PRIMINEIST E
FOR MEDIA FRIDAY, 7 DECEMBER 1979
LOAN COUNCIL
Commonwealth and State Governments' meeting today as Loan Council,
approved nine new projects under the special financing programme
designed to accelerate the national development.
It has been the concern of the Commonwealth for some time that
national development should not be impeded because of inadequate
supporting capital facilities whether they be power generating
plants, roads, coal loaders, or ports.
The Loan Council endorsed the provisions of $ 489 million for
electricity power generation; $ 182 million for rail electrification;
$ 53 million for conversion away from oil fired generation; and
million for provision of other infrastructure facilities.
The $ 800 million programme agreed to, will expedite the development
of energy reserves which are alternatives to liquid fuels.
It will increase the national capacity for the export of these
reserves. It will increase the extent to which these reserves can be used
on the domestic market.
It will provide an unprecedented coal-fired power base for mining
and manufacturing investment in Australia including the
domestic processing of our own raw materials.
As part of this programme for national development and consistent
with our initiatives in liquid fuel conservation, the Commonwealth
today sought Loan Council approval for 3 projects of its own, the
chief of which is the electrification of the Sydney to Melbourne
Rail Link. / 2
The Commonwealth has, subject to the agreement of the
States, agreed to support this project in principle.
Having regard to increasing oil prices and the effect
this will have on various surface transport costs,
the Commonwealth has taken the view that, because of
the lead times involved, it is now appropriate to seek firm
proposals and detailed technical advice on the works that
would be involved in electrifying'the Sydney to Melbourne
Railway. Preliminary investigations and planning will be carried
out by private consultants in liaison with the NSW
and Victorian Railway Authorities. The Commonwealth has
undertaken to meet the costs of such a feasibility study,
including consultancy fees, with a view to a report being
presented to the June 1980 Meeting of the Premiers' Conference.
on the basis of this report firm decisions for the project
should then be taken, but precise terms of reference for
the study will be agreed upon with the States and announced
next week.
In conjunction with this initiative agreement has been reached
between the Commonwealth, all States, and the Northern Territory,
on the suggestion of Sir Charles Court, for the establishment of
a separate joint study of the practicality of electrification of
the Government railway systems of Australia.
This study is designed toiassess
the economies of such a proposal including railway
upgrading requirements which would be necessary
to promote efficiencies in electric rail transport
the impact of rail electrification on consumption
of liquid fuels / 3
any needs for expanded capacities for electricity
generation and supply, and consequent requirements
that electrification would make
assessment of the impact of increased demand on
facilities for coal production and shipment
the timetable and programme needed to optimize
economic returns from electrification of rail links.
A preliminary report indicating the scope and approach to be taken
in the joint study made to the Governments by 1st June, -1980.
This will enable Governments to consider relative priorities
and give further guidance.
The joint study will be assisted by private consultants but full
use will be made of Government railway authorities and their
considerable knowledge of railway factors.
As part of the expanding development prog ramme the Commonwealth
today sought the co-operation of the New South Wales and
Queensland governme nts in a study to determine the requirements
which will facilitate the expanding trade in export of steaming
coal.
Exports-. of steaming coal are anticipated to rise from 6 million
tonnes per year to approximately -100 million tonnes by the end
of the century. Concern has been expressed about the
availability of proper facilities to cope with this enormous
increase in exports of steam ' ing coal from Australian mines
to overseas power stations, cement works and steel mills.
This increase will require significant expansion of existing
facilities. The Commonwealth is anxious that such facilities
should exist to allow Australia to take full advantage of the
trading opportunities which seem likely to arise as a result
of our extensive reserves of steaming coal. / 4
All this development is now possible because in the last four
years the fundamentals of the Australian economy have been
restored. Australia's inflation rate is now below that of the O. E. C. D.
average and well below some of our major trading partners.
Development projects announced today take advantage of three
major strengths in our national economy--our new international
competitiveness; our abundance of raw materials and energy
resources in a world hungry for both; and the quality and
calibre of our human resources.
The need for development has given new urgency as a result
of the deteriorating international energy position.
This makes it imperative that our drive towards
alternatives to liquid fuels must continue and accelerate.
