AtD
October 25th, 2004, 02:04 PM
Australian Financial Review
http://afr.com/premium/articles/2004/10/24/1098556291464.html
Dark side of a Queensland sea change
Mark Ludlow and Stephen Wisenthal with Kathy Mac Dermott
25 October 2004
Queensland might be the boom state that has long benefited from "sea-change" southerners moving north to a better life and a near-perfect climate. But it has a dark little secret.
The recent power crisis, which showed Queensland had not been spending enough on its power distribution network over the past decade, is the tip of the iceberg of infrastructure problems Premier Peter Beattie does not want potential migrants and investors to see.
More than 1 million people are predicted to move to south-east Queensland over the next 20 years, and the Beattie government is only now coming to terms with the catch-up required to keep on top of the infrastructure needs of the fastest-growing state in Australia.
The Premier who loves describing Queensland as the "California of Australia" is frantically trying to adjust to the dark side of sea change.
The irony of California's power crisis, which was the downfall of once-popular state governor Gray Davis, is not lost on Beattie's critics, who believe he could suffer a similar fate.
While Beattie and his majority government are more than happy to surf the wave of economic growth with 1100 arrivals each week bringing new taxpayers to fill government coffers they are now facing the downside of growth.
"It's not too crowded. It's just our infrastructure hasn't kept pace with our growth," says prominent Queensland businessman Jim Kennedy.
"If all the politicians of all the political parties that have been in power over the last few years had built things for the future rather than just for the present, we wouldn't have this problem."
Queensland's chief executive officer of the Urban Development Institute of Australia, Brian Stewart, says new roads and better public transport are two critical issues if Queensland's quality of life is to be protected.
"There is certainly a very strong feeling that we are in catch-up with major infrastructure. What we need is more strategic larger items such as an upgrade of major highways and planning for transport infrastructure, such as a VFT [very fast train]."
Last week, Queensland Resources Minister Stephen Robertson warned that the state could be facing a water crisis by 2020 as the climate became warmer and the number of days over 35 degrees doubled.
Water and power infrastructure may be stretched to the limit, but Beattie the eternal optimist with his trademark toothy grin says 86,000 people moving north of the Tweed each year can only be viewed as a positive for Queensland.
"These problems like the population coming here are, at the end of the day, a strength for us, as long as we manage it," Beattie told the The Australian Financial Review.
"As a government we are looking five, 10, 20 years down the track. We are trying to adapt strategies for the future of the Queensland economy."
For Beattie, it's not just about building new schools and hospitals for interstate migrants, but creating a new knowledge-based economy to ensure the job-boom in the state continues.
"The real issue for us is to shift the cultural change in this state, which is happening. By cultural shift I mean everybody valuing what Smart State is about education, skills and training. We are building a new Queensland," he says.
He cites 5000 new jobs in aviation and 2500 new jobs in biotechnology as the first fruit of his strategy to move Queensland away from its reliance on traditional industries such as mining and tourism.
"Smart State strategy is changing the culture to one of innovation for new jobs. When people come the problem is not just finding them a home, not just finding them a school or hospital or road to drive or power to run everything, it's where are the jobs, where are the skills?"
"Skilling, jobs and education are the most important things to deal with that growth."
But amidst the hot air of the Smart State rhetoric which is espoused with monotonous regularity by Beattie and his ministers there are serious concerns about the ability of Queensland's road, rail, water and power infrastructure to cope with rapid growth.
A report prepared for the Civil Engineering Construction Alliance earlier this year found Queensland needs to invest a minimum of $1.4 billion a year on infrastructure to cope with a shortfall in spending by governments over the past decade.
It established that public capital investment in Queensland is about 76 per cent of the rate needed to maintain a similar standard and quality of infrastructure to NSW.
Paul Bidwell, general manager of peak business body, Commerce Queensland, says much of the state's infrastructure is at "crisis point".
"There is a real risk because of the real lead time to develop infrastructure. Energy, water and transport they've all got a long lead time. You can't start to fix them when you've got a problem."
