Industry News

The ongoing strife with the construction of Victoria’s Wonthaggi desalination has seen Melbourne Water attempt to recoup $306 million in lost funding by upping charges to customers.

“We understand that customers are concerned about the over recovery of desalination funds in 2011-12 to 2012-13 due to delays in the completion of the Victorian desalination plant, and are keenly interested in how this money will be returned,” the company said in a statement.

The company defended the move to recoup the funds, saying it was following a previously agreed upon procedure with the previous State Government.

“Prices for the current Water Plan period (2009-10 to 2012-13) were set by the Essential Services Commission in June 2009 based on the best information available. At that time, the desalination contract between the Government and Aquasure had not been finalised and construction of the plant had not started.”

The issue surrounding the recouping of funding first arose when the company released its Melbourne Water Draft Water Plan, which found that the construction of the strife-ridden Wonthaggi desalination plant had significantly contributed to a costing blowout. 

The company has announced plans to return funds to its customers by lowering its prices over the five year period between 2013-2018, including inflation and interest.

“We have proposed a wholesale price of CPI+30.8% in 2013-14 and then CPI-1% for each of the following four years. This will translate to customers’ bills increasing by no more than CPI from 2014/15,” the company said in its statement.

The draft plan can be found here

http://www.melbournewater.com.au/content/about_us/customers_and_prices/draft_2013_water_plan.asp

Aurora Oil & Gas’s takeover bid of Eureka Energy is inching closer to reality after estimates show that Aurora already owns some 33 per cent of the company.

Despite Eureka’s directors accusing Aurora’s bid of $0.45 cents per share as grossly undervaluing the company, the company’s directors have admitted that they now believe shareholders should accept the bid in lieu of any other reasonable offer.

The directors conceded that the shareholders should accept the deal after Aurora declared $0.45 would be the ceiling price paid in the takeover bid. Coupled with current market conditions and an already substantial stake taken by Aurora, the directors have admitted that the takeover is all but an inevitability.

The Supreme Court of Victoria has given the final approval for the proposed merger of Gloucester Coal and Yancoal Australia. The approval by the Court is the final step needed before the announcement is made on the ASX.

Under the proposed merger, first announced in December last year, Gloucester will take a 22 per cent stake in the merged company, with Yanzhou Coal, Yancoal’s Chinese parent company, will take the remaining 78 per cent.

On behalf of the Gloucester Board, Chairman, James MacKenzie, said “the Gloucester directors recognised from the outset the merits of combining the Gloucester and the Yancoal assets. We are therefore pleased to have completed our due diligence inquiries that enable us to proceed with a transaction that we can recommend to our shareholders.”

“This transaction provides Gloucester shareholders with the opportunity to participate in a globally significant coal company that is expected to be Australia’s largest listed pure-play producer.”

The World Health Organisation (WHO) has concluded that diesel engine exhaust is undeniably carcinogenic after a week-long of international experts was held in Lyon, France. The WHO now classifies diesel exhaust as a Group 1 carcinogen, meaning it is now undeniably harmful to humans.

The meeting saw the classification of diesel fumes upgraded from probably carcinogenic to humans, and was held after the US National Cancer Institute found that occupational exposure to such emissions in underground miners was resulting in substantially increased risk of death from lung cancer.

“The scientific evidence was compelling and the Working Group’s conclusion was unanimous: diesel engine exhaust causes lung cancer in humans.” Dr Christopher Portier, Chairman of the IARC working group.

“Given the additional health impacts from diesel particulates, exposure to this mixture of chemicals should be reduced worldwide.“

The WHO has urged engine makers and diesel producers to work to higher standards to ensure a marked reduction in sulfuret content, changes to engine design to ensure cleaner burning of fuel and to reduce overall emissions through exhaust control technology.

The Westpac Melbourne Institute Index of Consumer Sentiment has found that the country’s consumer confidence has increased by 0.3 per cent from 95.3 to 95.6 in June.

"This is another disappointing result. It follows a second consecutive cut in the official cash rate by the Reserve Bank. Sentiment has risen only 1.1% from its April level and remains 1.7% below the level recorded in October last year despite a 125bp reduction in the cash rate that has brought the average standard variable mortgage rate down by nearly 1%,” Westpac’s Chief Economist Bill Evans said.

“Clearly other factors are dominating rates in the minds of consumers – those factors are concerns about the domestic economy and international conditions. “

The survey operated across five sub-indexes of consumer sentiment, with two improving and three deteriorating. Lower interest rates resulted in a solid upswing on the ‘family finances vs a year ago’ (up 4.6 per cent), and ‘time to buy a major household item’ (up 7.5 per cent).