But at the same time, the international energy crisis has
created -unique opportunities for Australia, and today's
announcements place us advantageously to capitalise on
these opportunities.
The development of alternative energy sources and the use of
our coal-fired energy reserves will give a thrust to
national development in the 80' s which will strengthen the
economy and its capacity to provide the right opportunity
for new employment and investment.
These opportunities have been clearly seen by private
enterprise and were evident from the involvement of overseas
and domestic capital in development projects for Australia.
The Government has its part to play.
It has already created the economic climate in which
this development can profitably take place.
This new determination to see that capital works which
are needed to provide the structure for private
enterprise are able to proceed with urgency.
Because of this, at a historic mneeting last November, the
Loan Council approved a new borrowing programme to finance
provisions for future development.
our emphasis then was on creation of an adequate supply
of coal-fired energy to meet our needs during the next
decade. At that-meeting the Commonwealth approved twelve projects
estimated at a total of $ 1.7 billion ( in June 1978 prices).
The. actual borrowings in the last financial year amounted
to $ 149 million and the June Loan Council meeting approved
a further $ 393 million for those projects in 1979-80.
Consistent with our plan for national development the
allocation of approvals was as follows:-
electricity generation $ 869 million
coal loaders $ 164 million
other resources development $ 643 million
other projects $ 91 million
The projects approved today represent a continuation of the
significant initiative begun last year.
Since November. 1978, however, when the first series of
projects were announced, the world energy situation has
further deteriorated.
Consequently, in assessing projects, particular
attention has been given to those coal-based energy projects
which fit into our over-all energy policy.
These are projects which specifically encourage either
the conservation of oil, or alternatives to its use.
The major projects announced today relate to the provision
of electricity generation capacity.
Three of them,. for which a total of $ 489 million has been
approved, are to provide additional generating capacity
using Australia's abundant coal resources.
These projects are:
The B'ayswater Electricity Project in New South' Wal'es
$ 142 million has been approved for this project near
Musswellbrook in the Hunter Valley.
The first stage will involve the consideration of
2 x 660 Mw -units and the development of associated
coal and water supplies.
The advancement of the Tarong* Power Station in Queensland
$ 202 million has been approved to bring the first 350 Mw
unit on-stream in May 1984 rather than the planned
October 1985.
The Northern Power Station in South Australia
$ 145 million has been approved for this programme.
This provides for construction of a coal-fired power
station at Port Augusta and further development of the
Leigh Creek coal field, including re-location of existing
township.
Two other electricity projects, while not aimed at providing
additional capacity, will conserve fuel oil by partially
converting power stations to other forms of fuel. / 7
The Kwinana Power Station in Western Australia
Approval has been granted of $ 28.5 million for this project.
It will provide a further two generating units converted
from oil to dual coal/ oil, reducing the station's
dependance on oil to the point where less than 3% of its
capacity will be dependant totally on oil fule.
The Hydro-Electric Commission Fuel Oil Conservation Project
in Tasmania
For this project $ 25 million has been approved.
It is designed to increase the capacity and flexibility
of the Commission's hydro power generating system and
to reduce the use of the oil-fired thermal station at
Bell Bay.
North West Shelf Infrastructure
One further project is closely related to major
private resource development.
Approval was given last November to special infrastructure
borrowing for the Dampier-Perth Gas Pipeline.
An integral part of the massive North-West Shelf project.
Approval has now been given for further infrastructure
financing associated with the North-West Shelf.
A total of $ 45 million has been approved to meet
essential needs in the form of water supply, airport,
social and civic facilities, and the acceleration of the
development of the pipeline.
RAIL ELECTRIFICATION
The increased cost of fuel oil means that the electrification
of major rail links has assumed a new significance.
Electrification will result in savings in diesel fuel
consumption sales providing a range of operating and
economic benefits.
I have already indicated the details of the Commonwealth
initiative in relation to the electrification of the
Melbourne to Sydney railway link. However, borrowings
for two major rail electrification projects, proposed
by the States, have now been approved under the infrastructure
guidelines. Brisbane Railway Electrification in Queensland
For this $ 68 million has been approved. Approval in
principle had been given in June 1979. This provides for
the upgrading of public transport in Brisbane involving
rail electrification and the intergration of car, bus
and rail traffic.
