Report: Rebirth of Regional Queensland

The Queensland Futures Institute’s Rebirth of Regional Queensland panel underscored the existing competitive advantages and economic strength of regional Queensland - anchored by world-class mining and resources, agriculture and horticulture, and tourism. The regions are well positioned to diversify into biomanufacturing, critical minerals processing and clean energy supply chains. But realising this potential will rely on enabling infrastructure – including resilient road infrastructure, adequate housing, affordable and reliable energy, productive ports, and secure water systems.

Panellists highlighted that achieving this will require key enablers around investment and project delivery – requiring alignment of regional priorities with state and national programs and collaborative investment between local, state and federal government. A vibrant, skilled workforce is another enabler of regional economic growth.

Claudia Brumme-Smith
Chief Executive Officer
Townsville Enterprise

Brian Restall
Managing Director, Regional Leader- Australia
Quinbrook Infrastructure Partners

Cr Greg Williamson
Mayor
Mackay Regional Council

MODERATOR
David Edwards
Principal
BGE Advisory

David Edwards

• The recent Productivity Roundtable in Canberra provides relevant context for today’s discussion on economic development of regions.
• Regional Queensland holds some of the most productive sectors in the state, including
  mining and resources, agriculture and horticulture - all world-class in productivity.
• Regional and remote councils are used to doing more with less, innovating to serve communities despite rising costs and shrinking revenue bases.
• Small businesses also punch above their weight – for example, an import-export business
  in Herberton can thrive with only an internet connection and a local post office.
• Despite this productivity, uncertainty for regional Queensland is high given geopolitical
  tensions, fluctuating commodity prices, rising energy costs, and protectionist policy
  revival from the U.S.
• Australia relies on free trade, and the current environment is making decisions increasingly challenging for businesses and investors.

Mackay Council has been working on an economic development strategy in collaboration with industry leaders over the last 12 months. How will it build on Mackay’s traditional competitive advantages in coal mining, agriculture and tourism, and diversify its economic base?

Councillor Greg Williamson

• We have Mackay, Townsville and Cairns represented here today – all examples of how
  regional Queensland doesn’t need a rebirth; we’re here and delivering for the state and
  national economy.
• Mackay Regional Council has developed a strategy to take our regional council footprint
  into the next 50 years, building on the region’s strong contributions in resources, agriculture and domestic tourism.
• Moving forward, we will build on these areas to drive productivity and economic growth.
• A key area of focus is bio-manufacturing, which leverages the sugar industry – given we
  grow a third of Australia’s sugar. This enables us to turn the carbon content of the sugar
  crystal into chemical-based products, pharmaceuticals and food.
• An example of a company doing this is Cauldron – which is raising $100 million for a trial
  in Mackay to produce powdered milk protein to meet South Pacific demand.
• We are also focused on critical minerals. This will build on the leading example of
  innovation we’ve already seen in the industry – including the coal sector’s decades of
  leadership in innovation, Artificial Intelligence and machine learning, and automation.
• Council has invested in the Resources Centre of Excellence Stage 2 – which is focused
  on critical minerals.
• The final area of focus is the energy transition. Mackay Sugar has supplied about a third
  of our energy demand for 30 years via cogeneration (bagasse to steam/electricity).
• We also import 1.8 Mt of fuel each year, mostly diesel for the coal mines.
• While Mackay has produced ethanol since 1928, mills struggle to make money out of it
  despite the government focus on decarbonisation.
• Our strategy aims to enhance these long-standing decarbonisation efforts and take us
  into the next 50 years.

What do you think are some of the factors that are impacting on your ability to realise that vision and diversify the economy?

Councillor Greg Williamson

• The central issue is infrastructure, and the Productivity Commission should focus on this
  rather than matters like EV taxes.
• Public investment in infrastructure has historically enabled industries such as wool and coal to flourish over the past century.
• In the case of biomanufacturing, there is little understanding in Canberra of the
  infrastructure needed to deliver Queensland’s future.
• The process of turning the carbon content of sugar into food products for the world requires significant infrastructure. For example, the planned pilot plant will consume more water than the region can currently produce.
• When Cauldron’s facility is operational, producing around 6,000 tonnes of powdered milk
  annually for export to southern China and Southeast Asia, it will need approximately 70
  megawatts of power just to run.
• If the facility is duplicated, major investment in power, port, rail and water infrastructure
  will be essential.
• Without government focus on these enablers, infrastructure will remain the key roadblock
  to realising the strategy.

