COMMONWEALTH OF AUSTRLIA
SPEECH BY
The Rt Hon. J. G. GORTON, M. P.
ON
GLADSTONE POWER STATION AGREEMENT BILL
Second Reading
[ From the ' Parliamentary Debates', 14 April 19701
Mr GORTON ( Higgins-Prime Minister)
[ 4.61-1 move:
That the Bill be now read a second time.
On 26th September last year I announced
to the House that the Commonwealth Government
was prepared to provide a loan
of up to $ 80m to the Queensland Government
to help the State finance the construction
of a proposed large scale power station
at Gladstone in central Queensland which
would provide low-cost power and, through
it, attract a viable export oriented industrial
complex to central Queensland. The offer
was conditional on the State being able to
satisfy the Commonwealth that it could
attract such special industrial development
to the region. Since that announcement
negotiations have progressed between the
State and Organisations likely to establish
industries in the central Queensland region,
and also between the Queensland Government
and the Commonwealth. The result of
these negotiations is that the Queensland Government
has satisfied the Commonwealth
that major export oriented industries are
likely to be attracted to central Queensland
through the provision of the low-cost power;
and the Commonwealth and Queensland
governments have reached agreement on
the terms and conditions of a Common-
14461/ 70 wealth loan to the State to assist with the
necessary works. On 8th April an agreement
between the 2 governments was signed
by myself and the Premier of Queensland.
The purpose of this Bill is to seek Parliament's
approval for the agreement to come
into effect and for the provision of the
financial assistance specified in the aggreement.
The estimated cost of the proposed power
station together with local reticulation at
Gladstone, at 1968 prices, is $ 155m. It
will have an approximate total installed
generating capacity of 1100 megawatts, of
which about 600 megawatts will be reserved
by the State for special industrial purposes
in central Queensland. For the purpose of
the agreement the Queensland Government
shall produce evidence satisfactory to the
Minister for National Development that the
State has entered into or proposes to enter
into agreements, arrangements and options
for the consumption of electrical power by
industrial organisations which will export
a substantial proportion of their products
or which will produce goods of a kind
which will be supplied to industries producing
goods predominantly for export.
As in other similar arrangements, provision
is made in the agreement for the
approval by the Minister for National
Development of the letting of major contracts-
in this instance those for the performance
of works to a value in excess of
Sim. The actual amount of the Commonwealth
financial assistance will depend on
the cost of construction of the power station
and local reticulation. The agreement provides
for a variation in the amount of
finanical assistance above or below $ 80m
according to any variation which occurs in
the total cost above or below $ 155m. Thus
the amount of financial assistance may be
-expressed arithmetically as 80/ 1 S5ths of the
total cost of the project. Commonwealth
financial assistance will be available towards
expenditure by the State on the project
during the period commencing on the date
of my announcement, 26th September 1969
and ending on 30th June 1977. The assistance
will be in the form of an interest
bearing loan repayable over a period of
years commencing when the power
station is completed. The loan will carry
interest at the rate of 6.4% per annum to
accrue and to be capitalised during the construction
of the project. There is, however,
provision for the State to make payments
of interest, instead of allowing the interest
to be capitalised, once integral components
of the station are commissioned and producing
power. There is also provision for
interest charges not to be payable during
the early stages of construction of the project,
thus reducing the overall interest cost
to somewhat below 6.4%.
Honourable members no doubt will be
interested in an outline of the background
to this important project. Prior to its consideration
of a major power station at
Gladstone the State had already envisaged
the construction of a thermal power station
in the region as part of its programme for
a general expansion to meet normal growth
in the demand for electricity. The initial
planning involved interconnection of the
supply networks located in southern and
central Queensland. A number of studies of
the prospects for development of central
Queensland, including a study by the Department
of National Development in conjunction
with the State Department of Industrial
Development, have pointed to the imposing
array of natural resources which exist in
the region. These resources have been
shown to be outstanding in bath variety
and magnitude, yet still relatively underdeveloped. The official studies and various
industry inquiries have indicated that these
resources could well be a base for the
establishment of large scale export oriented
industries. In saying this, it should be remembered
too that impressive developments have
already been taking place in the region.
For example, large coal mining and export
operations have become established, the
ports of Gladstone and Port Alma have
been considerably developed and a large
scale alumina project established at Gladstone
is entering a major expansionary stage.
The region possesses very large resources
of steaming coal, considerable quantities of
which are mined and produced together with
coking coal by companies principally engaged
in the production and export of
coking coal in the region. This steaming
coal will be regularly available to the State
at low cost.
Against this background of resources and
potential the Premier of Queensland in
September 1968 raised with me the possibility
of the Commonwealth assisting the
State with capital in order that a power
station could be built at Gladstone to provide
the high load factor and low-cost
supply required to attract major export
oriented industries to central Queensland.
At that time negotiations had commenced
between Queensland Ministers and officials
and several companies interested in major
industrial development in the region. Since
then the proposals put forward by the
Queensland Government have been closely
examined by the Commonwealth. I would
mention that, in the course of these investigations,
the Snowy Mountains Authority
was engaged as consultants. The Commonwealth,
as a result of these investigations,
is greatly impressed with the potential of
the power station project both for attracting
major industries to central Queensland and
for bringing about a substantial lift in
exports. Naturally the negotiations between the
Queensland Government and the companies
concerned are confidential. I can say that
the Commonwealth is satisfied from the
evidence presented to it that major export
oriented industries will be establishing in
central Queensland. In fact, the Government
believes, as the Governor-General said in
his speech on 3rd March, that the power
station will result in the construction of an
aluminium smelter, possibly the biggest in
the southern hemisphere, and in other industrial
development. We are confident, along
with the Queensland Government, that the
power station will attract a major chemical
industry using the extensive salt resources in
the area and we have high hopes that operations
in this field may commence in 2 or 3
years time. There is indeed a whole range
of industries which could be attracted to
central Queensland by the power station.
To the best of my knowledge these have
not been brought to finality, but it is fully
expected that that will happen. The Government
believes that its support of this project,
besides encouraging new industrial development
and a lift in exports, will prove to be
a concrete example of decentralisation.
There is one further matter which I
should bring to the attention of honourable
members. The Queensland Government has
also asked that the Commonwealth give
consideration to further financial assistance
at a later date should the demand for power
from the special export oriented industries
to be established in the region increase to
such a pronounced degree that further enlargement
of the power station would then
be required. While the Government cannot
at this stage give any commitment in relation
to decisions that will have to be taken by a future Government in the circumstances
existing then, we have informed the Queensland
Government that we would approach
the matter sympathetically when it arrives.
I would like to give to the House an
example of the kind of development to
which this project might lead. If the
aluminium smelter to which I have referred
should be established in this region it is
likely that at its first stage of production
it could be producing 240,000 tons of
aluminium a year at a value on present
day prices of about $ 126m. At a later stage,
should a go well, it could be producing
320,000 tons of aluminium at an export
value of $ 165m. The taxation revenue alone
from such a development, should it come
to fruition, would make this indeed a
proper business proposition. But this is not
only a business proposition. It is, as I have
said, a concrete example of decentraiation
and it may well prove to be the greatest
step yet taken to awaken in that area of
Queensland-a State which has been called
a sleeping giant-really significant industrial
development, a real increase in population,
a real benefit to the State, and, through its
exports, a real benefit to the nation. I
commend the Bill to the House.
Debate ( on motion by Mr Stewart)
adjourned.
W. G. MuKRAY, overnment Printer, Canberra