The Gosford to Newcastle Rail Electrification Project
in New South Wales
For this $ 114 million has been approved involving the
electrification of 90k of double track railway line between
Gosford and Newcastle.
These initiatives evidence the determination of national
transport development must be based on alternatives to
liquid fuels. / 9
L7-
COMMONWEALTH PROJECTS
At the first meeting for which the Loan Council gave special
borrowing approvals all projects were proposed by State Governments.
At today's Loan Council meeting the Commonwealth proposed three
projects under the infrastructure guidelines.
One of these was the electrification of the Melbourne-Sydney
rail link.
The other two projects are as follows
1. The Telecommunications Rural Sector Network
For this, $ 30 million has been approved.
It is for the acceleration of the programme to
convert most of the telecommunications rural
sector network to automatic exchanges by 1985.
2. Adelaide-Crystal Brook Standard Gauge Rail Link
The Loan Council has approved in principle the
Commonwealth's proposal for borrowing to finance
the construction of this link. A detailed proposal
will be put to the Loan Council by the Commonwealth
incorporating spending for the year of $ 62 million.
ALTERNATIVE FUNDING
Two other projects proposed by the States were viewed by the
Loan Council as being more appropriately suited to be funded
in specific Commonwealth programmes. These were
1. WURDEE BOLUC PIPELINE IN VICTORIA
A special borrowing of $ 12 million has been sought
to increase the water supply of Geelong and
Bellarine Peninsulars. Consideration will be
given to this project under the National Water
Resources Programme.
2. THE NORTH EAST CORRIDOR TRANSIT PROJECT SOUTH AUSTRALIA
$ 27 million was sought for this project for an electrically
powered light rapid transit system in suburban Adelaide.
This project will be considered in the Urban Public
Transport Programme.
PORTLAND VICTORIA
At the June, 1979 Loan Council Meeting, approval in principle was
recommended for inclusion under the infrastructure programme and
finance for the provision of power supply associated with the
development of an alumina smelter in Portland, Victoria.
It is expected that this proposal involving estimated borrowings
of $ 120 million will be formally considered in 1980.
It can be seen that the heavy emphasis in the total plan for
national development has been placed on projects which
facilitate electricity generation.
on-going programmes amounting to $ 869 million ( at June 1978 prices)
were approved in November 1978 out of a total borrowing approval
of $ 1.7 billion.
Electricity generation projects account for $ 489 million out
of the additional $ 800 million which was approved by Loan Council
today. However, in addition to projects already approved, the Commonwealth
has invited Premiers to submit further proposals under the
infrastructure programme for the development of further electricity
generation projects.
This initiative by the Commonwealth has been motivated by the
worsening international energy position in conjunction with the
availability of Australia's reserves of coal.
This highlights Australia's potential for development of energyintensive,
export-oriented industries, and it is the Commonwealth's
concern that these should not be inhibited by the unavailability
of adequate electricity reserves.
11.
The Commonwealth is gratified by the positive response
of the States to the development programme who have indicated
that they will be proposing further projects designed to
improve the electricity generation programme.
These will be considered at future meetings of the Loan Council.
000---
ATTACHMENT 1
SPECIAL ADDITIONS TO STATE SEMI-GOVERNMENT BORROWING PROGRAMS UNDER
INFRASTRUCTURE FINANCING GUIDELINES AMOUNTS AND PHASING IN
JUNE 1978 PRICES TOTAL 1978-79 1979-80 1979-80 1 1980-81 1981-82 1982-83 1983-84 1984-85 1985-8
SPECIAL Approved Approved
ADDITION in Nov in June
1978 1979
June ' 78 June ' 79
prices prices
$ m $ m $ m $ m $ m $ m $ m $ m $ m $ m
NSW Coal Loaders 89 24 32 35.0 33
Eraring Electricity 210 55 80 81.0 75
Vici VIC Loy Yang Electricity 343 35 88 96.5 37 119 64
World Trade Centre 56 10 24 17.3 20 2
QLD Hay Pt Coal Loaders 75 40 44.0 35
Electricity Projects 130 70 76.0 60
SA Redcliff 186 11 70 96 4 4
WA Dampier-Perth Pipeline 416 133 263 17 3
Pilbara Electricity 111 -5 4.5 11 15 16 16 27 21
Worsley Rail and Water 41 9( a) 20 14.9 12 1
TAS Hydro-electric power 75 15 15 16.5 15 15 15
Water supply projects 35 10 8 7.0 8 5 4
1,767158393392.7316313236283
In the event no borrowings were undertaken for this project in 1978-79.