However, the survey reported a significant deterioration in the sub index ‘forward views on family finances’ (down 7.7 per cent) and sub-index ‘views on economic outlook over the next five years’ (down 3.8 per cent).

“Responses to questions on ‘time to buy a dwelling’ and ‘time to buy a car’ both showed an improvement in June, with these indexes rising 8.2% and 7.5% respectively. Lower interest rates and lower prices are clearly improving affordability and buyer sentiment on both fronts although buyers will tend to be reluctant to follow through on purchases while there are concerns about the economic outlook and job security,” Mr Evans said. 

The Western Australian Local government Association has announced it will be seeking feedback from the state’s local councils over the coming months to develop a suite of ideas to discuss with the State Government to deal with the spread of vicious dog attacks.

The announcement comes after the State Government moved to introduce a Dog Amendment Bill in the coming session of parliament to help curb the spread of dog attacks.

“The recent spate of vicious dog attacks is appalling and our sympathy goes out to the families affected,” WALGA President Mayor Troy Pickard said.

“It highlights to most that dog control laws that have not been changed for more than 35 years are clearly out of date and out of step with current community expectations.”

Mayor Pickard said it was critical that this time the State Government followed through on ensuring the community was protected from dangerous breeds and irresponsible owners.

“I welcome the announcement by the Minister that he intends to introduce a Dog Amendment Bill to the coming session of Parliament,” he said.

“It is encouraging that his proposed amendments will consider prohibiting the availability, breeding and sale of dangerous breeds and sterilisation of dangerous breeds along with increased penalties for irresponsible owners and powers for local rangers. 

“Revisions to the Dog Act to deal more effectively with vicious dogs have been on the agenda of State Governments for years and it is time to do something about it, before another innocent person or family pet is seriously mauled or killed.”

The Queensland Government has announced plans to reform the tendering process by the state-owned RoadTek in a bid to boost the state’s road and transport construction industry.

State Minister for Transport and Main Roads Scott Emerson said the reform to RoadTek will ensure that no longer takes precedence over private operators.

“The changes mean RoadTek will no longer take work away from private companies in major markets, such as South East Queensland,” Mr Emerson said.

The Queensland Government will spend about $310 million on roads and transports infrastructure in South East Queensland this financial year.

Mr Emerson said that RoadTek would still play an important role in regional and remote areas where its expertise and responsiveness would deliver when private firms were unable to do so – particularly during natural disasters.

The Department of Transport and Main Roads will begin consultation with RoadTek’s 2500 staff and contractors, the construction industry and councils to deliver a better tendering process.

The Australian Bureau of Statistics (ABS) has released the March quarter’s Mineral and Petroleum Exploration findings, showing that the sector is continuing to display healthy growth.

The seasonally adjusted estimate of mineral exploration expenditure rose 12.3% (or $118.8m) to $1086.0m in the March quarter 2012. The largest rise this quarter was in Western Australia (up 19.0% or $95.5m) followed by Queensland (up 13.4% or $31.7m).

In original terms, mineral exploration expenditure fell 15.1% (or -$156.3m) to $876.1m in the March quarter 2012. Queensland had the largest fall (down 22.4% or -$57.5m), followed by Western Australia (down 7.9% or -$41.8m).

In original terms, exploration on areas of new deposits fell 23.2% (or -$75.0m), while expenditure on areas of existing deposits fell 11.5% (or -$81.3m).

In original terms, the largest fall by minerals sought came from expenditure on iron ore exploration (down 14.1% or -$43.9m), with the largest fall occurring in Western Australia. The next largest fall came from expenditure on coal exploration (down 18.5% or -$40.2m).

However, petroleum exploration failed to perform during the March quarter, falling 33.6 per cent, or $301 million, to finish at $596 million.  

The Federal Government has released a report which provides detailed information for companies investigating north-eastern South Australia’s resource potential.

Federal Minister for Resources and Energy, Martin Ferguson, released the Frome airborne electromagnetic survey, South Australia: implications for energy, minerals and regional geology interpretation record, providing information into mineral systems in the region.

The Frome airborne electromagnetic survey was the most extensive of its type ever undertaken in Australia, covering more than 95,000 square kilometres in northeast South Australia, representing about one tenth of the State," Minister Ferguson said.

