Commercial services

Value-for-money infrastructure and attracting investment

Treasury supports economic growth in Queensland by providing timely financial and commercial advice to government and by leading major commercial government projects to achieve time, cost, risk and quality objectives. This service includes:

  • providing commercial and financial advice to government on service and infrastructure projects and managing the procurement of privately financed major public infrastructure and service projects
  • working with government agencies to realise the contracted value of major public infrastructure and service projects through the delivery and operations phases
  • providing commercial and policy advice on private sector investment in Queensland
  • managing the state’s engagement in the Northern Australia development agenda
  • managing the state’s project assessment framework to drive rigorous project development across government
  • assessing government-owned corporations’ (GOCs) capital investments and driving a focus on maximising performance and rates of return through improved commercial focus
  • leading implementation of a new financial provisioning scheme for the resources sector
  • advising government on competition policy and legislation, economic regulation and structural policy
  • leading the state’s negotiations with the Australian and local governments on City Deals.

 Key issues in our environment

Uncertainty about Australian energy policy may impact on the government’s ability to deliver reliable, affordable energy with an appropriate mix of baseload and renewable energy.

Objective

Enable sustainable growth that supports current and future government

Powering Queensland Plan

The government is committed to making Queensland a clean energy leader through reaching the 50 per cent Queensland Renewable Energy Target (QRET) by 2030.

Throughout 2018–19, Treasury assisted with the implementation of the $1.16 billion Powering Queensland Plan for affordable, secure and sustainable electricity supply for the state. Major actions under this plan included:

  • one-off funding of $771 million to help stabilise electricity prices by funding the removal of Solar Bonus Scheme costs from electricity prices for three years from 1 July 2017 to 30 June 2020
  • progressing the Renewables 400 auction to procure up to 400 megawatts (MW) of renewable energy
  • directing Stanwell to put downward pressure on wholesale electricity prices and to return Swanbank E power station to service
  • establishing CleanCo Queensland Limited (CleanCo), Queensland’s new renewable energy government-owned corporation (GOC).

As a result of these initiatives, Queensland’s wholesale prices remain the lowest in the National Electricity Market (NEM).

Queensland’s ownership of its energy assets means its businesses can be run for the benefit of Queenslanders, not just for profit. The Powering Queensland and Affordable Energy plans have reformed the market and delivered lower prices to Queenslanders.

Queensland has experienced significant growth in the renewable energy sector in recent years. Over 1,500 MW worth of projects have commenced operations, bringing more than $3.1 billion worth of investment and more than 3,200 construction jobs. A further $800 million worth of projects are under construction or committed, and are set to deliver another 1,000 MW of generation capacity by the end of 2019. These works will generate more than 820 construction jobs, and put Queensland on track to achieve the 50 per cent QRET by 2030.

CleanCo Queensland Limited

In December 2018, CleanCo Queensland Limited (CleanCo) was established as the state’s new renewable energy GOC.

CleanCo is a long-term structural solution to assist in the government’s energy affordability objectives that will also offer renewables-focussed solutions to the energy market. CleanCo will improve competition in the wholesale electricity market, placing downward pressure on prices and increase system security and reliability.

With a mandate for securing 1,000 MW of renewable generation by 2025, CleanCo will help achieve Queensland’s Renewable Energy Target of 50 per cent renewable energy by 2030.

On 31 October 2019, CleanCo will have a portfolio of the state’s renewable and low-emission power generation assets and commence trading in the National Electricity Market (NEM). The foundation portfolio includes Wivenhoe Power Station and pumped storage hydro, Swanbank E, and the Barron Gorge, Kareeya and Koombooloomba power stations, transferred from CS Energy Limited and Stanwell Corporation Limited.

CleanCo will add to this foundation portfolio with new renewable energy generation assets over time, with government making an initial funding injection of $250 million for CleanCo to build, own and operate renewable energy assets.

Queensland renewables output

Queensland renewables output
Analysis

By the end of 2019, approximately 16.2 per cent of Queensland’s electricity generation is expected to be comprised of renewables. This is expected to grow to 21.6 per cent by the end of 2020.

Treasury will drive forward with assisting CleanCo in its establishment while continuing to work with the state’s existing energy generation businesses, Stanwell and CS Energy, to ensure they also have opportunities to be part of Queensland’s renewable energy future alongside CleanCo.

Read more about CleanCo at cleancoqueensland.com.au.

City Deals

City Deals are a mechanism of the Australian Government’s Smart Cities Plan. They provide a new approach for all levels of government to work together to transform Australian cities. The Cities Transformation Taskforce in Treasury is leading the state’s negotiations with the Australian Government and local governments on City Deals and Regional Deals.

