Wednesday, October 3, 2012

Dredging the dredge report

The controversial Hillbilly blog, much beloved by Warren Entsch, has posted a link to what would appear to be the "confidential" report on dredging Trinity Inlet which featured in the Cairns Post and discussed here previously at Loose Change:

http://www.dsdip.qld.gov.au/resources/project/cairns-shipping-development/csdp-ias.pdf

However, there is a subtle difference between the economic benefits stated in the Executive Summary and those reported by the Cairns Post and Gavin King:

Cairns Post: "Ports North also estimated that by 2025 there would be 61 mega ship visits to Cairns a year, injecting an estimated $436 million into the region’s economy."

Gavin King: "The report everyone's been waiting for... The Cairns Shipping Development Project will inject $435 million+ into our city's economy over the next 13 years."

Dredge Report: "It estimates that improved access to Cairns will see mega cruise ship numbers grow by 61 annual visits by 2025, delivering regional economic benefits of $436m over the next 25 years."

Ummmm ........ well depending on assumptions and timing the 25 years does sort of reduce the economic benefit by half or so from what was reported by the Cairns Post and King? To be kind, perhaps it's just old mate the King Parrot's unfortunate numeracy problem again? What's a dozen years between mates anyway?

The cost - benefit section of the report takes less than two pages so I will post it here in full. Presumably this is derived from the business case prepared by Arup listed in the references but there is no indications of the basis of estimates or assumptions. The report doesn't appear to contain a cost estimate to confirm the recent comments from the Minister of $85 million to $110 million compared to the $40 million budgeted in forward estimates.


8 Costs and Benefits Summary
8.1 Economic Impact

The proposed Cairns Shipping Development project will see mega cruise ship numbers grow by 61 annualvisits by 2025, with continued growth beyond that time. The additional value added in the economy,generated over the 25-year project period 2016 to 2041, is estimated at $436m.


This project delivers significant economic benefits to both Cairns and the State of Queensland. The expansion of cruise ship facilities in Cairns is seen as an important step in developing increased tourism opportunities in North Queensland and to support and grow cruise ship operations in Queensland. Improving infrastructure to facilitate this will result in considerable benefits to the local economy and the Queensland cruise industry. Having an additional alongside berth for mega cruise ships based in the north of the state will provide opportunities for increased cruise itineraries throughout the whole of the state. Dredging a broader and deeper channel to allow port access for larger cruise ships will lead to the general expansion of North Queensland’s cruise industry and also bring some stability and diversity to the Cairns tourism market sector.
 

The fact that about a quarter of cruise ships currently visiting the area are not able to come into Cairns seaport and that this was because of their size, means that significant expenditure is being lost. Looking forward, the sector is currently growing strongly and is expected to grow strongly into the future, with most of the growth being in ship sizes not currently able to enter Cairns seaport. Major economic benefits will accrue from deepening the channel and having available fuel types suitable for large cruise ships, with the additional value added to the economy estimated at $46m pa by 2026 and $116m pa by 2041.

The estimated additional direct and flow-on jobs resulting from the increased cruise ship visits is 370 pa in 2026 and 540 pa in 2041.


8.2 Economic Efficiency (Benefit Cost Analysis)
The major justification for the project stems from Economic Efficiency gains in terms of direct benefits. The current situation where the larger cruise ships need to stand off the coast and ferry passengers into Yorkey’s Knob and then bus most of them into the city is very inefficient; in extra costs of shore transfers and bus transfers, but also in time cost. In these circumstances also, generally crew are unable to come ashore for leave and passengers are discouraged from coming ashore, especially if weather conditions are not good.


The above cost efficiency benefits are offset, in part, by higher port charges. Operating costs of coming into Trinity Wharf however, are more than outweighed by the extra crew and operating costs of remaining at sea and benefits of being able to carry out maintenance activities while wharf side.


The indications are that the net additional costs to passengers and the ship of landing via Yorkey’s Knob isabout $55 per passenger on board the ship in 2016 dollars.


With the projected growth in larger cruise ship visits, it is projected that over the 25-year project period, 2016 to 2041, the direct benefits to the cruise ship trade of deepening the channel, wharf improvement, and installing facilities for fuel types used by larger ships would have an NPV of $141m in 2011 prices.

8.3 Non Cruise Ships
Calculated NPV (2011 prices) of savings to existing larger fuel, fertiliser and sugar ships being able to enter the port without tidal restrictions are estimated to be of the order of $9m.










2 comments:

  1. On this link, the investment amount was 127 million. Then after complaints it had already ballooned from 110 million the amount was deleted and replaced with "not available". So Ports North do not seem to want to put their name to the cost 80-110 million.
    http://www.dsdip.qld.gov.au/assessments-and-approvals/cairns-shipping-development-project.html

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  2. The study doesn't contain a lot of details on the economic analysis unfortunately. I imagine a significant proportion of the benefits they're counting (in terms of reduced travel times) would accrue to foreigners. Benefits to foreigners, however, are irrelevant to a cost-benefit analysis conducted for the Queensland Government.

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