It’s the water, stupid

Nicholas Gruen reckons the Darwin-Alice Springs railway is a “white elephant”. That’s certainly long been the prevailing view of a high proportion of southern politicians and bureaucrats.

In part it depends on how you define white elephant, I suppose. There would be a multitude of public infrastructure projects whose short-medium term economic cost-benefit analysis would be vastly superior to the Darwin-Alice railway. The Access Economics study undertaken shortly before construction began indicated it would be commercially viable, at least with the not inconsiderable investment of public funds in constructing the line. But it also showed that the economic return to taxpayers, though positive, was quite small, at least on the “base scenario” of just servicing local demand without any development of international freight “land-bridging” or stimulation of large new mining projects.

On the other hand, as far as I know the Darwin-Alice railway isn’t receiving (or entitled to receive) any ongoing public subsidies beyond the $600-700 million it received in construction subsidies (out of a total of around $1.2 billion), and the taxpayer gets the line back in 50 years or so, by which time it will certainly be still serviceable and profitable. It was a “BOOT” (build-own-operate-transfer) public-private project, which limits the extent of taxpayer financial exposure, unless the current operators go broke and government has to decide whether to go in and operate the line itself or let the investment be completely wasted by closing it down (as they eventually did with the old Darwin-Larrimah line which ceased operating in the 1970s and later got sold for scrap to the Japanese).

According to the operators, freight figures are currently well ahead of initial projections at this stage. And the Ghan passenger service has been much more successful than anyone imagined.

But maybe there are good reasons to fund a project like this despite unimpressive cost-benefit analysis.

The Territory is a major consumer of taxpayer funds and, in the absence of forced depopulation of the north (including its indigenous population which otherwise needs to be supplied and supported), it may make sense to construct infrastructure which enables it over time to develop a critical population and economic mass so that reliance on federal funding can be reduced and the local revenue base substantially increased.

But maybe there’s an even better reason. WATER. Sydney, Melbourne, Adelaide and Perth are rapidly running out of the stuff, in case you hadn’t noticed. State politicians are exploring increasingly desperate measures like extroardinarily expensive desalination plants just to keep their people supplied with enough water to drink and keep gardens reasonably green. And much of southern inland Australia looks like sinking into semi-permanent drought conditions. Is it all a result of global warming? It’s certainly looking increasingly like there has been a long term adverse change in rainfall patterns in much of southern Australia, with decent rain largely confined to the narrow coastal strip excluding existing urban water catchments.

Meanwhile, northern Australia, including north Queensland and the Kimberley, has extremely reliable and almost inexhaustible water supply. Unless the north-west monsoon fails (something global warming modellers don’t predict), that water supply is going to remain abundant and reliable. So why aren’t our politicians taking even more dramatic and extensive measures than the Darwin-Alice railway to boost northern development? It just doesn’t make sense to keep cramming more and more people and industry into Australia’s south-eastern corner when much of it is running out of water!

As well as abundant water supplies, the Top End of the NT (north of about Daly Waters) has plenty of reasonably fertile arable land, large quantities of minerals, abundant offshore natural gas supplies to fuel large-scale power generation to support a much larger population, and huge tidal variations which would allow massive tidal power generation (a renewable and greenhouse gas-free energy source).

And on top of all those potential advantages, we’re within spitting distance of Indonesia, Malaysia, Singapore and so on. Maybe physical proximity to markets isn’t anywhere near as important in this post-industrial age as it once was, but it shouldn’t be overlooked.

Until now, the lack of a freight railway and regular, competitive shipping services into Darwin have drastically hampered economic development. This has meant that it just doesn’t make sense for industry to locate here by comparison with the east coast, despite all those potential unrealised advantages. Moreover, one suspects those potential advantages might never be realised in the absence of government initiative. Large-scale infrastructure investment won’t be made by the private sector alone until the demand is there for it to make immediate economic sense (i.e. Nicholas Gruen’s point), but the demand can’t develop until the infrastructure exists. It’s a classic catch 22, and therefore a classic case for far-sighted government investment.

The Whitlam government attempted to stimulate regional development and decentralisation, but with very limited success. People preferred, and still prefer, to live in or near large coastal cities where the climate is temperate and services are abundant and cheap. But that situation isn’t going to continue as the southern half of the world’s driest continent rapidly runs out of water. The climate of Darwin, Cairns, Broome and so on is every bit as benign as Singapore, Jakarta, Kuala Lumpur or Bangkok, though certainly considerably steamier than Sydney or Melbourne for 6 months of the year. Future generations will look back in disbelief at the wilful collective myopia of an era when Australians stubbornly kept cramming themselves lemming-like into the semi-waterless southern parts of the continent while simultaneously begrudging any public investment in development of regions with plenty of water and other natural resources to support millions of people.

About Ken Parish

Ken Parish is a legal academic, with research areas in public law (constitutional and administrative law), civil procedure and teaching & learning theory and practice. He has been a legal academic for almost 20 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in the early 1990s.
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2021 years ago

Why don’t we just send a train across with its cars loaded with ice from Antarctica?

Dave Ricardo
Dave Ricardo
2021 years ago

Nice try Ken, but your basic premise is wrong. There is no shortage of water which requires the population to move north. In fact, less than one tenth of Australia’s water consumption is by households. The problem is extremely inefficient use of water by irrigators, especially rice and cotton farmers.

