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City of Greater Geelong

Yarra Street Pier ReconstructionProject Business Case

27 June 2012

This document is to be used for reading and research purposes only

21/010124/5/202471 Yarra Street Pier ReconstructionBusiness Case

This City of Greater Geelong, Yarra Street Pier Reconstruction Project Business Case (“Report”):

1. has been prepared by GHD Pty Ltd for City of Greater Geelong;

2. may only be used and relied on by City of Greater Geelong;

3. must not be copied to, used by, or relied on by any person other than without the prior written consent of GHD;

4. may only be used for the purpose of preparing a funding submission to the State Government for budget purposes(and must not be used for any other purpose).

GHD and its servants, employees and officers otherwise expressly disclaim responsibility to any person other than City of Greater Geelong arising from or in connection with this Report.

To the maximum extent permitted by law, all implied warranties and conditions in relation to the services provided by GHD and the Report are excluded unless they are expressly stated to apply in this Report.

The opinions, conclusions and any recommendations in this Report are based on assumptions made by GHD when undertaking services and preparing the Report (“Assumptions”), including (but not limited to) those listed in Section 5 of this report.

GHD expressly disclaims responsibility for any error in, or omission from, this Report arising from or in connection with any of the Assumptions being incorrect.

Subject to the paragraphs in this section of the Report, the opinions, conclusions and any recommendations in this Report are based on conditions encountered and information reviewed at the time of preparation and may be relied on until 6 months, after which time, GHD expressly disclaims responsibility for any error in, or omission from, this Report arising from or in connection with those opinions, conclusions and any recommendations.

GHD has prepared the preliminary cost estimate set out in Appendix H (Bill of Quantities) of this Report (“Cost Estimate”):

using information reasonably available to the GHD employee(s) who prepared this Report; and

based on assumptions and judgments made by GHD.

The Cost Estimate has been prepared for the purpose of comparing options and indicative funding requirements and must not be used for any other purpose.

The Cost Estimate is a preliminary estimate only. Actual prices, costs and other variables may be different to those used to prepare the Cost Estimate and may change. Unless as otherwise specified in this Report, no detailed quotation has been obtained for actions identified in this Report. GHD does not represent, warrant or guarantee that the project can or will be undertaken at a cost which is the same or less than the Cost Estimate.

Where estimates of potential costs are provided with an indicated level of confidence, notwithstanding the conservatism of the level of confidence selected as the planning level, there remains a chance that the cost will be greater than the planning estimate, and any funding would not be adequate. The confidence level considered to be most appropriate for planning purposes will vary depending on the conservatism of the user and the nature of the project. The user should therefore select appropriate confidence levels to suit their particular risk profile.

GHD has prepared this Report on the basis of information provided by City of Greater Geelong, which GHD has not independently verified or checked (“Unverified Information”) beyond the agreed scope of work.


GHD expressly disclaims responsibility in connection with the Unverified Information, including (but not limited to) errors in, or omissions from, the Report, which were caused or contributed to by errors in, or omissions from, the Unverified Information.


Contents

1. Executive Summary 1

2. Introduction 15

2.1 Background 15

3. Problem 17

3.1 Lack of Marine Infrastructure 17

3.2 Regional Tourism and Major Events 24

4. Benefits 29

4.1 Greater Economic Returns for the State 29

4.2 Improved Profile of Port Phillip Bay as a Marine Destination29

4.3 Improved Liveability and Profile of Geelong as Waterfront City30

4.4 Evidence of benefit delivery 31

4.5 Reporting the delivery of benefits 32

4.6 Importance of the Benefits to Government 32

5. Base Assumptions 33

5.1 Recreational Boating Numbers 33

5.2 Cruise Ship demand 33

5.3 Naval Vessel Visits35

5.4 Major Events and Yachting Regattas 35

5.5 Visitation to Geelong Waterfront35

6. Strategic Response 36

6.1 Strategic options considered 36

6.2 Strategic Interventions 36


6.3 Potential Strategic Options 36

6.4 Strategic Options Description 39

6.5 Evaluation of Strategic Options 45

7. Economic Assessment of Shortlisted Options 49

7.1 Scope of Work for each Option 49

7.2 Benefit Cost Assessment 50

7.3 Economic Impact Assessment 52

8. Details of the Preferred Project 57

8.1 Wharf Infrastructure 57

8.2 Ship Services 62

8.3 Customs and Border Security Requirements 62

8.4 Pier/land Interface 63

8.5 Cruise Ship Terminal 63

8.6 Other infrastructure on the Pier 64

8.7 Additional Berths at RGYC 64

8.8 Strategic and Statutory Planning 64

9. Project Costs and Cashflows 69

9.1 Capital Cost Estimates - Non-preferred options 71

10. Procurement strategy 72

10.1 Purpose 72

10.2 Approach 72

10.3 Key Objectives of the Procurement Strategy 73

10.4 Suitability Assessment 73

10.5 Project Specific Assessment 75

11. Funding Strategy 81

12. Stakeholders 82

12.1 Stakeholder Management 82

12.2 Consultation82

13. Risk Management 84

13.1 Risk Assessment Methodology 84

13.2 Top five risks 84


14. Implementation 85

14.1 Governance and Resourcing 85

14.2 Project Timelines 86

Table IndexTable 1 Strategic Options 2

Table 2 Capital Expenditure 4

Table 4 Options Summary 8

Table 5 Tourist Expenditure Profile – Geelong Otway 24

Table 6 Cruise Ship Demand 33

Table 7 Strategic Interventions 36

Table 8 Potential Strategic Options 37

Table 9 Evaluation criteria 45

Table 10 Strategic Options assessment results 46

Table 11 General Assumptions 50

Table 12 Option assumptions used in benefit cost assessment 50

Table 13 Summary Results of economic assessment $m present value 52

Table 14 Direct and flow-on GRP ($m) and Employment (FTE) impacts of the construction of the Yarra Street Pier Reconstruction options, Geelong region

53

Table 15 Direct and flow-on GSP ($m) and Employment impacts of the construction of the Yarra Street Pier Reconstruction options, Victoria 54

Table 16 Direct and flow-on GRP ($m) a and Employment (FTE) impacts of the operation of the Yarra Street Pier Reconstruction options for first ten years, Geelong region 55

Table 17 Direct and flow-on GSP ($m) and Employment (FTE) impacts of the operation of the Yarra Street Pier Reconstruction options for first ten years, Victoria ($m) 56

Table 18 Vessels 59

Table 24 Capital Costs – Preferred Option 69

Table 25 Dredging Costs 70


Table 26 Capital Cost Estimates 71

Table 27 Procurement Methods Assessment 73

Table 28 Procurement Assessment 76

Table 29 Assessment of Procurement Options 80

Table 30 Capital Expenditure 81

Table 31 Operational Expenditure for CoGG 81

Table 32 Stakeholder List 82

Figure IndexFigure 1 Investment Concept Brief 10

Figure 2 Investment Logic Map 12

Figure 3 Benefit Map 13

Figure 4 Table 2 of Central Boating Coastal Action Plan20

Figure 5 Tourism Expenditure 25

Figure 6 Forecast Passengers, Melbourne27

Figure 7 Strategic Options assessment results– final scores46

AppendicesA Letters of Support for Large Ship Facility

B Evaluation of Strategic Options

C Drawings of Options

D Benefit Cost Assessment Methodology

E Econsearch Report – Economic Impact Assessment

F Navigation Channel Options

G Review of Strategic Planning Reports for the Area

H Project Risks


1. Executive Summary

Purpose

The Yarra Street Pier Reconstruction Business Case defines the need, considers the options available and identifies an optimal implementation strategy for the preferred option for the City of Greater Geelong (CoGG) and the Victorian Government in addressing the lack of marine infrastructure at Geelong’s waterfront, which in turn limits the development of Geelong’s maritime/waterfront activities, regional tourism and generally business activities in Geelong and the surrounding region.

ObjectiveCoGG is a progressive, focussed municipality with a priority to grow the City as a leading centre for business, tourism, health and education. The centre of Geelong is located on the southern coast of Corio Bay and CoGG and the Victorian Government have spent approximately $30 million on improving the waterfront area. This public investment has been supported by private sector investment of nearly $400 million in the same period of time. The objective of this Business Case is to identify an optimal way to:

Improve the marine infrastructure which is preventing Geelong’s development of maritime/waterfront activities, and

Stimulate regional tourism and business activity in Geelong and the surrounding region.

OutcomesThe Business Case has found that the reconstruction of the Yarra Street Pier incorporating wave protection and the ability to berth cruise ships is the optimal way of addressing the identified problems.

It entails construction and operation of a 260m long jetty along the old alignment of the Yarra Street Pier capable of berthing large cruise ships and dredging of an approach channel and swing basin to enable a cruise ship to access the facility. Incorporated into the design should be wave protection, additional marina berths and public berths. This will provide the Geelong waterfront with a safe harbour and allow the development of Geelong as a recreational boating destination on Port Phillip Bay.

The estimated cost of the project is $33.2 million and the investment will deliver benefits to the State, Local Government, business community and public.

This project combines benefits of public amenity and commercial operation and therefore the costs need to be offset against a wide range of benefits. In order to reflect this complexity and to capture the wide range of benefits, the economic impact of the project has been used as one of the key indicators of project worth.

It is estimated that the project will have an economic impact that will see the creation of up to 403 new jobs in the first 10-year period of operation. More importantly the new employment will be created in the region with strong population growth and within an economy in transition.

It will also result in an additional $52.4 million worth of Gross State Product and $41.0 million Gross Regional Product over the first 10-year period of operation.

The project will mitigate any potential loss of the State market share in the growing cruise-ship tourism market and provide a redundancy infrastructure option for the State whilst providing new infrastructure in an area of major population growth. It will also directly support State Government priorities including:

Supporting regional and country Victoria

Improving and rebuilding our transport infrastructure.

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Project DriversThere are two major problems that are driving the initiative to reconstruct Yarra Street Pier.

The first is the lack of marine infrastructure in Corio Bay and wider Port Phillip Bay. Work completed by Parks Victoria as part of the Bays and Maritime Initiative identified that the reasons for a decline in

boat ownership as a proportion of the overall population in Victoria (the only State that experienced this decline) is due to a lack of safe harbour, no destination or marine events, and access to boat launching facilities. The Minister for Manufacturing, Exports and Trade also announced in June 2011 the intention of Government to develop a strategy to grow the recreational boating industry in Victoria. The recreational boating industry contributes more than $696m to the Victorian economy and supports more than 10,000 jobs.

Geelong is also designated as a State Marine Precinct in the Victorian Coastal Strategy and the Central Boating Coastal Action Plan, its existing marine infrastructure is limited and falls short of standards expected for such a precinct. These result in a number of deficiencies, including an inability to attract more itinerant boating, staging water-based major events, provision of a safe harbour in the event of need and to accommodate berthing for large ships including cruise ships and navy vessels.

The second major problem relates to the downturn in regional tourism and its impact on business activities in the region, Geelong’s CBD and the waterfront. The current downturn trend in visitor numbers impacts mainly business activity in the “Accommodation and Food Services”, “Transport, Postal & Warehousing” and “Retail Trade” sectors. While the G21 Region1 has traditionally received a very high number of visitors –due largely to the presence of the Great Ocean Road - the ongoing challenge has been to grow tourism yield.

The projected growth in cruise shipping as a tourism experience represents an opportunity to introduce a higher yield segment into the regional tourism mix. Recent changes in cruise shipping are well aligned with the competitive strengths of the Great Ocean Road Region. Developing Geelong as a cruise ship destination would complement the growing activity at the Port of Melbourne and provide potential for a tourism route for the southern coastline of Victoria, linking Geelong and Portland.

The Investment Logic Map outlining the problems, proposed strategic interventions and benefits is provided in Figure 1.

Choosing the right optionIn developing the business case, the project team followed in the development of the strategic options aligned with DTF, 2011, Strategic Options Analysis, Guideline, Working Draft (& June 2011); published at www.dtf.vic.gov.au/investmentmanagement.

Table 1 outlines the strategic options considered. The strategic options were evaluated against the following criteria:

Contribution to Benefits

Deliverability

Value for Money.

Table 1 Strategic Options

Option Name Description Outcome

Strategic Business as usual Do nothing option Base case

1 Geelong Region Alliance (G21) is the formal alliance of government, business and community organisations working together to improve the lives of people within the Geelong region across five municipalities – Colac Otway, Golden Plains, Greater Geelong, Queenscliff and Surf Coast

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http://www.dtf.vic.gov.au/investmentmanagement

Option A

Strategic Option B

Dispersal of activities

Dispersal of waterfront activities into other existing locations

Discarded

Strategic Option C

Recreational jetty only

Construction of a 225m long recreational jetty which is 8m wide. It is assumed that the predominant load will be pedestrians and light vehicles, with an ability to berth recreational boats alongside the jetty.

Option 1

Strategic Option D

Recreational jetty with marina protection

Construction of a recreational jetty 225m long and 8m wide, which incorporates wave protection along the jetty and running east-west at the end, along with a floating pontoon to the east of the new jetty. An additional 47 berths are proposed for the RGYC marina as well.

Option 2

Strategic Option E

Redevelopment of Cunningham Pier

Upgrade of the pier to cater for berthing of large vessels.

Cunningham Pier is a privately ‘owned’ structure operating within a leased area of the sea-bed under a 99 year lease which expires in 2093.

Option 4

Strategic Option F

Large Ship Jetty with marina protection

(Reconstruction of Yarra Street Pier)

Construction and operation of a 260m long jetty along the old alignment of the Yarra Street Pier capable of berthing large cruise ships. Incorporated into the design will be wave protection, additional marina berths, public berths, and dredging of an approach channel and swing basin to enable a cruise ship to access the facility.

Option 3 – Preferred Option

Benefits of implementing the preferred optionThe proposed reconstruction of Yarra Street Pier, that includes provision of water based infrastructure for recreational boating and the capture of the rapidly growing cruise ship market, will activate Geelong’s waterfront and consequently benefit the State, business community and public. The benefit categories include:

Greater economic returns for the State - direct economic benefits and wider economic impact of the increased spend driven by increased cruise ship visitation and other activities related to the waterfront.

Improved profile of Port Phillip Bay as a marine destination – addition of a key itinerant boating destination within Port Phillip Bay (Geelong Waterfront- Corio Bay) will improve Port Phillip Bay, Bay’s overall position as a marine destination and grow Victoria’s recreational boating industry.

Improved liveability and profile as Waterfront City – activation of the Geelong Waterfront through major events and better recreational and commercial opportunities.

Direct economic benefits include:

Additional visitation spend driven by the provision of marine recreational infrastructure;

Additional major events spend driven by the provision of marine recreational infrastructure;

Increased expenditure from additional and larger cruise ship visits;

New expenditure by navy vessels; and

Savings in marina protection.

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An economic impact assessment detailed in Section 7.3, has generated regional and state-level estimates of the economic impact of the construction and operation of each of the short listed options.

The main indicators used in describing economic impact are:

Gross regional product (GRP)/gross state product (GSP)

Household income

Employment (full time equivalent position - FTE)

It is estimated that:

The total construction impact for the preferred option will result in $22.5 million GSP and 234 FTEs

The total operational impact for the preferred option will result in $52.4 million GSP and 403 FTEs in the first 10-year period of operation

In addition to the above benefits the project will:

Assist in delivering on a range of State Government priorities specifically in relation to Port Phillip Bay by contributing to the network of boating destinations in Port Phillip Bay, and to growing the boating industry in Victoria.

Provide greater choice and diversity for recreational boaters on Port Phillip Bay. Similar facilities are currently missing on the western side of Port Phillip Bay for boaters undertaking day trips/weekend trips from Melbourne to elsewhere in the Bay. Recent developments of the Geelong Waterfront and adjacent CBD make Geelong an attractive destination for these types of visits.

Provide safety benefits for boaters and other users of Port Phillip/Corio Bays and contribute to Geelong becoming a State Marine Precinct.

Diversify experience at the Geelong Waterfront and contribute to Geelong’s appeal. Geelong residents and visitors will be able to undertake promenading, fishing and other activities on a publicly accessible pier as well as view boats at the pier and in RGYC’s marina. These will be all additional experiences that can be undertaken from Yarra Street Pier.

Enable staging of a range of water-based events and activities. The reconstruction of the Yarra Street Pier will enable the Geelong Waterfront to realise its full potential as an events space and become an even more significant asset to Geelong, the G21 Region and Victoria. This includes an enhanced Festival of Sails and other major yachting regattas.

Utilise increased capacity for hospitality at Geelong Waterfront and adjacent CBD.

Increase viewing spaces for major events.

Implementation StrategyThe proposed funding sources are as follows:

Table 2 Capital Expenditure

2012/13 2013/14 2014/15 Total

Project Cashflows $3.0m $21.0m $9.2m $33.2m

Funding – CoGG $3.0m $2.0m $0m $5.0m

Funding - RGYC $0m $2.5m $0m $2.5m

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Funding – State Government

$0m $17.5m $9.2m $26.7m

Total additional funding required

$0m $0m $0m $0m

Note: figures shown are in today’s dollars

The funding sources are based on commitments already made by CoGG and RGYC with the remaining funding sought from the Victorian Government.

Ongoing operating costs to be funded by CoGG are estimated to be as shown in Table 31

ProcurementThe project would be best delivered under the ‘Traditional Delivery’ method (e.g. design then construct) for the following reasons:

The CoGG in-house project delivery team has in-depth understanding of the operational environment and has established local networks.