Local researcher Michael Matusik says the cracks appearing in Queensland's infrastructure are starting to dent the flow of interstate and overseas migrants, with migration falling from 1300 a week last year to the current rate of 1100 a week
"The cracks should have been fixed five to six years ago, but they need to be fixed now," says Matusik.
John Mulcahy, managing director of Suncorp Metway, Queensland's largest listed company and a major lender to property developers, believes the Beattie government is finally starting to show signs of listening.
"I think that certainly the messages from the last budget from the Beattie government suggest that they are recognising the need for infrastructure investment. I'm pretty confident that Queensland will make the right investments."
"So far they've done a good job and I think they recognise pretty clearly that a lack of infrastructure will slow that growth."
In the 2004-05 budget, the Beattie government allocated $6 billion to capital works, up $1 billion or 19 per cent from the previous year.
In the aftermath of the damaging Somerville Report released in July, the government which fears continued power outages could cost it office at the next election has also fast-tracked $53 million in maintenance work to be completed before Christmas.
The matter was further complicated when Energex chief executive Greg Maddock committed suicide last month.
New Energex chief executive Gordon Jardine says he can't promise there won't be power outages over summer. But he is confident the existing network which faced growth of 13.9 per cent in demand last year will adapt to meet the needs of the growing population.
"My focus is on the coming summer and making sure we deliver the best outcome for all the electricity consumers in south-east Queensland," Jardine told reporters after his appointment last month.
"We've got plenty of money to do the job this summer, but the one thing we are short of is time. But the Somerville Report outlined the challenges to the power network and the company is up to the challenges."
One of the most obvious signs of Queensland's infrastructure problem is the worsening traffic problems, especially in the state's two biggest cities, Brisbane and the Gold Coast.
While traffic problems may pale in comparison with Sydney, locals have noticed a worsening in conditions during the past decade.
Car journeys that used to take 20 minutes are taking more than an hour during peak periods. Congestion on some key arterial roads in Brisbane and the Gold Coast is now being compared with peak-hour on Parramatta Road in Sydney which is not a good advertisement for newcomers trying to escape gridlocked southern cities.
Brisbane residents were getting so sick of traffic they elected Liberal candidate Campbell Newman as the Lord Mayor. Newman campaigned almost solely on anti-congestion and a pledge to build a five-tunnel orbital road to ease the capital's traffic woes.
"Transport and traffic is No.1 issue in south-east Queensland today," Newman told the AFR.
A poll conducted for Brisbane City Council found transport and traffic issues were more important than health and education.
Property adviser with KPMG and demographic expert Bernard Salt, the author of The Big Shift, says transport issues are more important to voters than other types of infrastructure.
"I think people vote on traffic, not on infrastructure like power or water," says Salt. "This is an issue that detracts from the quality of life of the individual on a daily basis. Every bloody day driving to or from work or to the shopping centre it's a constant reminder."
Another problem in some Queensland cities is water. Showers on Surfers Paradise beaches have been shut off for the past couple of years because of water shortages.
It is another sign in the daily life of Queenslanders that indicates everything is not perfect in the Sunshine State.
The founder and managing director of Queensland's second biggest company, Flight Centre, Graham Turner, believes a population cap is the answer to south-east Queensland's growing pains.
"That's the challenge there's just too many people," says Turner. "I think we're getting overpopulated in south-east Queensland and the government needs a policy to try to cope with that such as putting a cap on the population like they've done in Noosa. That's their major failing."
But Beattie rejects suggestions the government cannot cope with south-east Queensland's population expanding from 2.4 million now to 3.5 million in 2025.
He points to the establishment of the Office of Urban Management, headed by his right-hand man, Deputy Premier and Treasurer Terry Mackenroth, as an example of his government's active approach to adapting to the strains of growth.
The office which will act as a "planning body with teeth", forcing local councils to submit their plans to the state government to ensure development is not winning over environmental protection will release its draft plan for south-east Queensland on Wednesday .
"We expect there will be arguments with councils from time to time. The reality is the large part of development will be in the south-east corner, so we need to get that development right and manage it. And we will," he warns.
