a firm in another region which results in an outflow of money thus they are importing services. No distinction is

made between domestic and international imports, and so imports into Pilbara Region include goods and services sourced from the broader region.

The value of the import and export flow of the major industries is shown below, indicating, consistent with the value add data, a net outflow in mining and construction industries. Shire of Roebourne value of imports and exports (major industries) $M

Data Source: PDC / REMPLAN

When the Shire import and export data for other industries an interesting picture emerges of high levels of import flows compares with export flows from the Shire across a wide range of services. This is shown in the table following:

Shire of Roebourne value of imports and exports (other industries) $M

Data Source: PDC / REMPLAN

Note that the Shire is net importer of many services, including many that service the local economy and local community. Most of these services would be sourced from major administrative and commercial centres, principally Perth, but also other Australian major centres (Sydney, Melbourne, Canberra) and overseas. This points to an area of expansion as the community expands and diversifies. It would also increase as the role of Karratha as the principal service centre for eh Pilbara region expanded. An objective would be for the Shire to be a net exporter of services such as health, education, professional and administrative services and knowledge industries in general to the wider Pilbara region.

2 Growth Prospects

2.1 The Global and Regional Context

The demand for iron ore is expected to grow; one of the biggest drivers of demand is the growth of China. The Bureau of Resources and Energy Economics forecasts that iron ore world demand will continue to grow up to nearly 2000 mtpa by 2025.6

In 2011 approximately 410 million tonnes of iron ore was exported from the Pilbara at a value of AU$60.3b, approximately 45% of world iron ore exports.

Iron Ore: Based on data provided from the Bureau of Resources and Energy Economics and the WA Department of State Development, the current identified figures for additional jobs required in the Pilbara between 2012 and 2018 are:

27,300 construction jobs;

15,870 operational jobs.

Primary risks to the growth of the Pilbara iron ore industry are:

Change in the Chinese economic outlook;

Cost pressures;

Lack of skilled workers;

International competition from Brazil and West Africa; and

Infrastructure constraints, ports, roads, housing, power, water.

The Pilbara LNG industry is experiencing major growth simultaneously with the iron ore industry and looking to expand to 30 mtpa by 2015 and 60 mtpa by 2020.

LNG: In 2011 the world LNG trade measured 238 million tonnes of LNG. Due to location, the growth in the Asia pacific region is most important to the Pilbara and this trade in 2011 was measured at 147 million tonnes annually. Demand for LNG in the region is expect to continue to increase at a 6% yearly average.

Based on data provided from the Bureau of Resources and Energy Economics and the WA Department of State Development, the current identified figures for additional jobs required in the Pilbara between 2012 and 2018 are:

11,330 Construction jobs

708 Operational jobs.7

Primary risks to the growth of the Pilbara liquefied natural gas industry are:

Demand for skilled labour will outstrip supply

Increase in capital and labour costs

Development of alternative fuel sources

Competition from other suppliers

6 (Resource and Energy Quarterly March 2012 BREE) 7 WA Chamber of Minerals and Energy

Other minerals: Based on data provided from the Bureau of Resources and Energy Economics and the WA Department of State Development, the current identified figures for additional jobs required in the Pilbara between 2012 and 2018 are:

2,176 construction jobs;

915 operational jobs.

Given the current investment detailed across all categories of minerals and petroleum in the Pilbara it is estimated by the WA Chamber of Minerals and Energy that an additional workforce of approximately:

40,000 construction workers and,

17,493 operational workers; will be needed between 2012 and 2018.

2.2 Shire growth prospects – the minerals and energy sector Regional growth is primarily driven by major projects in the Minerals and Energy sector. A recent report released by the Chamber of Minerals and Energy8 investigates all resources projects currently underway, committed or in planning (up to a stage of preliminary feasibility study) and uses a weighting methodology incorporating the probability of any individual project proceeding to provide estimates of labour demand from resources projects.

It also uses indirect employment multipliers and family population multipliers to arrive at estimates of

population change in Pilbara LGAs arising from resources projects.

The report recently released by the Chamber of Minerals and Energy indicates only limited likely

expansion of resource projects within the Shire itself.9 The CME/PWC report investigates all resources

projects currently underway, committed or in planning (up to a stage of preliminary feasibility study) and

uses a weighting methodology incorporating the probability of any individual project proceeding to

provide estimates of labour demand from resources projects.

It also uses indirect employment multipliers and family population multipliers to arrive at estimates of

population change in Pilbara LGAs arising from resources projects.

Continuing growth for the regional economy is forecast: the CME report estimates that the workforce

required to meet current growth plans for the resources sector in the Pilbara is expected to peak at just

over 65,500 in 2014, up from over 51,000 in 2011 - an increase of 28.4 per cent.

The overall employment outlook is a function of construction and production activity. The construction

workforce will begin to fall after 2012, but will remain above 2011 levels until 2015. The operations

workforce will see sustained growth to 2020. The net effect is minerals and energy sector employment

8 PricewaterhouseCoopers, Pilbara Population and Employment Study, Chamber of Minerals and Energy of WA, November

2012 9 PricewaterhouseCoopers, Pilbara Population and Employment Study, Chamber of Minerals and Energy of WA, November 2012

for the region peaking at just over 65,500 in 2014, up from over 51,000 in 2011, with minerals and

energy employment settling at around 55,000 from 2018.

The overall conclusions for the Shire of Roebourne are:

The Shire of Roebourne will see a decline in the overall workforce directly related to minerals

and energy projects. This decline will commence in 2014 and increase through to 2018;

A major driver of the decline is the large construction workforce already employed in the area in

2011. This workforce will decrease as the current set of projects is completed;

Although there will be a corresponding increase in the operations workforce, it will not be large

enough to offset the decline in construction personnel.

The expectation is therefore for some increase in operational workforce to 2020 (around 2,100 increase

over 2011), but for a very substantial decrease in construction workforce (up to 10,600 by 2020) as

projects are completed. This would only change if new projects not yet at a stage of preliminary

feasibility study were to arise before 2020 and if major infrastructure projects, for example Anketell Port

were to commence within that time. If this were to occur it would likely extend the duration over which

the construction FIFO workforce was a significant factor in the economy of the Shire (for example

extending demand period for short stay and TWA accommodation), but the end outcome would be

similar to that described here.

Note however, there is a long list of prospective resources projects, some of which are accounted for in

the CME analysis above, but some which may become viable in the medium and longer term.

These new prospects that may arise and become viable over time and be either located in or serviced

from the Pilbara and these would re-ignite the construction sector. These include Canning Basin gas

projects and the Balmoral South and Balla Balla magnetite projects.

However, there are several threats facing Australia‘s LNG market. High project costs, scarce labour

supply, a strengthened Australian dollar, infrastructure bottlenecks and tight environmental regulations

could combine to delay the timing of some LNG projects coming on stream.

The graph below illustrates various LNG facilities globally based on their output and investment value.

This data indicates that new Australian LNG facilities have a relatively high capital costs basis when

compared to projects in other countries. The Sabine Pass project in Texas is the first export LNG facility

to be constructed and available data indicates that its capital costs are substantially lower than most

Australian projects. This gives the prospect of US-sourced LNG competing directly with Australian

product and puts a cloud over new LNG projects in Australia in the short and medium term.