Projects of similar scale have been successfully delivered by the in-house project delivery team. The requirements and processes are documented and well understood. This will contribute to the accelerated delivery of the project.

The Project allows for early work package implementation, effectively mitigating any delays caused by the linear implementation of the processes.

The project is of low technical complexity and its scope is well defined.

The model allows for close cost control and management.

Alternatively CoGG may also consider a Design and Construct model where the risk of latent conditions could effectively be managed by a contractor.

Project RisksThe key risks to the project are shown in the table below:

Table 3 Top 5 Project Risks

Risk Description Initial Risk Assessment

Proposed Mitigation and Management strategy

Residual Risk

Unexpected ground conditions for dredging of the approach channels in regards to geotechnical properties

4. High Undertake geotechnical investigation 3. Significant

Dredge material is contaminated

4. High Undertake sediment sampling and testing in accordance with relevant guidelines and regulations

Appropriate management of dredged material

3. Significant

Risk of failing to obtain Planning and Environmental approvals

4. High Thorough investigations completed

Proactive engagement with approval authorities

Adopt learning’s from previous approvals (e.g. Port Phillip Channel

3. Significant

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Residual Risk

Deepening Project)

Current VRCA approvals

Cruise ship growth is below expectation

4. High

Ensure diverse/multi-use of the proposed facility

3. Significant

Cruise ships opt for alternative existing or future ports

4. High CoGG actively promotes the destination

Consult with the operators during the design phase to meet expectations

Ensure commercial and service offering is competitive

3. Significant

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The completion of geotechnical investigations and sediment sampling and testing for the material to be dredged will allow the costs and approvals to be obtained / retrieved prior to the project commencement. Achieving the cruise ship growth can be assisted by CoGG actively promoting Geelong as a destination

itself as well as CoGG engaging with Tourism Victoria, the State Government, Cruising Down Under and other forums to raise its profile and promote Geelong.

Governance and TimingIt is proposed that CoGG is the organisation with overall responsibility to deliver this project, both during construction and its operation. In doing this, CoGG will be assisted by a Steering Committee of key stakeholders during project development and construction, as well as RGYC and potentially VRCA to deliver some elements of the project.

Project development would continue from July 2012 to June 2013, with construction and commissioning (including tendering) to December 2014. The key short term actions are to commence geotechnical investigations at the Yarra Street Pier and undertake sediment sampling and testing for the material to be dredged. Further design development could also be undertaken for the pier. The above activities will continue to build the base information required to improve certainty around key project parameters, enabling the further refinement of cost estimates for the project, key risks and the project duration.

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Fast FactsThis part of the executive summary provides a brief overview of the key facts and findings of the

business case. Detailed analysis is provided in the body of the document.

Table 4 Options Summary

Option 1 Option 2 Option 3 Option 4

Name Recreational jetty Recreational jetty with marina protection

Large Ship Jetty with marina protection

Cunningham Pier

Upgrade

Total Capital Cost $8,600,000 $ 18,600,000 $33,200,000 $27,830,000

Funding Required by State/Federal Government

$3,600,000 $11,100,000 $25,700,000 $22,830,000

Annual Recurrent Costs to City of Greater Geelong2

$21,500 Maintenance per annum for the first five years of operation and then $43,000 maintenance per annum for remainder of the operation

$46,500 maintenance per annum for first five years of operation of option and then $93,000 maintenance per annum for remainder of the operation

$133,000 maintenance for first five years of operations and then $266,000 maintenance plus $100,000 for 1 new FTE.

$249,000 maintenance for the first five years and then $498,000 maintenance plus $100,000 for 1 new FTE

Design and Construction Timeframe

18 Months

July 2012 - Dec 2013

18 Months

July 2012 - Dec 2013

30 Months

July 2012 - Dec 2014

18 Months

July 2013 – Dec 2014

Cruise Ship/Naval Unit/Major Event Details

Nil Additional yachting regattas (1-2 per year) and major events (1 per year), safe harbour for recreational boats, additional marina berths

Additional Cruise ships (4 in 2015 up to 22 in 2025), naval visits (2-4 per year), 3

additional yachting regattas (1-2 per year) and major events (1 per year), additional marina berths, safe

Additional Cruise Error: Reference source not found

ships (4 in 2015 up to 19 in 2025), naval visits (2-4 per year) and major events (1 per year), safe harbour for recreational boats4

2 GHD used industry experience for recurrent maintenance costs.

- Recreational jetty (Options 1 & 2), a range of 0.25% to 0.50% of CAPEX per annum

- Large Ship Jetty (Option 3), a range of 0.40% to 0.80% CAPEX per annum

- Cunningham Pier (Option 4), a range of 0.90% to 1.7% CAPEX per annum due to 100 year old structure3 GHD adopted a conservative approach to forecasts based on AEC for CDU data, THINC, 2009 and further Industry consultation.

Option 4 was further constrained in numbers due to vessel size able to berth at Cunningham Pier.

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harbour for recreational boats

Economic Impacts (financial benefits)

Continues development of Geelong waterfront.

Attracts private investment to waterfront.

$545,000 spend* from increased visitation and average length of stay for visitors to Geelong.*



$545,000 spend from increased visitation and average length of stay for visitors to Geelong.*

$1,284,000 spend from expansion of Festival of Sails.*

$694,000 spend from Major Triathlon Event.+



$1,090,000 spend from increased visitation and average length of stay for visitors to Geelong.*

$1,284,000 spend* from expansion of Festival of Sails.*


$176,000 spend by passengers and crew per Cruise Ship visit.5

$30,000 spend by Cruise Ship operators per visit in Channel Fees, Berth Fees, Security, Services etc.

$29,000 spend by City of Greater Geelong per Cruise Ship visit.

$30,000 spend by Navy personnel each visit with $20,000 spend by City of Greater Geelong per Navy ship visit



$545,000 spend from increased visitation and average length of stay for visitors to Geelong.*


$91,500 spend by passengers and crew per Cruise Ship visit. 5

$30,000 spend by Cruise Ship operators per visit in Channel Fees, Berth Fees, Security, Services etc.

$29,000 spend by City of Greater Geelong per Cruise Ship visit.

$30,000 spend by Navy personnel each visit with $20,000 spend by City of Greater Geelong per Navy ship visit

Other Benefits Nil Safety for small vessels.

Reduced maintenance of existing marina.

Safety for small vessels.

Reduced maintenance of existing marina.

Safety for small vessels.

Producer surplus from increased expenditure from

4 Option 4 provides safe harbour for recreational boats in the immediate vicinity but is not integrated with the marina and is therefore unable to provide benefits in additional marina berths to expand the ‘Festival of Sails’ yachting regatta and provide marina protection.

5 Option 4 is constrained to cruise ships less than 200m long, therefore, less passengers and crew per cruise ship compared to Option 3. The maximum length of cruise ships able to berth at Options 3 and 4 is based on existing or proposed length of pier rather possible future increase in length using dolphin configurations.

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Producer surplus from increased expenditure from larger ship visits.

larger ship visits.

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Source: * Ernst & Young, Reconstruction of the Yarra Street Pier Business Case, 2009+ City of Greater Geelong, Major Events, 2011

Figure 1 Investment Concept Brief

Figure 2 Investment Logic Map

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21/010124/5/202471 Yarra Street Pier Reconstruction Business Case

Figure 3 Benefit Map

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2. Introduction

2.1 Background

2.1.1 Geelong – The City

Geelong is Victoria’s largest regional city with a population of more than 210,000 people. The City of Greater Geelong (CoGG) is a progressive, focussed municipality with a priority to grow the City as a leading centre for business, tourism, health and education.

Further, with its location on the shores of Corio Bay, CoGG plans to develop Geelong as an international waterfront city that boasts first class facilities and caters for a range of events and activities.

Geelong is highly accessible being linked to Melbourne and Adelaide by railway and only 83km (1 hour) by freeway to Melbourne Airport. Avalon airport, Melbourne’s second domestic airport, is only 15 km from Geelong with plans to accommodate international flights in the future.

2.1.2 The Geelong Waterfront

The centre of Geelong is located on the southern coast of Corio Bay and as such has a northern aspect. From 1996 to 2010, the CoGG and the Victorian Government have spent approximately $30 million on improving the waterfront area. This public investment has been supported by private sector investment of nearly $400 million in the same period of time.

CoGG has produced a Waterfront Central Geelong Masterplan which outlines a planned and integrated approach to the development of the Central Geelong Waterfront into the future. The aim of the Masterplan is for Geelong to be an international waterfront city that boasts first class facilities and caters for a wide range of events and activities. One of the Strategic Projects identified in the Central Geelong Waterfront Masterplan is Yarra Street Pier.

Yarra Street Pier was originally built in the mid 1800’s as a commercial wharf. It was burnt down in October 1988. At the time, the Pier was used for commercial and recreational fishing and boating, as well as for general promenading on the Geelong waterfront.

The remains of the Pier have been largely demolished with pile remains located in the seabed below the water level and a mound of remains located on the former pier footprint which have not been dredged.

Due to the private ownership of the other major pier in Geelong, Cunningham Pier, the city lacks a full sized public pier which is suitable for berthing large vessels. In addition, there is no unrestricted facility over the water for the general public to undertake the range of activities that are being encouraged by the development of the waterfront – namely, promenading, fishing, boating, sailing and other activities.

The Geelong Waterfront is also home to a number of events including the Festival of Sails, which is the largest sailing regatta in Australia, and the longest running in the southern hemisphere.

2.1.3 This Business Case

BackgroundThis assignment has initially focused on the development of a business case for a new cruise ship facility, however it became apparent early in the process, primarily during the Investment Logic Map workshop discussion, that the original drivers of the project (the problems) are broader and need to consider recreational boating including additional destinations, and safety along with public access to the waterfront and urban amenity as well as the economic benefits of the cruise shipping industry.

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FocusThe development of the waterfront precinct in Geelong is critical to Geelong becoming an international waterfront city. The reconstruction of the Yarra Street Pier is seen by CoGG as a critical element in

achieving its objectives. In addition, the reconstruction of Yarra Street Pier addresses a number of state level policy objectives around boating and recreational activities on Victoria’s waterways.

This business case shows how the reconstruction of Yarra Street Pier addresses the service needs identified and documents costs and benefits arising from the development.

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3. Problem

3.1 Lack of Marine Infrastructure

3.1.1 State Level Policy – the Victorian Coastal Strategy and the Central Boating Coastal Action Plan

3.1.1.1 Marine Industry Round Table6

On 6 June 2011, the Minister for Manufacturing, Exports and Trade met with recreational boating business leaders to commence the preparation of a growth strategy for the recreational boating industry. The $2 billion recreational boating industry contributes more than $696 million to the Victorian economy and supports more than 10,000 jobs.

The purpose of the strategy is to stimulate recreational boating demand through increased facilities and services, thereby increasing recreational boating participation and alleviating pressures of growth.

3.1.1.2 Decline in Boat RegistrationsThere are more than 160,000 boat registrations in Victoria with almost 20% of these in and around the Geelong area.

Work completed by Ernst and Young, and others, for Parks Victoria in supporting the Bays and Maritime Initiative has found that the proportion of registered boats to the overall population in Victoria is 3.1% (2006) which is the lowest of the other states.

The research found that the reasons for the decline are:

Lack of a safe harbour

No destinations or marine events

Access to launching facilities

Conversely, if safe harbours are available, destinations or marine events are increased or more launching facilities are made available, then boating registrations would increase.

As well as increasing employment and GSP as a result of growth in the boating sector and its supporting industries, other benefits are likely as follows:

Enhanced tourism

Property value improvements

Health

Enhanced community benefits

3.1.1.3 Victorian Coastal Strategy“Boating is an important recreational and social outlet for many people. Boat registration is increasing faster than population growth. The size of boats is increasing as is the demand for launching and retrieval and boat storage facilities”

“It is important to understand and strategically manage the increasing demand for improved and new boating facilities. We need to provide safe access to, from and on the water while ensuring that impacts

6 Media release – 6 June 2011, Minister for Manufacturing, Exports and Trade.17


on the natural environment and coastal processes are minimised. The safety of boat users and swimmers are paramount”.

The above statements are quoted from the Victorian Coastal Strategy (2008, Victorian Coastal Council)

and highlight two service needs – the increasing demand for boating facilities including storage facilities, and the requirement to provide safe access/facilities for boating.

These issues (which are outlined further below) have led to the following policy objectives:

Strategically plan for and deliver sustainable boating facilities and infrastructure on the coast via Coastal Action Plans that respond to a demand assessment, safety considerations, the protection and sustainable management of coastal processes, conservation objectives, and quality of experience for all beach users.

Provide new access and review existing inappropriate access in accordance with the recreational boating facilities hierarchy.

The Victorian Coastal Strategy also identifies Geelong as a State Marine Precinct. The development and implementation of the policy objectives in relation to boating from the Victorian Coastal Strategy are delivered via Boating Coastal Action Plans which are developed by the relevant coastal boards which are detailed in Section 3.1.1.4 below.

3.1.1.4 Central Boating Coastal Action Plan - Geelong as a State Marine PrecinctThe Central Coastal Board Boating Coastal Action Plan (CBCAP) is the policy document which develops the principles documented in the Victorian Coastal Strategy and applies them at a region, precinct or local level. The CBCAP provides the following information in regards to boating in Victoria, and in particular the central region of Victoria of which Geelong is a part:

Victoria is one of the larger boating markets in Australia with current increase in boat registrations greater than population increase;

There is a demand for safe harbour developments and overnight berths at strategic locations around the Bays as well as pressure on existing marinas and yacht clubs to meet current berth demand;

There is increasing demand for cruising destinations around the bays and the concept of a cruising circuit;

Victoria has approximately 160,000 boat registrations (2006), with a ratio of 1:32 per capita;

More than half of the registered boats in Victoria are based in the central coastal region;

Marine Safety Victoria statistics from 1998 to 2005 show a steady increase in boat registrations of around 3% per annum;

Over the last 10 years (1994 to 2005) there has been a 20.8% increase in boat registrations;

There are 93 registered yacht club;

An estimated 98% of recreational boats are trailerable, placing considerable pressure on boat ramp;

The vast majority of trailerable boats are power boats, with non-powered boats comprising an additional 25% of boats making the total number of vessels approximately 200,000;

Of those boats that are required to be registered, open type boats are presently the most common;

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Over 87% of registered boats in 2005 are less than 5.5 metres, with over 44% being less than 4.0 metres;

The size of boats is generally getting larger;

Direct expenditure on boating for 2005 was approximately $1.4 billion for power boats, equating to approximately $8,600 per boat per annum.

Geelong is designated as a State Marine Precinct in the Victorian Coastal Strategy and the Central Boating Coastal Action Plan. A State Marine Precinct7:

“incorporates facilities of international, national, State, regional and local significance and provides a major activity focus for boating opportunities. These include ports, marinas, charter boat facilities, slip facilities, waterfront activities, marine services, piers, jetties and ramps. Such a location would generate major investment to harness and use the synergy of facilities.”

The statistics above demonstrate the historic growth in boating and other water-based activities. This growth puts pressure on the existing boating infrastructure with the Boating Coastal Action Plans showing how this demand can be managed through to 2030 by developing a network of boating facilities

The Central Boating Coastal Action Plan also identifies the elements of a State Marine Precinct as follows:

Criteria:

State level of significance that provides a key boating and tourist destination;

Commercial shipping potentially a dominant activity;

High level of investment as a key boating activity centre;

Exceptional level of service that caters for a wide range of boating activity and skill levels;

Safe harbour and controlled water space;

Wide catchment area, with an even spatial distribution, at major population centres;

All tide access;

Public access to the facility and coastal environment; and

servicing facilities.”

The aim for Geelong is to: “ provide a boating destination with international appeal”

The policies outlined in the CBCAP to achieve this goal are as follows:

A3.1 In this boating area, the strategic focus for investment to significantly upgrade facilities will be at the central Geelong Waterfront, consistent with the development of a state marine precinct;

A3.2 Development of new or improved boating facilities in accordance with the Geelong Foreshore Boating Strategy and Master Plan will be encouraged subject to approvals, including development that enables the continuation of cruiseship activities and visits;

A3.3 Existing servicing and maintenance facilities for recreational vessels will be retained and, where possible, new facilities promoted in accordance with the master plan.

7 Boating Coastal Action Plan, Central Coastal Board (2007)19


Figure 4 of the CBCAP states that a State Boating Facility should have the following infrastructure.

Figure 4 Table 2 of Central Boating Coastal Action Plan

Source: www.ccb.vic.gov.au

Within the Coastal Action Plan (CAP), boating destinations are categorised as a level of importance in the network ranging from State level to regional, district and local importance.

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http://www.ccb.vic.gov.au/

3.1.1.5 Service Needs

In evaluating Geelong against Table 2, it is considered that Geelong doesn’t comply with the requirements of a State Boating Precinct in the areas listed below. These deficiencies generate a number of service needs which are the subject of the options considered in this business case.

capacity for major boating events

safe harbour

public access

public (casual) berths

3.1.1.6 Capacity for Major Boating EventsThe capacity to stage major boating events currently exists in Geelong, predominantly through the facilities at Royal Geelong Yacht Club (RGYC).

The largest of these events is the Festival of Sails which had 38,000 domestic day visitors, 8473 domestic overnight visitors and 9 international visitors at the five day event in January 2011. In addition to this RGYC has hosted a number of international, national and state based yachting regattas.