But many locals who have watched Brisbane grow from a large country town to a city that is predicted to overtake Melbourne in 15 years as Australia's second largest metropolis, fear the quality of life that once lured southerners may be lost.
"The city's beautiful, it's blossomed," says Kennedy. "But we're going to have to seriously address infrastructure, not just energy or electricity. Otherwise the city's going to plateau and get more and more unliveable and it's livability that's important."
Beattie agrees growth can create as many problems as benefits for a region that prides itself on its relaxed, laid back lifestyle.
"I love this place. The real challenge for us is to keep that quality of life," says Beattie. "Is growth a two-edged sword? Yes, but we are prepared for it, we are changing. We have avoided the Sydneyisation of Queensland."
But as long as Queensland continues to be the "engine room" of the Australian economy producing four out of every 10 new full-time jobs in the past year young families will continue to move north.
It is the opportunity to enter the housing market and to secure employment with the warm climate as an added bonus that is drawing interstate migrants, according to Matusik.
"To really reverse migration there would have to be falling job prospects," he says. Queensland's unemployment rate is 5.5 per cent a 23-year low.
Businesses too are being lured to Queensland, not just by the lowest payroll tax in the country (4.75 per cent) but by incentives grants offered by the Beattie government, which totalled $53 million in 2002-03.
But Salt warns the growth problems confronting Queensland are not just confined to the state's south-east. Sea change communities along the coast are struggling to cope with the influx of wealthy southerners who come to small towns to escape the cities but still expect metropolitan services.
"It may have been OK 20 or 30 years ago to just provide water, sewage and roads, but these days people expect a higher level of service provision from local authorities," says Salt.
"The dark side [of sea change] is not just the bleedingly obvious, such as roads and water although it is difficult to meet those. The pressures go well beyond that."
In the longer term, there are some real threats looming. Matusik says unless infrastructure issues are addressed Queensland is in danger of mirroring California which is now experiencing population loss and a raft of bad infrastructure problems in the next 10 to 15 years.
Queensland's time in the sun could ultimately fall under a similar shadow.
http://afr.com/premium/articles/2004/10/24/1098556291464.html
Dark side of a Queensland sea change
Mark Ludlow and Stephen Wisenthal with Kathy Mac Dermott
25 October 2004
Queensland might be the boom state that has long benefited from "sea-change" southerners moving north to a better life and a near-perfect climate. But it has a dark little secret.
The recent power crisis, which showed Queensland had not been spending enough on its power distribution network over the past decade, is the tip of the iceberg of infrastructure problems Premier Peter Beattie does not want potential migrants and investors to see.
More than 1 million people are predicted to move to south-east Queensland over the next 20 years, and the Beattie government is only now coming to terms with the catch-up required to keep on top of the infrastructure needs of the fastest-growing state in Australia.
The Premier who loves describing Queensland as the "California of Australia" is frantically trying to adjust to the dark side of sea change.
The irony of California's power crisis, which was the downfall of once-popular state governor Gray Davis, is not lost on Beattie's critics, who believe he could suffer a similar fate.
While Beattie and his majority government are more than happy to surf the wave of economic growth with 1100 arrivals each week bringing new taxpayers to fill government coffers they are now facing the downside of growth.
"It's not too crowded. It's just our infrastructure hasn't kept pace with our growth," says prominent Queensland businessman Jim Kennedy.
"If all the politicians of all the political parties that have been in power over the last few years had built things for the future rather than just for the present, we wouldn't have this problem."
Queensland's chief executive officer of the Urban Development Institute of Australia, Brian Stewart, says new roads and better public transport are two critical issues if Queensland's quality of life is to be protected.
"There is certainly a very strong feeling that we are in catch-up with major infrastructure. What we need is more strategic larger items such as an upgrade of major highways and planning for transport infrastructure, such as a VFT [very fast train]."
Last week, Queensland Resources Minister Stephen Robertson warned that the state could be facing a water crisis by 2020 as the climate became warmer and the number of days over 35 degrees doubled.