"Cooperative ventures of this nature play an important role in providing industry with valuable pre-competitive data to help reduce exploration risk and enhance opportunities to better target areas for exploration and production, as well as increasing industry's understanding of the geological architecture associated with known resources such as the Beverley, Honeymoon and Four Mile deposits.

"The Lake Frome region contains significant known mineral resources, including around 60,000 tonnes of uranium as well as other commodities such as copper and gold." Minister Ferguson said.

An airborne electromagnetic survey involves transmitting an electromagnetic signal from an aircraft which induces electric currents in the ground that are detected by receiver coils towed behind the aircraft. This allows the identification of a range of geological features which can indicate the presence of certain minerals.

The Victorian Government released the latest Growth Corridor Plans, approving six Precinct Structure Plans to create new suburban communities at Diggers Rest, Lockerbie, Lockerbie North, Manor Lakes, Merrifield West and Rockbank North.

The announcement comes after the completion of the Logical Inclusions Review into Melbourne’s Urban Growth Boundary.

“Growth corridors identified in the plans will provide for housing, jobs, transport, town centres, open space and key infrastructure across our city’s newest metropolitan suburbs,” State Planning Minister Matthew Guy said.

“Local Councils have played a key role in the formation of these plans, which were the first to be completed as part of an accelerated program aimed at improving land supply in areas requiring an increase in housing lot availability.”

Approval of the six PSPs will see the completion of planning for the delivery of over 60,000 new housing lots.

The Municipal Association of Victoria has preducited that council costs will need to rise an estimated 3.9 per cent to deliver the same level and range of community services and infrastructure as last year.

The Local Government Cost Index is released each year and is equivalent to the consumer price index forecasting.

Cr Bill McArthur, MAV President said council expenses were primarily driven by construction, materials and wages, rather than the Consumer Price Index (CPI) which measures changes in household expenses.

“For councils to maintain $60 billion in community assets and provide more than 100 services requires both front-line workers and construction materials. These are the main cost drivers for local government.

“From child carers, engineers, road workers, nurses, planners, parks and gardens staff to life guards, school crossing supervisors, food safety inspectors and home care staff. Local government does it all.

The Local Government Cost Index is calculated using published industry and Government construction and wage indices that best represent the mix of council spending profiles. This year the Cost Index also includes estimated increases in municipal construction, electricity, gas and landfill costs associated with the introduction of the carbon price on 1 July.

Cr McArthur said the 3.9 per cent forecast rise in costs was a sector-wide average that would differ for individual councils depending on factors such as population growth, actions to reduce their exposure to the carbon price, Government funding received, and the impacts of other cost pressures,” Cr MacArthur said.

“Government funding for joint community programs continues to be lower than actual council costs to deliver these services, and other cost pressures will also affect council budgets for the coming year.

“Many municipalities are struggling with growing waste management costs due to stricter State regulations for landfills, plus steep annual rises in State landfill levies. This year landfill levies that councils must collect and pass on to the Government will be in the order of $49 million or $20 per household.

The full index is available here

http://www.mav.asn.au/about-local-government/local-government-finance/Related%20documents%20%20cost%20index/2012%20cost%20index%20report.docx

The New South Wales Government has announced an additional $30 million to assist local councils pay for infrastructure upgrades and maintenance, as part of the state’s Local Government Renewal Scheme.

In handing down his second State Budget, Treasurer Mike Baird said the spending reflects the success of the scheme, with the additional funding extending its reach, allowing more councils to benefit.

The Scheme provides councils an interest subsidy for a period of up to 10 years on significant loans taken out specifically to pay for backlog infrastructure projects such as roads, community halls, libraries, paths, parks, sports fields and water facilities.

“The Scheme is a key aspect of the NSW Government’s Local Infrastructure Backlog policy and will not only help NSW councils reduce the large backlog of infrastructure projects in their communities, it will also assist councils on such matters as better use of debt funding, exploring various borrowing options, and each council’s borrowing capacity,” State Minister for Local Government Don Page said. 

The Local Government Association of Tasmania (LGAT) has announced it will support the formation of a single water and sewerage corporation in the state, subject to agreement by the State and set to a number of requirements associated with its governance.

The in-principle support will see fundamental requirements for State Government oversight and involvement removed and will be guided by ASX Corporate Governance Principles.

LGAT President Mayor Barry Easther said owner councils resolved that there will be two formal meetings of all owner councils, and four regional shareholder meetings per year.