There is a diverse accommodation offering in the G21/Geelong Otway region and Geelong is well placed during major event periods with large scale accommodation offerings such as Four Points by Sheraton Geelong, Chifley on The Esplanade and Mercure Geelong. Geelong also has a wide variety of self contained, hotels/motels and tourist parks. In addition to this, Geelong is only 20 minutes from Torquay and the Bellarine Peninsula where there is a diverse amount of accommodation including holiday resorts. During busy event periods, visitors are often referred to these close areas to accommodate the overflow.

The current marina layout at the RGYC means that yachts have to moor adjacent to one another (often up to 6 vessels together) during major sailing regattas. There are no other suitable mooring facilities in the Geelong Harbour.

The lack of sufficient mooring facilities and a safe harbour (see below) is the major threat to the ongoing success and retention of the Festival of Sails in Geelong. Due to the increasing number and size of vessels that participate in this event, the marina facility at RGYC is overcrowded, and as a result the yachts become exposed to weather events, especially from the north. This leads to an increased potential for storm damage.

In addition, the support infrastructure required for the larger vessels (e.g. access for support vehicles, fendering) is not available during a regatta.

Cunningham Pier is seen by the yacht owners as being too far away from the yacht club to moor their boats. There are no facilities that provide sufficient protection at Cunningham Pier either.

The overcrowding, as a result of the lack of marina/public berths, also means that the vessels aren’t moored in the optimal configuration which also exacerbates the risk of damage during a storm.

In order to meet these needs, the following is required:

The provision of additional public berths in Geelong Harbour

The provision of additional marina berths in RGYC

The provision of protection for the new public and RGYC berths and existing berths in RGYC

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3.1.1.7 Safe HarbourA safe harbour is a boating facility which provides protection in some, or all, weather conditions for boats and other recreational craft. The provision of safe harbours is a key tenet in implementing Theme 3 –

Boating Safety and Standards in the Central Boating Action Plan. As noted above, Geelong as a State Marine Precinct should have facilities that provide safe harbour functions. In the Geelong Boating Area, Limeburner’s Point and St. Helen’s boat ramps are considered to provide some functions of a safe harbour, namely a boat ramp

It has been identified by both Parks Victoria and CoGG that there is currently no safe harbour functions for recreational vessels (particularly for the public) in Central Geelong. Further, the safety of vessels in large yachting events such as Festival of Sails is also compromised when the RGYC marina is at full capacity as it is during major sailing events.

This is particularly the case for protection from the wind and waves that are generated when the weather comes from the north-west to north east quadrant. Under these conditions, the area that makes up the majority of the Central Geelong Waterfront is exposed, and there is little available infrastructure to provide safe harbour facilities.

In order to meet these needs, the following is required:

The provision of safe harbour facilities in central Geelong.

3.1.1.8 Public accessPublic access to the waterfront is identified in the Central Boating CAP as a guiding principle in the management of existing boating and coastal facilities, and in the development of new facilities.

The Geelong Waterfront currently has one pier that is available for public access, being Cunningham Pier, which is privately owned. There is not a publicly owned, and accessible pier in order to meet these needs, the following is required:

The provision of a publicly accessible pier.

3.1.1.9 Public (casual) berthsA State Marine Precinct includes a component of a boating and tourism destination. On the Geelong waterfront currently, there are no publicly available boating destinations for boat owners, (e.g. from Melbourne or Queenscliff) to berth their vessels should they wish to visit Geelong.

In order to meet these needs, there is a requirement to provide public berthing facilities along the Geelong waterfront.

These facilities, along with the attractions available on the Geelong foreshore and Central Geelong, provide a compelling offer to boat owners in Melbourne who are looking for an attractive destination for day or weekend trips in their boats. In combination with Wyndham marina and Queenscliff, along with potential developments at Portarlington, additional facilities in Geelong provide a network of destinations along the western side of Port Phillip Bay.

The proposed actions identified above to meet the service needs are consistent with policy A3.1 of the Central Boating CAP which States:

“In this boating area, the strategic focus for investment to significantly upgrade facilities will be at central Geelong Waterfront, consistent with the development of a State Marine Precinct.”

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3.1.2 Local Government Policy – City of Greater Geelong

3.1.2.1 Boating Needs Strategy and Masterplan (2004)

In 2004, the City of Greater Geelong completed the Geelong City Foreshore Boating Needs Strategy and Master Plan the overall aim of which was:

“To identify the current and future (to 2020) boating infrastructure needs of the Geelong foreshore, to investigate the facility requirements to meet these needs and to provide a prioritised strategic blueprint for the provision of boating infrastructure along the Waterfront.”

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Through the development of this master plan, the community developed a vision for the waterfront which was:

“Geelong – A regional boating destination with international appeal”

This vision was interpreted as:

The Geelong foreshore becomes a regional - and ultimately international - boating destination, with an excellent and full range of facilities for visiting and local boaters, cruise ships, yachts and others. A mix of tourist related retail, accommodation, commercial fishing, and other commercial activities along with regattas and regular events create a vibrant waterfront. The Geelong CAA and other 'tourist' activities in the region provide key attractions for visiting boaters, tourists, cruise ships and locals. Boating is accessible to all locals, and users are integral in the planning of facilities. As Geelong develops as an international destination, it also becomes the best and most popular regional destination in Port Phillip.

For the City Waterfront Precinct, as the area in Central Geelong was termed, the following actions were identified:

Retain capacity to berth cruise ships at Cunningham Pier, and promote appropriate redevelopment of the Pier;

Improve the operation of Steampacket Quay through further berthing capacity;

Protect important coastal views from the city by avoiding inappropriate development of infrastructure in water space;

Develop a pier at Yarra Street which includes opportunity for commercial vessel berthing, charter boats and recreational vessel use;

Promote development of tourist related activities along the waterfront, including Yarra Street Pier, to enable a range of people focussed activities near and on the water;

Enable the expansion of the Royal Geelong Yacht Club marina to accommodate more recreational vessels within the constraints identified on the city waterfront;

Redevelop Fisherman’s Basin as a hub for commercial fishing, visiting boaters and facilities for local boaters (fuel supply and sewage pump out);

Protect the ability to host a range of water and land based events along the city waterfront area.

Of relevance to this business case is the long term desire of the City of Greater Geelong, and its residents to develop facilities at Yarra Street Pier to be used for boating and recreational uses. The desire for cruise ship facilities in Geelong is also present.

3.1.2.2 Waterfront Geelong Masterplan 2010The City of Greater Geelong has prepared the Waterfront Geelong Master Plan 2010 which outlines its vision for the waterfront of Corio Bay from Rippleside to Eastern Park. CoGG’s vision is for Geelong to be an international waterfront city that boasts first class facilities and caters for a wide range of events and activities.

The masterplan identifies a number of Strategic Projects along the waterfront which are:

The Geelong Exhibition and Convention Centre;

Rebuilding Yarra Street Pier;

The Eastern Beach Minerals Springs Complex;

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Youth activities Area.

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3.2 Regional Tourism and Major Events

3.2.1 Reduction in Regional Tourism is impacting on Business ActivitiesTourism is a significant activity in the G21 regional economy8 and accounts for:

Almost 3% of the value of regional outputs or $838.6M;

5.6% of regional employment or 5,159 jobs – making “tourism” the sixth highest employment sector;

Much of the employment is in the “Accommodation and Food Services” which account for almost 50% of jobs and “Retail Trade” which accounts for almost 22% - collectively, these sectors represent more than 70% of the employment generated by tourism in the G21 Region;

3.7% of the total value of wages and salaries or some $218.1M.

The Great Ocean Road is a tourism icon and in the year ending June 2011 received nearly 5.1 million domestic daytrip visitors (down by 0.5% on YE Jun 10). The Great Ocean Road received 49.9% of visitors and 25.8% of nights in regional Victoria.

In the areas that are of high interest to visitors arriving via cruise ships, and in particular the Great Ocean Road, tourism generates a much higher percentage of employment. In the Surf Coast Shire, in which the Great Ocean Road originates, tourism generates 13.3% of employment making it the largest employment sector in the local economy.

Visitation to the G21 region generates much expenditure – the expenditure profile is noted in Table 5 below.

Table 5 Tourist Expenditure Profile – Geelong Otway9

Visitor Profile Domestic Day Domestic Overnight International

Average stay (nights) - 2.9 5.6

Average spend per trip ($) $84 $303 $472

Average spend per night ($) - $106 $84

The tourism expenditure is dispersed across a number of industry sectors and is depicted in Figure 5. As the figure highlights more than 35c in the tourism expenditure dollar is spent on Accommodation and Food Services with businesses in the “Transport, Postal & Warehousing” and “Retail Trade” sectors accounting for almost another 30c in the tourism dollar.

8 G21 REMPLAN Economic Model9 Tourist Expenditure Profile data sourced from Tourism Research Australia Local Government Area Profiles 2007 - weighted average of

Greater Geelong, Surf Coast, Queenscliff and Colac-Otway (no Golden Plains profile available)

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Figure 5 Tourism Expenditure10

A range of factors11 are impacting on visitation to the region including: -

A high Australian dollar which has made travelling to overseas locations more attractive for domestic tourists who would have travelled within Australia;

The availability of low cost travel options (i.e. low cost air fares);

Petrol costs – which has impacted day trippers and touring in particular;

A move in the market to where many are focused on the “experience” rather than the “destination” and are changing both visitation patterns and activities undertaken by visitors.

In the twelve months from June 2010 to June 2011 information collected by Tourism Research Australia indicates that there has been a decline in visitor numbers to the G21 (Geelong Otway) region: -

Geelong Otway received over 1.7 million domestic overnight visitors - down by 3.5% on YE Jun 10. Visitors spent nearly 4.7 million nights in the region - down by 18.7% on YE Jun 10.

10 G21 ThereLAN Economic Model11 Advice from GOT

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Geelong Otway received 75.2% of visitors and 70.3% of nights in the Great Ocean Road. Compared to YE Jun 10, the share of visitors was down by 1.6% points and the share of nights

was down by 4.1% points.

Interstate contributed12 13.5% of visitors and 16.1% of nights in the region. Compared to YE Jun 10, interstate visitors were down by 21.5% and nights were down by 48.5%.

Given the data noted earlier, the downturn in visitor numbers will have most impact on business activity in the “Accommodation and Food Services”, “Transport, Postal & Warehousing” and “Retail Trade” sectors in particular.

While the G21 region has traditionally received a very high number of visitors, due largely to the presence of the Great Ocean Road - the ongoing challenge has been to grow tourism yield.

There are very few large high quality “internationally branded” tourist accommodation establishments in the Great Ocean Road region. This is a key barrier to the promotion of the Great Ocean Road from an international experience13

The projected growth in cruise shipping as a tourism experience represents an opportunity to introduce a higher yield segment into the regional tourism mix. Cruise shipping has somewhat reinvented itself as a tourism segment that, in the past, appealed to either the very affluent or young singles (party cruises) to now having a much broader appeal to other visitor segments better aligned to the competitive strengths of the Great Ocean Road Region.

3.2.2 Geelong as a Cruise Ship Destination

The international cruise industry continues to grow with the Cruise Lines International Association (CLIA) estimating that major lines carried 15.0 million passengers in 2010, a 12.0% rise from 2009.

The International Cruise Council of Australasia (ICCA) has projected that there will be 1 million Australians cruising by 2020. In 2002/03, this figure was 116,000 and in 2010/11 was 466,000 Australian passengers.

Cruise shipping is the fastest growing segment of tourism in Australia due mainly to the value proposition with all inclusive packages and competitive prices. The main drivers for this growth in Australia are:

Global instability – the recent unrest in the Middle East has caused a decline in traditional destinations such as Egypt;

The US is looking for new markets such as Australia;

Cruise lines are putting larger, modern ships into Australia with different ships for different segments;

Sydney is the marquis port in Australia; however, there are limited berthing facilities, particularly for larger ships which can’t sail under the Sydney Harbour Bridge;

Melbourne is a seasonal port for cruise ships, from November to April and tends to be the jumping off port to New Zealand and Tasmania. New Zealand is an important market, with the

12 National Visitor Survey, YE Jun 11, Tourism Research Australia13 Great Ocean Road World Class Tourism Investment Study- A Product Gap Audit, October 2011, Urban Enterprise

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Sydney, Melbourne, and Hobart to New Zealand route seen as a positive experience by cruise companies.

After recording a decline in 2010/11, cruise ship visits to Australian ports are expected to increase by approximately 180 visits to an estimated 740 – 750 in 2011/12. The projected strong growth in 2011/12 takes the number of port visits back to the historical trend and indicates that 2010/11 is likely to be an isolated year of negative growth. Growth is projected to be driven by the Eastern Seaboard capital cities of Sydney (+ 74 visits), Brisbane (+39 visits) and Melbourne (+ 20 visits). This expected increase will likely lead to a significant increase in passenger and crew expenditure in Australia and associated economic impact.

Melbourne is projected to experience strong growth in cruise ship passenger departures in the next decade. Carnival Australia forecasts an increase in passenger departures of about 83,000 in 2010 to over 216,000 by 2020. This is due in part to strong growth in the base port activity, increasing from about 20,000 passenger departures in 2010 to about 79,000 in 2020. Refer to Figure 6.

Figure 6 Forecast Passengers, Melbourne14

Carnival Australia also anticipates significant growth in passenger numbers outside the four major ports (Sydney, Brisbane, Melbourne and Fremantle) through their operation as predominantly transit ports, where passengers briefly embark (up to 10 hours). Consultation with cruise lines indicates that Geelong is seen as a transit port destination.

Melbourne’s Station Pier has capacity for the “Spirit of Tasmania’’ plus two transit cruise ships or one turnaround cruise ship. There are restrictions in the number of cruise ships able to berth at Station Pier at certain times of the year e.g. Victorian Racing Carnival and there is an opportunity for Geelong to take the overflow in cruise ships during these events. Beyond maintenance, there are no expansion plans for Station Pier, Melbourne.

Given the predicted growth in passengers through Melbourne, Geelong is well placed to become Victoria’s second cruise ship destination and to help grow Victoria’s share of the national cruise market. Victoria must develop more berthing options or risk being placed in a competitive disadvantage to the other states. Developing Geelong as a cruise ship destination would complement the growing activity at the Port of Melbourne and provide potential or a tourism route for the Southern coastline of Victoria, linking Geelong and Portland.

14 Source: Carnival Australia

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Over the past five years, Geelong has hosted a small number of cruise ships which have been successful visits for Geelong and the community, (refer to Appendix A) for the vessel operators and more

importantly, the passengers. Previously, cruise ships have berthed at Cunningham Pier and whilst these have been successful visits, because of the other uses of the privately owned Cunningham Pier, this option had not been available. CoGG have been advised by the Costa group that it is now considering selling Cunningham Pier. Should this transaction be viable, it is possible that some cruiseships may be able to utilise Cunningham Pier.

If in the future, Cunningham Pier was not made available, future cruise ships visiting Geelong will not be able to berth but will have to anchor approximately 1 km from shore in Corio Bay. Passengers will be transported to and from the shore using the ship’s tender.

This is not a satisfactory arrangement in the long run and will most likely constrain both the number and the size of ships visiting Geelong to boutique cruise ships with niche market capacity of less than 500 passengers at a time.

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4. Benefits

The proposed reconstruction of Yarra Street Pier, that includes provision of water based infrastructure and capture of the rapidly growing cruise ship market, will further activate the Geelong Waterfront and consequently benefit the State and Local Governments, business community and public. The benefit categories, identified in the Investment Logic Map provided in the Executive Summary, include:

Greater economic returns for the State - direct economic benefits and wider economic impact of the increased spend driven by increased cruise ship visitation and other activities related to the waterfront;

Improved profile of Port Phillip Bay as a marine destination – addition of the key itinerant destination within the Port Phillip Bay (Geelong Waterfront- Corio Bay) will improve overall Port Phillip position as a marine destination;

Improved liveability and profile of Geelong as Waterfront City – activation of the Geelong Waterfront through major events and better recreational and commercial opportunities.

This chapter provides an outline of the benefits and evidence of the benefits delivery.

4.1 Greater Economic Returns for the StateActivation of Geelong Waterfront will result in direct economic benefits and have wider economic impact of the increased spend driven by increased cruise ship visitation and other activities related to the waterfront for the State of Victoria as well as the Geelong Region (defined as Greater Geelong Council and Queenscliff Borough).

Direct economic benefits include:

Additional visitation spend driven by the provision of marine recreational infrastructure;

Additional major events spend driven by the provision of marine recreational infrastructure;

Increased expenditure from additional and larger cruise ship visits;

Increased expenditure by navy vessels; and

Savings in marina protection.

An economic impact assessment detailed in 7.3 generated regional and state-level estimates of the economic impact of the construction and operation of each of the short listed options.

The main indicators used in describing economic impact are:

Gross regional product (GRP)/gross state product (GSP);

Household income;

Employment (full time equivalent position - FTE).

4.2 Improved Profile of Port Phillip Bay as a Marine DestinationDeveloping Yarra Street Pier with public access and berthing facilities, and the incorporation of wave protection to form safe harbour facilities will develop the recreational boating industry in Victoria and

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improve the profile of the whole of Port Phillip Bay as a marine destination, generating benefits to the State and the Region.