Water and power infrastructure may be stretched to the limit, but Beattie the eternal optimist with his trademark toothy grin says 86,000 people moving north of the Tweed each year can only be viewed as a positive for Queensland.
"These problems like the population coming here are, at the end of the day, a strength for us, as long as we manage it," Beattie told the The Australian Financial Review.
"As a government we are looking five, 10, 20 years down the track. We are trying to adapt strategies for the future of the Queensland economy."
For Beattie, it's not just about building new schools and hospitals for interstate migrants, but creating a new knowledge-based economy to ensure the job-boom in the state continues.
"The real issue for us is to shift the cultural change in this state, which is happening. By cultural shift I mean everybody valuing what Smart State is about education, skills and training. We are building a new Queensland," he says.
He cites 5000 new jobs in aviation and 2500 new jobs in biotechnology as the first fruit of his strategy to move Queensland away from its reliance on traditional industries such as mining and tourism.
"Smart State strategy is changing the culture to one of innovation for new jobs. When people come the problem is not just finding them a home, not just finding them a school or hospital or road to drive or power to run everything, it's where are the jobs, where are the skills?"
"Skilling, jobs and education are the most important things to deal with that growth."
But amidst the hot air of the Smart State rhetoric which is espoused with monotonous regularity by Beattie and his ministers there are serious concerns about the ability of Queensland's road, rail, water and power infrastructure to cope with rapid growth.
A report prepared for the Civil Engineering Construction Alliance earlier this year found Queensland needs to invest a minimum of $1.4 billion a year on infrastructure to cope with a shortfall in spending by governments over the past decade.
It established that public capital investment in Queensland is about 76 per cent of the rate needed to maintain a similar standard and quality of infrastructure to NSW.
Paul Bidwell, general manager of peak business body, Commerce Queensland, says much of the state's infrastructure is at "crisis point".
"There is a real risk because of the real lead time to develop infrastructure. Energy, water and transport they've all got a long lead time. You can't start to fix them when you've got a problem."
Local researcher Michael Matusik says the cracks appearing in Queensland's infrastructure are starting to dent the flow of interstate and overseas migrants, with migration falling from 1300 a week last year to the current rate of 1100 a week
"The cracks should have been fixed five to six years ago, but they need to be fixed now," says Matusik.
John Mulcahy, managing director of Suncorp Metway, Queensland's largest listed company and a major lender to property developers, believes the Beattie government is finally starting to show signs of listening.
"I think that certainly the messages from the last budget from the Beattie government suggest that they are recognising the need for infrastructure investment. I'm pretty confident that Queensland will make the right investments."
"So far they've done a good job and I think they recognise pretty clearly that a lack of infrastructure will slow that growth."
In the 2004-05 budget, the Beattie government allocated $6 billion to capital works, up $1 billion or 19 per cent from the previous year.
In the aftermath of the damaging Somerville Report released in July, the government which fears continued power outages could cost it office at the next election has also fast-tracked $53 million in maintenance work to be completed before Christmas.
The matter was further complicated when Energex chief executive Greg Maddock committed suicide last month.
New Energex chief executive Gordon Jardine says he can't promise there won't be power outages over summer. But he is confident the existing network which faced growth of 13.9 per cent in demand last year will adapt to meet the needs of the growing population.
"My focus is on the coming summer and making sure we deliver the best outcome for all the electricity consumers in south-east Queensland," Jardine told reporters after his appointment last month.
"We've got plenty of money to do the job this summer, but the one thing we are short of is time. But the Somerville Report outlined the challenges to the power network and the company is up to the challenges."
One of the most obvious signs of Queensland's infrastructure problem is the worsening traffic problems, especially in the state's two biggest cities, Brisbane and the Gold Coast.
While traffic problems may pale in comparison with Sydney, locals have noticed a worsening in conditions during the past decade.
Car journeys that used to take 20 minutes are taking more than an hour during peak periods. Congestion on some key arterial roads in Brisbane and the Gold Coast is now being compared with peak-hour on Parramatta Road in Sydney which is not a good advertisement for newcomers trying to escape gridlocked southern cities.
