Article – Darwin set to come of age as front door to Asia

August 26, 2013
Ross Muir
The Canberra Times
Who would have believed that a remote northern settlement to keep out the French would become an important city for us? Yet George Goyder, Darwin’s founding father, saw its importance in 1869. And our colonial governments, even at that time, saw the benefits of a truly northern city. Darwin is set to play its role in Australia’s northward engagement. As building cranes rise over its skyline, our youngest and smallest capital city has come of age. It’s Australia’s front door to Asia. In the election campaign Kevin Rudd and Tony Abbott have revealed policies to develop the north. They have proposed several actions – tax incentives, a broad ornarrow focus on the region, development of agriculture, new infrastructure But what are the right choices? What key principles should guide us? Essentially, there are three. The first principle is that we should build on existing expansion – to boost population growth, commercial viability and economies of scale. In this, Darwin seems the only credible candidate. Cairns, Townsville, Broome and Karratha are too far south and not suitable for a range of reasons, including the damage economic growth could inflict on the Great Barrier Reef (Townsville and Cairns) and insufficient population size and service provision (Broome and Karratha). Moreover, Darwin provides a seaport much closer to Asia. With rising shipping tonnages through Darwin, shipping costs will fall. Darwin has the infrastructure and services of a modern city, including high-quality education and health infrastructure. It also has potential to accommodate fast population growth.
Darwin began to take off in the past decade through both private and public investments. Critical were the new East Arm Wharf, opened in 2001, and the extension of The Ghan railway to Darwin in 2003. This 3000-kilometre rail “tentacle” from Adelaide to Darwin has attracted freight for export through Darwin’s ports. Indeed, in the first five years alone Darwin’s East Arm Wharf experienced a fourfold increase in tonnage. It makes sense to build on this growth. With Darwin the recipient of huge private-sector investment in the oil and gas sector – and public investment in the defence sector – its population has sped past 130,000. Housing construction is booming, rental vacancies are low, and new suburbs – both in Darwin and its satellite city, Palmerston – are opening up fast. And a second satellite city, Weddell, is already planned. It will be needed within five years. In all, more than 8000 houses are either under construction or approved. Afurther 5000 housing lots can be provided in Weddell by 2025. The second principle is that “national benefit” must be our lens. We must make decisions about northern Australia through the lens of what provides the best economic and social benefits for the nation as a whole. An example of potential national benefit is the long-proposed rail line from Mount Isa to Tennant Creek – which would connect Queensland with The Ghan line to Darwin. A national interest lens reveals benefits, including reduction in pressures on shipping through the Great Barrier Reef. The proposed rail would also provide alternative export routes should, say, Darwin or Townsville ports be closed due to natural disasters (e.g., cyclones). Whatever the final decision, calculation of national benefit must carry the day over parochial concerns from individual states and territories. Decisions about the national benefit are not easy. But “vision” and “nation building” are crucial to making decisions that can only be properly assessed with a long- term perspective. In other words, we will never have all the facts. Courage is required. In this light former prime minister John Howard’s decision to fund the Alice Springs-Darwin railway – against the advice of the government technocrats – was a good call. The new owner of The Ghan line, Genesee & Wyoming Australia, which bought it last year, is running a thriving business. That is a good signal for private investment in the north. The third principle is that trade- focused physical infrastructure is vital. And private investment is the best way to provide it. Australia’s free trade agreements negotiated with our Asian neighbours help create the “psychology of trade”. They’re important. But more important is good physical trade infrastructure – rail and ports – which actually enables trade to take place at lower cost. The extended Ghan railway line from Adelaide boosted Darwin as a trade focal point. But as trade expands more infrastructure will be needed – including a larger port within the next decade. Eventually, as agricultural, horticultural and mining production expands in Western Australia’s Kimberley, a rail link from the Ord River region to Katherine (connecting with The Ghan to Darwin) could be viable. Present budget constraints won’t support full public funding of major northern infrastructure. For this reason governments should encourage the private sector to build and operate it. Commercial viability is needed to entice private investment. That means a focus on one major city in the north, i.e., Darwin. We should support full private direct foreign investment where the party clearly has the expertise – as is the case with Genesee & Wyoming Australia. These three principles are not exhaustive. But they can help to develop Australia’s north. Slowly our “centre of population” – now in NSW – will move northward.
Ross Muir is a recent director of the Northern Territory government’s growth planning unit. An economist by training, he worked with AusAID as a director of various Asian aid programs for 20 years. Before that he served in Jakarta as an Australian diplomat.
Courtesy of The Canberra Times

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