ATTACHMENT 2
SPECIAL ADDITIONS TO STATE SEMI-GOVERNMENT BORROWING PROGRAMS UNDER INFRASTRUCTURE FINANCING GUIDELINES
AMOUNTS PHASING ( At June 1979 prices unless otherwise indicated)
State Project TOTAL Special 1979/ 80 1980/ 81 1981/ 82 1982/ 83 1983/ 84 1984/ 85 1985/ 86 1986/
Addition
N. S. W. Bayswater Electricity 142 12 38 92
Gosford-Newcastle
Rail Electrification 114 18 36 41 19
QLD Brisbane Railway
Electrification 68 8 20 22 18
Power Stations:
Advancement of Tarong 202 0 32 78 92
S. A. Northern Power Station 145 10 13 17 19 26 25 19 18
W. A. North West Shelf Gas:
Infrastructure 45 1 21 .2 11 12
Kwinana Power Station.. 28.5 2.4 5 14 6.4 0.7
Conversion ( c)
TAS Hydro-Electric Commission:
Fuel Oil Conservation 25 4.5 6.8 8.6 5.1
CTH Telecommunications Rural
Sector Network 30 30
TOTAL: 799.5 85.9 172.0 283.6 171.5 26.7 24 19 18
December 1979 prices
January 1979 prices
current prices
current prices with provision made for inflation
A'i" I'ACH 9MNT 3
INFRASTRUCTURE FINANCING
SUMMARY OF PROJECTS APPROVED BY LOAN COUNCIL
7 December 1979
BAYSWATER ELECTRICITY PROJECT ( NSW)
Brief Description
The Bayswater Power Station near Muswellbrook in the
Hunter Valley is required to meet load growths arising from
the development of large, new electricity intensive
industries. The project, the first stage of the station,
involves the construction of 2 x 660 miW units and development
of associated coal and water supplies.
Funding Arrangements
Total cost is estimated at 590m in June 1979 prices.
Total funding arrangements cannot be specified currently.
However funds from the Electricity Commissions sources for
the 3 years from 1979/ 80 are fully committed to other
projects and funding in full by special infrastructure additions
totalling $ 142m in June 1979 prices is required with further
requirements beyond 1981-82 possible.
Phasing Special additions required in the 3 years commencing
1979/ 80 are $ 12, $ 38 and 892 million in June 1979 prices.
Very little flexibility exists in these timings if the
units are to be phased in as planned for the winters of
1985 and 1986.
General Comments
The project is essential for provision of adequate
electrical energy in N. S. W. from 1985 onwards. This is
particularly important in the light of oil supply problems
and expected transfer of many domestic and industrial
loads to electricity.
Proposed aluminium. refining developments could not
be supplied without clear indications that Bayswater will
be in commercial operation in 1985.
Benefits for non metropolitan employment: 1,200
workers will be employed during the construction phase
and 315 will be required to operate the plant:-in addition
there will be increased coal production with possible
employment increases.
GOSFORD NEWCASTLE RAIL ELECTRIFICATION PROJECT
Brief Description The electrification of 90 km of double track
railway line . between Gosford and Newcastle together with
of sidings, crossovers etc. The cost includes
provision for electric locomotives and interurban electric
cars, construction works, electrical equipment and the
raising or replacement of more than 30 over bridges.
Funding Arrangements Estimated total cost is $ 114m in June 1979 prices.
As funds available for the Public Transport Commission for
the 4 years 1979/ 80 to 1982/ 83 inclusive are fully committed
to other projects funding in full from special infrastructure
additions is required.
Phasing Special additions required are $ 18m in 1979/ 80 and
$ 36, $ 41 and $ 19 million in the following 3 years.
The project should be comoleted as quickly as
possible to take advantage of operating economies and the
chance to conserve oil fuel.
General comments Electrification of the Gosford Newcastle line will
further reduce the Public Transport Commissions reliance on
liquid fuel as a prime energy source. At present
approximately 15% of the Commissions annual liquid fuel
consumption is used between Sydney and Newcastle.