As a consequence of the TransformingSEQ: The South East Queensland City Deal Proposition released by the Deputy

Premier in early 2019, the Australian Government committed to negotiating an SEQ City Deal. A Statement of Intent was signed by local, state and the Australian Government. Negotiations for the agreement are expected to be finalised by mid-2020.

Australia’s first City Deal was secured for Townsville. Throughout 2018–19, Treasury continued to work with the Australian Government and Townsville City Council on this deal. A formal review of the City Deal will begin by the end of 2019.

Jobs and Regional Growth Fund

Treasury works in partnership with the Department of State Development, Manufacturing, Infrastructure and Planning to deliver the Jobs and Regional Growth Fund, which creates jobs for Queenslanders and grows regional economies.

Nearly 1,000 operational jobs will be generated by fund-supported projects over the next five years. In 2018–19, the fund assessed and supported projects including:

  • NIOA’s artillery shell forging plant in Maryborough, which will create up to 100 jobs when the facility is fully operational in 2022
  • Jimbour Beef and Bacon’s new meat processing facility on the Western Downs, adding 35 new full-time jobs over the next three to four years
  • Laminex Australia’s re-opening of the former Carter Holt Harvey timber processing plant in Gympie, securing continued employment for 42 local workers.

The 2019–20 Queensland Budget allocated a further $25 million to the fund, taking its total to $175 million.

Business Development Fund

The Business Development Fund is the government’s $80 million early stage and follow-on venture capital fund for growing innovative Queensland businesses.

During 2018–19, the fund invested $28 million in businesses, with a further $39 million secured in co-investment.

Investments included:

  • RedEarth Energy which develops and manufactures innovative solar storage batteries
  • Implicit Bioscience, a clinical-stage biotech drug development company focused on immunotherapy for a range of diseases
  • Cairns-based Didgigo, which seeks to further commercialise its tailored travel itinerary platform
  • Verton Technologies, which produces devices that increase the safety, productivity and efficiency of hoisting operations
  • Valti/Croomo, for its PrepL on-line interactive learner driver training module.
  • This brings the total amount invested by the fund to more than $59 million, and more than $79 million in co-investment since 2015–16.
BDF and co-investment – total investment since inception

BDF and co-investment – total investment since inception

Analysis

BDF’s leverage of private co-investment, combined with the funds investment of $59 million, resulted in nearly $140 million in investment into innovative Queensland-based businesses since the fund’s inception.

Resources Regional Development Framework

Treasury makes a key contribution to securing resources investments under the Resources Regional Development Framework. This framework promotes investment in undeveloped or underdeveloped resource regions in Queensland including the Galilee and Surat Basins, and the North West Minerals Province. Proponents are required to provide jobs and common-user infrastructure, and to have a positive impact on the state’s finances. Treasury works with applicants to determine their eligibility, and conducts detailed due diligence on both project and proponent, to ensure that the regions obtain the best possible outcomes under the framework.

Land Restoration Fund

Treasury continues to work with the Department of Environment and Science to establish and implement the government’s $500 million Land Restoration Fund. The fund aims to:

  • facilitate a pipeline of qualifying Queensland-based carbon offset projects, including through private sector investment
  • pursue environmental and economic co-benefits as defined by the government
  • conduct research and development into emerging carbon farming areas where Queensland has a comparative advantage.

Financial provisioning for mining rehabilitation

From 2018, Treasury has led the implementation of the Financial Provisioning Scheme. This scheme will address the state’s abandoned mine legacy by improving environmental and mine rehabilitation while reducing the financial risk to the State associated with the resource sector.

The focus during 2018–19 was on collaborating with stakeholder agencies, the resources sector and environment and community groups to deliver a functioning scheme and progress complementary reforms. Discussion papers were released on addressing the state’s abandoned mines legacy, the management of other associated risks to the achievement of improved rehabilitation and the management of residual risks.

The scheme was formally established in April 2019 under the Mineral and Energy Resources (Financial Provisioning) Act 2018.

The sector is now transitioning to the new scheme, and the issuing of ‘transitional’ assessment notices has commenced. It is expected that approximately 38 per cent of environmental authorities will have been issued with a transition notice by the end of 2019–20, and the remainder will be progressively completed by 2022. Following transition, all applicable environmental authorities will be reassessed annually.

Looking forward:

  • Contributions to the Financial Provisioning Fund are expected to grow significantly over the three-year transition process, establishing a sustainable pool of funds to rehabilitate mining projects if an owner fails to.
  • Responsibility for the financial provisioning reforms will remain with Treasury. Other related reforms – including an improved abandoned mines program – will be implemented by the Department of Environment and Science and the Department of Natural Resources, Mines and Energy from 1 July 2019.

Build-to-Rent Pilot Project

Treasury is leading the Build-to-Rent Pilot Project, working with the private sector to deliver affordable rental housing for eligible low-to-moderate income earners and to establish and grow the Build-to-Rent sector in Queensland.

