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Interview

with Lisa Scaffidi, The Lord Mayor, Council of the City of PerthThe Lord Mayor

01.07.2010 / Energyboardroom

The following interview was conducted with Frank Edwards, Chief Executive Officer, and The Right Honourable Lisa Scaffidi, The Lord Mayor, of the City of Perth

While the focus of this report is on the current challenges and future goals of energy in Australia, if we begin from a historical perspective, what has been the role of the resources and energy sector in the present-day development of the City of Perth?

LS: Without a doubt the exponential growth that we have experienced in our city over the last two decades is largely due to the strong influence of the resources sector. In particular, we have been feeding the insatiable appetite of China and neighboring customer countries. There has been a strong desire for many of the major resource and energy companies such as BHP Billiton, ExxonMobil, Chevron, and the like to have a stronger base in Perth.

FE: Putting geography into context, Western Australia is 1/3 the size of the continental United States but with only 2 million people, 1.6 million of whom live in Perth and another 300,000 living just outside of Perth. There are no large population centers outside of the Perth metropolitan area.

We have had a boom and bust economy since settlement based on resources of some sort. Whether it is gold, wheat, sheep, alumina, or iron ore, the economy has been heavily concentrated on the resources industry. The emergence of oil and gas, gas in particular, is adding a new component to resources, which gives it more breadth. Oil and gas bring another layer of resilience to the state’s economy which of course Perth benefits from. We are home to a range of oil and gas exploration companies as well as the other major players in the world who have established offices here. The approaching significance of the Browse, Gorgon, and Wheatstone projects is that when they are all online by 2015, Australia will be the world’s 2nd leading liquefied natural gas (LNG) exporter behind Qatar.

Outside of oil and gas we are currently producing 18% of the world’s supply of iron ore, 18% of the world’s alumina, 15% of industrial diamonds, and 9% of world gold. There are a wide range of resources of which LNG is still hugely significant but only starting to mature as a project. Markets are growing and will continue to grow given the enormous demands from China and India over the long term. Our challenge as a city is to find ways to leverage benefit to the community, the city, and the people of Western Australia as a consequence of that, and not have the profits go elsewhere.

LS: There are two tangents to that assessment. First is the legacy factor. We want to make sure that when the resources are finished we are left with something to show for it. Second is ensuring quality living standards for the citizens of Perth be they the skilled workers that the city attracts or future citizens down the road.

To meet those challenges, what initiatives is the City taking to ensure the assimilation of new workers and provide the necessary resources?

LS: We constantly grapple with those issues. We work very closely with the State Government to encourage precinct renewal and infrastructure development that will appropriately brand our city but also cater to the skilled workforce coming in and who, possibly because of the cities they are arriving from, expect a certain benchmark of living standards. People seeking employment in the petroleum industry can choose from jobs in a number of amazing cities around the world: Calgary, Aberdeen, and Houston for example, all of which score high rankings on The Economist’s livability index. Perth ranks in the top-10 of that index so we are doing well. We want to maintain our high score and can only do that by ensuring that our city grows, providing the needed infrastructure, and remaining vitally connected to the world. I believe it comes to cultural activities as well and providing all of the incidental extras that people want to see in a city so that they are gainfully able to enjoy the recreational benefits of life that they are accustomed to.

FE: We need to have amenities such as world class symphony and ballet, which Perth does have. The City and State Government have to ensure that those services continue to be renewed so that through a broad range of activities we will attract and keep the health facilities, quality schools, and universities that make quality of life high and therefore brand Perth as a competitive and knowledge economy for skilled workers to come and live.

LS: That is one of the benefits of the World Energy Cities Partnership that we are involved in. I am currently the President meaning that the annual general meeting will be in Perth this year. The 16 member cities find at the meetings that we can benchmark the strengths and weaknesses of each city and learn from each other. We know we are competing for skilled labor that exists within these cities. Whilst we are competing on one hand, we can share a lot of information and shorten the paths to certain lessons on the other hand. Working together is always the smartest solution.

FE: Aberdeen is an interesting case-in-point because the oil and gas reduced significantly. But they were reborn as an oil and gas city because they exported their expertise and technology around the world. We always need to keep an eye on the lessons from the other oil and gas cities of the world as we are just growing. We need to observe how countries peaked in terms of raw materials supply and learn from them as to how they go forward.

