The Federal Government’s recently released white paper, Our North, Our Future: A vision for developing North Australia, underlines the strategic and economic importance attached to regional industries in the country’s north.
Within the vision and, hopefully, the reality, industries like agriculture, tourism, and minerals and energy are recognised as having a key role to play in the region’s, and Australia’s, future prosperity.
This isn’t surprising, of course. Deloitte’s 2013 Building the Lucky Country series report, Positioning for prosperity? Catching the next wave, made exactly this point.
Gas, along with agribusiness, international education, tourism and wealth management, was identified as a ‘Fantastic Five’ industry with good prospects for growth at least 10 per cent faster than the average rate of global gross domestic product growth over the next 10 to 20 years.
As they turn on the taps on a series of mega projects, and just as commodity prices present a myriad of challenges, the big gas operators are at a critical point in their investment, construction and production journey.
These challenges reinforce another key message in our report – that no one can afford to be complacent.
Success isn’t assured for the gas sector, or any sector for that matter, comparative advantage is never static. The cost side of the equation was also identified as a threat to bringing opportunities to fruition, along with a lack of infrastructure as a strategic bottleneck.
This is why the White Paper process is so important, as it brings focus and resources to bear on the infrastructure issue in particular and, importantly, will provide funding and soft loans to help facilitate infrastructure investments.
It is important that the federal government listens to the key stakeholders as it shapes the policy details for the Northern Australia package.
Worthy projects will need certainty around their eligibility for assistance under any final plan. The White Paper, and the plan and industry assistance that will come out of it is, of course, forward looking.
For the here and now, industry players also should not forget that existing support measures might be available to them.
The Emissions Reduction Fund (ERF), for example, can be of benefit to emissions abatement and energy efficiency projects in the oil and gas sector.
There is also other federal government co-funding for infrastructure projects that generate spill-over economic benefits to local communities in disadvantaged regional areas, and state governments can be approached to assist with project facilitation.
The key in terms of access to assistance Deloitte Government Incentives Team has had success in assisting regional infrastructure investors to overcome investment bottlenecks and access government co-funding to bring strategic projects to fruition.
A problem we typically see for project proponents is that the return on investment for the project doesn’t quite stack-up, despite the fantastic benefits it might deliver for communities in terms of employment and other outcomes.
This is usually because of the need for expensive enabling infrastructure.
But by working with governments at all levels, an adviser can help its clients identify any available government funding opportunities and work with them to overcome other bottlenecks to bring these projects to fruition.
The Northern Australia package will provide even more scope to work with project proponents in the oil and gas space to get good projects over the line. One of the keys to success will lie in the federal government’s ability to shape the policy detail to ensure these kinds of projects are covered.
Damon Cantwell leads Deloitte’s government incentives team. Brian O’Meara is a team director. Both are based in Melbourne.