Build-to-Rent is a new residential property asset class for Queensland. Housing will be built and managed in areas within inner Brisbane by private sector owners. Investors will achieve returns from long-term rental income, rather than sales or capital growth.

Offering affordable housing within these developments can help ease housing stress for low-to-moderate income earners who work in the inner city yet can’t afford inner-city rents. Build-to-Rent will deliver affordable housing against the targets established in the Queensland Housing Strategy 2017–2027 and invigorate construction jobs and growth in the SEQ area.

Working with the Department of Housing and Public Works in 2018–19, the project has progressed to the Expressions of Interest phase.

Continued support for major infrastructure projects

During the year, Treasury continued supporting Building Queensland in developing detailed business cases for government investment decisions.

Treasury also had involvement in
the delivery of major infrastructure projects with a number of government agencies, including:

  • Innovation, Tourism Industry Development and the Commonwealth Games to progress the Cairns and Gold Coast Global Tourism Hub projects, and on the delivery of the Queen’s Wharf development in Brisbane
  • Housing and Public Works
    on the delivery of the Police counter-terrorism training centre
  • State Development, Manufacturing, Infrastructure and Planning on progressing the Advancing Our Cities and Regions strategy
  • Department of Education, with commercial advisory support for the scheduled periodic refinance of public-private partnership arrangements for various Queensland schools
  • project board and steering committee representation on a range of projects currently under delivery, including Toowoomba Second Range Crossing, Logan Motorway Enhancement Project, New Generation Rollingstock and Herston Quarter Redevelopment.

Support for these projects will continue throughout 2019–20.

Water for irrigation

Local management for irrigation schemes

During the year, Treasury supported the Department of Natural Resources, Mines and Energy in investigating the transfer of Sunwater’s irrigation water channel distribution schemes to local ownership. The objective of local management is for irrigation customers to own and control the channel irrigation scheme on which their business relies.

The St George, Theodore and
Emerald schemes transferred to local ownership during 2018–19 and Treasury will continue to support Natural Resources, Mines and Energy to potentially transfer the Eton scheme during the coming year.

Rural Irrigation Water Price Review

Irrigation water prices for 37 water supply schemes across Queensland are currently set until 30 June 2020. The Queensland Competition Authority (QCA), the state’s independent economic regulator, began a review

of irrigation pricing in October 2018. Throughout 2018–19, Treasury partnered with relevant agencies and stakeholders to progress the key policies that underpin the review. The QCA is to provide a draft report in August 2019, with the final report due by the end of January 2020.

In 2019–20, Treasury will work with Natural Resources, Mines and Energy to consider the QCA’s recommendations, to allow government to make an informed decision on pricing for the period 2020 to 2024.

Cairns Shipping Development Project

The Far North Queensland Ports Corporation (Ports North) is delivering the $127.6 million Cairns Shipping Development Project (CSDP) to deepen and widen the Cairns Port channel and upgrade ship berths and wharves. Dredging and construction for the project is expected to generate up to 2,700 direct and indirect jobs and allow for up to 103 additional cruise ship visits per year by 2031.

During the year, Treasury and the Department of Transport and Main Roads:

  • reviewed Building Queensland’s detailed business case
  • progressed ministerial approvals for the project investment and arrangements for debt and equity funding.Ports North’s progress on the delivery of the project, due for completion in mid 2020, will be monitored over the coming year.

Master Planning for the Priority Port of Gladstone and the Port of Townsville

Under Queensland’s Sustainable Ports Development Act 2015, a Priority Port Master Plan must be finalised before capital dredging for expansion projects can commence within that Priority Port’s boundary.

The Department of Transport and Main Roads is responsible for completing the Master Planning program for the Priority Ports of Gladstone, Townsville, Hay Point/ Mackay and Abbot Point. Treasury assisted Transport and Main Roads, and Gladstone Ports Corporation (GPC) and Port of Townsville Limited (POTL) with input into long-term planning for future infrastructure and addressed public submissions on the draft and final Master Plans.

On 5 November 2018, the Minister for Transport and Main Roads approved the Final Master Plan for the Port of Gladstone. This will allow GPC to finalise other project approvals for the $80 million Clinton Vessel Interaction Project. Also on 5 November 2018, a Draft Master Plan for the Priority Port of Townsville, a preliminary draft Port Overlay, and supporting materials were released for public consultation which closed on 17 December 2018.

Going forward, Treasury, Transport and Main Roads, POTL and GPC will continue developing and consulting with stakeholders on the Townsville Port Final Master Plan and Gladstone’s Master Plan Port Overlay which contain the detailed planning regulations.

