Archive for October, 2009

Victor Harbor aged care (BEST PRACTICE)

October 16, 2009

 Silverhawk muses above about how local communities might attract business and government marbles rolling around the landscape.

 Well here is a great example. Victor Harbor – aka known as ‘Victor’ – is a typical seaside town. It is where the pride of South Australia lost its innocence in hot summers long gone. Some have now retired there with a wistful gaze and a rug on their laps. (My in-laws live there!).

 Anyway, Graeme Maxwell et al at Victor Harbor Council explain they have the oldest age cohort in Australia (54.1 years), an excellent hospital (albeit a shortage of GPs), and now a priority rollout of the National Broadband Network. We got talking about the potential of these factors to underpin a health care precinct.

The vision splendid – research associated with an ageing population (Flinders Uni has a rural clinical school there), clinical trials for drugs for elderly patients, design and manufacture of gophers, wheelchairs, rehab devices etc., alternative medicine, web-based businesses, golf courses, walking trails, adventure tourism, knowledge-based outdoor jobs for youths. And a more balanced population age structure.

You don’t need to be prescriptive – the investors will determine the specific business activity. But th locals need to remove impediments and get the right mix of infrastructure to support these businesses.

But my vision doesn’t get much encouragement from the SA Government’s 30-year plan for Greater Adelaide. It makes scarce reference to Victor. I actually rang the folk in the Department of Planning & Local Government to check that Victor (one hour’s drive from Adelaide) is inside the geographic scope of this exercise. When I was assured that the answer was ‘yes’, I respectfully suggested that they could look a bit more closely at Victor. They obviously thought I was being a smart-arse because the line went dead.

But the 30-year plan certainly talks about health and wellbeing, business clusters and growth corridors. Is the SA Government leaving it to the invisible hand of the market to fill in the details? From my experience of tracking how entrepreneurial hot spots emerge, there are usually three success factors.

  • A trigger via a new piece of infrastructure that gels with other economic and social infrastructure to establish a locational advantage – the NBN roll-out might be that trigger.
  • Local champions to raise awareness and press buttons – to connect to external champions. Coincidentally, the 3 federal Ministers relevant to health care are women (Macklin, Roxon, Gillard) as are the 2 state ministers (Lomax-Smith, Rankine). And 7 of the 10 councilors are also female! 
  • A collaborative structure that can connect the dots – the Fleurieu RDB is being formed.

Anyone for marbles?

October 16, 2009

 A national economy is a mosaic of integrated regional economies. And they are essentially basins of attraction for private and public sector investments, that in turn drive economic activity and wealth.

Imagine each basin varying in size, with different sized marbles rolling around looking for a home. Large cities attract both business marbles and government marbles. But small towns and distant regions have shallow basins, and any business marbles don’t stick around if things get slippery – they gravitate to larger nearby basins, and the government marbles follow the action.

The business marbles have shrunk in recent times due the GFC winter events, so the government marbles have grown in size and become bolder.

The biggest is the PM marble (gold) that rolls around spreading largesse wherever it can.

The next biggest marble is Treasury/Finance (black), but it doesn’t get out much, and remains nailed to the Canberra basin.

And there are big pink marbles – community services (FAHCSIA), health and education. They are incredibly active, smooching around big and small basins alike, looking to do good things. They have a feminine side because Mesdames Macklin, Roxon and Gillard are in charge. But their progress is slowed by jaffa-sized marbles rolled in their path by things called the states.

The Defence marble is also big, adorned with medals and ribbons. It has a strong masculine side and it rolls where it likes, spilling more than it dispenses.

And the Infrastructure marble is blue because it’s controlled by males infatuated with planes, trucks and trains. This particular marble has been rolling around for over a century, but says it’s close to making things fit, despite many jaffas rolled out by the states.

Then there are four medium-sized industry marbles – innovation, industry, science and research; broadband, communications and the digital economy (BCDE); agriculture, fisheries and forestry; resources, energy and tourism. They are RED because Treasury thinks they are dangerous. The BCDE marble has flashing red lights due to its promised expenditure across all basins.

The two green marbles are climate change-water and environment-heritage-arts. They have a feminine bent, shamelessly rolling around most basins with a mix of carrots and sticks. Jaffas are also in evidence.

Contributed by Silverhawk – article appears in the Good Oil column (LG Focus – October 2009)

The connected university (BEST PRACTICE)

October 7, 2009

 A new UK report says the UK’s universities are precious national assets. And with the collapse of the UK’s financial services sector, universities are a key to the revival of innovative businesses.