LNG Project – Output and Investment Value

Source: MacroPlan Research Report

Nevertheless there is substantial activity in the Australian LNG projects and iron ore projects under

construction already. Most have long term contracts attached to them. The proximity, low political risk

and available resources will enable Australia to maintain a key role in supplying the Asian market.

By 2018, global LNG trade will be heavily dominated by Qatar and Australia, with a combined total of

approximately 50% of the global market. This outcome would generate a very substantial pricing power

for these two countries.

The base economic activity for the region is strong. The economy of the Pilbara, particularly the

contribution from the resources sector, is the major driver of growth in the region. The Pilbara has

impacts on the economic progress of the State, and in turn, is impacted by developments in the State

and Australia, including policy settings and competition for inputs needed for large-scale expansion and

diversification.

Expansion projects in advanced planning include infrastructure that will strengthen the capacity of the

Pilbara region overall. These include the Anketell Port project and the Lumsden Point Maritime

Common User Facility in Port Hedland. The latter, in particular, will provide infrastructure to service the

oil and gas, resources, defence, housing and construction industries. It could provide the capability for

the region to play a significant role in newer on-shore and off-shore gas and other resources projects

and will have spin-off activity for Karratha businesses.

2.3 Shire growth prospects – diversification projects

A common theme amongst the numerous planning and economic studies for the Pilbara10 and for the Shire of Roebourne is the need to diversify the local economy if the labour force and therefore the population is to expand.

Other base and driver industries have been suggested. For example, a report by Worley Parsons on the land requirements for the establishment of an algae industry in the Pilbara11 notes the Pilbara has a number of characteristics that provide the potential for the future development of sustainable, commercial scale algae industries. The sunny weather conditions, the vast tracts of non-arable land, matched with the proximity of both sea water and world scale sources of concentrated CO2, provide the ideal inputs for high volume algae production. The Pilbara also houses a number of major industries that are significant consumers of diesel, and these industries provide a natural market for regionally produced algae based biofuels.

The report includes a preliminary assessment of potential locations and identifies a site in the Shire of Roebourne south of Dampier as being amongst the most viable, although there are constraints and risks to address.

The report notes, however, that while the Pilbara has many attractive attributes for the development of algae industries, it also has a high cost operating environment. There are a number of other areas around the world that offer similar potential to the Pilbara in terms of attractive attributes for algae production, but which currently offer cheaper operating environments. Such areas include parts of the Middle East, Southern USA, and North Africa. Global competition from these (and other) areas could materially impact the likelihood of the Pilbara becoming a future site of major algae industry developments. Therefore the establishment of this industry could be regarded as possible, but by no means certain in the Shire. Similar factors working against industry establishment are likely to be relevant in many of the other non-mining sector diversification industries that arise for consideration. The labour resources required to operate a full scale 5,000 ha facility would see the employment of in the order of 200 people. Although a high degree of automation is possible, the efficiency of biological processes such as algae production is highly dependent on operator input and expertise. As such, many of these people would require a biological background, and/or a strong understanding of algae production. A further spin-off could be the building of a research institute, using the technical input and technical workforce requirements for algae production facilities as a basis for such an institute. However, this

10 For example:

Development Australia Pilbara: • Pilbara Report 2012 • Pilbara Regional Plan 2012 – 2017 Pilbara Development Commission / Pilbara Cities Office: • Pilbara Cities Vision document • Karratha City of the North Plan • Pilbara Planning and Infrastructure Framework • Pilbara Regional Council Plan for the future • Pilbara Regional Economy

11 WorleyParsons, Pilbara Algae Industry Study, Pilbara Cities Office, June 2012

could prove difficult. The effectiveness of research institutes of this type is determined by both the long term commitment of major funding of infrastructure and its ability to attract high calibre researchers. This is long term commitment in a highly competitive and high risk environment. Are more likely path is the establishment of negotiated and managed relationships with existing and internationally recognized research organisations. This would result in a modest number of researchers on site. (As an aside a local example of the difficulty of generating anything more than modest local employment from specialist research and education bodies can be found in the Margaret River Centre of Wine Excellence and Margaret River Education Campus, which despite being located in a region of high quality wine production and in one of the most attractive places to live now has a high proportion of its research and education activities and staff located in Perth.) Aurora Algae have had a pilot plant south of Dampier. The future of this is currently uncertain, but it illustrates the type of diversification project that might prove viable in the Pilbara. Aurora Algae Pilot Plant

Source: Aurora Algae Other potential non-mining export sector projects arise for consideration. Those currently identified by Regional Development Australia Pilbara12 include: Prospective employment (operations)

Project: Skilled professional Skilled technical and semi-skilled

Bio-fuels Project 5 - 10 20 - 30

Hi-Tech Greenhouse 5 - 10 20 - 30

Aquaculture fish farm 4 10

Fish processing factory 2 10 - 20

Source: RDA Pilbara

12 Regional Development Australia Pilbara, Pilbara Report 2012

Other projects will arise for consideration; for example a pilot high intensity horticulture facility in South Australia using seawater desalinated on site shows promise and may represent a technology which could be utilised in the Shire at some stage in the future. Some or all of these, or variation of them have some prospects of implementation and will be important for the economic diversification of the Shire. However, it is important to retain a sense of scale for each of these projects: even a very large project (e.g. the algae farm) in full production provides only a modest contribution to employment growth. Assuming all employment multipliers are applied locally and with minimal FIFO employment the full scale algae farm or 200 workers might account for a population increase in the Shire of only around 500 people. A large number of these projects are therefore required to achieve significant economic diversification of the export driver sections of the economy away from its current resources base and to significantly increase the population to the levels anticipated in the Pilbara Cities program. Their viability requires all factors to align:

Technical viability must be proven;

There must be confidence that cost of production will be competitive;

There must be confidence that markets can be supplied over the long term at a competitive price;

There must be confidence that people will the necessary skills will be available at a competitive cost.

Direct and Indirect Effects Expenditure or local employment leads to further activity in the economy. The extent to which extra activity circulates and stays in the economy depends upon a number of factors including fly-in fly-out and the size and capacity of the local economy. The following employment multipliers have been calculated by Compelling Economics and are specific for the Pilbara. The multipliers include the industrial and consumption effect of direct employment in the Pilbara Regional Economy.

Employment multipliers in the Pilbara

Pilbara industry sector Employment multipliers using 2006/07 national input/output tables

Employment multipliers updated to 2007/08 national input/output tables

Agriculture, Forestry and Fishing 1.27 1.27

Mining 1.94 1.97

Manufacturing 2.17 2.04

Electricity, gas, water and waste services

1.5 1.46

Construction 1.73 1.78

Wholesale trade 1.55 1.52

Retail trade 1.16 1.14

Accommodation and food 1.19 1.18

Transport, postal and warehousing 1.5 1.45

Information media and telecommunications

1.49 1.45

Financial and insurance 1.47 1.46

Rental, hiring and real estate services 1.68 1.66

Professional, scientific and technical services

1.42 1.38

Admin and support services 1.42 1.42

Public admin and safety services 1.34 1.32

Education and training 1.22 1.2

Health care and social assistance 1.18 1.18

Arts and recreation services 1.26 1.22

Other services 1.22 1.2

Source: Pilbara Development Commission, Pilbara Regional Economy Version 2, March 2012

Additional jobs in manufacturing have the strongest impact on employment in the Pilbara. With a multiplier of 2.04, a single manufacturing job leads to 1.04 new jobs in the Pilbara regional economy. A high proportion of manufacturing in the Pilbara, both current and prospective activity, is connected to the resources industry, and much current manufacturing activity is likely to be connected to the construction phase of resource projects and will be vulnerable to fluctuations in construction activity.