State LevelIt will assist in delivering on a range of State Government priorities specifically in relation to Port Phillip Bay by contributing to the network of boating destinations in Port Phillip Bay.

It will stimulate recreational boating demand in Victoria through the provision of improved facilities and services and the provision of a safe harbour. It will also contribute to the network of boating destinations in Port Phillip Bay.

Currently, on the western side of Port Phillip Bay, there are no attractive boating destinations.The development of the Geelong Waterfront, in conjunction with the Wyndham Harbour development creates a network of destinations that will provide greater choice and diversity for recreational boaters on Port Phillip Bay. This will lead to growth in recreational boating numbers and consequently the growth of the boating industry.

The proposal will also provide safety benefits for boaters and other users of Port Phillip/Corio bays and contribute to Geelong becoming a State Marine Precinct.

Geelong/Regional LevelThe project will result in the provision of facilities currently missing on the western side of Port Phillip Bay for boaters undertaking day trips/weekend trips from Melbourne to elsewhere in the Bay. Land development in the Geelong Waterfront and adjacent Central Geelong area make Geelong an attractive destination for these types of visits.

The provision of a publicly accessible pier will provide an additional experience at the Geelong Waterfront and will contribute to Geelong’s appeal. Geelong residents and visitors will be able to undertake promenading, fishing and other activities on a publicly accessible pier as well as view boats at the pier and in RGYC’s marina. These will be all additional experiences that can be undertaken from Yarra Street Pier.

4.3 Improved Liveability and Profile of Geelong as Waterfront CityProvision of suitable marine infrastructure at the Geelong Waterfront is essential for staging of range of water-based events and activities. The reconstruction of the Yarra Street Pier will enable the Geelong Waterfront to realise its full potential as an events space and become an even more significant asset to Geelong, the G21 Region and Victoria.

The reconstruction of the Yarra Street Pier will:

Utilise increased capacity for hospitality at Geelong Waterfront and adjacent CBD;

Improve cost competitiveness;

Increase viewing spaces;

Enable to service temporary accommodation and transport services associated with major events;

Improve reliability of water quality and safety.

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Increased Capacity for Hospitality The potential of the Geelong Waterfront for hospitality has been extended through:

New eating and entertainment businesses and spaces in the waterfront precinct;

Program of redevelopment of spaces between the waterfront precinct and the retail hub of central Geelong, which has enabled greater connectivity and stimulated more development of eating and entertainment businesses and spaces.

These changes have significantly added to capacity for considerable visitation and the activation of Central Geelong and Geelong Waterfront precinct. Additional visitors to the waterfront from new recreational boaters visiting Geelong will provide additional patronage to these restaurants and businesses.

Improved Cost CompetitivenessThe reconstruction of the Yarra Street Pier will provide permanent infrastructure that will service a range of events. At present much of the infrastructure required for events has to be brought in on an event-by-event basis; this arrangement reduces the attractiveness of the precinct as an event space due to:

Relatively high costs of moving infrastructure in and out of the precinct which has a significant negative impact on the feasibility of many events;

Disruption to local trading and recreational activities associated with the logistical task of moving infrastructure in and out of the precinct – i.e. truck movements, road closures etc.

These issues have been a major impediment to either attracting more events to, or growing existing events at Geelong Waterfront.

Improved Viewing SpacesA key to the success of many events is the provision of viewing areas that enable visitors to be highly engaged with the event and add to overall experience associated with the event. The reconstruction of the Yarra Street Pier will provide for improved viewing space including the creation of a “viewing arena” that would be formed by the Cunningham and Yarra Street Piers.

The ability to accommodate more spectators is highly appealing to event licence holders, organisers, sponsors as well as a range of key stakeholders and will add to the overall attractiveness of Geelong Waterfront as an event and activity platform.

Servicing Accommodation and Transport for Major EventsThe recent conduct of the 2010 UCI Road World Cycling Championships in Geelong highlighted the need for the provision of temporary accommodation and a greater diversity of transport options.

The reconstruction of the Yarra Street Pier will provide the capability to service temporary accommodation in the form of cruise ships and enable the use of major ferry services from other destinations. This potential will significantly add to Geelong’s attractiveness as a location for major events, such as the Festival of Sails and Triathlon events.

Reliability of Water Quality and SafetyThe waterfront precinct offers a reliable location for water-based events due to its consistent water quality and reduced occurrence of issues that can make other locations unsafe for usage. This reliability

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is highly appealing to event organisers and when added to the above potential, the Geelong Waterfront will increasingly become a highly attractive location for events.

4.4 Evidence of benefit deliveryThe Benefit Map for the investment identifies the Key Performance Indicators (KPIs) which will be used to measure extent to which the identified benefits are being delivered (refer to Figure 3).

4.5 Reporting the delivery of benefitsIf funded, the CoGG Project Team that will oversee the implementation of the investment will set up a ‘data room’ and benefit evaluation model to use through-out the project implementation and operational period to monitor the progress against the delivery of expected benefits.

The progress will be initially reported through the General Manager, Infrastructure Services (GGCC). It is envisaged that the responsibility for the ongoing benefits monitoring will be determined by the Project Control Board prior to the completion of the construction phase (refer to Section 14 for the Governance details).

4.6 Importance of the Benefits to GovernmentThe proposed project will deliver benefits to the State, Local Government, business community and public.

As identified in the Key Performance Indicators for this investment, it is expected that the project will have economic impact that will see creation of up to 403 new EFTs over the 10-year period. More importantly the new employment will be created in the region with the strongest population growth and economy in transition.

It will also result in additional $52.4 million worth of gross State product and $41.0 million gross regional product.

The project will mitigate any loss of the State market share in the growing cruise-ship tourism market and provide redundancy infrastructure option for the State whilst providing new infrastructure in the area of major population growth.

The proposed project is directly aligned with the number State policies and directions including Victorian Coastal Strategy and Central Boating Coastal Action Plan. It will also contribute to the policy to grow the recreational boating industry.

More importantly the benefits will directly supports number of the State Government priorities including:

Supporting regional and country Victoria;

Improving and rebuilding our transport infrastructure.

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5. Base Assumptions

5.1 Recreational Boating NumbersThe design of the Yarra Street Pier reconstruction provides additional casual day berths which can be used by recreational boaters visiting Geelong. Estimated numbers are as follows:-

Summer (November – March) – average of 10 visits per day on a weekend and 4 visits per day on week days

Other times – average of 6 visits per day on a weekend and 2 visits per day on weekdays

A total of 1,400 visits per year.

5.2 Cruise Ship demandIt was assumed that the number of cruise ships currently using Geelong would continue but there would be no growth in volumes over the analysis period if no berthing was available. With the building of a large ship jetty facility (option 3) at Geelong, growth in both the size of vessel and the number of vessels per annum was forecast. This was based on AEC for CDU data, THINC, 2009, and industry consultation.

The demand forecasts used in the THINC Projects 2009 report were considered fair and reasonable however, given the increasing size of vessels in the future, an average passenger/crew of 1100/650 was adopted for cruise ships in Option 3 and 580/380 in Option 4. In addition, a slightly more conservative approach was taken in number of vessels forecast for 2025 in Option 3. Option 4 was further constrained in numbers due to vessel size able to berth at Cunningham Pier. The number of vessels per annum in a number of the years in the assessment period for each option and the base case is detailed in Table 6.

Table 6 Cruise Ship Demand

Cruise Ships Base Case Option 1 Option 2 Option 3 Option 4

Number of vessels 2011 3 3 3 3 3




Passengers per vessel 500 500 500 1100 580

Australia Passengers 90% 90% 90% 90% 90%

International Passengers 10% 10% 10% 10% 10%

Crew Per Vessel 350 350 350 650 300

Australia Crew 50% 50% 50% 50% 50%

International Crew 50% 50% 50% 50% 50%

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Cruise Ships Base Case Option 1 Option 2 Option 3 Option 4

Type of Stop Anchoring with tender

Anchoring with tender


Berth Berth

Passengers Disembarking 70% 70% 70% 90% 90%

Crew Disembarking 50% 50% 50% 50% 50%

No. of passengers disembarking

350 350 350 990 522

No. of crew Disembarking 175 175 175 325 150

Avg spend/passenger/day $154 $154 $154 $154 $154

Avg spend/crew/day $74 $74 $74 $74 $74

Avg spend/passenger ship $53,900 $53,900 $53,900 $152,460 $80,388

Avg spend/crew/ship $12,950 $12,950 $12,950 $24,050 $11,100

Avg spend/cruise ship/annum $200,550 $200,550 $200,550 $706,040 $365,952

New Spend 2015 $0 $0 $0 $505,490 $165,402

New Spend 2025 $0 $0 $0 $3,682,670 $1,537,722

Cruise ship operator and Geelong Council Expenditure on cruise ships arriving at Geelong:

Cruise Ship opex/vessel (all local)

$41,000 $41,000 $41,000 $63,000 $63,000

COGG expenditure (local) $25,000 $25,000 $25,000 $29,000 $29,000

Total expenditure by vessel $66,000 $66,000 $66,000 $92,000 $92,000

Total expenditure/annum 2015 $198,000 $198,000 $198,000 $368,000 $368,000

2015 Additional Expenditure 0 0 0 $170,000 $170,000

2025 Additional Expenditure 0 0 0 $1,826,000 $1,550,000

Navy Ships:

Number of ships/annum 0 0 0 4 4

Spend/ship by crew (all local) 0 0 0 $15,000 $15,000

Spend/ship by COGG (all local) 0 0 0 $20,000 $20,000

Navy Ship spend/annum 0 0 0 $140,000 $140,000

“In order for Geelong to create net additional business for the state of Victoria as a result of cruise ship visits, Geelong will need to attract passenger days without predating those already forecast to visit Melbourne. This may be achieved most successfully by actively enticing cruise ships already visiting

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Melbourne to visit Geelong to spend an extra day in Victoria. Due to the relatively small distance between Melbourne and Geelong this seems highly achievable”.15

The base assumptions used for cruise ship visitation to Geelong indicate a market segment of approximately 8-10% of predicted passengers into Melbourne by 2020.

5.3 Naval Vessel VisitsBased on industry advice it was assumed that the construction of the large vessel jetty in option 3 will enable four navy vessel visits per annum.

In a letter to CoGG, dated 7th December 2011, the acting chief of Navy advised that the Royal Australian Navy would welcome the opportunity for naval ships (refer Appendix A) to resume visiting Geelong on an occasional basis should the proposed Yarra Street pier be built. The annual rate of visits would be anticipated to comprise 1-2 major fleet units such as Frigates or large amphibious ships and possibly Submarines depending upon the pier design, and potentially up to 1-2 minor war vessels such as Minehunters or Hydrographic vessels and the future Offshore Combatant Vessels.

5.4 Major Events and Yachting RegattasBased on advice from COGG and RGYC, it was assumed that the construction of the recreational jetty or the large vessel jetty will result in an expansion of the Festival of Sails and the capture of a Major Triathlon event or similar of two days duration.

RGYC advised that with marina protection and the additional berths, it would be able to expand the Festival of Sails event, especially in duration. The additional facilities would also make it well placed to deliver other single class regatta’s and expand existing events such as the ocean Racing Clubs annual race to Geelong from Melbourne.

Patronage and length for these events was sourced from COGG and Ernst and Young (2009).

5.5 Visitation to Geelong WaterfrontIt was assumed that all options would result in an extension of stay for existing visitors based on improved facilities in the Geelong region. For the options which involve the construction of a recreational jetty data on visitor expenditure from Ernst and Young (2009) was discounted by 50% whereas for the option involving a large vessel jetty it was assumed that the Ernst and Young data was appropriate.

15 Business Case Study – Cruise Shipping Demand Analysis and Infrastructure, THINC Projects, 2010

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6. Strategic Response

6.1 Strategic options consideredThe approach followed in development of the strategic options is aligned with DTF, 2011, Strategic Options Analysis, Guideline, Working Draft (& June 2011); published at www.dtf.vic.gov.au/investmentmanagement.

As per the guideline, the first step involved the definition of the problems. This was critical in clarifying stakeholder views and prioritising the reasons for implementing the project.

The benefits have also been defined and documented, with the KPIs and measures outlined in the Benefit Map (refer to Figure 3).

6.2 Strategic InterventionsThe strategic interventions are categorised as follows:

Reduced demand;

Improved productivity; and

Increased supply.

The initial strategic interventions have been drafted without prejudice to ensure that all response options are considered in the early stages of options consideration.

6.3 Potential Strategic OptionsThe potential strategic interventions listed below in Table 7.

Table 7 Strategic Interventions

Strategic Intervention Category of Intervention

Comment

Business as usual (do nothing)

Nil Base case scenario

Secure a segment of growing cruise ship tourism

Increased supply

Existing arrangements constrain growth in demand

Increase activity in Central Geelong through its waterfront

Increased supply

Considered in a supply issue as it requires diversification of maritime infrastructure to increase demand.

Improve itinerant boating options in Corio Bay

Increased supply

There is a real and latent demand for additional maritime infrastructure on the Western side of Port Philip Bay. It is not considered under improved efficiency category as there is insufficient existing infrastructure.

Promote alternative waterfront destinations in the region

Reduce demand

Dispersal of active waterfront usage to other destinations.

Stimulate business activities through

Reduce demand

Reduce dependency of local businesses on tourism

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http://www.dtf.vic.gov.au/investmentmanagement

Strategic Intervention Category of Intervention

Comment

alternative service

industries

Secure higher yields from existing visitor numbers

Improved productivity

Provide value added services

Maximise use of existing assets


Consider upgrade of existing infrastructure (eg Cunningham Pier)

Each strategic intervention was considered for its ability to address the identified problem(s) (recorded as percentage (%) of total contribution) and consequently grouped to create Strategic Options – refer to Table 8 for detail. The resulting strategic options are as followed:

Strategic Option A - Business as usual;

Strategic Option B - Dispersal of activities;

Strategic Option C - Recreational jetty only;

Strategic Option D - Recreational jetty with marina protection;

Strategic Option E - Redevelopment of Cunningham Pier;

Strategic Option F - Large Ship Jetty with marina protection.

Detailed description of each Strategic Option is provided in Section 6.4

Table 8 Potential Strategic Options

Intervention Strategic Option A

Strategic Option B

Strategic Option C

Strategic Option D

Strategic Option E

Strategic Option F

Business as

usual

Dispersal of

activities

Recreational

jetty only

Recreational

jetty with

marina

protection

Redevelopment of

Cunningham Pier

Large Ship

Jetty with

marina

protection

Nil Response

Business as usual (base case)

100%

Reduced Demand

Stimulate business activities through alternative service industries

30%

Promote alternative waterfront destinations in the

70%

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Intervention Strategic Option A

Strategic Option B

Strategic Option C

Strategic Option D

Strategic Option E

Strategic Option F

regions


Secure higher yields from existing visitors

Maximise use of existing assets

70%

Increased supply

Secure a segment of growing cruise-ship tourism market

10% 25%

Increase activity in Central Geelong through its Waterfront

70% 40% 10% 35%

Improve itinerant boating options for Corio Bay

30% 60% 10% 40%

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6.4 Strategic Options Description

6.4.1 Strategic Option A - Business as usual

Lack of Marine InfrastructureUnder the Business as Usual approach, no additional marine infrastructure would be developed; hence the problem regarding the lack of marine infrastructure would not be addressed.

Reduction in Regional Tourism

Under this option, CoGG would continue to host cruise ships, as it has done in recent years, with the vessels mooring in the designated anchorage in Corio Bay, with passengers being ferried to/from shore in smaller vessels.

This current approach is not seen by CoGG, the cruise ship industry, and other stakeholders to be a long term option in enabling increased cruise ship demand to be met by visits to Geelong. The principal reasons for this are:

The safety risks of managing the passengers getting on and off smaller vessels both at the ship and at shore;

Client expectations around having direct access to shore;

Time to process possibly thousands of passengers each way;

The need to optimise limited time in port; and

The limited time in port that ships stay.

In addition, the ability to tender passengers to/from shore is highly dependent on the weather conditions. If the wind is too strong, or there is rain, this process cannot be undertaken, leaving passengers on the vessel for the duration of the visit. This impacts on the whole passenger (and cruise ship operator) experience.

6.4.2 Strategic Option B – Dispersal of activities

This option was prepared without prejudice to assess to what degree a dispersal of waterfront activities into other existing locations would address the problems identified.

It considers a hypothetical scenario where maritime and waterfront activities would be supported and/or further developed in alternative location(s) and the existing and potential future users would be encouraged to travel to those locations. Existing business would be activated through sectors other than tourism or re-located to alternative location(s).

6.4.3 Strategic Option C - Recreational jetty only

In summary, this option proposes to construct a 225m long recreational jetty which is 8m wide. It is assumed that the predominant load will be pedestrians and light vehicles, with an ability to berth recreational boats alongside the jetty.

Lack of Marine Infrastructure

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The development of a recreational jetty will add to the marine infrastructure on the Geelong Waterfront. It will provide a publicly owned jetty that enables fishing, walking and sight-seeing. In addition, this facility would provide some additional berthing options as a destination for recreational vessels (mainly itinerant vessels calling at Geelong) adding to the improved profile of Port Phillip Bay as a marine destination.

This option will partially address the strategic aims of the Waterfront Geelong Masterplan 2010 by providing the opportunities for the public described above. It also provides a connection between the city and the water, and if historic events are an indication of future behaviour, will attract additional private investment around the new jetty.

