Colin Barnett’s Kimberley canal project is the kind of frontier project WA needs more of, according to Andrej Karpinski.
Most politicians are like ruminant animals. They regurgitate their ideas every three to four years, chew on them for a month or two and then swallow them again when the election is over.
The ideas usually have one thing in common; implemented or not, they would have little, if any, long-term impact on Western Australia.
It was therefore very refreshing to see Opposition leader Colin Barnett come out in support of the Kimberley water proposition, which is admittedly not new, but which has the potential to dramatically alter the future of this state.
Rather than stick to the safer: “we will send it to a committee for review” line, he has decided to opt for “we will build it” approach, causing considerable commotion and throwing the Government’s strategists off balance.
There is nothing more dangerous than a man with an idea who knows how to use it.
Mr Barnett is arguably the best-equipped person to tackle the issue of building the canal from Kimberley to Perth. His years spent running the industry lobby make him acutely aware of the problems faced by the regional areas of WA.
Being the largest state of Australia in terms of its area, WA has been endowed with almost every natural resource imaginable. There is only one problem – they are not where they are supposed to be.
The mineral riches and the population centres are far from water sources, making both the urbanisation and the development of downstream processing difficult to achieve in a balanced way.
Bringing the water to where it’s needed should not seem like a radical idea. But the scale, complexity and cost of the project make this a very contentious topic. Without pretending to offer an exhaustive analysis, let’s have a look at this issue.
The technology proposed by Tenix has not been tested in practice and it remains to be seen if the advantages of the proposed design will outweigh potential problems.
The current proposal is for the canal to be essentially a wide ditch covered with plastic running from the Kimberley to Perth.
Some of the areas in the north-west are prone to flooding, so breaching of the canal wall could cause massive, irreversible flooding. When in 1905 a Californian canal linking the Colorado River with the coastal irrigation areas broke its banks, it created an inland sea 56 kilometres long and 24km wide.
On a positive side, the flooded area has since become a major recreational attraction offering fishing, hunting, boating and bird watching.
On a negative side, the lake has become polluted and its salinity recently reached levels 25 per cent higher than the Pacific Ocean.
The optimum design is a canal linking the Kimberley with a chain of five or six new reservoir lakes created at various spots along the coast from Pilbara to Lancelin, and then connected by the last link of the canal to the existing dams and reservoirs east of Perth.
The new lakes would be flooded over a period of time to create source of water able to supply the whole coastal region stretching from the Kimberley to the South West for several years.
Lake Mead in Nevada (Hoover Dam) holds a two-year supply of water for southern California. If a single lake can satisfy the water demand of the most populated section of the fastest developing state in US, a series of lakes stretched along the coast could provide WA with virtually unlimited development potential. It would also reduce the construction cost of the canal proper.
Water use in the metropolitan area and the South West is very seasonal. Storage of water in reservoirs would allow for a narrower canal, as the increased summer demand would be met by water from the reservoirs.
There is no doubt that development would follow the provision of fresh water. This would mean more jobs for the regional population, new industries and a rapid population growth. But it would also mean more conflict over land rights, sacred sites, Native Title issues, and the like.
Rapid pace of development would put significant pressure on the social framework of the affected areas. Over time, with the abatement of the welfare dependency of the regional centres there we should expect reduced crime rates and greater economic participation of the local population.
This in turn would lead to a decline in welfare expenditure, reduction in subsidies by the government and increased revenue from excise and taxation. The growth would mostly come from agriculture, downstream mineral processing, housing construction and tourism.
The areas to the north of Perth have a potential to rival the east coast in terms of tourist pulling power.
At present, the main problem with attracting tourists is that visiting some of the coastal towns seems more like a trip to Simpson Desert than Cairns.
Whatever the environmental lobby may say, the average tourist, and for that matter average resident, prefers lush green vegetation to parched red dirt.
Irrigation and re-vegetation of a 20 to 50km-wide and several thousand kilometre-long stretch of land would probably affect the local climate. Increased evaporation from the vegetation tends to lead to increased precipitation.
Vegetation also absorbs a lot more solar radiation than soil. This tends to lower the local temperature relative to the surrounding areas.
Regretfully, the re-vegetation of the coastal areas would also affect the native flora and fauna, with some species coming under pressure from climate change, introduced species, and from urban and industrial development.
However, opening up vast tracks of coastal land to development would reduce the pressure on Perth metro area and the South West.
It could be argued that I am being a tad vague. Usually, when people are concentrating on the big picture, they do so to avoid addressing the more mundane issues that could derail their argument.
As I am not being paid $5 a minute to perform what cynics will probably call the ‘in-feasibility’ study, I can only touch on the issues that will be considered during the review.
Expressing an opinion in a newspaper column has its advantages. No-one expects me to fix the public health system, lower the crime rate or provide the right answers to other key problems facing Western Australians. However, as Perth investment banker and businessman John Poynton said: “WA is a frontier state and frontier states need frontier projects”.
I could not agree more. North West Shelf gas project and the Goldfields pipeline were expensive for their time.
There were many critics who argued against their construction, but we are all thankful that some individuals had the vision and the political rectitude to make the hard decision.
These projects have done more than just transform the state economy, generated jobs and stimulated regional development. Even more importantly, they forced additional investment in private and public infrastructure at the time when it was very unlikely that either the government or the private sector would find this idea tantalising enough to justify it.
Every government has to make tough choices every day. Deciding how to spend the limited financial resources is not an easy task. Everyone wants lower tax rates but doesn’t want to compromise on the quality of services that government agencies provide.
The only way to combine these two conflicting goals is to increase the pace of economic growth. But there is a limit to how much the growth can be increased without causing serious economic and social problems down the track.
The only way to exceed this limit is to make a quantum leap and to shift from one paradigm to another.
Singapore achieved this by educating its population. California made that leap at the beginning of last century by bringing water from Nevada to the coast. The original investment and sacrifice paid for itself many times over.
The multiplier effect of a Kimberley canal would be far greater than that of the North West Shelf project. It could also be argued that it would be greater than in California, given that we would start from a lower economic base.
The myopic focus on Perth and South West, with the lack of concern for the development of the coastal regions north of Perth, has led to overdevelopment of the coastal strip from Mandurah to Two Rocks.
Land prices in these areas have risen significantly and there are increasing pressures on environment and services as a result.
This myopia still continues. We argue whether the canal will cost $2 billion or $10 billion. Instead of focusing on the potential to turn this state into Australia’s answer to California we focus on the garden watering restrictions and the preservation of the credit rating.
If WA had towns and cities stretching from the South West to Kimberley, the income from state and federal taxation and from the sale of land to developers would be enough to finance the best quality law and order, health care and education in the Commonwealth.
Unfortunately, the bigger the idea the stronger the resistance from vested interest groups.
Fortunately, Western Australians can warm up to a large scale project if it is put to them in a right context by a leader who understands that you can’t lead and inspire people if you always think with your wallet.
• Andrej Karpinski has a background in economics and corporate finance. He sits on boards of several public and private companies involved in technology research, funds management and resources exploration. He has published extensively in Australia, Asia and Europe on subjects ranging from economics and public policy to finance.