2.4 Shire growth prospects – regional services

The Population Report13 identifies the prospect of an increased regional role for Karratha as the main

service centre for the Pilbara, becoming the primary centre in the Pilbara for high-end and specialist

services, particularly in meeting demand for

Education services;

Health services;

Administration (private sector and public sector).

It is well placed for this:

It has the largest regional airport, with a capacity for expansion to international operations

under the Airport Master Plan;

It has a substantial health campus;

It has good secondary and some tertiary education facilities;

It is the location of the regional office for a number of government agencies;

It has a good variety of lifestyle attractions around the Nickol Bay area generally;

It is the largest town in the Pilbara and most likely to contain the mix of community, cultural and

social facilities that will keep attract and keep a wider population mix.

2.4.1 Education Services The provision of high quality tertiary education is a critical requirement for the future of the Pilbara. There are a number of precedents for a substantial regional university in a town of the scale of Karratha and larger.

Institution Students Location / population

James Cook University Townsville

11,500 including 1,500 international

Townsville – 175,000

University of New England, Armidale NSW

Students 17,000, including 12,500 on-line students

Armadale - 26,000

Charles Sturt University:

Multi-campus Bathurst - 37,000 Goulbourn - 30,000 Orange - 38,000 Port Macquarie - 44,300 Dubbo - 39,500 Wagga Wagga - 58,000

One possible model for the establishment of a university in the Pilbara is the Geraldton Universities Centre. This is an independent, not-for-profit, incorporated body, supporting university courses in Geraldton on behalf of a range of universities including CQUniversity, Charles Sturt University and the University of Southern Queensland. It was generated by initiatives from within the Geraldton community.

13 MacroPlan, Shire of Roebourne LPS Technical Report # 3

The Geraldton Universities Centre's objective is to facilitate, deliver, promote and provide access to university education for people residing in the Mid-West. It was established in 2002, has been in its own facilities since 2006, and has 187 graduates and 180 current student enrolments. The population of the wider Geraldton region is around 44,000; the Pilbara population is around 63,000 people. The University of Western Australia is examining the possibility of establishing facilities in the Pilbara to bolster research, professional development and undergraduate outreach and support. A UWA Pilbara Taskforce is assisting UWA’s Energy and Minerals Institute (EMI) to examine the many areas of the University’s research, professional development and outreach capabilities that could be delivered through UWA Pilbara. Some potential areas include energy and minerals, the Centre for Rock Art Research and Management, the School of Indigenous Studies, the Oceans Institute, the Centre for Social Impact, the Rural Clinical School of WA and Aspire UWA.

The Regional Australia Institute regional comparisons show that the Pilbara has some way to go in the overall level of its secondary education if it is to be competitive and resilient. The recent expansion of Karratha Senior High School upper school facilities gives promise. The increasing size of this school and of Hedland Senior High School gives opportunity to develop a wide range of programs and develop areas of excellence in secondary education in the Pilbara. An objective is to get these schools to rank amongst the highest in WA in key educational areas; this would help make the two main Pilbara cities a residential place of choice, similar to Perth suburbs with high ranking secondary schools. Boarding facilities for at least one of these schools would further widen their appeal and enable them to fill a wider regional role. An objective for the Shire is for the Karratha Senior High School to increase its size to over 1,000 students (it is currently around 630) and to become the highest standard regional secondary school in WA. A boarding facility at the school would assist his aim.

2.4.2 Tourism

The growth of the tourism sector will be an urgent action for the Shire from around 2014 on as the

construction phase of major projects winds down. Demand for informal FIFO accommodation has

underpinned the viability of many of the short-stay establishments in the Shire. There is likely to be

capacity and need to change orientation to tourist demand to maintain business turnover. Note that this

will spill over to many other areas of economic activity in the Shire, including retail and food services in

the same period.

There are many opportunities to increase tourism as a proportion of the total economy from its current

fairly low base. In investigating how this might be achieved it is useful to look at the five ‘A’s of tourism,

namely: attractions, amenity, access, accommodation and activities.

Attractions:

A number of tourist attractions are identified in the Shire or directly accessed through the Shire, including:

Cossack;

Old Roebourne Gaol;

Yaburara Heritage Trail;

Millstream;

Karijini;

Mt Herbert, Wittenoom Road, Chichester Ranges, Roebourne;

Burrup Peninsula;

Stairway to the Moon from Hearson's Cove;

The Dampier Archipelago;

The Montebello Islands. Many of these are world-class. The Shire has attractions that can form the basis of a viable and larger tourist industry. Amenity: Tourist amenity is variable across the shire – it is not as advanced or comprehensive as some of its competitor locations. Access: In comparative terms accessibility to the Pilbara is very good – it has good regional road connections and, importantly, a busy airport with a range of interstate and intrastate connections and prospects of international connections. Airfares are comparatively high and if a discount airline were to operate the route it would be a tourist advantage. Accommodation: The Shire is not a major established tourist destination in the way that, for example, Broome or Exmouth are. There are a number of reasons why this might be the case:

Accommodation has been difficult to get and expensive - a FIFO effect;

The region is not prompted as a tourist destination the same way that certain other regions are; and consequently;

There are few tourist –oriented resorts and facilities, with a small ‘resort’ and caravan parks at Point Samson being the notable exception – but these are a small fraction of the range and scale of tourist accommodation that is available in other similar localities. By comparison, Broome has a wide and extensive range of tourist accommodation and therefore gets much more attention;

There is some evidence that accommodation shortage has led to a major component of the northern tourist market, namely the ‘grey nomad’ caravan and camping trade, to by-pass Nickol Bay and travel direct from Broome to Exmouth14 Activities: Tourist activities are comparatively underdeveloped in the Shire. In large measure they have been crowded out by the activities of the resource industries. An example is the very low availability of boats for tourist operations to off-shore islands in preference for resources off-shore work. This is an opportunity for expansion. The Shire already undertakes or sponsors a range of events which are becoming drawcards, including Cossack Art Awards, Rd Earth Arts Festival’ NAIDOC week, Karratha Community Celebration plus the FeNaCLNG festival.

14 TNS Social Research, Study of Caravan Park Development in Western Australia, 2006

Opportunity: There are many opportunities for an expansion of the tourism sector:

Better and more facilities for caravan and camping segment. There is an opportunity to examine the possible re-use or re-orientation of existing TWA camps or, at least, the various short stay accommodation facilities which are in and around the major centres in the Shire;

Expansion of adventure tourism – fishing and diving – in the Dampier Archipelago and Montebello Islands. This would be based out of Dampier and Samson;

Industrial tourism;

Burrup rock art.

There are several requirements to facilitate and enable this: Immediate requirements:

An overall coordinated Shire tourism strategy – this could expand to a regional strategy for the Pilbara with the involvement of the PDC and RDA Pilbara;

Skills development;

Promotion;

Link with other areas (e.g. Broome, Exmouth) for packages;

Accommodation. Longer term expansion of infrastructure capability:

Dampier marina – base for adventure tours;

International airport – direct links to Asian capitals.

