Fix roads to build north: CPC, NTCA

James Nason, 22/08/2014

Poorly maintained roads that are impassable for several months of the year and ‘sealed’ roads where tar is no longer wider than a table remain major roadblocks to successful northern development, a Parliamentary hearing in Darwin this week was told.

The Joint Select Committee on Northern Australia has been conducting public hearings across Australia since March to gauge local opinions on the future of Australia’s north.

After conducting a marathon 27 public hearing days in 22 locations, mainly across northern Australia, the committee held its final public hearings in Darwin on Monday and Tuesday.

It tabled an interim report in June and is due to present its final report to Parliament early next month.

In separate sessions on Tuesday Consolidated Pastoral Company chief executive Troy Setter and representatives of the Northern Territory Cattlemen’s Association reinforced the message that targeted investment in road and water infrastructure and reductions in red tape are essential to unlocking the potential of the northern cattle industry.

Mr Setter and NTCA CEO Tracey Hayes both emphasised a single infrastructure master plan to guide northern infrastructure development, and one that is able to “withstand political cycles”, as stated by Ms Hayes.

Mr Setter said private capital will be needed to fund northern development and it will only flow if investors can see attractive returns on investment and policies that instill confidence.

The biggest barrier to profitable production in the north remained the cost of production inputs and cost of getting product to market.

Harmonise regulations, reduce duplication

Mr Setter told Tuesday’s hearing that Government’s should be working to harmonise regulations across jurisdications, such as in the area of road transport, and to reduce duplication across different regulatory systems.

For example the Australian Standards for the Export of Livestock (ASEL) and the Exporter Supply Chain Assurance System (ESCAS) rain in parallel to each other, which was “a waste of everyone’s resources and time,” Mr Setter said.

He said CPC supported ESCAS and regarded animal welfare as “the most important thing for us”. However, ESCAS also required a massive amount of paperwork that was focused on the process of animals leaving Australia rather than on the humane treatment of animals at the point of slaughter.

 Road upgrades, toll-funded?

Describing the poor state of NT beef roads, Mr Setter explained that along large sections of the Buntine Highway which runs from from Katherine to the Victoria River District, the width of the tar on the road was “now not as wide as the widest point of the table we are now sitting at”.

 During the wet season and the start of the dry season down there, the road is often closed for considerable period of time. That means our sales process and moving staff and developing and running a business for the full year is challenged.

…Roads like the Murranji stock route, which are dirt, take substantial freight savings off. Going east from the Victoria River or the Kimberley, if you go down the Murranji you can save 200 to 300 kilometres on a journey. You must appreciate that it is dirt, and there would be substantial cost to deliver it to tar.

But even just maintaining those dirt roads and getting them open earlier would cause a substantial saving in operating expense for us. At the moment, they are not graded well enough for water to run off them. They are closed from the first rain in November and they do not get opened until May or June.

Queensland Liberal Senator Ian Macdonald asked if truck owner/operators would be prepared to pay a toll to fund the cost of the road. “Someone once suggested to me that you could have a toll of $2000 per road train to try and pay the cost of that road…  It was commented to me that they would save that amount in blown tyres.”

Mr Setter said that while the figure of $2000 per truck sounded high, he had heard reports of the cost being over $1000 per truck in terms of maintenance.

He urged the Parliamentary committee members to consider the merits of developing rail infrastructure from Mount Isa to Tennant Creek.

 The money that could be saved on road infrastructure and taking trucks off the roads, which do cause wear and tear on the roads, what would be the saving on spend and the better allocation of resources by linking a rail line through?

 Spelling infrastructure on SA/NT border

In their separate presentations both Mr Setter and the NTCA representatives drew attention to the need for spelling and cross-loading facilities on the road between Alice Springs and Port Augusta.

Moving northern cattle south currently involves a relatively short journey to the spelling yards at Alice Springs and then a long 1200km journey without adequate rest facilities to Port Augusta.

The committee was told that a spelling facility somewhere near the NT/SA border that broke the journey south into two-well balanced trips would reduce double handling, animal welfare, OH&S and driver fatigue issues, and would also make it more competitive for producers in the Victoria River and Kimberley regions to trade cattle into the south.

Mr Setter estimated that a suitable facility would cost in the order of $3-$5 million.

NTCA chief executive Tracey Hayes said the development of cross-loading facilities at Port August was also critical for driver safety.

Cattle have to be transferred from six deck road trains into shorter configurations at Port Augusta but no cross-loading facilities available to do that, she explained:

Currently you have six deck road train units pulling up on the side of the road and B-Double configuration pulls up alongside and they cross-load them.

 Often it is in the middle of the night. It is in an area where there are no facilities for drivers or animals. It is highly visual. It is something we have been flagging with the government for quite some time. We see a requirement for some type of facility there.

 Darwin Port bottlenecks

 A key cause of post-farm gate inefficiency is the shipping bottlenecks and congestion issues at the Darwin Port, Mr Setter said:

 The feedback that we get for our live export cattle going out of Darwin port is port congestion and over demand compared to the size of the port.

 The feedback we get is that if the port was longer and there was some increased focus between ship operators, exporters and the port operators around efficiency as well—that it is not just about infrastructure; it is also about efficient communications—some of the current bottlenecks that we face, with cattle standing in yards in Darwin for days waiting for a ship could be alleviated.

 Crop finished cattle in north not yet economically viable

One of the more popular visions that exists for the development of the northern cattle industry involves using irrigated agriculture on pastoral lands to finish locally bred cattle, and to export more northern product as boxed beef.

WA Labor MP Allannah MacTiernan asked if Mr Setter believed capacity existed to do more value adding of cattle in the north via irrigated cropping and export abattoirs.

Mr Setter said CPC had done detailed work and had found that it was not economically viable to irrigate and grow corn and feed it to cattle in northern Australia at present:

We as a company believe in developing northern Australia and developing irrigated cropping and farming in northern Australia. But, as it currently stands today, without good road infrastructure, good storage infrastructure for commodities and efficiency through the port of Darwin, it is not working for us.

If we get the right infrastructure and we can get the cost post farm gate issues sorted, we would certainly be a developer of northern Australia for irrigated cropping for cattle production.

… Using Katherine as an example, the challenge is the volume of groundwater.

There is also just the pure economics of growing crops in northern Australia, all of the different feed requirements that are required to feed the cattle and the lack of storage infrastructure.

I was involved in the Tipperary Group of Stations for the last couple of years overseeing the agistment that AACo had over that. The cost of freight to bring protein in more than the value of the protein. We would feed cottonseed, and it would cost us over $250 a tonne to truck the cottonseed into the site. It was not viable. There is a feedlot there, and we fed cattle there. This is substantial cropping infrastructure there and there is a small amount of irrigation. We had plenty of rainfall there and we brought all of the infrastructure, and it was not viable to produce grain-fed cattle there. The cost of gain—to put a kilo on northern high Bos indicus content cattle that are not genetically bred for high-growth feed-lotting production systems did not work at Tipperary station. It was costing us about $2.50 a kilo to put weight on animals worth less than $2 a kilo.

Senator IAN MACDONALD: Is that when you bring in the supplements?

Mr Setter: We grew corn, sorghum, hay and silage on site, but our proteins and supplement were—

Senator IAN MACDONALD: Even with the corn, sorghum and silage that you had on site, it was not a profitable operation?

Mr Setter: No.


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