BRISBANE RAILWAY ELECTRIFICATION ( QLD)
Brief Description Upgrading of public transport in Brisbane with the aim
of providing an integrated passenger transport system involving
rail electrification the provision of modern rail and bus
rolling stock and the integration of car, bus and rail traffic
through interchanges.
Funding Arrangements
The total cost of the completion of the upgrading
program is estimated at $ 248m ( at current prices) of which
$ 151m will be required over the 4 years ending 1982/ 83. The
current States Grants ( Urban Public Transport) Act under
which $ 48.6m will be contributed to the program also ends
at that date. Two thirds of the remainder of the program
$ 68m will be funded from special infrastructure additions.
Phasing Sm
1979-80 8
1980-81
1981-82 22
1982-83 18 68m
General Comments
While the project may not directly contribute to
development it will result in the more rational utilisation
of Australia's natural resources. Electrification will
brinq about a 3% drop in Queensland railway oil consumption
equal to 100,000 barrels of crude oil per annum.
ADVANCEMENT OF TARONG POWER STATION (. QLD).
Brief De'scription Advancement of the construction of the Tarong
Power Station program to bring the first 350 MW unit on
stream in May 1984, rather than the planned October 1985,
to ensure sufficient power generation in 1984 to allow the
development of three planned aluminium smelters.
Three further 350 MW units will be in service
by the end of 1986, rather than 1988 as planned.
Funding Arrangements The total Tarong project will cost $ 812 million
( Dec 1979 prices) Expenditure on the accelerated project
will amount to $ 480 million over the period 1979-80 to
1982-83 or an increase of $ 202 million over the present
development program.
Queensland is already in receipt of special
infrastructure additions for power station projects and
there is no scope for raising the $ 202 million required
for advancing the Tarong Project from State Government or
State Electricity Commission of Queensland sources.
Phasing The lead time associated with tiae construction of
power stations is such that funding must be approved now
and expenditure committed although additional funds will
not be required until 1980-81 as follows:-
1980-81 $ 32 million ( in December 1979 prices)
1981-82 $ 78 million
1932-83 $ 92 million
General Comments As a result of three new aluminium smelter projects
up to 600MW of electr-icity in excess of available supply will
be required by 1984. The State Electricity Commission
investigated the options available for providing additional
generating capacity and concluded that the most realistic
course was to accelerate the Tarong Power Station Project.
The construction of the power station and associated
works will provide employment for approximately 1,000 men
( peaking at 1,1400) for up to 7 years. The permanent
work force for the stations operation will be 300. Further
jobs will be created by the development of the associated
mines;* Additional employment opportunitie ' s will be
generated by the planned aluminium smelters..
NORTHERN POWER STATION ( SA)
Brief Description The project comprises construction of a coal-fired
power station at Port Agusta, the first stage of which is
the installation of two 250 MW units, and further development
of the Leigh Creek coalfield including relocation of the
existing township and purchase of additional mining equipment.
The first generating unit will come on stream
towards the end of 1983 and the second a year later.
Funding Arrangements The total cost of the project is estimated at
$ 263 m in June 1979 prices. The Electricity Trust of
South Australia requires special additions for its borrowing
program of $ 145m ( at June 1979 prices) to assist financing
of the project.
Phasing: $ m at June 1979 prices
1979-80
1980-81 13
1981-82 17
1982-83 19
1983 -84 26
1984-85 24
1985-86 19
1986-87 18
$ 145 m
Construction of the power station has been in
progress for 12 months approximately and site preparation
work for the new township of Leigh Creek South is in progress.
A number of major contracts have been left.
General Comments The power station and its associated Works are
essential to ensure adequate power supplies are available
for industrial and general consumers in the Adelaide
metropolitan area by the late 1980' s. The expansion of
existing industry and the development of new industry is
dependent on assured and economic power supplies.
The project will also reduce the dependence of
the State's electricty supply or natural gas from the
Cooper Basin. During the construction phase 400 workers will
be employed on the power station while 250 will be employed
in building the new township and additional facilities at
Leigh Creek.