A measure of success for the tourism industry in the Shire would be for it to be able to regularly house industry and academic conferences, including international conferences, of some size. If it could do this it wold demonstrate that it has the requisite accommodation, facilities and transport connections to also appeal to a wider tourist market. This is an objective of a Shire tourist strategy. An expansion of Karratha airport to include regular international services – particularly from business centres in China, Singapore or India is a good medium term objective. The good interstate connections from Karratha means that such a route need not have Karratha as a primary destination, but possibly a stopover on the way to or from Sydney, Melbourne or Perth.

2.4.3 Administration, producer services, consumer services

The analysis in section 2 shows that the Shire houses a large proportion of the regions services and administration, including:

Public administration and safety;

Construction services;

Professional, scientific and technical services;

Retail trade;

Rental, hiring and real estate services;

Financial and insurance services;

Manufacturing and manufacturing services;

Transport, postal and warehousing;

Information media and telecommunications;

Education and training;

Wholesale trade;

Health care and social assistance;

Administrative and support services. These have capacity for expansion to form a wider regional role, and for the specialist resources –related skills and services, for export outside of the region. This would take advantage of any relative agglomeration economies that there already are in Karratha and will rely on very high quality communications ability. The NBN is crucial to this.

An example of the way in which this might develop is the Pilbara Development Commission / IBM Smart City concept. This uses broadband and big data to optimise water, power and transport networks, to connect and integrate key services to minimise risks and gain efficiencies. It uses the cloud, shared services, and wi-fi to enable teleworking, smarter education, E-health and connection with remote communities Through this, the Pilbara can realistically aim to be:

a leader in renewable energy and the conservation of water and other resources;

amongst the world’s top industrial and environmental tourism destination;

a trading and technology leader; and

enable connected and integrated communities.

3 Competitive Position

To get a better idea of how to achieve the Pilbara Cities vision, an investigation of the competitive

position of the Pilbara and of the Shire is instructive.

A range of factors largely explain differences in regions’ economic prosperity and growth patterns.

These include differences in resource endowments, the size of markets, demography and population

dispersion, levels of human capital, the extent and incidence of taxation and the level and quality of

public expenditure, as well as competition and market settings. It is therefore useful to investigate

prospects for the region through the prism of its economic performance and competitiveness relative to

other regions or wider areas.

A competitiveness index developed by the Regional Australia Institute and drawing on the World Economic Forum’s Global Competitiveness Report provides some guidance15. The Competiveness Index Elements for the Pilbara (showing Australia- wide regional comparisons) and the Shire of Roebourne (showing Australia- wide LGA level comparisons) are explored in some detail in the Economic Development Strategy. The summary overall conclusions are reported below:

3.1.1 Institutions:

Competitiveness Index Element Pilbara Situation

Regional government influence at state and national level

The Pilbara is a high profile regional location and has very good exposure at the state government level and, to a lesser extent, nationally.

Clear roles and responsibilities in regional governance

At the development level there is quite a lot of crossover between individual local governments and state agencies and at development policy level there is some duplication across all three tiers of government.

Financial burden of local government

The local governments have very high financial commitments for the provision of infrastructure and services for a rapidly expanding population, with a limited rate base and are under constant financial pressure.

The local and regional assistance available for businesses.

The local and regional bodies have limited funds available for direct business assistance, but it ranks amongst the highest amongst Australian regions.

Regional government independence (Councils with more autonomy are more able to respond to local needs/demands)

Compared with some other Australian jurisdictions, there is a high reliance on government decisions made outside of the region, particularly at State government level.

Overall: In comparative terms the Pilbara is in a strong institutional position: its influence at state

and national level is comparatively high and regional governance is relatively transparent

with reasonable clarity of roles However, regional autonomy is quite low: local capabilities

are highly dependent on continuing influence and good relations with the state government

(in particular) and national government for resources; there is limited ability to raise funds

15 Regional Australia Institute: Insight Regional Australia, http://insight.regionalaustralia.org.au/#

locally for expansion projects. The relatively low proportion of people working in the public

sector has positive and negative aspects to it: there is reduced understanding amongst the

various levels of the bureaucracy of regional conditions, but a higher reliance on private

sector activity to drive the economy.

3.1.2 Infrastructure and Services

Competitiveness Index

Element

Pilbara Situation

Road infrastructure The region contains part of the intrastate regional road network - given the relative remoteness of the Pilbara it is a high quality connection.

Aviation infrastructure The region has several large airports, including two that have regular interstate connections and are capable of expansion to regular international operations.

Access to higher education. There is only limited access to higher education – the Pilbara Institute provides a range of vocational education and training courses, but there is virtually no access to tertiary education

Port infrastructure The region contains some of the largest and busiest bulk ports anywhere. It has no or limited capacity for general cargo. A common user facility is planned but not yet executed. This would enable servicing of new projects outside of the region, either off-shore or in the Canning Basin.

Land cost Land cost generally is very high for all classes of accommodation. The median cost of buying a house in December 2012 was $747,000 in Karratha; $844,000 in Port Hedland; $840,000 in Newman and $890,000 in Onslow. It was $495,000 in Perth.

Access to hospital services and to allied health services

With the establishment of the Nickol Bay Hospital in Karratha and the South Hedland Health Campus, there are good quality district and regional hospitals, but limited specialist services. There is evidence that people need to leave the region for long periods for specialist treatment. There is limited aged care available.

Overall: The region has good transport connections and infrastructure. However it ranks poorly in

all aspects of access to health services and education services. These are critical areas if

the population is to be to retained and expanded. Extended GP, specialist and aged

services are required to service population growth and to meet Pilbara Cities objectives.

There is a critical need for vastly expanded access to tertiary education and also technical

and further education.

The Shire of Roebourne matches the regional pattern across all measures, with low

rankings for all essential services except police services. On a per capita basis, Port

Hedland ranks much higher than The Shire of Roebourne for access to health services.

3.1.3 Macroeconomic Conditions

Competitiveness Index Element Pilbara Situation

Population churn The population turnover is high. This makes it difficult to develop a large and consistent group of regional ‘champions’.

Stability of the local economy (local inflation)

Local inflation is high – local costs generally are high compared with elsewhere in the country.

Building approvals – value of new investment

The rate of building approvals is generally high, showing good evidence of business willingness to invest in the local community.

Total income per person The average income is much higher than the national average, with a very high proportion of individual workers earning very high incomes.

Overall: Average incomes are high, meaning there is wealth in the community and latent demand

for new business initiatives; however the cost base is very high.

3.1.4 Human Capital

Competitiveness Index Element Pilbara Situation

Median age of the workforce Generally the workforce is younger than the national average, with a high proportion in the 25 to 44 year age groups.

Workforce education levels The region has a lower proportion of people with tertiary education in the workforce, even compared with other resources regions in Australia.

Overall: The region has a relatively young, healthy and energetic workforce. However, the region

ranks comparatively poorly on other measures of human capital, with a lower than average

incidence of trade qualifications and of tertiary education amongst the workforce. The high

proportion of FIFO workers limits the ability of this part of the workforce to contribute to

regional expansion beyond the specific project on which they are working. Of particular

note is the relatively low school performance scores at both primary and secondary level.

This is a key factor that must be improved if population retention and growth is to be

achieved.

At the LGA level, both the Shire of Roebourne and Port Hedland have higher than average

rankings in population health measures and lifelong learning and the Shire of Roebourne

has good scores on early childhood performance. These are good signs that there is a

level of comparative attraction on some key measures in Karratha.