Townsville Port Channel Capacity Upgrade

The Queensland Government committed $75 million towards the $193 million Townsville Channel Capacity Upgrade to widen Townsville’s shipping channel allowing larger ships access, facilitating future trade growth. This project will be delivered by the Port of Townsville.

After a Queensland Government request, on 4 September 2018, the Prime Minister announced the Australian Government’s $75 million funding commitment to the project.

Treasury will continue to work closely with Transport and Main Roads on final details for a National Partnership Agreement on funding for the various stages of the project.

Project delivery is being progressed by the Port of Townsville, which will also fund the balance of the project cost.

Queensland Competition Authority Declaration Review

QCA is reviewing whether services declared for third party access under the Queensland Competition Authority Act 1997 should remain declared after the existing declarations expire in September 2020. The objective is to ensure that third party access to infrastructure is only applied where it is appropriate.

The services concerned are:

  • rail transport services on the Central Queensland Coal Network
  • rail transport services on the intrastate passenger and freight network operated by Queensland Rail
  • coal handling services at Dalrymple Bay Coal Terminal.

The QCA released draft recommendations in December 2018. It will make final recommendations to the Treasurer by March 2020. The Treasurer then has 90 days in which to make decisions about the services’ declarations.

Treasury is actively monitoring the review and will support the Treasurer in the decision-making phase. Further information is available at www.qca.org.au.

Aurizon Network Access Undertaking

Rail transport services on Aurizon’s central Queensland coal network are declared for third party access under the Queensland Competition Authority Act 1997.

This means that third parties can gain access to the coal network rail infrastructure to provide their own rail transport services. Access is provided to users on terms and conditions set out in the Aurizon Network Access Undertaking 2017–21, which was finalised on 21 February 2019.

On 3 May 2019, Aurizon Network announced that it had reached agreements with the majority of its customers on amendments to the undertaking and submitted a Draft Amending Access Undertaking (DAAU) to the QCA. The QCA is currently considering stakeholder submissions prior to making a final decision, which is expected later in 2019.

Queensland Productivity Commission Inquiries

Treasury is responsible for the strategic direction of the Queensland Productivity Commission, including its work program.

  • A key project in 2018–19 was the commission’s Inquiry into Imprisonment and Recidivism, which began in September 2018. The inquiry examined how government resources and policies can be used to reduce imprisonment and recidivism and improve outcomes for the community over the medium and longer term.
  • The commission published a draft report in February 2019 and will provide a final report to the government in August 2019. The government will then prepare its response, which will be publicly released with the final report before February 2020.
  • In February 2019 the Queensland Government requested the QPC to monitor and report on any adverse pricing effects or behaviours from the operation of the Container Refund Scheme over its first 12 months. The scheme, introduced on 1 November 2018, allows people to take empty drink containers to a collection point for a refund, to help improve the overall recycling rate and reduce the amount of litter in Queensland.

An issues paper was released in May 2019. The interim report will be delivered in August 2019 and the final report will be delivered to the government in February 2020.

Treasury will be working with other key departments in the development of the government’s response to these inquiries.

Further information is available at www.qpc.qld.gov.au.

Northern Australia Infrastructure Facility

Treasury works with the Northern Australia Infrastructure Facility (NAIF) to pursue significant investment in infrastructure across North Queensland, including chairing a panel that manages the state’s interest in NAIF. The panel assesses projects when they enter due diligence and again when an investment proposal is received from NAIF, to ensure they align with the state’s interests.

Over the year, the NAIF Board made investment decisions for the following loans:

  • up to $98 million to James Cook University for its Technology Innovation Complex in Townsville
  • up to $50 million to Queensland Airports Limited to redevelop the Townsville Airport passenger terminal.

Objective

Partner proactively to facilitate better outcomes for the community

Cross River Rail

Cross River Rail is Brisbane’s 10.2 kilometre underground rail link from Dutton Park to Bowen Hills. It will ease congestion, improve network reliability and increase accessibility to the Brisbane CBD.

During the year, procurement for Cross River Rail major works packages significantly advanced and early works became visible at sites around central Brisbane. The preferred bidders for the major works packages are:

  • Tunnel and station development – Pulse consortia. Delivering the tunnel and four new underground stations
  • Rail integration and systems – Unity. Design, supply and install the supporting rail system
  • European train control system – Hitachi Rail

Contract close with the Pulse consortia was achieved on 30 June 2019, with the completion of procurement for the other packages expected in mid 2019. Construction of major works is expected to commence by the end of 2019. The project is being managed by the Cross River Rail Delivery Authority through the Cross River Rail Delivery Authority Board, which includes the Under Treasurer.

Treasury will continue to support the finalisation of procurement processes and project delivery.

Construction of Cross River Rail is due to be completed by 2024. Read more at www.crossriverrail.qld.gov.au. The Cross River Rail Delivery Authority publishes its own annual report.

Last updated: 1 October 2019