However, it does not incorporate the wave attenuation facilities, the expansion of the RGYC marina or provide for berthing of large vessels.


By virtue of providing facilities for berthing itinerant vessels, this option will provide a small increase in tourism visitation to Geelong (and possibly the surrounding area).

In summary, this option continues the development of Geelong waterfront, attracts private investment to waterfront and generates a $545,000 spend from increased visitation and average length of stay for visitors to Geelong.

6.4.4 Strategic Option D - Recreational jetty with marina protection

In summary, this option proposes to construct a recreational jetty 225m long and 8m wide, which incorporates wave protection along the jetty and running east-west at the end, along with a floating pontoon to the east of the new jetty. An additional 47 berths are proposed for the RGYC marina as well.


This option provides some enhancement over Strategic Option C above in that it provides additional berthing for itinerant vessels via the proposed floating pontoon – this further enhances opportunities for improving the profile of Port Phillip Bay as a marine destination.

The wave protection provides a safe harbour on the eastern side of the new jetty. Protection for the RGYC marina is also enhanced.

The protected harbour also provides the following opportunities:

Attracting further yachting regattas to Geelong (or expanding existing regattas); and

Attracting other major events such as triathlons and other water based sports.


As for Strategic Option C, this option enhances opportunities for growing the tourism industry in Geelong and its surrounds by attracting tourists (boat owners) to Geelong. By virtue of the additional boating facilities provided for in this option, it is expected that additional tourists would visit Geelong.

This option:

Continues the development of Geelong waterfront;

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attracts private investment to the waterfront;

$545,000 spend from increased visitation and average length of stay for visitors to Geelong;

$1,284,000 spend from expansion of Festival of Sails;

$694,000 spend from a major Triathlon Event or similar.

It also provides safety for small vessels and reduced maintenance of the existing RGYC marina

6.4.5 Strategic Option E – Redevelopment of Cunningham Pier

This option represents the more general ‘Reuse of an Existing Asset’ option, as Cunningham Pier is the only existing infrastructure with some potential to address the problems as identified in the ILM (Figure 2).

The Waterfront Geelong Masterplan 2010 identifies Cunningham Pier as a potential site for marine or tourist retail, cruise ship and yacht berthing. It is however a privately ‘owned’ structure operating within a leased area of the sea-bed under a 99 year lease which expires in 2093. Public use of the pier is limited to walking, fishing and sight-seeing.


CoGG is not aware of any proposal from the Costa Group to redevelop Cunningham Pier to provide additional marine infrastructure suitable for itinerant vessels or serving a function of a safe harbour. In regards to additional marine infrastructure, one of the benefits sought is to be able to provide additional berthing for yachts during yachting regattas – these facilities, if developed at Cunningham Pier, would not provide this benefit as they would be too far away from the RGYC at which the regattas would be based.


In the past, cruise ships have berthed at Cunningham Pier. In early 2011, the owners of Cunningham Pier advised Council that they were no longer able to accept cruise ships. The Costa Property Group has indicated that they would sell the Pier to Council for $20million, with the main rationale for Cunningham Pier’s purchase being related to cruise ships.

On 28 February 2011, the Costa Property Group advised Council, the Victorian Regional Channels Authority and the Navy that due to “some loss of revenue” and to protect Cunningham pier from “risk of damage by impact”’ [the Costa Property Group] “cease granting permission for vessels of any size or ownership to berth at Cunningham pier” and confirmed to the Victorian Regional Channels Authority to “discontinue the maintenance of deep water branch channel to Cunningham pier”.16

As stated, the current owners have stopped ships berthing at the pier because of concerns about the risk of damage to the structure, and loss of revenue to the new business recently established at the end of the pier. Both of these ‘issues’ would be transferred to Council if it purchased the pier.

Due to strict government security requirements access to the pier is prohibited when a cruise ship is berthed, causing disruption to the business at the end of the pier and loss of car park revenue.

16 E-mail to Council February 2011

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It is understood that current revenue from these activities is approx. $1M per annum.

While recent cruise ship visits have only been for a few hours, Council’s aim is to encourage ships to stay for longer periods of time and therefore increase the economic impact to Geelong. This would be achieved as longer stays would result in increased opportunities for passengers and crew to spend while ashore.

Council would therefore not want to see a business at the end of Cunningham Pier significantly impacted for an extended period of time to accommodate cruise ships. The length and structure of Cunningham Pier limits the opportunities for Geelong to host cruise ships of all sizes and scales, mainly due to the location and protruding building at the end of the pier. The size of cruise ships is generally getting bigger and longer. Currently, Cunningham Pier can only cater for boutique ships up to approximately 185-200m in length. A key positioning for Geelong in the cruise ship market is to be Victoria's second cruise destination, inclusive of the need to be able to cater for many of the ships that are going to Melbourne or could go to Melbourne. Geelong requires a facility that can cater for the large scale ships that visit ports in Sydney and Melbourne.

As an annual event on the Waterfront, the Festival of Sails is the biggest keel boat regatta in the Southern Hemisphere and Council hopes this event grows to be the largest of its type in the world. The need to grow this event is linked specifically to the precinct bordered by Yarra Street.

One option to overcome this would be for CoGG to purchase Cunningham Pier from the Costa Group. Recently, the Costa Group has advised CoGG that it would be prepared to sell Cunningham Pier, in lieu of constructing a new Yarra Street Pier

The cost estimate to purchase and upgrade the facility is approximately $27.83m however, Cunningham Pier has the following limitations:

It is a 100 year old facility. Although, it is recognised that a significant amount of work has been undertaken on strengthening the piles in recent years, it is expected that the maintenance costs will be higher for this facility than a new structure (which are not considered in above costs but are factored into the Benefit Cost Analysis);

Cruise ships would be limited to less than 200m long, along with limits on wind conditions when the vessels could berth at the facility. To achieve the larger vessels, additional infrastructure and strengthening would be required.

In addition, feedback from sailors to RGYC has confirmed that using Cunningham Pier to moor their vessels during regattas is not preferred as it is too far away from the RGYC.

6.4.6 Strategic Option F – Large ship jetty with marina protection

This Option may be considered as a single berth jetty or double berth jetty.

Single Berth Cruise Ship Jetty with Marina and ProtectionIn summary, this option provides for a 260m long jetty that is 8m wide and has been designed for the berthing of cruise ships. The jetty width is increased over 100m of its length to provide a total width of 20m. Also incorporated into this option is wave protection and additional marina berths (as per Strategic

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Option D) and dredging of an approach channel and swing basin to the new jetty to enable a cruise ship to access the facility.


This option provides all of the functionality and benefits of Option 2 as described above.


As described in Section 3 there has been significant recent growth in the cruise ship industry in Australia. It is considered that an ability to ‘tap in’ to that growth via the development of a cruise ship facility in Geelong will grow tourism not just in Geelong, but across south-west regional Victoria.

This option also provides the opportunity for other larger non-recreational vessels (such as Naval vessels) to visit Geelong. As well as increase consumer spend in Geelong from the crew, these types of visits also attract visitors to the waterfront to view the vessel whilst it is in port, generating additional expenditure.

Strategic Option F provides for the complete development proposed in the Waterfront Geelong Masterplan 2010, with the exception of the development of Fishermans Basin, and permanent business opportunities on the jetty itself.

This option:

continues the development of the central Geelong waterfront;

attracts private investment to waterfront;

$1,090,000 spend from increased visitation and average length of stay for visitors to Geelong;

$1,284,000 spend from expansion of Festival of Sails;

$694,000 spend from a major Triathlon Event or similar;

$176,000 spend by passengers and crew per Cruise Ship visit;

$51,000 spend by Cruise Ship operators per visit in Channel Fees, Berth Fees, Security, Services etc;

$29,000 spend by City of Greater Geelong per Cruise Ship visit;

$20,000 spend by Navy personnel each visit with $20,000 spend by City of Greater Geelong per Navy ship visit.

Double Berth Cruise Ship Jetty with Marina Enhancement and ProtectionThe preceding discussion was for an option for a single cruise ship berth alongside the western side of a re-constructed Yarra St Pier built on the old alignment.

The options to simultaneously cater for two ships are:

To berth the second ship in an east – west direction so that the ship lies to the north of the RGYC marina. The structure would be similar to the new Yarra St pier in that it would comprise a pier plus a number of berthing and mooring dolphins. In the extreme case, the 340m long ship berthed east west would extend well east past the marina and thus cause some inconvenience

45


for marina users for the short time the ship was in port. There is the remote possibility that the ship could be berthed during the Festival of Sails week regatta;

Anchor the second ship in Corio Bay and ferry passengers ashore. This was discounted in Section 6.4 for safety, time and other reasons as being impractical;

Construct the new Yarra St Pier along the alignment of Yarra Street and have a small ship berth on the east side and a large ship berth on the west side. This arrangement provides for a 50m exclusion zone on the eastern side of the small ship berth that does not impinge on the Royal Geelong Yacht Club (which would not be possible if the old Yarra Street Pier alignment was adopted for a double berth facility). The form of the structure would be changed to a heavily piled reinforced concrete pier without berthing dolphins.

At this stage, it is not proposed to develop a facility with two berths as the vessel volumes are not considered warranted. Of importance though is consideration as to whether two berths would be required at some stage in the future. To keep this option open, the most efficient layout would be to realign the proposed jetty so that as it is parallel with Yarra Street. However, this will necessitate the removal of most (all) of the remaining piles from the old Yarra Street Pier, and additional dredging. Should this work be required SKM17 estimated the cost at $2m or more, subject to further investigation and development of how and where to dispose of the sediments assuming that statutory approval for the work could be obtained.

Therefore, given the preferred alignment of the new pier is along the old Yarra Street Pier alignment, constructing a second berth in the east-west direction would be possible in the future.

17 Yarra Streert Pier Reconstruction – Preliminary Design Report, 2 March 2009, SKM

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6.5 Evaluation of Strategic OptionsThe evaluation criteria and weightings are based on the ILM as well as broader implementation issues and considerations.

The evaluation framework consists of three primary criteria, presented in Table 9.

Table 9 Evaluation criteria

Primary criteria – (weighting) Description Secondary criteria – (weighting)

Benefit criteria (55%) This primary criterion addresses the ability of the option to contribute towards identified benefits.

Greater economic returns for the State (55%);

Improved profile of Port Phillip Bay as a marine destination (20%);

Improved liveability and profile as Waterfront City (25%).

Deliverability (35%) This primary criterion assesses factors that can influence project deliverability and the ability to meet the required project parameters.

Stakeholder issues (20%);

Project Risk Profile (80%).

Value for money (25%) This primary criterion measures the economic aspects of the project in delivery and post-delivery.

BCR (35%);

Economic Impact (65%).

6.5.1 Assessment and scoring

Each option was assigned a score range and the scoring scale is uniquely defined for each criteria item. The scores are multiplied by the respective weightings, to receive a final assessment score.

The framework, weightings and criteria have been developed through workshops with the project team.

Details of the scoring assessments and comments to support the score are provided in the Multi-criteria analysis (refer to Appendix B).

6.5.2 Options assessment results

Strategic Option F - Single Berth Cruise Ship Jetty with Public Berths, Marina Enhancement and Protection, and Dredging is the preferred option. This option is assessed as best able to meet all of the primary criteria – delivery of benefits, deliverability and value for money, as well as receiving the highest final score. This option will also deliver substantially higher economic impacts than other options to the Region and the State of Victoria.

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A summary of the strategic options assessment results is presented in Table 10 and Figure 7.

Figure 7 Strategic Options assessment results– final scores

Table 10 Strategic Options assessment results

Strategic Option Name

Final Assessment Score

Contribution to Benefits Deliverability

Value for Money

ABusiness as usual -0.73 -1.10 -0.48 0.00

BDispersal of activities 0.05 0.30 -0.48 0.00

CRecreational jetty only 0.55 0.73 -0.20 1.00

D

Recreational jetty with marina protection 1.03 1.20 -0.14 2.00

E Redevelopmen 0.53 1.18 -0.18 -0.35

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Strategic Option Name

Final

Assessment Score

Contribution to Benefits Deliverability

Value for Money

t of Cunningham Pier

F

Large ship jetty with marina protection 1.82 2.00 0.48 3.00

The results of the strategic options assessment provide a compelling case against the do nothing option which is assessed as having strong adverse impacts on the ability to meet needs criteria as well as deliverability and value for money criteria.

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7. Economic Assessment of Shortlisted Options

7.1 Scope of Work for each OptionAs discussed in Section 5 above, four options, along with the business as usual case are considered in more detail below: For future assessment, the options have been re-named as follows:

Strategic Option C (Recreational Jetty) becomes Option 1;

Strategic Option D (Recreational Jetty with marina protection) becomes Option 2;

Strategic Option F (Large Ship Jetty with marina protection) becomes Option 3;

Strategic Option E (Cunningham Pier) becomes Option 4.

For each of the shortlisted options (with the exception of Option 4) GHD prepared a concept design to enable capital and operating costs to be estimated along with indicative timeframes to be input into the detailed option evaluation process.

Option 1 (Recreational Jetty) consists of the construction of a pier which is approximately 225m long (its northern most point is assumed to be the same distance from shore as the northern most point of the RGYC marine). The pier will consist of a reinforced concrete deck supported by steel piles. It will have the ability for recreational vessels to berth/moor against it with capacity for pedestrians and light vehicles on the deck.

Option 2 (Recreational Jetty with marina protection) consists of the jetty as per Option 1 but with enhancements being:

Incorporation of a wave barrier along the jetty;

Construction of a 90m long wave alternator at the end of the jetty to the east to provide additional protection to RGYC;

Floating pontoon suitable for public berthing to the east of the new pier;

An additional 47 marina berths in the RGYC marina.

There has been no allowance for any dredging in Option 1 or Option 2.

Option 3 consists of a 260m long jetty suitable for berthing large cruise ships along the western side. An additional 1200m2 of the deck (nominally 12m wide by 100m long) has been allowed on the eastern side of the pier for marquees, etc. during a cruise ship visit. This option also includes the wave protection and additional marina berths described in Option 2.

Option 3 also includes for dredging an approach channel and turning basin to a depth of 9m suitable for berthing 260m long, 32m wide cruise ships.

Option 4 consists of the purchase and upgrade of Cunningham Pier to cater for berthing of large vessels. This will include wave protection and addition of fenders to the structure.

Preliminary drawings have been prepared for Options 1, 2 and 3 and are provided in Appendix C.

Based on the concept designs, a benefit cost assessment and economic impact evaluation has been carried out to assist in determining the preferred option for implementation.

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7.2 Benefit Cost Assessment

Section 5 and Appendix D detail all assumptions and key inputs into the economic benefit cost assessment. In short the economic benefit cost assessment evaluates the costs and benefits of the project to determine a benefit cost ratio and net present value for the shortlisted options. These indicators provide a relative measure of the economic merit of progressing the options. Detailed methodology behind the derivation of the benefits in this assessment is shown in Appendix D.

Table 11 General Assumptions

General Input Value Units

Evaluation period 30 Years from year of opening

Assumed residual value of assets at end

Yarra Street Pier Options 1,2 and 3

Cunningham Pier Upgrade

40

0

Per cent

Per cent

Assumed discount rate 6% Per cent

Table 12 Option assumptions used in benefit cost assessment


Recreational Jetty Recreational Jetty plus Marina Protection

Large Ship Jetty, plus Marina Protection


Total Capital Cost

$8,600,000 $18,600,000 $33,200,000 $27,830,000


July 2012 - Dec 2013

July 2012 - Dec 2013

July 2012 - Dec 2014

July 2013 - Dec 2014

Construction Profile

Start Design July 2012Start Construction Jan 2013End Construction Dec 2013Open Jan 2014

Start Design July 2012Start Construction Jan 2013End Construction Dec 2013Open Jan 2014

Start Design July 2012Start Construction July 2013End Construction Dec 2014 Open Jan 2015

Start Design July 2013 (post purchase)Start Construction Jan 2014End Construction Dec 2014Open Jan 2015

Capex spend 2013 (2012/13)

59% 52% 3% 1%

Capex spend 2014 (2013/14)

41% 48% 63% 79%(includes purchase)

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Capex spend 2015 (2014/2015)

34% 20%

Annual Recurrent Costs

$ 21,500 maintenance per annum for first five years of operation and then

$ 43,000 maintenance per annum for remainder of assessment

$ 46,500 maintenance per annum for first five years of operation of option and then


$ 133,000 maintenance per annum for first five years of operations and then


$249,000 maintenance per annum for first five years of operations and then $498,000 maintenance per annum for remainder of assessment

Benefits Producer surplus from additional visitation spend

Residual value of asset

Producer surplus from additional visitation spend


Savings in marina protection

Producer surplus from additional major events spend

Producer surplus from additional visitation spend and


Savings in marina maintenance


Producer surplus from increased expenditure from more and larger cruise ship visits

Producer surplus from increased expenditure by navy vessels

Producer surplus from additional visitation spend


Producer surplus from increased expenditure from more cruise ship visits

Producer surplus from increased expenditure by navy vessels

Discounted (6% real) costs and benefits for the three options, the benefit cost ratio and the net present value of the three options is detailed in Appendix D. All values are in $ million present value apart from the benefit cost ratios (BCR).