3.1.5 Labour Market Efficiency

Competitiveness Index Element Pilbara Situation

Wage/labour costs Very high

Unemployment rates in the region Generally low

Levels of labour force participation in each region

Generally high

Youth unemployment Generally low

Skilled labour Generally very low

Welfare dependence Generally low (except for indigenous community)

Overall: In comparative terms the labour force is relatively engaged, flexible and mobile.

However, the participation rate is quite low, possibly partly reflecting the indigenous

population , but also possibly reflecting the lower than average participation of partners

of people working in major projects who might regard their time in the Pilbara as

relatively short term and not have employment that meets their needs or expectations.

The level of skilled labour (i.e. people employed as managers and professionals) is

amongst the lowest in the country.

At the LGA level both the Sire of Roebourne and Port Hedland have lower than

average levels of welfare dependency.

3.1.6 Technological Readiness:

Competitiveness Index Element Pilbara Situation

Government IT investment Karratha and Port Hedland are served by the Telstra fibre optic trunk cable

High-speed broadband availability Large parts of the major centres already have NBN commenced or are on the three-year rollout program

Mobile phone coverage Adequate in the major centres

Businesses in technology related industries

Average for a regional centre

Overall: There is coming to be good access to high speed broadband in most parts of the region

and particularly in the main settlements. This is not a barrier to growth. There is no

particular expertise amongst the business community for technology related industries.

At the LGA level, the Shire of Roebourne has the highest relative proportion of workers in

ICT occupations than other Pilbara shires, except for the much smaller Shire of East

Pilbara.

3.1.7 Business Sophistication

Competitiveness Index Element Pilbara Situation

Quality of region’s overall business networks

Small business networks and local chambers of commerce exist and can be expanded.

Dominance of large employers - number of large firms in the region.

Economy is dominated by a very small number of very large employers

Exports High proportion of imports in all sectors (except for mining), particularly services

Economic diversification Low

Access to local finance All channelled through Perth and elsewhere

Income source – own business Relatively small SME sector

Overall: The region is dominated by very large employers and has a small and underdeveloped

small and medium business sector. With several exceptions there is not a tradition of new

enterprise creation. The Shire of Roebourne shows the most diverse and sophisticated

business environment in the Pilbara, with the highest level of income sourced form own

business, the highest levels of economic diversification and reasonable access to local

finance.

3.1.8 Innovation

Competitiveness Index Element Pilbara Situation

Human resources in science and technology

Comparatively low

Presence of research organisations Very low

Patents Very low

Expenditure on research and development

Very low, except for within major companies as part of their operations research; this explains the high overall ranking.

Overall: Amongst the major minerals and resources companies the level of leading edge research

and development is very high and its application in the region is widespread, resulting in

continuous innovation and globally competitive operations. This presents an

opportunity for the future of the region. It provides a level of skill and expertise that can

be applied to other regional enterprises and also opportunity for supply chain and spin-

off enterprises.

3.1.9 Economic Fundamentals

Competitiveness Index Element Pilbara Situation

Size of local market There is a substantial and growing population base, although it is relatively small compared with most other Australian regions. A key strategic advantage is the presence of very large purchasers in the form of the major mining companies – local businesses able to supply to them will develop skills and expertise in selling to world-class purchasers, which will increase their viability for expansion outside of the region, including international expansion.

Number of businesses relative to population size

There is a relatively small business sector – this might be explained by the presence of very large employers and the high cost base

Proximity to markets Main metropolitan markets are distant and will have high freight cost to service them. This will affect the viability of some potential agri-business diversification projects

Overall: While the region currently has a relatively small local market, it is coming to a scale

that it can support a greater range and diversity of business and services; the presence

of world-class purchasers provides a substantial opportunity.

3.1.10 Natural Resources

Competitiveness Index Element Pilbara Situation

Regional access to natural resources

There are abundant mineral resources but very limited water resources.

Physical attributes of a region, and whether they are conducive to industry

The climate is not conducive to agriculture, except for some potential specialist and technology-intensive applications. There is CO2 feed stock and good conditions for intensive algae farming. There are high-value heritage sites, giving tourist potential.

Overall: There is opportunity for several main classes of expansion to the externally-oriented sectors

of the Pilbara economy:

Expansion of the economic base – the probability of development of the main minerals and

energy projects has been addressed and analysed in the Chamber of Minerals and Energy

report. This shows some expansion, but a general slowing of new construction and a fairly

quick transition to an operational phase overall. However, there are new prospects that may

arise and become viable over time and be either located in or serviced from the Pilbara. These

include Canning Basin gas projects and the Balmoral South magnetite project.

Diversification projects: several of these are possible and are addressed below.

Exportable services: at the moment the services base of the Pilbara is small and

underdeveloped. However research institutes and tertiary education focussing on further

development of the region’s base minerals and energy industries and spin-offs form

technology-based diversification projects would provide a services sector with output applicable

outside of the region. This is an area of great opportunity for the region and is one key to

achievement of the Pilbara Cities vision.

4 Conclusions

4.1 Summary strategic assessment

A summary strategic assessment of the economic strengths, weaknesses, opportunities and threats informs the development of specific programs: Strengths

The Shire contains large world-class economic activity;

This provides world-class purchasers, which means that local businesses selling to the main economic base (i.e. the minerals and resources sector and to any agri-business diversification projects that may become established) will have the skills and experience of marketing to major purchaser and may have exportable goods or services applicable to in other similar international markets;

It is the biggest centre in the region, housing the greatest diversification, scale and range of regional services, including a substantial health campus, one public and one private high school and a TAFE centre with remote university facilities. It is the location of the regional office for a number of government agencies;

As the largest town in the Pilbara it is most likely to contain the mix of community, cultural and social facilities that will keep attract and keep a wider population mix. There is a good variety of lifestyle attractions around the Nickol Bay area generally;

There is forecast continuing expansion for the local and regional economy. Weaknesses

Labour costs are high, on all national and international comparisons;

General costs of doing business are high, including high utilities and services costs;

Costs of commercial and residential accommodation remain relatively high, although these are starting to moderate;

Local market is still small (Scale not yet there);

There is ‘crowding out’ of tourism activity by FIFO worker demand – this is expected to reduce fairly quickly from 2014;

Human capital rankings (educational attainment, skilled labour) are relatively low compared with other Australian regions;

High proportions of services are imported from other centres, principally Perth.

Opportunities There are opportunities in:

Expansion of the economic base;

Diversification projects;

Tourism expansion;

Services expansion;

Expansion of the small business sector.

Threats Threats to economic growth include:

An unexpected slow-down in mining activity possibly caused by substantial reductions in commodity prices due to reduced economic activity in major markets, particularly China;

Reduced or delayed infrastructure investment, possibly caused by budgetary constraints at both state and federal level;

Failure to address weaknesses in the local economy, particularly labour and accommodation costs;

Uncertainty of the future of significant government funding (e.g. via the Royalties for Regions scheme) for necessary infrastructure projects.

4.2 Responding to opportunities - expansion of existing projects and additional resource projects

Situation summary:

The prospects are for strong growth in operations expansion in for iron ore and other minerals in the

Pilbara and wider region. However, very few of these new projects are in the Shire.