NORTH WEST SHELF GAS PROJECT SOCiAL, CIVIC
AND ECONOMIC. INFRASTRUCTURE
Brief Description Essential infrastructure needs in the form of
water supply, airport, general purpose berth and social
and civic facilities to meet the requirements arising
from the development project and the projected doubling
of Karratha's population.
Funding Arrangements Estimated total expenditure on the relevant
infrastructure works is $ 73.1 m ( in Jan 1979 prices) of
which $ 45m is sought as a special addition. The remainder
of the cost of projects will be bourne by the State, various
State authorities, the joint venturers-and in some cases will
be partly funded through Commonwealth-State assistance programs.
An in-principle agreement to a special addition
for the second stage of the water supply upgrading was reached.
Phasing $ m ( in January 1979 prices)
1979-80 1
1980-81 21
1981-82 11
1982-83 12
General Comments The infrastructure elements are essential components
of the gas project which in total will make a major
contribution to Australian resource development and mineral
export proqgram. The operational workforce on the N. W. She& lf
project will be approximately 200 off-shore, 500 on-shore
and 50 on the gas pipeline. However during the construction
phase available jobs will rise to 10,450 in 1983 falling to
about 4,000 in 1985.
KWINANA POWER STATION CONVERSION
Brief Descriptionl Conversion of a further two generating units at
the Kwinana Power Station from oil to dual coal/ oil
firing. Twounits have already been converted. These
additional conversion would reduce the stations' dependence
on oil to the point where less than 30% of its capacity
would be dependent totally on oil fuel.
Funding Arrangements The total cost of the project is $ 28.5m at current
prices. The State Electricity Commissions other capital
works commitments necessitate the total funding of the
conversion from special additions.
Phasing $ m ( at current prices)
1979-80 2.4
1980-81
1981-82 14.0
1982-83 6.4
1983-84 0.7
28
This phasing ensures that the reliablity of the power
system will not be jeopardised while the units being
converted are not operative for about a year.
General Comments The continued development of Western Australia's
natural resources and its mineral exporting industry
require a stable and economic electricity supply.
The conversion of oil fired units to coal will
contribute to the future reliability and economy of the
State electricity supply system.
HYDRO-ELECTRIC COMMISSION FUEL OIL CONSERVATION
PROJECT ( TAS)
Brief Description The object of the proposal is to increase the
capacity and flexibility of the Commission's hydro-power
generating system and to reduce the use of the oil
fired thermal station at Bell Bay. There are two components;
the raising of the existing Great Lake Dam and the
acceleration of the Pieman River power development to bring
the Rosebery and Lower Pieman stations on stream 6 months
earlier than currently programmed.
Funding Arrangements The total estimated cost of the project at June
1979 prices is $ 25m the whole of which is sought as a
special addition because the Commission is already committed
to a peak capital development program over the next 5 years.
Phasing $ m ( at June 1979 prices)
1979-80
1980-81 6.8
1981-82 8.6
1982-83 5.1
General Comments The project will make use of Tasmania' s abundent
water resources, will contribute to industry development
and to employment both in the short-term, through the
creation of 170 construction jobs, and in the long term.
The project has indirect implications for the
balance of payments through the reductions in the use of
imported fuel oil that can be achieved. Significant
direct savings will also be achieved through the reduction
of oil fuel use.
TELECOMMUNICATIONS RURAL SECTOR
NETWORK ( COMMONWEALTH)
Brief Description An accelerated program to convert most of the
telecommunications rural sector network to automatic
exchanges by 1985, including associated upgrading of
telephone lines.
Funding Arrangements
The total cost of Telecom Australia's program to
complete rural upgrading by 1985 is estimated at $ 300m
in June 1979 prices. Telecom plans to finance not
less than half the costs of the program from internal
sources and the balance from external borrowings.
The special addition of $ 30m is to finance approximately
half of the estimated expenditure in 1979-80.
Phasing A special addition for 1979-80 only has been
provided. General Comments
In the absence of special funding arrangements the
program would proceed but would not he completed until
1990. The program is planned to reduce the number of
subscribers On manual exchanges from 91,000 in 1979
to about 10,000 in 1985.
The program will greatly improve the. services to
remote areas, make telecommunication available in areas
where it is not yet available, assist the development of
the pastoral and mining industries, stimulate employment
in those industries
7-