The report highlights the importance of universities as sources of knowledge and skilled employees, as well as centres for regional economic clusters e.g. Cambridge. In the last 15 years, the process of formal knowledge transfer – developing spin-out companies, profiting from patents and licences – has been professionalised. This ‘commercial university’ model has helped promising clusters emerge.

More recently, the ‘connected university model’ has emerged – building clusters, connecting to the national and international economies, bringing together thinking, practice, and finance. Several ways to do this:

  • Ensuring tech transfer organisations are performing at the standard set by leading UK institutions.
  • Recruiting and developing ‘boundary spanners’ – people who can make the linkages.  
  • Better measuring benefits of university-business interaction and communicating them to the public.

 Local government should look at how it applies planning regulations to universities. Physical spaces for business interactions are important. Also a need for a broader dialogue on the role the university in local economic development. 

The connected university (PDF).

Contributed by Professor Roy Green (UTS).

Inland Rail is THE opportunity to build capacity, says Silverhawk

October 7, 2009

The Regional Economics Conference (Parkes NSW) in July 2009 saw Silverhawk speaking about the ‘Out of Sight – Out of Mind’ syndrome – or how the Sydney-Canberra-Melbourne triangle forgets those outside it. Other speakers in the session – demographer Bernard Salt and RDA Chair Sandy Morrison – ran complementary themes.

Silverhawk’s basic proposition was that the economic and population stagnation of inland NSW can be turned around. To explain it away to the Drought, the lure of the big cities and the Seachange effect is simplistic and defeatist.

The Inland Rail project is a litmus test. The early analysis is that it is “not financially viable as a standalone commercial entity.” Minister Albanese has thus asked the consultants to now examine how to (a) generate additional tonnages (b) lower capital costs (c) identify funding via different sources.

Re the low rail tonnages, no surprise. There is a serious lack of value-adding industry in the regions – check the trade statistics, or the imported foods on the supermarket shelves! Silverhawk suggested that councils along the route build an agenda with federal and state governments around:

  • Inwards investment missions.
  • Global supply chains.
  • Infrastructure and industry portfolios talking to each other.
  • Development zones and locational incentives (these are not heretical concepts). 

Re lowering capital costs, the cost of the Inland Rail project is around $2.8 to $3.6 billion – the figure might be nearer $2.5 billion if you weed out the ‘cost plus’ thinking. Also opportune to revisit the rail-road tax regimes. If heavy trucks paid full tote odds for the road damage, deaths, pollution, congestion they cause, rail MUST be more attractive.

Re the funding from different sources, the Building Australia Fund and super funds are loathe to finance the public interest. Silverhawk suggested they measure the public interest, and determine an equitable share for each level of government? EXAMPLE – assume the public benefit of the Inland Rail is $500m, and local communities derive $200m of this via rising property valuations, jobs etc. A cost-sharing formula might determine who should pay what along the route. Imagine – Wangaratta ($10m), Albury-Wodonga ($25m), Wagga ($25m), Junee ($5m) Parkes ($15m), Narromine ($5m), Dubbo ($25m), Moree ($10m), Toowoomba ($25m) etc. Then imagine a COAG session with 20-25 Mayors putting the deal on the table.

The Sigrid Effect

October 7, 2009

 Much of the McKinsey and OECD thinking is about regional communities needing to find their own niches, and developing distinctive capabilities around these niches. Indeed, overseas visitors often refer to a lack of distinctiveness of our towns.  

It was thus interesting to hear Bernard Salt speaking at Parkes about how population growth of towns can be triggered by events – Echuca benefited from the Sigrid Effect (i.e. Sigrid Thornton and the ‘All The Rivers Run’ TV series) because it marketed the area as a Tree Change destination.

 It gets you thinking – Torquay (Rip Curl, Quiksilver), Wahgunya (Uncle Toby’s), Shepparton (food), Armidale (education) got their kickalong via company investments or public infrastructure.

And now Industry Minister Kim Carr is funding the development of precincts e.g. minerals processing in Mackay, defence in Dandenong, clean energy in Newcastle, creative industries in the Sydney CBD. Local councils are well-placed to develop precincts with the support of federal and state governments.

Contact us to learn how.

Passionate amateurs – aquaculture

October 7, 2009

 Dear Cockatoo members

 Hopefully you will have visited our website www.growfish.com.au and read that it’s been placed 5th in the world ranking.  Last year we were ranked No.6. Needless to say we are mightily chuffed to achieve this ranking, as it puts Gippsland, Victoria and Australia on the map as a source of seafood news.