Opportunities will therefore be in value chain goods and services to both construction and operational

phases. Karratha is already a centre for this, with a god number of small and medium enterprises

marketing into the Resource sector value chain.

This requires support.

Similarly LNG generally shows very high growth prospects. However, the extent to which this will flow on to specifically to the Shire of Roebourne is uncertain. There are prospects for on-shore support to future Processing of Browse Basin gas on-shore at Dampier is one of the options for the Browse Basin gas (along with James Price Point at Broome and a floating LNG platform), and there is a small chance that this will occur. However, this is likely not to lead to very large increases in operational labour demand. With a solid and expanding LNG industry the opportunities for businesses in the Shire are likely to be to use the existing skill base in LNG and offshore servicing to expand to other areas. However, it is noteworthy that the current preferred site for a common user facility that might be a focus for the expansion of businesses servicing the off-shore industry is at Port Hedland. There is likely to be quite rapid increase in the level of knowledge of FLNG technology and capturing this in the Shire, possibly via some specialised research projects, to the extent it is possible will provide a knowledge base that can be applied elsewhere.

Consequences for Shire development:

Expansion of the existing economic base is largely out of the direct control of the Shire. The Shire can

therefore help with facilitation and seek to maximise local content, for example in

Fabrication;

Marine services;

Services (admin, food/catering).

It can achieve this by:

Ensuring there is sufficient zoned and serviced industry and commercial land;

Fostering the further development of SMEs in mining and resources support services and

the resources value chain;

Fostering incubation projects and support services, including small business incentives;

Fostering small business networking, clustering and skills development.

4.3 Responding to opportunities – diversification of the economic base

Situation summary:

A number of opportunities for diversification have been identified. Principal ones are:

Specialised agri-business;

Tourism;

Regional services;

Education services;

Health services;

Administration (private sector and public sector);

Knowledge industries, including research on regional specialties.

The highest proportion of services employment in the Pilbara is located in the Shire. However, a high proportion is imported from outside of the region. There is opportunity to increase the range and scale of services offered locally in all categories.

A recent study for the Small Business Centre West Pilbara16 identifies the provision of affordable accommodation as the most significant barrier to entry to the small business sector. It found that the lack of affordable residential accommodation is the single biggest obstacle to normalising the local economy. As a means of partially addressing this barrier, it proposes that subsidised business incubator premises matched with affordable residential accommodation be provided across the West Pilbara to encourage business growth and diversity.

Its recommended incubator model for Karratha is:

18 commercial/retail/incubator units in the Town Centre;

10 light industry incubator units in either the Karratha or the Gap Ridge light industry estates;

28 accommodation units of one, two and three bedroom configurations.

The report notes that the recommended incubator development model for the Karratha Business Park is unlikely to succeed without the 1:1 provision of residential accommodation matched to the subsidised business accommodation, and success for the businesses installed in the incubator will be largely dependent upon the level of support and expertise provided to the tenants. Adequate resources to empower the SBCWP in this regard are essential including skilled personnel and access to appropriate and affordable training and meeting spaces.

Communications:

Karratha is due to be connected to the Australian Government’s National Broadband Network via optic fibre cable, with most work to commence from March 2015. The rollout will include Karratha, Karratha Industrial Estate, Gap Ridge, Dampier and Roebourne. Construction in new developments in some of

16 CCS Strategic, Business Case for the Establishment of Karratha Business Park and Transferability of model to Tom Price and Onslow, Report prepared for SBCEP, August 2012

these areas has commenced. Horizon Power has an agreement with the NBN Co help install NBN conduits in Karratha in conjunction with its power undergrounding program.

Very high quality tele-conferencing facilities, with general availability through digital hubs17 or a resource centre is essential to the further expansion of general administration and regional services from Karratha. The NBN is crucial to the growth of this industry (and very beneficial to the growth of other industries) and it will be important for the Shire to be NBN ready.

A digital strategy should identify the opportunities for the local workforce, home based and small businesses and students, training, up-skilling requirements and collaborative workspace or business incubator space options.

Consequences for Shire Development:

The growth of diversification projects can be facilitated by:

Ensuring the needs of agri-business enterprises are accounted for in strategic planning. This is

particularly important for the algae farm which potentially is a very large land user;

Fostering the development of SMEs in agri-business support services

Fostering incubation projects and support services

Health: further expansion of the health campus and incorporation of areas of specialisation;

Education: actively promoting the establishment of full-service tertiary education facilities and

services in the Shire;

Promoting the expansion of aged care services and facilities in the Shire

Formulating a digital strategy for the Shire to enable:

o Remote and tele-working

o Improved viability of basing regional services and administration in Karratha

o Further progress on the Smart Cities initiative.

Tourism: Formulate a comprehensive tourism strategy addressing:

o Product – attractions and activities

o Amenity

o Access

o Accommodation

o Marketing

4.4 The Pilbara Cities

There is a danger of some duplication of roles between the two large Pilbara settlements of Karratha

and Port Hedland. Each is planned to reach a population of 50,000. At this scale each would warrant

substantial and high level education, cultural and health services to support its population. However

17 A Digital Hub is a community-based computer training and internet access point containing a number

of internet ready computers. Each Digital Hub is run by staff that provide training and assistance to

explain the benefits of participating online, to drive greater digital literacy skills and to demonstrate the

possibilities of using the NBN.

the essence of the economic task to support this population is to for the communities to encompass

activities and enterprise that extend beyond the local region and are capable of either replacing imports

– including services imports from other Australian regions – or exporting goods and services outside of

the region.

To be viable in this endeavour a focus on competitive advantages and the special capabilities of each

location is required. This will ensure the activities which emerge are viable over the long term, in other

words, sustainable. The leading edge activity that is required to support an expanded Pilbara

population is best focussed in one location.

This requires the respective roles of each of the major Pilbara centres to be identified and articulated.

These will emerge over time but already the key elements of the distinction are beginning to be

apparent.

While there is room for much discussion in this area, an initial assessment indicates that Port Hedland,

with expanded port operations and the Lumsden Point Common User facility with a general cargo

capacity will have the circumstances for development of a range of industrial, maintenance and support

activities, particularly by small and medium size industrial firms. These would service not only off-shore

gas and oil ventures, but also be available to support any new shale gas developments in the Canning

Basin This might include an emerging freight and logistics hub for consumer goods. While these

activities would also be in the Shire of Roebourne, they are likely to become rather more prominent in

Port Hedland and would start to set the tone of the community.

In contrast, Karratha already has substantial education, administrative, business, financial and technical

and professional activity. These will expand. It could emerge as the major centre for these services for

the entire northern region. The consequence for planning is that Karratha should allow for:

Substantial upgrades to the urban environment, with the full completion of the town centre

precinct, to ensure liveability aspects of the main centre are maximised;

A substantial education centre, including tertiary education and research facilities and an

expanded secondary school, including boarding facilities;

Expanded health facilities, including allowance for specialist services;

Tourist and business tourist accommodation, including conference facilities;

Implementation of the airport masterplan (as revised), including regular international services;

Accommodation for expanded government services.

4.5 Economic Changes: Workforce and population effects The potential changes in the Shire’s economy include:

Decline in construction activity;

Increases in services activity with high increases in the retail, education services and health

services sectors;

Diversification of the economy.

This will change the composition of the workforce and these workforce changes will be accompanied by

demographic changes.