“Today's meeting determined that an arrangement of one vote per council should apply unless a poll is requested, at which point voting would be based on the set asset contributions made by each council.  The meeting agreed that the circumstances under which a poll is to be requested needed further clarification and sign off by councils,” Mayor Easther said.

“The councils decided that the present arrangements for owner representatives be terminated and be replaced by a system of representation involving one delegate per council. “

The independent Pricing and Regulatory Tribunal (IPART) of New South Wales has handed down its final determination on the average prices that electricity retailers in the state can charge, authorising an average 18 per cent increase across the state.

The tribunal found that flow on costs from network maintenance costs and the introduction of the carbon tax were major factors in the increase. The final decision is higher than the preliminary 16 per cent increase outlined in the draft decision in April.

The average price increases will vary for customers of the 3 regulated electricity retailers as follows:

• 20.6% for EnergyAustralia customers, which translates to an extra $7.00 per week ($364 per annum) on an average residential customer bill, and $9.07 per week ($472 per annum) on average for its small business customers
• 11.8% for Integral Energy customers, which translates to an extra $4.00 per week ($208 per annum) on an average residential customer bill, and $5.19 per week ($270 per annum) on average for its small business customers
• 19.7% for Country Energy customers, which translates to an extra $8.21 per week ($427 per annum) on an average residential customer bill, and $10.67 per week ($555 per annum) on average for its small business customers.

IPART Chairman, Dr Peter Boxall said IPART is concerned about ongoing cost increases and has outlined a number of recommendations aimed at improving the future affordability of electricity.

“We would like to ensure that the electricity industry works for the long term interests of customers. There are aspects of the National Electricity Rules and the National Electricity Law that could be changed to reduce pressure on prices and to make sure that expenditure on the electricity network is efficient. We’ve also outlined some areas around reliability standards, green schemes, and subsidies that could be reviewed to limit future price increases,” Dr Boxall said.

IPART found that the carbon price accounts for an increase to treail prices by between 6 to 9 per cent.

The Grattan Institute has published a report into what it considers key reform areas for stimulating economic growth. The Game-changers: reform priorities for economic growth in Australia report found that governments must reform the tax mix and move to increase participation rates of women and the older generation.

“If Australian governments are serious about growth, they need to reform the tax mix and increase workforce participation for women and older Australians,’ Grattan Institute Chief Executive Officer John Daley said.

“Together those three things can grow GDP by $70 billion within the decade. Nothing else is big enough to change the game.”

In producing the report, the Institute analysed a range of policy areas to identify key reform areas that would produce the greatest returns over a ten year time frame.

“Some issues — like industrial relations reform, innovation and infrastructure investment — get a lot of attention. But our research shows that compared to the game-changers, the growth potential of reform in those areas is either unknown or surprisingly small,” Mr Daley said.

“Governments can’t do everything at once, and they shouldn’t try. When governments take on too many reforms at once, they tend to succeed with small reforms, but mishandle the big ones. Prioritisation is essential. Governments need to concentrate their effort on reforms that can make the biggest difference.”

The full report can be found here

http://grattan.edu.au/static/files/assets/3e1bdca4/Game_Changes_Revised.pdf

Work has begun on the new Bega Bypass following three years of extensive planning and community consultation.

The fully Federally funded $60 million bypass will see  a new 3.5 kilometre two-lane road to the west of the existing Princes Highway between the existing Bega River Bridge and Finucane Lane.

“The Bypass is no longer just an aspiration or a line on the map.  It will soon be a real road delivering real benefits including safer, quicker driving conditions and more than 500 fewer trucks a day rumbling through the town,” Eden-Monaro MP Mike Kelly said. 

The Federal Government has released the Rail Manufacturing Roadmap – On Track to 2040 – following extensive industry and academia collaboration.

The Federal Minister for Industry and Innovation, Greg Combet, urged industry leaders to make good use of the document in preparing their companies for the future.

"I encourage the industry to embrace the findings in this Roadmap, and harness the opportunities to innovate and grow Australia's rail manufacturing industry,” Mr Combet said.

Developed over twelve months, the Roadmap identifies three technical priority opportunities of Materials and Manufacturing, Monitoring and Management, and Power and Propulsion among 80 promising applications of local capability and technology.

Key outcome areas identified during the consultation process included six strategic implementation areas of governance, policy, research, funding, collaboration, and standardisation and regulation. The Roadmap also presents 22 recommendations supporting implementation areas.

The Roadmap was developed by ANU Edge with the Cooperative Research Centre for Rail Innovation, the University of Cambridge Institute for Manufacturing and Strategic Connections Group.