While Perth is the home to Western Australia’s oil, gas, and mining sectors most of the actual industrial activity takes place in the more remote parts of the state. Is a labor and brain drain from Perth inevitable as workers gravitate towards the centers of activity?

LS: There is a large fly-in/fly-out workforce to and from Perth. Whilst we go through cyclical periods of talking about creating more permanent bases and bigger cities in our regions, the economic realities highlight the fact that Perth will always be the gateway capital for the state. Whilst those other regions might grow, they will never have all the facilities that a capital city has such as colleges, universities, symphony orchestras, and all of the amenities that are part of a capital city.

FE: I think that anywhere in the world there will be a hierarchy of places where people live and work. But everywhere has a capital city that needs to support the hinterland and the outer resource areas. That will always be the case. Workers get drawn into that capital city for the things they cannot enjoy, experience, or have in those rural areas. That is why a good high quality modern city is essential to continually attract those people to the states. There are beautiful places in our state to visit in the north and northwest and stunning scenery to enjoy. It is a different matter, however, to permanently live and raise a family there. We have 50,000+ fly-in/fly-out workers at the moment for the whole mining and resources sector. That number will inevitably grow going forward. But a lot of them are working in places where it is not pleasant to live and the infrastructure does not exist. The cost of building schools, hospitals, theaters is too great to pay in a place that is not necessarily climatically suitable to raise families.

Does Perth naturally have an abroad and internationally oriented vision given its vast distance from the rest of Australia?

LS: Absolutely. Perth is very focused on being an international globally connected city of substance. There is definitely a new sense of self being realized in Perth by the very fact that there are so many construction cranes along the horizon. Over the last 10 years our residential areas have been growing at double digit rates. We have been the fastest growing local government authority in all of Australia, all of which is directly attributable to the demand within the resources sector. There is a realization amongst people in Perth that we have something special happening here and now it is time to think about our future and focus on how we can get the legacy from this special time. We do not want to blow our chances. We want to enjoy the moment, but have enough focus on transitioning into our creative ways for other sectors to grow so that when the resources ultimately run out many generations from now, the City will have a very strong future in other areas.

We are focusing on our creativity and opportunity. We are very supportive of the Perth fashion festival, for example. There is a realization now, aided by the internet, of the ability to be a top international fashion designer with a base in Perth. Years ago there was the need to have you a presence in Milan, Paris, or Sydney. We are looking at other industrial sectors to buffer the boom and bust mentality previously mentioned and not put all of our eggs in one basket; although we have a lot of eggs in a particular resources basket at the moment.

How has oil and gas sector reciprocated and reinvested the support the provided by the City?

FE: All of the big corporations in the resources sector play a big role in culture and the arts. They are also very involved in environmental management in their areas. Additionally, many of them are working with the indigenous community to ensure that their culture is preserved, managed, and assisted.

But most importantly they are putting money into our local economy. They are consuming local services, buying houses, providing jobs, using our hospitals, and employing our workers. Those jobs mean that that money gets spent here. The important point is that we want people to come, live, and spend money here. We do not want people to fly-in/fly-out from other parts of the world and spend their money abroad. Retaining that flurry of economic activity is what helps us grow.

What will be the mentality, preparation, and evolution of the City over the next 19 years as it approaches its historic bicentennial anniversary in 2029?

LS: There is a growing sense of awareness of our maturity just like a butterfly coming out of that chrysalis stage. We need to educate our citizens and society to embrace that. I have a very strong theory that our relative isolation has honed the psyche of our citizens in a certain way. There is a strong feeling of complacency here in many respects because it is so easy to live here. With the climate being mostly Mediterranean we have lovely weather, beautiful natural beaches, and a very pleasant lifestyle. We sometimes do not realize that we have to keep current and connect with the world as much as we do. I am on message all the time that we need to stay globally connected and that this exponential growth is positive for us.

There is a debate in our society with some voices advocating against growth and change and expressing a desire for Perth to stay as it is. Nothing stays the same; even our bodies age. We have to move with the times, stay current, and educate our citizens that progress is growth and growth is success.

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