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KEEPWAGROWING
FOREWORD
Western Australia is in a time of major
transition. The resources investment
boom has wound down for now and the
completion of major Government projects
such as Elizabeth Quay, the Perth Stadium
and the City Link is in sight. The question,
therefore, has to be asked what will keep
WA growing?
The property industry can provide the
answer. As WAs second largest industry,
contributing in excess of $31 billion to the
State economy, property is an industry
perfectly positioned to pick up the growth
baton from the resources sector.
Joe Lenzo
WA EXECUTIVE DIRECTOR
PROPERTY COUNCIL OF AUSTRALIA
This is a summary report. The full report is available from the Property Council.
EXECUTIVE SUMMARY
Keep WA Growing puts forward an assessment framework to allow the identification
of strategic infrastructure initiatives that can unlock property investment and broader
economic opportunities that will support growth and diversification of the Western
Australian (WA) economy as it transitions from the mining investment boom.
The unprecedented growth experienced by WA over the first decade
of the millennium, as a result of the mining investment boom,
has come to an abrupt halt, placing complex economic and fiscal
challenges before the States policy makers. Indeed, in his 2015-16
Budget Speech, the WA Treasurer described this as:
3,000
9%
8%
ANNUAL GROWTH %
2,000
$ (MILLION)
1,000
0
-1,000
-2,000
-3,000
7%
FORECAST
6%
5%
4%
3%
2%
1%
2010/
2011
2011/
2012
2012/
2013
2013/
2014
2014/
2015
2015/
2016
2016/
2017
2017/
2018
2018/
2019
0%
JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
KEEPWAGROWING
The key here is quality projects. Now, more than ever, it is crucial
that the decisions made by the WA Government regarding potential
investment in infrastructure be based on the most comprehensive
possible framework; one that looks beyond the short-term and
embraces the full economic and social value that can be unlocked.
Development of
key outcomes
for assessment,
focussing on
economic activity
and social and
environmental
outcomes
Selection of
project long list
from currenlty
identified
initiatives
Projects
assessed through
high level
filter, against
economic,
social and
environmental
criteria
Refinement
of short list of
projects
Quantification
of potential
economic impact
analysis of shortlisted projects
Final list of
projects for
further, detailed
consideration by
Government
Quantification of potential economic impacts is based on a hypothetical build out of the infrastructure in question, which
has been framed based on publicly available information and assumptions about how outcomes might be optimised.
Assumptions around timing and capital expenditure in particular should be read in this context.
0
International Monetary Fund, 2014, Is It Time for an Infrastructure Push? The Macroeconomic Effects of Public Investment, World Economic Outlook
Australian National Accounts: State Accounts, 2013-14. Cat. No. 5220.0, ABS. + Census of Population and Housing: Working Population Profile, 2011. Cat. No. 2006.0, ABS
NEW BUSINESSES/INDUSTRIES
Facilitates investment in new business and industry as a result
of filling infrastructure gaps, or through promotion of a precinct
SUPPLY CHAIN
Improves upstream and/or downstream access and
opportunities for organisations that are horizontally or vertically
connected across the supply chain e.g. paddock to port
PRODUCTIVITY ENHANCEMENT
URBAN ACTIVATION
The final shortlist of three projects chosen for further analysis were:
ACCESS TO EMPLOYMENT
KEEPWAGROWING
BRETON BAY
BUNBURY VERY FAST
TRAIN
ELLENBROOK RAIL
PROJECT
MAX LIGHT RAIL
PERTH TO DARWIN
(NORTHLINK)
HIGHWAY
$1.2
bn
$2.1
bn
EXTENSION TO
MITCHELL FREEWAY
$291
mn
MUNDARING INFILL
SEWER PROJECT
N/A
N/A
URBAN ACTIVATION
$2.2
bn
$112
mn
N/A
$1.4
-2.1
bn
WESTERN TRADE
COAST
N/A
$3 bn
$9.5
bn
Strong
SUPPLY CHAIN
Moderate
PRODUCTIVITY
(INC AGGLOMERATION)
Limited
NEW MARKETS
None
NEW BUSINESS/INDUSTRY
Not Applicable
N/A
KEEPWAGROWING
RECOMMENDATIONS
Prepared by Urbis; Source: Pracsys Peri-Urban Strategic Economic And Environmental Initiative
KEEPWAGROWING
INFRASTRUCTURE
ESTIMATED COST
KEY ASSUMPTIONS
$1.8 billion
Phase one sees the development of infrastructure from Polytechnic West in the North to
QEII in the South West and Victoria Park Station in the South East.
Phase two extends the rail from QEII to the University of Western Australia and from
Victoria Park Station to Curtin University.
$350 million
DEVELOPMENT STAGE
The construction phase of the redevelopment of land around light rail stops, including at and around the Universities, is expected to create around 7,000
jobs. The development is also expected to generate an average land value uplift of 9.5% for property within a 400m radius of each light rail station.5
RESIDENTIAL DEVELOPMENT
COMMERCIAL DEVELOPMENT
OTHER DEVELOPMENT
10
OUTCOME
VALUE
COMMENT
Economic Activity
$5.5 billion
Employment
Productivity
13,000
n/a
Social
Environmental
Transport cost of greenhouse gas per 1,000 dwellings as a result of continued urban sprawl.