Given Cairns’ port, airport and agricultural strengths - what are Cairns’ infrastructure priorities and how do you influence state and federal government to support these?

Councillor Amy Eden

• Cairns Regional Council has reached a point where generational infrastructure is essential.
  Economic growth has long been supported by tourism, but trunk infrastructure for housing is now critical.
• Cairns is a super growth region and is seeking $450 million for stage one of its last
  greenfield housing site.
• The Cairns Water Security Project is the council’s largest ever - at almost $480 million. Federal and state governments contributed $195 million, with council adding $82 million. This water infrastructure is vital for both current growth and future industry expansion.
• The State Development Area, announced in 2018, remains idle and requires trunk infrastructure to activate jobs closer to home.
• A 26-hectare major events precinct, combined with Barlow Park, is being planned with $850,000 in federal funding so the precinct can be ready for the 2028 elections, put Cairns on the global stage for the Olympics. This has the potential to be a game-changer for the region.
• Sports tourism is a major opportunity given Cairns’ natural assets and the connectedness
  of Australia’s sixth-busiest airport.
• The marine precinct is a critical project, for which we are currently securing federal, state, alongside private investment.
• This project is critical as Cairns is currently turning away superyachts and is constrained in cruise berths. 
• In addition to tourism, the wider region holds critical minerals; Cairns needs port
  infrastructure to support this industry too. 
• In terms of road connectivity, Cairns is geographically remote, with Port Moresby closer
  than Brisbane. The Bruce Highway often cuts the city off, leading to shortages of food,
  building materials and key supplies like welding gas.
• Businesses have been forced to stand down staff due to supply disruptions
  when this occurs.
• Improving resilience infrastructure is essential, and sometimes the solution is as
  simple as relying on the seaport, which is unaffected by road closures.

Can critical minerals, renewables, and sovereign capability industries fill the gaps when legacy industries - like Mt Isa’s copper mine - wind down? Is North Queensland getting its fair share of Commonwealth and State Government investment to support these opportunities? 

Claudia Brumme-Smith

• Townsville has a $44 billion investment pipeline over the next decade.
• The region is facing challenges in supporting legacy industry – including the copper
  smelter and refinery - as Mt Isa mine and copper mines are closing.
• Mt Isa has been a 100-year asset, creating wealth for Queensland and building ports,
  rail and providing royalties.
• Australia holds 10% of the world’s copper and ranks third globally, with demand expected
  to triple in coming years.
• Australia must keep the copper smelter and refinery operating, as it is the only third-party
  copper smelter in the country – and therefore process South Australia, Western Australia
  and North Queensland product.
• While we are seeing legacy mines closing, there remain tier two and tier three copper
  mines which require a smelter and refinery.
• As such, governments must help keep the supply chain intact.
• Energy costs need to fall and labour efficiency must improve to support manufacturing
  in general .
• Townsville’s smelters and refineries are still state-of-the-art, using digital twins and
  advanced technology. Additionally, the supply chain supports around 17,000 jobs.
• North Queensland is diversifying and has a bright, innovative future, proving regional
  economies can do more with less than capital cities.
• The $44 billion pipeline includes five new refineries, building on world-class mining and
  refining skills.
• The region also has some of the best wind and solar resources in the country.
• Enabling infrastructure is essential, and governments must return more royalties to
  regions to fund that enabling infrastructure.
• Advocacy in the region must be practical to be successful. For example, projects must be aligned with federal policy such as Future Made in Australia and the National Reconstruction Fund.
• Townsville has secured $1.2 billion in defence investment, $16 billion in new defence
  equipment and funding for the Great Barrier Reef Aquarium – a main tourism asset for
  Townsville although it’s a safe LNP seat federally.
• Renewable energy projects like Edify Energy and Ark Energy are also supported by the
  Feds because of strong business cases and alignment with federal policies.
• The state government recently announced $2.4 billion for CopperString – a critical project which underpins 40% of the broader investment pipeline for the region.
• CopperString is also critical for Mt Isa, which currently has no access to the national electricity grid – and relies on expensive diesel, making it globally uncompetitive.
• CopperString is a prime example of how regional infrastructure can deliver growth for
  Queensland and the nation.