The main labour force scenario is for:

Reduction in FIFO numbers as construction activity is completed;

Stabilisation of operational workforce;

Growth of service population (consumer services);

High increases in the retail, education services and health services sectors;

Possible growth of producer services; and

Some increase in knowledge intensive producer and consumer services.

This will likely be accompanied by changes in income patterns. Currently there are stark differences in income patterns between Pilbara communities, including the Shire of Roebourne, and other communities, with unusually proportions of individuals earning high income (above $1,500 per week and of that group more than two-thirds are earning above $2,000 per week). This is likely to moderate over time, especially in the Shire of Roebourne over time as the occupation mix changes. There would still be a high proportion of high income earners, but some growth in the proportion of lower and middle income earners. This will put pressure on housing affordability, with the need to provide moderately priced accommodation in greater numbers. This is a key point in the ability to achieve the Pilbara Cities outcomes – unless workers of moderate incomes can be accommodated in the Shire, in large numbers, the opportunities for economic diversification that underpin the higher population scenarios will not be realised. There has been pressure on housing affordability for some time and all relevant agencies need to continue the focus on affordability and increasing interventions such as subsidised key worker accommodation. The alternative is a continuation of the current situation, with a larger than average proportion of very high income residents, but no real population growth or economic diversity. The ability to accommodate a much higher proportion of lower and moderate income workers is likely to be a key requirement to achieve the economic diversification necessary for the higher population scenarios for the Shire.

5 Implementation Actions:

Successful Economic Development Strategy actions will achieve outcomes by:

Capitalising on strengths

Overcoming weaknesses

Realising opportunities

Defending against threats

5.1 Capitalising on Strengths – Realising Opportunities

Generally:

Investment in and development of major projects (private and public) is cyclical in nature with periods of highs and lows; new large projects are still in prospect and the Shire must position itself to participate in them.

However, energy and impetus for new economic growth in the Shire, particularly for significant diversification, will come from within the community; the days of big projects being undertaken by big companies and supported by big government are diminishing.

Growth and diversification will come from a large number of small projects, rather than the relatively small number of very large projects that has been typical in the past.

It is most efficient to build on the strengths of existing initiatives and land use activities, of which there are many.

Comparative Strengths

In summary the comparative strengths of the Shire and its economic activity are:

The Shire is home to large-scale world-class economic activity.

These include world-class purchasers. For local businesses this provides: o skills and experience of marketing to major purchasers; and

o exportable goods or services that may be applicable to in other similar international

markets.

It is the biggest centre in the region, housing the greatest diversification, scale and range of regional services and is most likely to contain the mix of community, cultural and social facilities that will keep attract and keep a wider population mix.

It is the location of the regional office for a number of government agencies; this provides a base for further expansion.

There is good variety of lifestyle attractions around the Nickol Bay area generally.

There is a very strong local and regional economy, with forecast continuing expansion.

It has natural features for a range of economic activity, including solar radiation, flat land and a large quantity of industrial by-product.

Strategies to capitalise on the strengths are:

Using the strong economic base as a springboard for diversification. Expansion of the existing economic base (i.e. the major minerals and energy projects) is largely out of the direct control of the Shire. There are many opportunities in servicing minerals and energy projects that can find competitive advantage in proximity to the mining operation, for example: o Mining services

o Marine services

o Construction and fabrication

o Project administration

o Additional downstream processing

o Processing of industrial waste

There is already a strong base of these activities in Karratha, with a number of mining services

companies with substantial operations based in Karratha and some downstream processing (e.g.

the Burrup Fertilisers ammonia plant). The ASX listed Mermaid Marine18, with its Dampier supply

base, is a good example of a company that developed its skill base in servicing world-class

economic activity (the off-shore gas industry) to expand internationally. The challenge for the

Shire is to assist operations such as these to base a high proportion of their activity in the Shire,

including activities that ultimately service projects away from the Pilbara. Key elements to assist

this are:

o Ensuring key infrastructure (transport infrastructure, general port space, services) are

in place;

o Ensuring there is sufficient zoned and serviced industry and commercial land;

o Fostering further development of SMEs in resources support services and the

resources value chain;

o Continually improving all liveability aspects for Shire residents.

Actively pursue other diversification opportunities – a large number of small projects o Specialised agri-business (but note algae farm current situation)

o Tourism

Business and specialist tourism

General tourism

o Knowledge industries, including research on regional specialties

Key elements to assist this are:

18 Mermaid Marine Australia (MMA) has grown substantially since listing on the Australian Stock Exchange in 1999 to become Australia’s largest marine services provider to the offshore oil and gas industry. With supply bases in Dampier and Broome and a range of modern offshore vessels, MMA is able to offer clients marine logistics services throughout all phases of the offshore oil and gas development cycle. MMA’s head office is in Fremantle and has its main operations base in Dampier, which includes a private wharf facility and ship repair facility capable of servicing the range of vessels engaged in offshore support activities. Over the last 5 years, MMA has invested over $200 million in a fleet renewal and infrastructure development program. MMA has an office in Singapore and is currently operating vessels in Egypt and West Africa, as well as ongoing extensive Australian operations.

o Emphasis on lifestyle and affordability and critical infrastructure

o Ensuring key infrastructure (transport infrastructure, general port space, services) are

in place;

o Ensuring the needs of agri-business enterprises are accounted for in strategic planning

o Ensuring there is sufficient zoned land, particularly for agri-business opportunities;

o Encourage and support the establishment of a UWA research facility in Karratha;

o Fostering further development of SMEs in general support services and the resources

value chain;

– Support to small business development programs

– Fostering incubation projects and support services

– Fostering clustering and SME incentives

– Fostering the development of SMEs in agri-business support services

o Formulating a digital strategy for the Shire to enable:

– Remote and tele-working

– Improved viability of basing regional services and administration in Karratha

– Improved e-health and e-education services

– Further progress on the Smart Cities initiative.

o Tourism: Formulate a comprehensive tourism strategy addressing:

– Attractions, Amenity, Access, Accommodation, Activities

– Product, Marketing

o Continually improving all liveability aspects for Shire residents.

Position Karratha as the key administration and business services centre in the WA north. The components of this are to expand: o Regional services (for the extended northern region)

o Education services (secondary and tertiary)

o Health services (including specialist services)

o Administration (private sector and public sector)

Associated with this is a strategy for Karratha to be a location of residential choice for

regional FIFO workers. This will be feasible if the following is in place:

o Education services at a high level to keep people in place longer:

better quality secondary school education;

More diversity, including private secondary schools:

Much upgraded tertiary education and development of research

specialities.

o Health services that meet all of the health needs of all the community;

o A richer cultural life, with a wide variety of cultural activities;

o Well supported and vibrant community groups;

o An wide range of formal and informal sporting and recreation opportunities;

o Places for people to meet – this means paying attention to the liveability of the major

centres, particularly the Karratha town centre program;

o Attending to cost issues – lowering the cost base for accommodation and key services.

Additional measures to support this are:

o Continually upgrading the town centre work environment:

– Ensuring sufficient office and commercial accommodation

– Cafes and restaurants

– General urban amenity

o Education: actively promoting the establishment of full-service tertiary education

facilities and services in the Shire; promoting Karratha SHS as a centre of excellence

o Health: further expansion of the health campus and incorporation of areas of

specialisation;

o Promoting the expansion of aged care services and facilities in the Shire;

o Attending to the duplication of NGO support

o Ensuring sufficient supply of affordable residential accommodation

Pursue the possibility of a substantial Defence presence in Karratha. While the establishment of an Australian Defence Force presence in the north-west is outside of the control of the Shire, any measure to improve affordability and liveability at Karratha would increase its desirability as a base for defence personnel.