Golub, Aaron, Subhrajit Guhathakurta, and Bharath Sollapuram. Spatial and temporal capitalization effects of light rail in phoenix from conception, planning, and
construction to operation. Journal of Planning Education and Research 32.4 (2012): 415-429
7
Department of Infrastructure and Regional Development, 2015, Transport infrastructure and land value uplift <https://bitre.gov.au/publications/2015/files/is_069.pdf>
8
Peter Newman, 2010, The Costs of Urban Sprawl - Physical Activity Links to Healthcare Costs and Productivity. Environment Design Guide. GEN 85: pp. 1-13
9
Graham Currie, 2006, Bus Transit Oriented Development Strengths and Challenges Relative to Rail <http://www.nctr.usf.edu/jpt/pdf/JPT%209-4%20Currie.pdf>
6
11
KEEPWAGROWING
INFRASTRUCTURE
ESTIMATED COST
KEY ASSUMPTIONS
Services infrastructure
$112 million
Includes land, power and water infrastructure necessary for the development of the PEEI.
Under Urbis assumed rollout for the PEEI development from 2018, the investment could generate $8 billion in Net Present Value in economic activity
over a 20 year period and 9,500 FTE jobs when operating at full capacity.
DEVELOPMENT STAGE
It is assumed there will be a total of 290ha of land available for development by 2017. In 2018, the introduction of key industries will be a catalyst to spur
development of land, until it is fully developed in 2038.
TRANSPORT (WAREHOUSE)
DEVELOPMENT
INDUSTRIAL
DEVELOPMENT
AGRICULTURE
DEVELOPMENT
$400 million EST. CAPTIAL EXPENDITURE $170 million EST. CAPTIAL EXPENDITURE
The construction of the PEEI could see development of around $700 million generated, over the period 2018 to 2038 with a peak of approximately 650
FTE in construction jobs. The development is also expected to generate land value uplift of around 3%-10%.
Western Australian Planning Commission, 2015, Perth and Peel@3.5 million
11
WA Department of Planning, 2010, Directions 2031 and beyond
12
Peel Development Commission, 2014, Peel Regional Investment Blueprint Vision 2050
10
12
OUTCOME
VALUE
COMMENT
Economic Activity
$8 billion
Employment
Productivity
9,500 jobs
n/a
3% - 10%
Increase the attractiveness of the
region through greater provision
of jobs, reduced commute times
for local workers, etc.
Land use will see a reduction or
neutral impact on Peel Estuary.
GVA measured over a 20 year period from 2018 to 2038. Will generate significant
exports to new markets (Asia, Africa).
Peak number of jobs when park is fully developed.
Agglomeration and synergy effects. A key example being that the Business Park will
provide food processing and manufacturing from agricultural production in Food Zone.
Based on analysis commissioned by the Peel Development Commission.
Assumes that jobs created are accessed predominately by local residents.
Environmental
The Peel Water Initiative is a key aspect of this, providing recycled waste water from
the Business Park as agricultural water for the Food Zone. The Business Park will also
offer renewable power generation through biogas.
13
Linehan, Verity, et al, 2012, Food demand to 2050: Opportunities for Australian agriculture. Paper presented at the 42nd ABARES Outlook conference
13
KEEPWAGROWING
INFRASTRUCTURE
$225 million
$500 million
$1. 3 billion
This is a major development that will take many years to fully develop.
In modelling the economic activity and social benefits that expansion
of the Western Trade could unlock, Urbis has assumed the timeline of
development as described in the table above.
DEVELOPMENT STAGE
The construction of new road and service networks in the WTC, together with the staged building of an Outer Harbour and intermodal terminal, is
estimated to unlock $740 million in capital expenditure for development of primarily industrial facilities.
VALUE
COMMENT
Economic Activity
Employment
Productivity
n/a
14
14
Newman, P and Hendrigan, C, 2015, Perth Freight Link: Making the right investment in Perths Freight task, Curtin University
Source: Urbis
Prepared by Urbis
15
propertycouncil.com.au
urbis.com.au
Perth
Mezzanine Level, Australia Place
15-17 William Street
Perth WA 6000
08 9426 1200
Perth
Level 1
55 St Georges Terrace
Perth WA 6000
08 9346 0500
This report is dated July 2015 and incorporates information and events up to that date only and excludes any information arising, or event occurring, after that date which may affect the validity of
Urbis Pty Ltds (Urbis) opinion in this report. Urbis is under no obligation in any circumstance to update this report for events occurring after the date of this report. Urbis prepared this report on the
instructions, and for the benefit only, of WA Property Council of Australia (Instructing Party) for the purpose of Economic Assessment (Purpose) and not for any other purpose or use. To the extent
permitted by applicable law, Urbis expressly disclaims all liability, whether direct or indirect, to the Instructing Party which relies or purports to rely on this report for any purpose other than the Purpose,
and to any other person which relies or purports to rely on this report for any purpose whatsoever (including the Purpose).
In preparing this report, Urbis was required to make judgements which may be affected by unforeseen future events, the likelihood and effects of which are not capable of precise assessment.
Urbis has recorded any data sources used for this report within this report. These data have not been independently verified unless so noted within the report.
All surveys, forecasts, projections and recommendations contained in or associated with this report are made in good faith and on the basis of information supplied to Urbis at the date of this report.
Whilst Urbis has made all reasonable inquiries it believes necessary in preparing this report, it is not responsible for determining the completeness or accuracy of information provided to it. Urbis
(including its officers and personnel) is not liable for any errors or omissions, including in information provided by the Instructing Party or another person or upon which Urbis relies, provided that such
errors or omissions are not made by Urbis recklessly or in bad faith.
This report has been prepared with due care and diligence by Urbis and the statements and opinions given by Urbis in this report are given in good faith and in the reasonable belief that they are correct
and not misleading and taking into account events that could reasonably be expected to be foreseen, subject to the limitations above.