‘Picking winners’ in the past has not always brought success – a recent example is Government support for the hydrogen sector here and abroad.  Given your experience in leading edge projects globally, what role should government play in fostering new industries - particularly in regional areas – and how should governments choose between sectors or opportunities?

Brian Restall

• Quinbrook is a global infrastructure investor operating in the UK, US and Australia.
• Its purpose is to accelerate the clean energy transition by supporting renewable projects
  and the supply chain.
• Supply chain sovereignty and trade disruptions are major international issues - a key
  focus for Quinbrook.
• Queensland is at the intersection of world-class renewable resources and critical
  minerals, making it a unique opportunity.
• Quinbrook believes governments should not pick technology winners but should instead
  focus on outcomes for customers.
• We assess projects based on the lowest cost marginal megawatt, not on subsidies.
• The firm has a proven track record, including delivering the largest solar and battery
  project in US history, which remains the cheapest on the market.
• Similar successes have been achieved in the UK, and this experience is now being
  applied to Queensland’s critical minerals sector.
• The transition must be an energy mix - wind, gas, batteries and more.
• Around 95% of people support the clean energy transition but do not want to pay more,
  so the industry must deliver lower costs.
• Quinbrook’s funds are sourced from pension money, so investments must provide both
  financial returns and community benefits.
• The firm has a $15 billion pipeline in Australian critical minerals and renewable energy, with $1.5 billion already committed.
• In Moreton, Quinbrook is delivering a large battery project to firm the grid, lower prices
  and prevent blackouts in Gladstone.
• We also have a green iron project – which will export magnetite, creating about 2,000 jobs and boosting Gladstone port exports.
• In Townsville, Quinbrook has proposed a metallurgical silicon smelter at Lansdown, using the region’s world-class quartz.
• Currently, 97% of the world’s polysilicon - essential for solar panels and semiconductors
  - comes from China.
• This investment therefore provides the opportunity to strengthen our supply chain sovereignty.
• Additionally, Quinbrook’s Townsville project represents a $7 billion investment and 2,500 jobs.

How quickly is large-scale battery technology advancing, and how is it changing the game – compared to other technologies like pumped hydro?

Brian Restall

• The Queensland Government is preparing a new energy plan, due for completion
  by the end of the year.
• Pumped storage is being considered, but it is only needed once coal-fired power
  stations close.
• While pumped storage is a proven technology, history shows costs usually double or triple between planning and delivery, as seen with Snowy Hydro.
• Batteries combined with gas turbines offer a compelling alternative for firming.
• Gas turbines are proven, can start within five minutes and only operate during emergencies.
• Batteries are now cost-competitive, providing daily arbitrage, stability and firming while
  being charged by solar, just like pumped storage.
• Pumped storage is vulnerable during cyclones: high winds stop turbines, cloudy skies
  halt solar, and once storage is discharged there is no way to replenish it.
• Battery technology has now reached a price point where it outperforms pumped storage,
  and Quinbrook launched the world’s first eight-hour battery in March.
• Gas turbines used as backup are a cheaper form of firmed capacity and create emissions only when running.
• The central principle is not to pick technology winners but to pick the customer as the
  winner by ensuring the lowest cost and most reliable mix of solutions.

David Edwards

• The gas story in North Queensland is a positive one.
• Fugitive gases from coal mines - which used to be flared - are now being captured by
  QPM through their gas project.
• That captured gas is fed into the North Queensland Gas Pipeline – which delivers gas to
  gas-fired power stations and to diesel power stations that should be converted to gas in
  the future.
• This creates a good news story of using gas that was previously wasted to help firm up
  the power supply in North Queensland.

AUDIENCE QUESTIONS

How do you believe we should get more young people into the regions – given we’ll need a strong workforce to deliver these opportunities. What are the main barriers to attracting young people to live, work and build a future in the regions?