The project was jointly funded by the Commonwealth, industry through the Australasian Railway Association, and the Victorian, New South Wales and Queensland Governments.

Mr Combet also thanked those involved in the production of the document, which he says will play a crucial role in delivering a cohesive vision for the Australian rail manufacturing sector’s future.

"Finalisation of the project is an excellent achievement and I would like to thank Bruce Griffiths, the Rail Supplier Advocate, for his tireless work with the rail industry in bringing the project to fruition.

"This project is symbolic of the industry's determination to achieve a consensus on a vision - it outlines directions for future opportunities and pathways. Importantly, it sets out necessary short-term decisions that will lay the foundations for long-term sustainability,” Rail Supplkier Advocate Bruce Griffiths said.

The report can be found here:

http://www.innovation.gov.au/Industry/AustralianIndustryParticipation/SupplierAdvocates/Documents/OnTrackTo2040-Roadmap.pdf

The Queensland Urban Utilities Board has announced the company is committed to a price freeze for the 2012/13 year.

Queensland Urban Utilities Chairperson, Jude Munro, said the price freeze was in line with the company’s commitment to lowering the cost of living impact on families.

“We have listened to our customers and understand the pressure the rising cost of living is putting on household budgets,” Ms Munro said.

“We have demonstrated this through our track record of freezing prices this year and reducing water and sewerage bills last year for customers in four out of five of our service territories.

 “Queensland Urban Utilities has been able to freeze its water and sewerage prices this year because our internal efficiency program has delivered almost $63 million in budget reductions and recurring efficiencies in our first two years of operation.

The Federal Government has announced the second round of funding of the Regional Development Australia Fund (RDAF) for Victoria, outlining nine major projects that will share in $38.9 million throughout the state.

"The nine Victorian projects announced today share in $38.8 million of RDAF grants but also leverage other funding sources to build a strong investment partnership," Minister for Local Government Simon Crean said.

"The $38.8 million of RDAF funds will unlock a total of $168 million in partnership investment between the Federal Government, state and local governments and the private sector.”

Mr Crean said RDAF, worth $1 billion, was part of the Federal Governments record $4.3 billion investments in regional health and hospitals, skills, higher education and infrastructure.

The successful Victorian projects are:

• $13.5 million for Frankston City Council to construct the $46.35 million Frankston Regional Aquatic Centre;
• $6 million to City of Greater Dandenong for the $62 million Dandenong Connects development;
• $4.8 million for the Mildura Rural City Council for the $13.3 million Mildura Riverfront (Eastern Precinct) development;
• $4 million for the Shire of Melton to develop the $19.5 million Melton Library and Learning Hub;
• $3 million for the Latrobe City Councils $6.2 million development of infrastructure at Latrobe Regional Airport;
• $3 million for Wimmera UnitingCares $9.3 million development of the Wimmera Community Service Centre;
• $2.5 million to the Wangaratta Rural City Council for the $5.22 million Ovens Riverside Precinct;
• $1.2 million to the Benalla Rural City Council for the $4.55 million Sir Edward Weary Dunlop Learning Centre; and
• $851,450 for the Loddon Shire Council for the $1.75 million major redevelopment of the Wedderburn Community Centre.

Global recruitment specialist Randstad has identified 14 of the world’s most attractive employers in this year’s edition of the Randstad Award, the largest independent employer branding study in the world.

he Randstad Award 2012 winners are: Newcrest Mining (Australia), Deme (Belgium), WestJet Airlines Ltd. (Canada), Eurocopter (France), Fraunhofer-Gesellschaft (Germany), Microsoft (India), Ferrero (Italy), Sony Corporation (Japan), Air New Zealand (New Zealand), TVN SA (Poland), Singapore Airlines (Singapore), Sony (Spain), KLM (Netherlands), and John Lewis (UK).

“Even in volatile economies, finding and retaining talent with the right skills to beat the challenges at hand, is a key priority for the coming years. Insights into the drivers of choice for potential talent can help shape talent management strategies and build attractive and sustainable employers,” Marielle de Macker, managing director HR at Randstad said.

The Randstad Award survey is the largest independent employer branding study in the world including a total of 120,000 respondents across 14 countries. Respondents are asked which aspects they value in companies when choosing a new employer. They are then asked if they know the 150 companies selected in that specific geography and whether they would like to work for those companies. Ranking the most attractive industry sectors and the means to look for a new job are also part of the survey.