Robert Merkel
2021 years ago

Ken, you might want to look at John Quiggin’s back of the envelope calculations on desalination:

http://johnquiggin.com/index.php/archives/2005/02/07/desalination/#comments

It’s expensive, but nowhere near enough to provoke the kind of mass migration you’re supposing. And, as the technology improves, it’s likely to get cheaper. Reverse osmosis membranes will continue to improve incrementally. More speculatively, there’s a possibility that a technology called clathrate desalination will improve to the point where most of the energy required for desalination will be provided by the temperature difference between the different ocean depths.

Dave Ricardo is also quite correct, but, while from an economic perspective diverting water from the Murray-Darling to Melbourne and Sydney makes perfect sense, politically it seems to be impossible. My guess is the cities will end up using desalination on a fairly large scale.

observa
observa
2021 years ago

As much as we should all be wary of politicians and their railways at election time, it would be interesting to do a cost-benefit analysis on the Sydney Opera House now. As I recall it was the biggest and most controversial white elephant of its time.

Ken Parish
Ken Parish
2021 years ago

Even quite conservative projections suggest that Australia’s population will increase by at least 6 million over the next 50-70 years. Desalination might conceivably become affordable, but if most of that population increase was housed in Australia’s north then so such public investment would be needed: the water is readily available. Does it make sense to cram those 6 million extra people into Australia’s south-eastern corner, even if the water crisis is potentially manageable? No doubt it’s feasible, but those regions will be much less pleasant places with so many more people living there. Environmental problems, the cost of replacing ageing existing infrastructure etc may make this an expensive and counterproductive option for a range of reasons of which water supply is only the most glaringly obvious.

There is already substantial and increasing public opposition from Sydney and Melbourne residents to further urban sprawl and consolidation/cramming, and that will surely increase over time. Surely it makes more sense to facilitate decentralisation (primarily but not exclusively to Australia’s north), at least by making the relatively modest investments in public infrastructure that are needed for these regions to capitalise on their inherent potential economic advantages.

Dave Ricardo
Dave Ricardo
2021 years ago

“to capitalise on their inherent potential economic advantages.”

Which are what?

The only industry in which the North has an inherent economic advantage is crocodile farming.

Cameron Riley
2021 years ago

Greg Egan’s novel “Quarantine” had New Hong Kong located in the Gove area. Kind of a city-state on the border of the (future) massive Indonesian market.

Water isnt an issue in the South-East if the agricultural industry didnt suck up 78% of it in NSW/ACT (200-2001).

http://www.southsearepublic.org/story/2005/5/18/342/34266

derrida derider
derrida derider
2021 years ago

My god, “develop the north” – that crude catchcry for massive Country Party pork-barrelling – is back. Perhaps Ken thinks we should turn the northern rivers back inland, or build more Lake Argyles, or any of the other boondoggles that were popular in the 50s and 60s.
Only that time the rationale was protection against the yellow peril, not the superior lifestyle supposedly available up there.

“Does it make sense to cram those 6 million extra people into Australia’s south-eastern corner”?

Absolutely, if that’s what they want and they’re willing to pay the price. If it’s not want they want and/or they’re not willing to pay the price then no boondoggles will be needed (they’ll move anyway), nor is it then moral to tax them to provide such boondoggles. Infrastructure development should be done to keep pace with such a movement, not to try and force it.

blank
blank
2021 years ago

A ‘benign’ climate in Darwin? Oh, yeah.
People will live in the North only if there is airconditioning to lower the humidity to something bearable.

Even ‘temperate’ Perth has power problems. So just how much extra electricity would be needed for 6 million people to run all those airconditioners? How are we going to generate it? A nuclear power station at Rum Jungle, and another at Jabiluka?

As for “cramming” in the south-east corner – it’s all relative. The Republic of Ireland is considered to have a low population density. However, it’s just a little bit bigger than Tasmania, and has a population of 4 million

Vee
Vee
2021 years ago

OT: I sent some email to Ken but it bounced back. Its okay as the information it contained probably wasn’t pertinent.

Joel Parsons
2021 years ago

Derrida Derider has it right, people should be allowed to choose to live where they like, and should be forced to pay the costs. Those costs may be high prices for water and land in the South Eastern areas or for transport and freight in the Northern areas.

That said, the North should be selling it’s benefits to the private sector as much as possible, and I would also support allowing the States & Territories to sponsor migrants on visas that restricted them to living in these areas until they became citizens.

derrida derider
derrida derider
2021 years ago

Thanks for the backup, Joel, but I can’t let that one about restricted visas pass. Without internal passports – a massive infringement of civil liberties – I can’t see how you’d possibly enforce it. And it would be problematic even with internal passports (have you been to any Chinese cities lately?).

used to be dry
used to be dry
2021 years ago

Just watched the Deputy PM on telly and I realize that the Coalition doesn’t ‘get’ ecological thinking. Because recurring drought cuts food exports we need to get out more coal via Pt Dalrymple. This will probably do things to hasten changes in weather patterns, like permanent rainfall decline. It’s like having a cigarette to ease fears of cancer. State Premiers seem to have a better grasp on what is needed where and the big picture generally.

hazym
hazym
2021 years ago

“Unless the north-west monsoon fails (something global warming modellers don’t predict)”…
Struth. If the modellers aren’t predicting it then its almost certain to happen.
How is it that we always manage to forget that all this is cyclic. Is this drought any worse than 1890 or 1930? The numbers seem to say no. But we go on as though its a permanent change. In a few years we’ll all be pondering what to do to avoid being washed away on those “flooding plains”. And then solution will be – move to Darwin of coarse.