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Table 13 Summary Results of economic assessment $m present value


Costs

Capital $7.93 $17.07 $29.04 $24.50

Operating $0.45 $1.14 $3.07 $5.85

Total Costs $8.37 $18.21 $32.11 $30.35

Benefits

Producer surplus from increased visitation to waterfront

$1.34 $1.34 $2.52 $1.26

Producer surplus from Events - $4.85 $4.57 $1.60

Reduction in marina maintenance - $0.25 $0.23 0.00

Producer surplus from cruise ship visits

- - $6.16 $2.54

Producer surplus from naval vessel visits

- - $0.46 0.46

Residual value of asset $0.49 $1.06 $1.70 0.00

Total Benefits $1.83 $7.48 $15.65 $5.87

BCR 0.22 0.41 0.49 0.19

NPV -$6.55 -$10.72 -$16.46 -$24.50

Based on the comparative assessment using BCR, Option 3 is marginally the preferred option. None of the options provides a commercial rate of return for the project and therefore economic impact assessments were undertaken for the three best performing options (Option 1, 2 and 3).

7.3 Economic Impact Assessment The economic impact assessment of the Yarra Street Pier Reconstruction Project three best performing options was undertaken by EconSearch Pty Ltd and their full report is in Appendix E.Using an input-output (I-O) method, EconSearch generated outputs for the following indicators of economic impact

Gross regional product (GRP) / Gross State Product;

Employment; and

Household Income.

For each indicator estimates of economic impact are presented in terms of:

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direct (or initial) impacts – an estimate of the changes in final demand or level of economic

activity that is the stimulus for the total impacts;

Indirect (or flow-on) impacts – the sum of production-induced, consumption –induced and offsetting consumption impacts;

Total impacts – the sum of direct and indirect impacts.

These economic impact indicators were considered for the three options at the Victorian and Geelong regional level. The Geelong Region incorporated the Local Government Areas of City of Greater Geelong and Queenscliff Borough. Impacts for Geelong were modelled on those expenditures expected to occur in the Geelong region only. Impacts for Victoria include those expenditures that will occur in Geelong and those that will occur elsewhere in Victoria. Expenditure that will occur elsewhere in Australia or overseas has been excluded from the analysis.

For the purposes of the assessment economic impacts were assessed for the construction phase of the options (2012/13-2014/15) and the first ten years of operation of the options.

7.3.1 Construction ImpactsTable 14 and Table 15 show the economic impact of the construction of the Geelong Maritime Infrastructure Options for the Geelong Region and Victoria respectively. Option 3 has significantly higher gross regional / gross state product impact than either Option 1 or Option 2. The economic impact for Victoria of this option is estimated at 234 FTE jobs (of which 89 jobs will be located in the Geelong region) and a $22.5 million boost to gross state product (GSP). Geelong’s gross regional product (GRP) is estimated to increase by $8.3 million under Option 3.

Table 14 Direct and flow-on GRP18 ($m) and Employment (FTE) impacts of the construction of the Yarra Street Pier Reconstruction options, Geelong region19

Total ($M)* FTE Total

Option 1

Direct 1.7 19

Flow-on 1.2 11

Total 2.9 30

Option 2

Direct 3.1 40

Flow-on 2.3 21

Total 5.4 60

Option 3

Direct 4.8 58

18 GRP impacts are a measure of gross regional product (i.e. household income, gross operating surplus and all taxes, less subsidies)

19 Source: EconSearch analysis, 2012

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Total ($M)* FTE Total

Flow-on 3.531

Total 8.3 89

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Table 15 Direct and flow-on GSP20 ($m) and Employment impacts of the construction of the Yarra Street Pier Reconstruction options, Victoria21

Total($m) a FTE Total

Option 1

Direct 2.9 36

Flow-on 3.5 27

Total 6.4 63

Option 2

Direct 6.7 91

Flow-on 8.0 65

Total 14.7 155

Option 3

Direct 10.2 136

Flow-on 12.3 98

Total 22.5 234

7.3.2 Operational impact Table 16 and Table 17 show the economic impact of the first ten years of operation of the Geelong Yarra Street Pier for the Geelong Region and Victoria respectively. Option 3 has more than double gross regional / gross state product impact than either Option 1 or Option 2. The economic impact for Victoria of this option is estimated at 403 FTE jobs (of which 335 or 83% will be located in the Geelong region) and a $52.4 million boost to gross state product. Geelong’s gross regional product is estimated to increase by $41.0 million over the first 10 years under Option 3.

20 GSP impacts are a measure of gross state product (i.e. household income, gross operating surplus and all taxes, less subsidies).


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Table 16 Direct and flow-on GRP22 ($m) a and Employment (FTE) impacts of the operation of the Yarra Street Pier Reconstruction options for first ten years, Geelong region23

Total($m) a FTE Total

Option 1

Direct 2.5 25

Flow-on 0.9 7

Total 3.4 32

Option 2

Direct 13.5 111

Flow-on 3.6 30

Total 17.1 141

Option 3

Direct 30.0 251

Flow-on 11.0 85

Total 41.0 335

22 GRP impacts are a measure of gross regional product (i.e. household income, gross operating surplus and all taxes, less subsidies).


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Table 17 Direct and flow-on GSP 24($m) and Employment (FTE) impacts of the operation of the Yarra Street Pier Reconstruction options for first ten years, Victoria ($m)25

Total ($m) a FTE Total

Option 1

Direct 2.5 25

Flow-on 1.8 13

Total 4.3 38

Option 2

Direct 13.5 111

Flow-on 7.7 56

Total 21.1 167

Option 3

Direct 30.0 251

Flow-on 22.4 153

Total 52.4 403

24 GSP impacts are a measure of gross state product (i.e. household income, gross operating surplus and all taxes, less subsidies).


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8. Details of the Preferred Project

The preferred option is Option 3 - Single Berth Cruise Ship Jetty with Public Berths, Marina Enhancement and Protection, and Dredging

The scope of the preferred project option is discussed and outlined in more detail below.

8.1 Wharf InfrastructureA conceptual layout for a rebuilt Yarra Street Pier incorporating a Cruise Ship Berth was developed by SKM in 2010 for a 220 m long cruise ship berthing alongside the western edge of a newly constructed Yarra Street pier along the old alignment.

Forecasting commercial ship sizes in the region is at best indicative only with a good example being the 220m ship forecast by SKM only a year ago compared to the smallest ship now considered in the forecasting for ‘typical’ vessels at 260m long.

Forecasting is typically based on the premise that the newest and largest ships service the major routes, and the older previous classes of ships the secondary routes and so on.

The latest advice from Royal Caribbean26 is for much larger ships in this region as follows:

Vision and Radiance class cruise ships of 260m and 290m and 32.2m beam respectively for the next 12 years, when these ships will be approaching their typical service life of 30 years;

Voyager class cruise ships to 310m and 47m beam for the next 20 years;

Freedom class cruise ships to 340m and 56m beam for the next 25 years.

Although the most probable immediate ship size is in the range of 260m to 290m, it is possible over the life of the jetty (assumed 50 years plus) that larger vessels may wish to berth at Geelong in the future either as a result of a not being able to berth at Melbourne (due to Station Pier being occupied or for maintenance reasons unavailable) or as a specific call at Geelong.

For the current scope it is proposed that the design of the new jetty should cater for the 260 to 290m ships on the basis of a single berth along the western side of the newly constructed Yarra Street pier on the old alignment to avoid having to dredge the contaminated sediments forming a shallower ledge on which the old pier stood, and to avoid having to extract the 1000 or so old timber piles that were cut off at the seabed. This will save money and time during the construction of the new jetty.

The form of the pier would be for a precast deck and cast insitu reinforced concrete topping slab 8m wide supported on tubular steel piles, nominally of 800mm diameter and of the order of 30m long, assuming reasonable geotechnical soil properties (all subject to further investigation and design), lightweight buildings and truck turning area would be similarly supported on additional decks on the eastern side of the pier.

To handle the ship induced loads, separate berthing dolphins fitted with cone fenders at intervals of 50m would be set into the pier. These would comprise a heavy reinforced concrete cap supported on vertical

26 Interview with Gavin Smith, Managing Director, RCL Cruises, on 21 November 2011

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and raked steel piles of nominal diameter 800 mm, again subject to investigation and design. As it is not feasible to later strengthen these dolphins, they should be designed for the ultimate “design” vessel which appears to be the 310 or 340m long vessel as these ships have considerably more mass and windage, and are expected within the life of the structure.

It is unnecessary for the pier to extend the full length plus additional length for handling mooring lines as the ship can manage with a shorter pier (typically 80% of the LOA) and the construction of berthing and mooring dolphins at the seaward end of the jetty. At approximately $500,000 for each dolphin, this approach provides significant cost savings compared to a full length pier.

7.4.1.2 Channel Design

A dredged channel from the main shipping channel (The Hopetoun Channel) into the new Yarra St Pier will be required for all cruise ships. There are 2 layout options for this channel as provided by the Victorian Regional Channels Authority (VRCA) (see ) as follows:

Layout 1 - From just east of the No. 14 Hopetoun Channel mark, southwards to Yarra St Pier with a turning circle just north of the pier.

Layout 2 - From just west of the No 14 Hopetoun mark, then via 3 legs SW, S and SE to Yarra St Pier.

Both options provide a channel depth of 10m providing access for vessels with a draft of up to 8.5 - 9m at all stages of the tide. The swing basin dimensions provided are potentially limiting for most of the cruise ships according to PIANC guidelines.

With the smaller volume of dredging required for Layout 2, this is the preferred option and is developed further below.

GHD has contacted Heritage Victoria to request the position of the listed wreck of the vessel Lightning, which is advised as 38.1410167 degrees south and 144.3661000 degrees east. This places the wreck approximately 13 degrees north and 350m north of Yarra St Pier and plots within the turning circle area suggested by the VRCA.

Accordingly, the VRCA layouts were amended by GHD, mainly by moving the swing basin further north so as it avoids the wreck and by re-aligning the proposed channels.

Based on the above discussion, there are a range of vessel sizes that could call at Geelong, either in the short term, or over the life of the pier.

With a view to minimising project costs during the initial project development, it is possible that the dredging could be staged to provide access to the smaller vessels in the short term, with future dredging completed in the longer term if there is a demand for larger vessels calling at Geelong.

GHD has analysed the vessel mix that is calling at Melbourne over the next 2 years to assess the number of vessels that could be berthed at Geelong if minimal dredging was undertaken. All of the vessels are shown in Table 18 below.

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Table 18 Vessels

No. of visits LOA (m)Draught (m) Passengers

Albatros 1 205 7.5 1000

Amsterdam 1 285.22 8 1738

Arcadia * 1 254.13 7.8 2534

Athena 1 160 7.6 580

Azura 2 289 8.5 3610

Carnival Spirit * 3 293.52 7.77 2667

Celebrity Century 4 250 8 2150

Celebrity Solstice 5 315 8.3 2850

Columbus 1 144 5.6 426

Costa Deliziosa 2 292 8 2826

Costa Romantica * 2 230 7.6 1356

Crystal Serenity 1 250 7.2 1147

Crystal Symphony * 1 238 8 1030

Dawn Princess 20 262 7.95 2342

Diamond Princess 10 290 8.3 3100

Marina 2 239 7.6 1258

Oosterdam 10 285 7.9 2387

Pacific Jewel 4 245 8.5 1860

Pacific Pearl 7 245 8 1800

Pacific Sun 13 223 8.1 1896

Queen Elizabeth 1 294 7.8 2175

Queen Mary 2 2 345 10.3 3090

Radiance of the Seas 5 294 8.5 2501

Regatta 4 180 5.7 702

Rhapsody of the Seas 1 279 7.6 2435

Saga Ruby 1 133 8.6 668

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No. of visits LOA (m)Draught (m) Passengers

Sea Princess 2 221.4 8.3 2250

Seabourn Odyssey 1 198 6.6 452

Seabourn Quest 1 198 6.5 462

Seven Seas Voyager 4 205 7 730

Silver Shadow 7 186 6 388

Silver Whisper 1 188 6 388

Spirit of Adventure 2 139 5.1 470

The World 1 196.35 6.9 699

Volendam 13 238 8.3 1840

Voyager of the Seas 5 311 8.8 3838

There are a range of vessel sizes projected to call at Melbourne. They can be loosely grouped into the following categories:

Table 19 Vessel sizes

Ship Categories Length (m) Beam (m) Draft (m)

Boutique <260m Varies up to 8.0m

Midsize 260 - 295 32.2 Varies up to 8.0m

Mega 310 - 340 47 – 56m 8.0 – 10.0m

Within each category are the following vessel numbers:

Table 20 Vessel numbers

Ship Categories Vessel Numbers

Boutique 19

Midsize 7

Mega 11

The Permanent International Association of Navigational Congresses (PIANC) is a widely used reference for the preliminary design of shipping channels. PIANC provide guidance on specifying a channel width according the particular environmental and operating requirements. Following this procedure the recommended channel width for conditions at Geelong is 2.5B, where B = the ship beam (width).

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PIANC also provides design guidance on a recommended channel depth for the particular environmental and operating conditions. However without knowledge of the seabed conditions, a rule of thumb guideline is to allow a minimum 10% of the maximum draft as the underkeel clearance. Drafts of the various vessel categories vary depending on the ship. Sources including the Clarksons Shipping database and cruise line websites have been used to verify applicable drafts and are considered to be reasonable ranges for use to develop a business case. For design, further investigation would be recommended.

Accordingly the recommended channel widths and depths are:

Table 21 Channel width and depths

Ship Category Beam (m) Channel Width (m) Channel depth (m)

Boutique 32.2 80

Midsize 32.2 80 9.0

Mega 47 - 56 120 - 140 10*

* based on the vessel mix, there is only one vessel, the Queen Mary 2 which has a draft of greater than 8.8m. It is assumed that a 10m channel depth will be sufficient for Geelong into the future given the low number of vessels with a deeper draft.

Typically the ship can be turned in the Hopetoun Channel and reversed down the access channel into the proposed Yarra Street Pier berth by tugs, or else enter the access channel and then be turned around closer to the berth at a designated swing basin, again all with tug assistance.

Concept sketches provided by the VRCA show the latter arrangement, and hence GHD has adopted the latter type of layout i.e. with the swing basin close to the berth.

PIANC recommend that the swing basin diameter be 1.8 times the ships length in order to provide reasonable room for tugs to turn the ship.

Accordingly the recommended swing basin diameters are as follows:

Table 22 Swing basin diameters

Ship Category Length (m) Swing Basin Diameter (m)

Boutique <260 Varies

Midsize 260 - 295 470 - 520

Mega 310 - 340 560 - 615

In order to create the shipping channel and turning basin described above, there is a need to undertake dredging to achieve the required depth of water.

Considering the initial design completed by the VRCA and modified by GHD to reflect the location of the Lightning, the likely dredging volumes for the different cruise ship classes are as shown in Table 23

Table 23 Dredging Quantity

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Ship Category

Dredge Quantity Midsize 120,000 – 150,000

Mega 400,000 – 600,000

Given the significant difference in dredging volumes between the mid-size and mega cruise ships, it is proposed that this business case will consider dredging for a mid-size vessel only.

It has been assumed that the structure will be designed for the deepest draft requirements (ie 10m) and largest vessel so as in the future, if dredging is required, then the wharf doesn’t need to be retrofitted in some way. The cost of this is likely to be relatively small with the main impact on the design being the pile size that is adopted – the cost to supply piles will increase as a result of a likely larger pile.

8.2 Ship Services

PowerThe practice of using shore supplied power in port is called “cold ironing”. Although cruise ships cold iron in environmentally sensitive areas, it is not common practice to do so especially when the ship is only in port for a day with no overnight stay. From a cost standpoint, most ships generate their own power requirements burning between 2 to 4 metric tonnes of fuel per hour for ‘Hotel” consumption, which is usually cheaper and more convenient than buying and arranging shore power. Hence shore power is non-essential and would not need to be offered.

FuelAssuming the ship will have called at Sydney or Melbourne and bunkered at one of these ports, then fuel will probably not be required at Geelong. If there is a requirement for fuel, the bunker barge “Zemira” of 3800 tonnes dwt (managed by ASP Ship Management) can service the cruise ship.

Sewerage Although ships can store and treat their black and grey water, the ability to dispose of these products to shore can be attractive subject to cost and convenience of connections. Typically the volume is not an issue as these products go straight to the town sewer system and would comprise approximately 500 tonnes per ship.

Potable WaterGood quality potable water may be an attractive proposition but would depend very much on whether the ship had or was about to call into a nearby port such as Melbourne or Sydney. The requirement would be approximately 1000 tonne which implies supply by pipeline would be necessary rather than by tanker.

Fire fightingWill be an essential service to be designed into the terminal and will include pumps, hydrant outlets, towers and a specified water pressure and rate of supply.

CommunicationsA Wi-fi service is desirable for guests, crew, statutory and administrative use.

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8.3 Customs and Border Security RequirementsThe customs and border security arrangements for transit vessels are less stringent than those required for vessels which would be using Geelong as a home port or are calling at Geelong as the first Australian stop from an international port (neither of which are predicted to occur in the short-medium term). For transit vessels, there are no customs requirements.

The critical element of a cruise ship visit is the requirement to have a 50m exclusion zone around the vessel. As discussed previously, for the single cruise ship berth on the west side of Yarra Street Pier on the historic alignment, the 50m exclusion zone can be achieved without impinging on the Royal Geelong Yacht Club or other fixed infrastructure.