 The significance of our achievement can be put into perspective by seeing who are the top 10 websites – 1. FIS (Fish Info & Services), Japan – 2. Pan Acuicola, Mexico – 3. Diversified, USA – 4. NHST, Norway – 5. Gippsland Aquaculture Industry Network Inc. Australia – 6. FAO, Italy – 7. The Oban Times, UK  – 8. Seafood.com, USA – 9. FAO, Malaysia – 10. Mecator Media, UK

 What amazes us is that all the others have paid staff and money is no object, and in some cases Governments are involved. We in GAIN are just a bunch of passionate, dedicated amateurs.  Passionate about aquaculture and its place in the world food chain.  If you think being linked to our site would increase the awareness of your site and the information you want to broadcast, then by all means asked to be linked.  We want to promote anything associated with aquaculture so you will be more than welcome.

Regards, Barry Dance, Deputy Chairman, GAIN – go to http://www.growfish.com.au/

Recycled rubber (BEST PRACTICE)

October 7, 2009

 Interest in the recycled rubber sector will be sparked on 4 November when the feds and states announce a revolutionary tyre recycling system.

It has taken close on 4 years. The new arrangements will involve a $1 tax on imported passenger tyres, with the proceeds (possibly $12-15m per year) being spent on R&D for local firms. The aim of the new program is to increase the recycling rate to 95% or thereabouts. Currently old tyres are burned in cement kilns, buried at tip sites or thrown into dams.

 The big opportunity is for councils and development agencies to attract companies to establish facilities to manufacture rubber crumb and the downstream products such a rubber matting and footpaths, underlay for soccer, hockey grounds etc, road safety barriers. In rough terms, developed nations generate one tyre/head of population per year.

Recent improvements in processing technology (UK, Germany) mean that a viable processing plant can be established with feedstock of one million tyres annually. Long distance haulage of used tyres in not economically viable, so regions of one million plus should be able to sustain their own vertically-integrated recycled rubber industry. Regional towns will be attractive locations for downstream product manufacture – Warragul (Vic) is a first-mover.

 The proposal for a $1/tyre tax to stimulate R&D and processing activity is new to Australia, and other nations should track our progress. Contact us if you’d like to develop a recycled tyre activity.

 

Infrastructure decisions based on poor financial analysis

October 7, 2009

Henry Ergas (Cockatoo member) and Alex Robson claim in a recent paper that the feds are approving big projects with poor cost-benefit analysis. Moreover, despite the commitment to transparency, very little information has been disclosed on the evaluation.

 Ergas and Robson examined the largest project – the construction of a new National Broadband Network – and found that in NPV terms, its costs exceed its benefits by between $14 billion and $20 billion, depending on the discount rate used. They say it’s inefficient to proceed if its costs exceed $17 billion, even if the alternative is a world in which the representative consumer cannot obtain service in excess of 20 Mbps. The current estimates of the costs the NBN are north of $40 million.

 They also examined the cost-benefit assessment for the second largest project, a rail link in Victoria. They say lower-cost alternatives were not taken into account e.g. increasing capacity via improved efficiency and better governance of the rail network. Even taking that exclusion on board, they say the appraisal approved by Infrastructure Australia is seriously flawed e.g. double counting, manifestly incorrect estimates of benefits.

 They argue for greater transparency, serious audits etc. Ergas’ views will not please PM Rudd and his advisers – Henry is well-connected with the federal bureaucracy and the Liberal Party. Watch this space.

 “The Social Losses From Inefficient Infrastructure Projects: Recent Australian Experience”, A paper for the Productivity Commission Round Table on Strengthening Evidence-Based Policy In The Australian Federation, Canberra, 17-18 August .http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1465226

Dandenong wins Defence Centre

October 7, 2009

The Industry Minister, Senator Kim Carr has launched a $21.2 million Defence Industry Innovation Centre. Based in Dandenong (Vic), it will assist Australian defence businesses.

“The Government recognises that businesses across Australia operate in an increasingly integrated international marketplace. A key challenge in responding to this is their capacity to develop strategies to become more competitive in the global community,” Senator Carr said.

The new Centre offers a range of hands-on services for SMEs, including free business reviews and supporting grants to help boost productivity and support the Australian Defence Force.

Our members are asking WHY Dandenong, given that regions like northern Adelaide, western Sydney and Townsville have a claim to such a Centre. The SES officer in charge explained to Cockatoo that some 200 defence-related companies are in the SE Melbourne/Dandenong area, and in any case two of the four advisers are to assist businesses in other regions. We suspect also that the Victorian Government was lobbying for this Centre. www.enterpriseconnect.gov.au

Postscript: Defence is about to ramp-up big expenditure for the Army’s School of Infantry. This has been off-on-off – but Lavarack Barracks (Townsville) and Singleton (NSW) are major beneficiaries.