Councillor Amy Eden

• Cairns is a beautiful place to live, but we need more homes and a stronger pipeline
  of opportunities.
• Universities are critical - too many young people leave for Brisbane or other capitals
  when they turn 18 - so retaining them is a priority.
• Making the city attractive for young people to live, work and play is essential.
• The proposed major events precinct is a key part of Cairns’ liveability and appeal.
• CQU is expanding its footprint, and the hospital is pushing to achieve university hospital status.
• Cairns should focus on its distinct strengths, especially tropical medicine and tropical
  health, to become a global leader in that space.
• Distinctive and defining attractions are vital to encouraging young people to stay in Cairns.
• Cairns is globally connected, with the sixth busiest airport in the country, making travel easy.
• The health sector is the largest employer in the region and will continue growing as the
  population ages.

Councillor Greg Williamson

• I agree that the key priority is attracting and retaining young people.
• Equally important is providing jobs of the future that will capture the interest of young
  people moving through universities and TAFE.
• Our strategy focuses on leveraging successful existing industries while creating jobs in AI,
  machine learning and automation to transform traditional sectors rather than replace jobs.
• Housing remains a core challenge - with our median age holding steady at 38 - reflecting a young community.
• The biggest challenge is keeping our children in the community as they grow.
• Sporting pathways are also crucial, many families with talented young athletes relocate to southeast Queensland because most associations - football, rugby league and netball - are based there.
• For years, regional Queensland did not have adequate pathways for elite young athletes. 
• Recently, Netball Queensland introduced new programs for the north, but far more
  is needed.
• If families cannot access local sporting pathways, they uproot and move south to support
  their children’s potential careers in sport.
• Governments need to see regional Queensland as a place to build pathways for young
  people from an early age, not just through public infrastructure but also through programs like sport that shape community opportunity

When deciding which projects to back, what are the three or four key metrics you always look for? 

Claudia Brumme-Smith

• As an economic development body, it is critical to assess whether projects fit the DNA
  of our region.
• Our strengths lie in critical minerals and renewables – so we must leverage these natural assets.
• Jobs are always a priority, but the real issue is whether proponents can secure investment
  and deliver projects. This depends on many factors, including financing, insurance, talent,
  land availability and proximity to ports or access to land for major impact industries in
  close proximity.
• At the core, industries need water and energy. We are blessed with water, but energy
  is the key challenge for us at the moment.
• Without secure and affordable energy, North Queensland will never be globally competitive.
• Currently, our zinc refinery shuts down when residents go home and switch on their air
  conditioners because energy costs exceed commercial competitive pricing – this must
  be addressed.
• Transmission losses from coal-fired power in Gladstone cost companies around $10 million a year, undermining competitiveness.
• We have critical minerals and the capacity for more refineries – including methanol,
  and ethanol - but solving energy must come first.
• Our goal is to keep manufacturing efficient and productive, generating economic returns
  for Queensland and the nation.
• If we fail to solve energy, investors will look to places like China where power and labour
  are cheaper.
• That is why we are so focused on CopperString, renewables, firming power and gas as
  enabling infrastructure.
• Energy is the key enabler; once it is secured, investors will come - but without it, investment risks moving overseas.

David Edwards

• We assess project viability for Lansdown using clear criteria.
• The key questions are: whether there is market demand for the product; if the proponent has a proven track record of delivering projects; and whether they have a funding and financing strategy with a history of raising capital.
• We don’t focus on job numbers or headline investment amounts at the early stage - those three fundamentals are what matter most.
• Only once those are satisfied will we consider expending council resources to work
  with a proponent.
• To manage the risk of projects not being progressed, we require proponents to pay a
  commitment fee upfront.

Brian Restall

• I have been impressed with the new Queensland government’s focus on the regions
  over the past 10 months.
• Previously, it felt like regions bore the impacts of infrastructure projects but received
  few benefits.
• The new approach is better: starting by consulting local councils and communities to identify impacts and ways to improve their lives.
• A second part of the challenge is facilitating investment.
• In a country proud of its environmental standards, we must question whether seven to ten years to approve projects is acceptable. People and communities deserve better than projects taking 7–10 years to start construction and then another 4-5 years to build.
• Faster approvals at both state and federal levels are essential to support regional growth.
• This would allow the benefits of investment to flow through sooner, creating the 4,500 jobs we are aiming for in Queensland without unnecessary delay.