If it was proposed to develop two parallel berths for cruise ships on either side of the pier, the new pier would need to be realigned to run parallel with Yarra Street to achieve the 50m exclusion zone around both vessels.

Given that the vessel calls at Geelong will have been preceded by calls at other Australian ports, vessel security arrangements will need to be in place – these can be erected in a temporary manner for the duration of the vessel call as is currently practiced at Geelong.

There may be a requirement for AQIS inspections if the vessel is calling at Geelong from interstate. Again, these requirements can be managed in a temporary manner for the duration of the vessel call.

8.4 Pier/land InterfaceA critical element of the cruise ship experience for passengers is the ease with which they are able to disembark from the vessel and link up with their tour bus. Generally, there is a need for departing buses to be within 200-300m of the vessel (i.e. a relatively short walk especially for elderly people, noting that specific arrangements can be made for those passengers that have limited mobility).

As the authority with responsibility for the road network around Yarra Street Pier, the CoGG can carry out reasonable actions to manage cruise ship related (buses, taxis, hire cars) and normal day-to-day traffic around Yarra Street Pier.

For the parking of tour buses, the creation of queuing for taxis and hire cars, it could be possible to close off Eastern Beach Road between say Moorabool and Bellerine streets.

Previous visits have generated 6-8 buses at Cunningham Pier and they have been reverse angle parked in the carpark onshore from Cunningham Pier to enable them to depart quickly. A similar arrangement could be possible at Yarra Street Pier (i.e. park out the front of Le Parisien/Fishermans Pier).

If there were additional buses, they could be queued in a closed off Eastern Beach Road and people either walk to them (an extra 100m) or they could move them into the holding bay as other buses depart.

The interface of passengers on foot and those departing in vehicles will need to be managed for each visit. This will result in management plans being developed and implemented. The planning will vary depending on the number of passengers on each vessel and the percentage that are undertaking each activity.

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8.5 Cruise Ship TerminalRecent feedback from cruise ship operators has confirmed that currently, for visits to Geelong, temporary facilities, which would provide shelter to passengers in the event of difficult weather would be sufficient. Typically, CoGG provide these sorts of facilities to cruise ships that call at Geelong now.

The jetty as proposed provides the capacity, via an allowance for an additional 1200 square metres of deck area, to construct a more permanent structure at some stage into the future, should demand be sufficient for this.

8.6 Other infrastructure on the PierThe preferred proposal (like Options 1 and 2) includes an allowance for lighting, handrails and 240V power in the scope of work. There is little other infrastructure or enhancements that have been allowed for in the scope of work.

8.7 Additional Berths at RGYCThe water area between the Yarra St Pier and the west side of the RGYC marina is the focus area. To protect this area the additional works required would be as follows:

Construct a fixed or floating wavescreen across the northern gap between the pier and marina, allowing sufficient overlap with the marina but still enough fairway width for yachts to enter / exit the marina from Corio Bay; and

Construct a wave barrier along and under the eastern edge of the Yarra St Pier. Subject to design this would need to only extend from approximately +2m to -3m to provide the desired degree of protection.

The proposal includes for a 90m wave screen as described above, the wave protection, a floating pontoon for public berthing on the eastern side of Yarra Street Pier and 47 additional berths in RGYC.

8.8 Strategic and Statutory Planning

A desktop review regarding Yarra Street Pier did not reveal that any applicable planning permits. Discussions with the CoGG confirmed that no planning permits have been issued for the Yarra Street Pier since is destruction by fire in 1988. The discussions also confirmed that there were no current planning permits of development proposals for the adjacent Cunningham Pier which may have implications for the reconstruction of Yarra Street Pier.

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8.8.1 Review of City of Greater Geelong Planning Scheme

A high level review of the City of Greater Geelong Planning Scheme has been undertaken to establish what strategic policy support may exist in relation to the reconstruction of the Yarra Street Pier. From this review Clause 21.09 Central Geelong is noted to be the most relevant. This Clause contains a number of high level objectives and strategies which broadly inform, and provide support for the consideration of any reconstruction of Yarra Street Pier. Relevant sections include:

Objectives

To support development of Central Geelong as an international waterfront city with world class facilities that is a highly desirable place to live;

To ensure the land use precincts are strengthened in accordance with their identified roles in the Structure Plan map at Clause 21.09-4.* (* note: Yarra Street Pier is noted to being within the Waterfront Precinct);

To ensure the activity clusters are strengthened and support their expansion in accordance with their identified roles in the Structure Plan map at Clause 21.09-4;

To maintain and enhance public access to the waterfront.

Strategies

Within each of the land use areas of the Central Geelong Structure Plan map at Clause 21.09-4, strengthen key activities and appropriate ancillary activities, such that the land use areas support and complement each other and reinforce and strengthen the primacy of Central Geelong as the business and cultural centre for the Geelong region.

A number of other strategic planning reports for the area address the reconstruction of the Yarra Street Pier. They are discussed in Appendix G.

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8.8.2 Review of existing zone and overlay controls

The area proposed to accommodate the redeveloped Yarra Street pier is predominantly located within the Public Park and Recreation Zone (PPRZ), except for a small area of former pier located at the waterfront edge which is within the Special Use Zone Schedule 2 (SUZ2). It is further noted that no overlay controls apply to the anticipated project area. Within the vicinity of the subject site the City of Greater Geelong municipal boundary is noted to be located along the shoreline.

The proposed works, including the proposed pier and the associated dredging (both adjacent to the proposed pier and within the existing shipping channel) is understood to occur on Crown Land, noting that the Crown Land state limit extends to 5.5 kilometres offshore.

Review of titles for the area and land tenure arrangements

A review of the titles for the areas illustrates a current Crown Land lease that the City of Greater Geelong holds for the subject site and surrounds, which includes both areas of land and water. As the proposed pier design may extend over the water beyond the current lease area, an amendment to the existing lease area would be required.

Likewise as proposed works will be located on Crown Land, extinguishment of Native Title should be investigated.

Review of land use definitions

The reconstruction of the Yarra Street pier to accommodate cruise ships would likely be defined as a ‘wharf’ under the City of Greater Geelong Planning Scheme. A ‘wharf’ is included within the ‘Transport Terminal’ umbrella land use, with a ‘wharf’ being specifically defined as: “Land used to provide facilities for ships, such as bulk and container ships, passenger ships, and defence force marine craft”.

From an initial review of the planning permit triggers of the PPRZ, it is noted that a ‘transport terminal’ is a Section 3 ‘prohibited use’. As a ‘transport terminal’ includes a ‘wharf’, the proposal for the Yarra Street pier is technically prohibited by the current PPRZ. Accordingly in order to facilitate the development of the Yarra Street pier, a planning scheme amendment would be required to rezone the area to accommodate the pier to an appropriate zone. This is addressed in greater detail below.

Identified statutory approvals

From a review of the City of Greater Geelong Planning Scheme and relevant strategic planning documents, it is clear that there is specific high level strategic support for the reconstruction of the Yarra Street pier. However a range of approvals are likely to be required to facilitate the proposed reconstruction of Yarra Street Pier. Following below is a high level summary of likely issues and approvals which are required to be investigated and appropriately addressed through the later detailed design.

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Combined Planning Scheme Amendment and Planning Approvals

The reconstruction of the Yarra Street pier (defined as a ‘wharf’) is currently prohibited by the PPRZ;

In order to facilitate the development of the Yarra Street pier, a planning scheme amendment would be required to rezone the area to accommodate the pier to an appropriate zone;

The SUZ2 is suggested as potentially appropriate zone, where a ‘wharf’ is a Section 2 ‘permit required’ use;

Alternately the Priority Development Zone (PDZ), Special Use Zone (SUZ) or Comprehensive Development Zone (CDZ) could be potentially appropriate zones, to allow the zone schedule to be specifically tailored to the Yarra Street pier reconstruction. The most suitable zone to facilitate the development should be further investigated and confirmed once the full details of the overall concept are known;

There are a range of amendment mechanisms which can be utilised to facilitate the rezoning of land. This includes: an amendment to rezone the land whilst including appropriate planning permit exemptions; a combined planning scheme amendment and planning permit proposal; and a Ministerial Amendment (if the project can be justified as being of state significance). The most appropriate amendment mechanism to facilitate the development should be further investigated and confirmed once the full details of the overall concept are known.

Potential Environment Approvals/ Issues

It is understood that the CoGG hase commenced investigation regarding the potential requirement for an Environmental Effects Statement (EES) and have received advice from the Department of Planning and Community Development (DPCD) that they are satisfied that no referral is required for an EES. Earlier proposals didn’t include dredging and whilst an EES shouldn’t be required with the volume of dredging proposed for this development, DPCD should be consulted again on this issue;

It is understood that the CoGG have commenced investigation regarding the potential requirement for Coastal Management Act Consent and have received advise from the Department of Sustainability and Environment (DSE) that as the CoGG are the project applicant, DSE would have no issue providing CMA consent outside the current committee of management boundary;

It is understood that the CoGG have commenced investigation regarding the potential revision of the committee of management boundary, where DSE have provided agreement in principle that the boundary would be revised upon completion of the approvals process;

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It is understood that additional dredging of the existing channel and adjacent to the proposed Yarra Street pier will be required to facilitate cruise ship access. It is further understood that this dredging will require disposal of dredged material, some of which may be contaminated. A range of environmental approvals are likely to be required for both dredging and disposal and should be further investigated and confirmed once the full details of the overall concept are known.

Potential Aboriginal Cultural Heritage Approvals/ Issues

Further detailed design of the proposal is required to be able to specifically assess regarding statutory obligations in relation to Aboriginal Cultural Heritage;

Whilst coastal land locations can trigger requirements for mandatory Cultural Heritage Management Plans (CHMP) under r 27 and r27 (coastal land) activities associated with jetties and the sea-bed may be exempted (r 17 and r 18).

Potential Historical Heritage Approvals/ Issues

Until the design is undertaken the exact requirements regarding statutory obligations in relation to Historical Heritage requirements cannot be confirmed with absolute certainty - Heritage Act 1995 (Act 1995), the Archaeological and Aboriginal Relics Preservation Act 1972 and Historic Shipwrecks Act 1979 were reviewed in relation to the proposed project;

A check of Historical/European overlays on Geo Vic identified the Yarra Street Pier and the shipwreck ‘Lightning’ to be located within the vicinity of proposed works. Historical Significance associated with the Yarra Street Pier has the pier listed on the Heritage Inventory;

Approval of Heritage Victoria is required to disturb an historical archaeological site or relic, which includes the listing of the Yarra Street Pier on the Heritage Inventory.

There is a likelihood that a permit would be required relating the Lightning shipwreck which is listed on the Victorian Heritage Register, due to the potential prohibited activities within restricted zones associated with Shipwrecks. Permit requirements would need to be confirmed upon detailed design and exact requirements together with additional details and information relating to the shipwreck. In addition permits for exploration or recovery of shipwrecks and relics may be required.

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9. Project Costs and Cashflows

For the preferred project scope (i.e. Option 3 being 260m long jetty, marina protection, additional marina and dredging), the estimated costs are as follows:

Table 24 Capital Costs – Preferred Option

Option 3 - Cruise Ship Jetty with Marina ProtectionItem CostLarge Ship Jetty $ 18,400,000 Safe Harbour Protection $ 6,900,000 Marina Development $ 2,200,000 Public Floating Pontoon $ 2,400,000 Dredging27 $ 3,300,000

TOTAL (Option 3) $ 33,200,000

Further details of the cost breakdown are provided in Appendix H.

The above costs include allowances for site investigations for the dredging works, the contractors preliminaries and supervision, contractor margin, engineering, project management and contingency, but exclude costs for approvals.

The above costs exclude dredging costs for an access channel and any services other than basic pier lighting, 240v basic power and potable water.

Dredge costs have been assumed based on previous GHD experience for similar size projects at $11 per cubic metre, which assumes “easy” dredging, minimal hard materials, no contaminated materials or special dredging, handling or disposal requirements. To this cost based on rates should be added an approximate $1m for establishment and demobilisation (mob/demob). Realistically a similar large amount should be added for studies and approvals (Preliminaries), and for this project we have assumed $1m. In addition, it has been assumed that this dredging would take place independently of other dredging that could be undertaken in Corio Bay. (Opportunities exist to link to other dredging projects, there by potentially reducing costs, as outlined in Table 25).

27 The cost of dredging allowed assumes minimal dredging

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For Layout 2 (From just west of the No 14 Hopetoun mark, then via 3 legs SW, S to a turning circle and S to Yarra St Pier.), the estimated dredging costs are:

Table 25 Dredging Costs

Ship Categories

Dredge Quantity(m3)

Cost at rates($m)

Mob/Demob ($)

Prelims($)

Total Cost ($m)

Mid-size 120,000 $1.3 $1m $1m $3.3

VRCA completed some preliminary investigations into the type of material that would be dredged in deepening the approach channel and turning basin for cruise ships. The findings show that material to be dredged from around Yarra Street Pier may be unsuitable for unconfined marine disposal and will require additional testing. The material to be dredged in the City Channel appears suitable for unconfined marine disposal, though additional testing will be required to confirm this.

The initial conclusions from the sediment testing further reinforce the preferred channel alignment of approaching in the City Channel to Yarra Street Pier. It is likely that some material that will need to be dredged around Yarra Street may not be suitable for unconfined marine disposal (subject to further testing as above).

VRCA has suggested that an allowance of USD15 per cubic metre be allowed for dredging in Corio Bay. Discussions have also been held with the VRCA regarding the possibility of coordinating any dredging required with an upcoming VRCA campaign. Such an approach may result in some efficiencies, through reducing mobilisation/demobilisation costs of a dredge.

The VRCA has advised that siltation in the Geelong channels is negligible.

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9.1 Capital Cost Estimates - Non-preferred optionsThe capital cost estimates for the non-preferred options are shown in summary below.

Table 26 Capital Cost Estimates

Option Description Capex

1 Reinforced concrete pier 224m x 8m wide for recreational vessels only. $8.6m with 20% contingency.

2 Reinforced concrete pier 224m x 8m wide for recreational vessels only. With 220m wave screen and wave attenuator to provide tranquil wave conditions between Yarra St Pier and RGYC marina.

$18.6m with 20% contingency

The above costs include allowances for the contractor’s preliminaries and supervision, contractor margin, engineering, project management and contingency, but exclude costs for approvals, and site investigations.

The above costs exclude dredging costs for an access channel and any services other than basic pier lighting, 240v basic power and potable water.

The difference in cost between Options 1 and 2 is due to the safe harbour protection, marina development and public floating pontoon elements in Option 2.

Further details are provided in Appendix H.

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10. Procurement strategy

Section 10 outlines the proposed Procurement Strategy for the project.

The key construction project elements are:

1. Jetty;

2. Safe Harbour Protection;

3. Marina Development;

4. Public Floating Pontoon;

5. Dredging

It is proposed to package the elements as follows:

Package A: Jetty Safe Harbour Protection and Public Floating Pontoon (items 1, 2 and 4)

Package B: Marina Development (item 3)

Package C: Dredging (item 5)

The works for Package A comprise around $27.7m worth of work and all of the works are on or connected to the new Yarra Street Pier. Therefore it is proposed that these works would be delivered by CoGG. The procurement strategy for these works is discussed below.

The works for Package B, the marina development are within the Royal Geelong Yacht Club and as such it is proposed that RGYC will manage the delivery of this. The typical approach for delivering a marina is via a design and construct contract.

The dredging works, Package C could be delivered either by CoGG, likely under a separate contract to Package A or by the Victorian Regional Channel Authority, under agreement with CoGG. If the VRCA is already doing the dredging in a similar timeframe to that required for this project, then this would be preferred.

10.1 PurposeDeveloping a procurement strategy for Package A that takes into account consideration of the project characteristics will help in several areas in delivering the project including:

Accurate costing;

Elimination of optimism bias;

Risk identification and management; and

Sound project management.

10.2 ApproachThis analysis will go through the following process to determine a preferred procurement approach:

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Key objectives of the Procurement Strategy;

Assessment Issues;

Risk Analysis;

Government experience;

Analysis of options against Assessment Issues; and

Recommendation.

10.3 Key Objectives of the Procurement StrategyThe key objectives of the Project Procurement Strategy are:

To ensure all outputs are delivered to the quality required, within the specified timeframe and within the project budget;

The delivery method will minimise any disruption to the surrounding environment, users and business;

To ensure that the various stakeholder inputs are managed effectively;

To allocate risks appropriately;

To ensure value for money outcomes for the State.

10.4 Suitability AssessmentThis initial assessment considers project objectives and parameters to determine the suitability of the listed procurement methods. This initial assessment has identified 5 options suitable for further consideration.

Table 27 Procurement Methods Assessment

Procurement Model Assessment Result

Construct Only Default procurement option.

Can be used to achieve project objectives.

Project parameters suit the model.

Suitable

Design & Construct Can be used to achieve project objectives.


Suitable

Design, Construct & Maintain Can be used to achieve project objectives.


Suitable

Managing Contractor Can be used to achieve project objectives.

(The proposed solution is clear, most risk can be identified and level of innovation required is standard)

Not suitable

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Procurement Model Assessment

Result

Construction Management Can be used to achieve project objectives.


Suitable

Alliance The profile of the project does not suit this procurement model.

Project parameters do not suit the model (The proposed solution is clear, most risk can be identified and level of innovation required is standard).

Not suitable

Partnerships Victoria / Design, Construct, Maintain and Finance

Key project characteristics do not meet Partnerships Victoria Guidelines.