Change driven by the community, not imposed from outside requires: o A sharper coordination of community effort

o Co-ordination of the efforts of main government and NGO regional agencies (PDC,

RDAP, local government, community groups, Aboriginal Corporations) so that a

consistent strategy is adopted and pursued.

o Establishment of a high level peak group (a Committee for the Pilbara) that includes

senior representatives of major companies, community groups (including Aboriginal

Corporations) and government agencies; this should be resourced with full time staff

and tasked with initiating and coordinating economic and community development

research, information and initiatives.

o Support for small business development: fostering incubation projects and support

services; fostering clustering and SME incentives; fostering the development of SMEs

in business support services

5.2 Overcoming weaknesses, defending against threats

The measures outlined above will help address the comparative economic weaknesses of the Shire:

A high cost base (this is common in many resource-based communities): – Labour costs are high, on all national and international comparisons;

– General costs of doing business are high, including high utilities and services costs;

– Costs of commercial and residential accommodation remain relatively high, although

these are starting to moderate;

Local market is still relatively small (scale is not yet there);

There is ‘crowding out’ of tourism activity by FIFO worker demand – this is expected to reduce fairly quickly from 2014;

Human capital rankings (educational attainment, skilled labour) are relatively low compared with other Australian regions;

High proportions of services are imported from other centres, principally Perth;

Competing centres (e.g. Geraldton) are seen to have better lifestyle amenity and a lower cost base;

The region competes with others (Kimberley, NT, North Qld) for political attention.

5.3 Key Projects

Key projects that align with the strategy are:

Project Strategic Impact

Major infrastructure projects (Cape Lambert, Gap Ridge)

Supports expansion of economic base

Airport expansion to international capacity Business and general tourism Karratha as an administrative centre for major projects

Dampier as high amenity residential and tourist location

Increases residential choice General tourism - opportunity for resort development

Dampier marina as tourist, general cargo and marine servicing base

Marine servicing base for SMEs servicing economic base activity

Anketell – general cargo capacity and associated general industrial land

Infrastructure for diversified economy and for further servicing of economic base

Tertiary education, research base and associated accommodation

Support for knowledge economy

Telecommunications infrastructure Support for digital economy

Excellence in secondary education Karratha as a centre of high quality education

Health specialities / Aged care Regional services Increased residential amenity

Youth facilities / Childcare Increased residential amenity

Urban amenity - Karratha City Centre Regional services Increased residential amenity

Waste recycling / re-use Industry development building on economic base by-product

Algae farm pilot Illustration of a major diversification project

Hotel projects Business and general tourism Karratha as an administrative centre for major projects

5.4 Summary EDS Measures and Implications for the Local Planning Strategy

In summary, key measures for economic development are

Ensuring there is sufficient zoned and serviced industry and commercial land;

Fostering further development of SMEs in resources support services and the resources value chain.

Support to small business development programs o Fostering incubation projects and support services

o Fostering clustering and SME incentives

o Fostering the development of SMEs in agri-business support services

Ensuring the needs of agri-business enterprises are accounted for in strategic planning.

Education: actively promoting the establishment of full-service tertiary education facilities and services in the Shire; promoting Karratha SHS as a centre of excellence

Health: further expansion of the health campus and incorporation of areas of specialisation;

Promoting the expansion of aged care services and facilities in the Shire; NGO support

Formulating a digital strategy for the Shire to enable: o Remote and tele-working

o Improved viability of basing regional services and administration in Karratha

o Improved e-health and e-education services

o Further progress on the Smart Cities initiative.

Tourism: Formulate a comprehensive tourism strategy addressing: o Attractions, Amenity, Access, Accommodation, Activities

o Product, Marketing

Promoting cultural activities and facilities.

The implications of the Economic Development Strategy for the Local Planning Strategy are that it

should allow for:

Continuing upgrades to the urban environment to ensure liveability aspects of the main centre are maximised;

A substantial education centre, including tertiary education and research facilities and an expanded secondary school, including boarding facilities;

Expanded health facilities, including allowance for specialist services;

Tourist and business tourist accommodation, including conference facilities;

Regional-level recreation / sports facilities;

Implementation of the airport masterplan (as revised), including regular international services;

Accommodation for expanded government services;

Efficient services supply (long term);

Placement of accommodation for FIFO workers (especially operational FIFO) to enable community engagement

An emphasis on affordable accommodation and diversity of supply, for both residential and commercial accommodation.

Upgrading of Dampier to provide opportunity for diverse and high quality residential accommodation and a marina, with associated resort, tourist and marine light industrial / servicing activity.

Appendix 1 Effect of Shire growth scenarios

The potential changes in the Shire’s economy include:

Decline in construction activity

Increases in services activity

Diversification of the economy

The effect on the composition of the workforce of these changes is outlined below.

Composition – Occupation

Potential changes in the occupation mix can be investigated by comparing the current mix in the Shire

with those in the average of Kalgoorlie-Boulder, Mt Isa, Geraldton-Greenough and Mackay, under the

scenario that the Shire economy evolves between 2011 and 2031 to resemble that mix.

The graph below shows the Shire’s current worker population (including FIFO workers) and the

potential mix of resident worker population 2031. The forecast changes reflect the expectation from the

CME report for a substantial decrease in construction activity and consequently for construction labour

demand.

Figure 1: Shire of Roebourne – potential changes in occupation 2011 – 2021

Source: ABS Census 2011, Syme Marmion The main increases in occupation by number would be as in the graph below, with high increases in the

retail, education services and health services sectors.

Figure 2: Shire of Roebourne - main potential occupation increases

Source: ABS Census 2011, Syme Marmion The following graph shows the occupations in the Shire workforce likely to decline in number, with the

greatest losses in the construction sectors.

Figure 3: Shire of Roebourne - main potential occupation decreases

Source: ABS Census 2011, Syme Marmion

Income The table below shows stark difference in income patterns between Pilbara communities as they are currently constituted and others, with very high proportions of individuals earning high income (above $1,500 per week and of that group more than two-thirds are earning above $2,000 per week). This is likely to moderate over time, especially in the Shire of Roebourne. It is likely that the individual income profile will come to resemble that of Kalgoorlie over time as the occupation mix changes. There would still be a high proportion of high income earners, but some growth in the proportion of lower and middle income earners. This will put pressure on housing affordability, with the need to provide moderately priced accommodation in greater numbers. This is a key point in the ability to achieve the Pilbara Cities outcomes – unless workers of moderate incomes can be accommodated in the Shire, in large numbers, the opportunities for economic diversification that underpin the higher population scenarios will not be realised. There has been pressure on housing affordability for some time and all relevant agencies need to continue the focus on affordability and increasing interventions such as subsidised key worker accommodation. The alternative is a continuation of the current situation, with a larger than average proportion of very high income residents, but no real population growth or economic diversity. The ability to accommodate a much higher proportion of lower and moderate income workers is likely to be a key requirement to achieve the economic diversification necessary for the higher population scenarios for the Shire.

Residents, personal weekly income (proportion of all income earners)

Source: ABS Census, 2011