Australia's last frontier may be turning into a project hot spot. Its huge, sparsely populated northern region has remained largely underdeveloped due to a harsh climate, land tenure claims and lackluster infrastructure. But that may soon change: The national government wants to jump-start the Northern Territory's economy to attract foreign investment and produce goods to export to Asia's growing middle class.
The government is vowing to cut red tape for projects, invest in infrastructure, relax visa rules and caps on seasonal workers, and fund projects that the private sector wouldn't want to sponsor.
But some practitioners with experience working in the region voice a note of caution. “Project managers must accept that Northern Australia is vastly different from Southern Australia,” says Andrew Fisher, director, Sensu Homes, Darwin, Northern Territory. “It has an entirely different climate, culture and business environment.”
Still, “while there are certainly risks, the opportunities up here are vast. We haven't yet scratched the surface,” says Mr. Fisher.
The government also sees vast project opportunities up north. To ease private-sector concerns about the viability of projects in the region, in June then-Prime Minister Tony Abbott announced AU$1.2 billion in funding for infrastructure projects. That includes AU$600 million for roads, AU$200 million for water-storage projects, AU$100 million to improve cattle supply chains and nearly AU$40 million to upgrade airstrips. Separately, the government set up the AU$5 billion Northern Australia Infrastructure Facility to get projects such as ports, pipelines, and electricity and water infrastructure off the ground. The focus will be on projects that have the ability to generate a return, but not at a level sufficient to be 100 percent financed by the private sector.
The government's moves should spur private-sector interest in projects, says Clara Cutajar, a Sydney-based transaction services partner, PwC Australia, a PMI Global Executive Council member.
In particular, she sees opportunity in cattle farming and the development of liquefied natural gas, but only if infrastructure and land ownership challenges are overcome. Indigenous populations own much of the land in Northern Australia, so success hinges on “meaningful engagement” with those communities, she says.
“Project proponents need to be cognizant of that context,” she says. “They can mitigate risks by working in partnership and by establishing meaningful relationships with indigenous people over the longer term.”
“Project managers must accept that Northern Australia is vastly different from Southern Australia. It has an entirely different climate, culture and business environment.”
—Andrew Fisher, Sensu Homes, Darwin, Northern Territory
Cautionary Projects
Past projects offer cautionary tales. A dispute with landowners and environmentalists forced Australian energy producer Woodside to ditch plans for a US$45 billion liquefied natural gas plant in Western Australia in 2013.
OPENING UP THE NORTH
Even before the Australian government announced AU$1.2 billion in funding for Northern Australia infrastructure projects, the private sector had projects underway.
PROJECT SEA DRAGON
Location: Legune Station, Northern Territory
Schedule: 2015-2018
Budget: AU$1.45 billion
Summary: Targeting growing demand in Asia, Seafarms Group is backing a project that may end up being the largest prawn farm in the country. The farm aims to produce 100,000 tonnes of black tiger prawns each year.
PORT MELVILLE
Location: Melville Island, off the coast of the Northern Territory
Schedule: 2013-2015
Budget: AU$130 million
Summary: The new port on the Tiwi Islands consists of a wharf, 36 hectares (89 acres) of land, and space for fuel storage and distribution.
INPEX ICHTHYS LIQUEFIED NATURAL GAS PROJECT
Location: off the coast of northwest Australia
Schedule: 2012-2017
Budget: US$34 billion
Summary: This project will build facilities 220 kilometers (137 miles) off the coast, onshore infrastructure and an 889-kilometer (552-mile) pipeline to connect the two.
STAGE 2 OF DARWIN CITY WATERFRONT REDEVELOPMENT PROJECT
Location: Darwin, Northern Territory
Schedule: 2012-2020
Budget: AU$90 million
Summary: This construction project includes 1,300 residential apartments, mixed-use space, roads and parklands.
Waterfront in Darwin, Australia
Resources have also been a challenge. Plans to develop a pilot biofuel site in the Pilbara region of Western Australia with an AU$4 million government investment were halted when the area's water source, dependent on a mine's dewatering operations, was briefly interrupted. The water reserves began to rebuild in July, and the project has since restarted.
One way the project team is protecting itself against similar hiccups down the road is through an advisory board of regional experts on land and water resources. The goal is to have “people there with a solid understanding of the groundwater, surface water and mine dewater operations in the Pilbara” to advise the project, Chris Schelfhout, of Western Australia's Department of Agriculture and Food, told Australian Broadcasting Corporation in July.
Project managers interested in capitalizing on Northern Australia's potential should not be deterred, Mr. Fisher says.
In Darwin, the capital of the Northern Territory, the government's ambitious plan is being greeted as an opportunity to further develop the area as a destination for freight and cargo shipments from Asia. Mr. Fisher is particularly hopeful about the government's infrastructure fund, which he said could boost the agriculture sector by opening up arable land and spurring private irrigation projects.
“If the system is simple and access is straightforward, it should attract some larger projects that were previously marginal.” —Ambreen Ali
“If the system is simple and access is straightforward, it should attract some larger projects that were previously marginal.”
—Andrew Fisher