Brisbane residents were getting so sick of traffic they elected Liberal candidate Campbell Newman as the Lord Mayor. Newman campaigned almost solely on anti-congestion and a pledge to build a five-tunnel orbital road to ease the capital's traffic woes.
"Transport and traffic is No.1 issue in south-east Queensland today," Newman told the AFR.
A poll conducted for Brisbane City Council found transport and traffic issues were more important than health and education.
Property adviser with KPMG and demographic expert Bernard Salt, the author of The Big Shift, says transport issues are more important to voters than other types of infrastructure.
"I think people vote on traffic, not on infrastructure like power or water," says Salt. "This is an issue that detracts from the quality of life of the individual on a daily basis. Every bloody day driving to or from work or to the shopping centre it's a constant reminder."
Another problem in some Queensland cities is water. Showers on Surfers Paradise beaches have been shut off for the past couple of years because of water shortages.
It is another sign in the daily life of Queenslanders that indicates everything is not perfect in the Sunshine State.
The founder and managing director of Queensland's second biggest company, Flight Centre, Graham Turner, believes a population cap is the answer to south-east Queensland's growing pains.
"That's the challenge there's just too many people," says Turner. "I think we're getting overpopulated in south-east Queensland and the government needs a policy to try to cope with that such as putting a cap on the population like they've done in Noosa. That's their major failing."
But Beattie rejects suggestions the government cannot cope with south-east Queensland's population expanding from 2.4 million now to 3.5 million in 2025.
He points to the establishment of the Office of Urban Management, headed by his right-hand man, Deputy Premier and Treasurer Terry Mackenroth, as an example of his government's active approach to adapting to the strains of growth.
The office which will act as a "planning body with teeth", forcing local councils to submit their plans to the state government to ensure development is not winning over environmental protection will release its draft plan for south-east Queensland on Wednesday .
"We expect there will be arguments with councils from time to time. The reality is the large part of development will be in the south-east corner, so we need to get that development right and manage it. And we will," he warns.
But many locals who have watched Brisbane grow from a large country town to a city that is predicted to overtake Melbourne in 15 years as Australia's second largest metropolis, fear the quality of life that once lured southerners may be lost.
"The city's beautiful, it's blossomed," says Kennedy. "But we're going to have to seriously address infrastructure, not just energy or electricity. Otherwise the city's going to plateau and get more and more unliveable and it's livability that's important."
Beattie agrees growth can create as many problems as benefits for a region that prides itself on its relaxed, laid back lifestyle.
"I love this place. The real challenge for us is to keep that quality of life," says Beattie. "Is growth a two-edged sword? Yes, but we are prepared for it, we are changing. We have avoided the Sydneyisation of Queensland."
But as long as Queensland continues to be the "engine room" of the Australian economy producing four out of every 10 new full-time jobs in the past year young families will continue to move north.
It is the opportunity to enter the housing market and to secure employment with the warm climate as an added bonus that is drawing interstate migrants, according to Matusik.
"To really reverse migration there would have to be falling job prospects," he says. Queensland's unemployment rate is 5.5 per cent a 23-year low.
Businesses too are being lured to Queensland, not just by the lowest payroll tax in the country (4.75 per cent) but by incentives grants offered by the Beattie government, which totalled $53 million in 2002-03.
But Salt warns the growth problems confronting Queensland are not just confined to the state's south-east. Sea change communities along the coast are struggling to cope with the influx of wealthy southerners who come to small towns to escape the cities but still expect metropolitan services.
"It may have been OK 20 or 30 years ago to just provide water, sewage and roads, but these days people expect a higher level of service provision from local authorities," says Salt.
"The dark side [of sea change] is not just the bleedingly obvious, such as roads and water although it is difficult to meet those. The pressures go well beyond that."
In the longer term, there are some real threats looming. Matusik says unless infrastructure issues are addressed Queensland is in danger of mirroring California which is now experiencing population loss and a raft of bad infrastructure problems in the next 10 to 15 years.
Queensland's time in the sun could ultimately fall under a similar shadow.