Not suitable

77


10.5 Project Specific AssessmentThe following project attributes will be assessed for the short listed approaches (note, individual attributes have assigned different weightings for each project, depending on the project requirements):

Understanding of Project Requirements and Specifications;

Time Certainty;

Cost;

Innovation;

Project Complexity;

Risk Understanding and Transfer; and

Supplier Base.

Table 28 below provides a relative assessment of the procurement options (e.g. ranks the option relative to each other) It is based on the interim project assessment, where:

Green denotes procurement method that suits the specific project attribute

Amber indicates that a particular procurement method will not a direct impact on the specific attribute

Red indicates that a particular procurement method could have adverse impact on the specific attribute

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Table 28 Procurement Assessment

Attribute

Assessment Considerations

Weighting

Construct Only (Design then Construct)

Design and Construct

Design, Construct and Maintain

Construction Management

Understanding of Project Requirements and Specifications

How well defined are the overall desired project requirements and specifications?

Has there being a similar project done recently that could be used as a ‘blueprint’?

To what degree have all the key stakeholders endorsed the project requirements and specifications?

Are project requirements and specifications in line with the client and sponsors strategic aims?

20% Green

Project is fully scoped and requirements well understood.

Green

Project is fully scoped and requirements well understood.

Green

Project is fully scoped and requirements well understood

Green

Project is fully scoped and requirements well understood

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Attribute Assessment Considerations Weighting





Time Certainty

How critical is time certainty?

15% Green

Linear implementation process that requires additional time for design tendering process.

However, CoGG has in-house capabilities which will see this process accelerated.

Early works package (site preparation works) can be undertaken.

Green

The contractor has full control of the timing for design and construction carries the ‘time’ risk.

Controls procurement of long-lead items

Green

The contractor has full control of the timing for design and construction carries the ‘time’ risk.

Controls procurement of long-lead items

Amber

Does not contribute to the time certainty attribute.

Cost How critical is cost certainty? 15% Green

Estimated construction cost will be well established before the construction tender, based on the detailed design.

Amber

Contract awarded before the documentation is completed and therefore less control over the cost certainty.

Amber

Contract awarded before the documentation is completed and therefore less control over the cost certainty.

Red

Limited ability to control cost

80







Innovation

How innovative do we need to be?

Does the project pose specific technical challenges?

Issues of design versus constructability?

5% Amber

Opportunity to introduce innovation through design.

Green

Able to synchronise design and constructor’s input.

Allows for early works.

Green

Able to synchronise design and constructor’s input.

Allows for early works.

Amber

Opportunity to introduce innovation through design and constructability (not integrated)

Project Complexity

How well is the delivery of the project understood?

How well is the process for delivery understood?

How well do we understand the various interfaces required for delivery?

How well do we know the external influences on delivery?

How well can we describe the project we want?

Have we undertaken similar project in the past?

15% Green

Relatively straightforward project that is well understood.

Amber

With limited complexity of the project, the advantages of this model are minimal.

Amber

With limited complexity of the project, the advantages of this model are minimal.

Red

With limited complexity of the project, the advantages of this model are minimal and additional cost is unwarranted.

.

81







Risk Understanding and Transfer How well do we understand

the risks to delivering the product?

Has a risk analysis been prepared?

How much risk are we prepared to retain?

How much risk do we want to pass to the supplier?

15% Amber

Standard project risks. CoGG will not be able to effectively transfer some of the risks (stakeholder and operational risks) and is best to manage them directly.

Green

CoGG may shift some of the project risks to the contractor.

Green

CoGG may shift some of the project risks to the contractor.

Amber

Standard project risks. CoGG will not be able to effectively transfer some of the risks (stakeholder and operational risks) and is best to manage them directly.

Supplier Base How well do we understand the current market?

How well do we understand the future market?

How well do we know our potential suppliers?

How many suppliers do we want to deal with?

Does our supply chain have the capability to deliver the product?

How many tenderers can we expect to have?

15% Green

Market is well versed in construction delivery under this model.

This model provides better direct opportunities for regional contractor involvement.

Amber

Market is well versed in construction delivery under this model.

Red

There could be a limited number of local companies willing to tender under this model due to the specialised nature of the operational environment.

Red

There could be a limited number of local companies willing to tender under this model due to the specialised nature of the operational environment.

82


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10.5.1 Assessment

Table 29 outlines scores for the individual procurement options.

Table 29 Assessment of Procurement Options

Attribute

Wei

ghtin

g

Con

stru

ct

Onl

y (D

esig

n th

en

Con

stru

ct)

Des

ign

and

Con

stru

ct

Des

ign,

C

onst

ruct

and

M

aint

ain

Con

stru

ctio

n M

anag

emen

t

Understanding of Project Requirements and Specifications

20% 2 2 2 2

Time Certainty 15% 2 2 2 1

Cost 15% 2 1 1 0

Innovation 5% 1 2 2 1

Project Complexity 15% 2 1 1 0

Risk Understanding and Transfer 15% 1 2 2 1

Supplier Base 15% 2 1 0 0

Total Weighted Score 100% 1.8 1.55 1.4 0.75

10.5.2 Summary

Based on the above assessment, the project would be best delivered under the CONSTRUCT ONLY (DESIGN THEN CONSTRUCT) procurement model for the following reasons:

The CoGG in-house project delivery team has an in-depth understanding of the operational environment and has established local networks;

Projects of similar scale have been successfully delivered by the in-house project delivery team. The requirements and processes are documented and well understood. This will contribute to the accelerated delivery of the project;

The Project allows for early work package implementation, effectively mitigating any delays caused by the linear implementation of the processes;

The project is of low technical complexity and its scope is well defined;

The model allows for close cost control and management.

Alternatively, CoGG may also consider a Design and Construct model where the risk of latent conditions could effectively be managed by a contractor.

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11. Funding Strategy

During the construction of the project, the likely cashflows are shown in the top line of the Table 30. The proposed funding sources are as follows:

Table 30 Capital Expenditure

2012/13 2013/14 2014/15 Total

Project Cashflows $3.0m $21.0m $9.2m $33.2m

Funding – CoGG $3.0m $2.0m $0m $5.0m

Funding - RGYC $0m $2.5m $0m $2.5m

Funding – State Government

$0m $17.5m $9.2m $26.7m

Total additional funding required

$0m $0m $0m

Note: figures shown are in today’s dollars.

The funding sources are based on commitments already made by CoGG and RGYC with the remaining funding sought from the Victorian Government.

The estimated operating costs are shown in Table 31:

CoGG is committed to these ongoing costs.

Table 31 Operational Expenditure for CoGG

Maintenance $133,000 per annum for first five years of operations

$266,000 per annum for remainder of assessment

Cruise Ship Visits $29,000 per visit

Navy Ship Visits $20,000 per visit

Additional 1 FTE $100,000 per annum

Note: figures shown are in today’s dollars.

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12. Stakeholders

12.1 Stakeholder ManagementThis section of the document provides a brief outline of relevant project stakeholders. Project stakeholder categories are defined as follows:

SponsorsSet direction and policy content for the project. Sponsor’s support and alignment is critical to the success of this project. Sponsors endorse all key decisions and review all external communication.

Primary UsersMust be consulted on all relevant aspects of the project development. Primary users have direct access to the project team.

PartnersContribute to the project development. Partners have to be consulted on the design aspects of the proposal. Partners contribute to the relevant aspects of external communication. Partners have direct access to the project team and receive project updates.

Secondary StakeholdersHave some interest in the Yarra Street Pier Reconstruction. Secondary stakeholders are informed on the key milestones of the project development and consulted on relevant aspects of the project development.

12.2 ConsultationThis business case was prepared with consultation by GHD and/or CoGG with the following stakeholders:

Table 32 Stakeholder List

Stakeholder List

Carnival Paul Mifsud Central Geelong Marketing Jodie Smith-Reyntjes

City of Greater Geelong Bec Casson

City of Greater Geelong Andrew Ross City of Greater Geelong Keelie HamiltonCity of Greater Geelong Felix HemingwayCity of Greater Geelong Terry Demeo City of Greater Geelong Dean Frost City of Greater Geelong Steve Bentley

Colac Otway Shire Rob Small

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Stakeholder ListCommittee for Geelong Peter DorlingCosta Property Group Carl Schokman

Cruising Down Under Ms Chris WhiteDepartment of Business & Innovation Anna Georgalis

Department of Business & Innovation Louise Dahlenburg

Department of Transport John ClareboroughDepartment of Transport Maggie BaronDepartment of Transport Sonja BertottoDepartment of Transport Glen ForsterG21 Elaine Carbines

Geelong Otway Tourism Brett InceGeelong Otway Tourism Roger GrantGolden Plains Shire David SpearQueenscliff Borough Council Lennie JennerRegional Development Victoria Diana TremigliozziRegional Development Victoria Yogeeta Silva

Royal Australian Navy Commander Graeme Furlonger, Staff Officer Fleet Operations

Royal Caribbean Gavin Smith, Managing Director, / Adam Armstrong – Commercial Manager

Royal Geelong YC Phil ClohessySurf Coast SC - Economic Development Neil NoelkerTourism Victoria Bill Renehan

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13. Risk Management

13.1 Risk Assessment MethodologyA Risk Assessment was undertaken using a methodology consistent with Australian Risk Management Guidelines (AS/NZS 4360:2004) and using the State Government’s Risk Management Framework.

The consequence table incorporates the risk rating for business continuity and risk ratings taken from the Risk Management Guidelines, as well as the categories and definitions of likelihood used in the risk assessment are provided in Appendix I.

Using support materials such as existing risk assessments developed for the business case and risk assessments from other similar projects, the assessment focussed on capturing the major risks at each project phase of the project.

13.2 Top five risksA detailed risk assessment is provided in Appendix I. The five major risks identified for the preferred option and the proposed mitigation and risk management strategies are presented in Table 33.

Table 33 Top five risks



Residual Risk

Unexpected ground conditions for dredging of the approach channels in regards to geotechnical properties

4. High Undertake geotechnical investigation 3. Significant

Dredge material is contaminated

4. High Undertake sediment sampling and testing in accordance with relevant guidelines and regulations

3. Significant


4. High Thorough investigations completed

Proactive engagement with approval authorities

Adopt learning’s from previous approvals (e.g. Port Phillip Channel Deepening Project)

Current VRCA approvals

3. Significant

Cruise ship growth is below expectation

4. High Ensure diverse/multi-use of the proposed facility

3. Significant

Cruise ships opt for alternative existing or future ports

4. High CoGG actively promotes the destination

Consult with the operators during the

3. Significant

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Residual Risk

design phase to meet expectations

Ensure commercial and service offering is competitive

89


14. Implementation

14.1 Governance and ResourcingThe governance arrangements for the Yarra Street Pier RReconstruction are proposed around the premise that CoGG will be the proponent of the project given that the Yarra Street Pier, when constructed, will be managed by the CoGG. As proponent, CoGG has overall responsibility for the successful delivery of the project and its ongoing operation as a public and cruise ship facility.

As is outlined in section 10, there are packages of the overall project, namely the dredging and the development of additional marina berths that will be undertaken by other parties, namely the Victorian Regional Channels Authority and the Royal Geelong Yacht Club respectively.

Beneath CoGG as proponent, governance arrangements for the project will vary depending on the stage of the project and are outlined below.

14.1.1 Project Development, Construction and Commissioning

During the project development, construction and commissioning phase, it is proposed that CoGG would form, and chair, a Steering Committee which provides strategic input and advice to CoGG regarding the overall direction of the project, and a monitoring and oversight role for the project.

Members of the Steering Committee would likely include:

CoGG;

Department of Transport;

Regional Development Victoria;

Tourism Victoria;

Victorian Regional Channels Authority;

Royal Geelong Yacht Club.

This composition provides the opportunity for key stakeholders to be involved, ensures the commitment of these organisations and enables a range of different skills and experiences to be utilised on the project.

The tasks/involvement of the Steering Committee would likely include:

Review of strategies, plans and documents produced during the development of the project;

Monitor the project program, costs, key risks and stakeholder involvement;

Receive advice from external bodies and organisations.

Within CoGG it is recommended that the following roles are resourced to deliver the project:

A dedicated Project Manager with infrastructure project delivery experience to manage/oversee the project;

90


A small team of project officers/administrative staff to support the Project Manager;

Resource allocation within CoGG to support the project team and ensure its integration into the broader council business at the completion of construction and commissioning.

14.1.2 Operation

During operation, the Yarra Street Pier is substantively a public facility with periodic visits from cruise ships and other vessels.

As such, CoGG would operate and maintain the Pier as it would any other public asset under its control or ownership, calling on the involvement of other organisations on an as needed basis.

The likely increase in recreational vessel visits may require the need for some operational changes along the waterfront including systems for managing recreational vessels which berth at the Pier. An internal team within CoGG, with some external assistance from relevant government agencies, will be required to manage this change and its ongoing implementation.

In regards to cruise shipping and other large vessel visits (eg Naval visits), CoGG will need to have an internal team which is responsible for working to attract cruise ships to Geelong, and then provide the services required to service and support the cruise ships once they are at Geelong. These functions are already provided within CoGG – given the new facility, additional resources may need to be devoted to these tasks, especially as the cruise ship visits grow into the future.

14.2 Project TimelinesIn the next phase of the project, a detailed implementation plan should be developed which will include a detailed construction program.

Based on the scoping and analysis that has been completed in the business case, the following timelines are proposed for the project (assuming budget allocation for FY2012/13):

Project Development and Design Phase – July 2012 – June 2013

Key tasks are as follows:

Geotechnical investigations and sediment testing;

Preliminary design of the works;

Obtain planning and environmental approvals for the works;

Update project budget;

Prepare detailed designs for the works;

Prepare construction documents and contracts;

Stakeholder consultation;

Prepare contracts/agreements with VRCA and RGYC for delivery of their components of the works

91


Construction and Commissioning Phase – July 2013 – December 2014

Key tasks are as follows:

Tender the various work packages;

Mobilise contractor(s);

Undertake construction works;

Commissioning;

Project handover

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Appendix A

Letters of Support for Large Ship Facility


Appendix B

Evaluation of Strategic Options


Options Title

A Business as usualB Dispersal of activitiesC Recreational jetty onlyD Recreational jetty with marina protectionE Redevelopment of Cunningham PierF Large ship jetty with marina protection

Evlauation Criteria

Primary Criteria# Name Weighting1 Contribution to Benefits 55% Refer to ILM for defined problems2 Deliverability 25%3 Value for Money 20%

Total 100% OK

Primary Criteria 1 Contribution to BenefitsSecondary Criteria Name Weighting

1.1 Greater economic returns for the State 55% Refer to ILM for description and weightings1.2 Improved profile of port Phillip Bay as a marine destination 20%1.3 Improved liveability and profile as Waterfront City 25%

Total 100% OK

Primary Criteria 2 DeliverabilitySecondary Criteria Name Weighting

2.1 Stakeholder issues 20%2.2 Project risk profile 80%

Total 100% OK

Primary Criteria 3 Value for MoneySecondary Criteria Name Weighting

3.1 Cost 0% Considered as part of BCR3.2 BCR 35%3.3 Economic Impact 65%

Total 100% OK


-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Final Assessment Score Contribution to Benefits Deliverability Value for Money

Business as usual Dispersal of activities Recreational jetty only Recreational jetty with marina protection Redevelopment of Cunningham Pier Large ship jetty with marina protection


OptionsOption 1 Option 2 Option 3 Option 4 Option 6 Option 6Business as usual

Dispersal of activities

Recreational jetty only

Recreational jetty with marina

Redevelopment of Cunningham

Large ship jetty with marina

Primary Weighting

Secondary #

Secondary Weighting Secondary Criteria

Tertiary Weighting Tertiary Criteria Question

Evalaution Scale

Scale - description

Measurement / Indicators

Contribution to Total Score

100.00%

FINAL ASSESSMENT -0.73 0.05 0.55 1.03 0.53 1.82

1Contribution to Benefits 55.00% Weighted Score (Primary) 55.00% -1.10 0.30 0.73 1.20 1.18 2.00

1.1 55.00% Greater economic returns for the StateWeighted Score (Secondary - out of possible 2) 30.25% -2.00 1.00 0.50 1.00 1.50 2.00

50% Growth in tourism related expenditure -2 to 2

-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Describe 8.32%

Score -2.00 1.00 1.00 1.00 2.00 2.00Weighted Score (Tertiary) -1.00 0.50 0.50 0.50 1.00 1.00

50% Growth in tourism related employment -2 to 2

-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Describe 8.32%

Score -2.00 1.00 0.00 1.00 1.00 2.00Weighted Score (Tertiary) -1.00 0.50 0.00 0.50 0.50 1.00

1.2 20.00% Improved profile of port Phillip Bay as a marine destination Weighted Score (Secondary) 11.00% 0.00 0.00 1.00 2.00 0.50 2.00

50% Increased maritime traffic in Corio Bay -2 to 2

-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact % 3.03%

Score 0.00 0.00 1.00 2.00 1.00 2.00Weighted Score (Tertiary) 0.00 0.00 0.50 1.00 0.50 1.00

50%Diversification of experience at the waterfront -2 to 2

-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact % 3.03%


1.3 25.00% Improved liveability and profile as Waterfront City Weighted Score (Seconary) 13.8% 0.00 -1.00 1.00 1.00 1.00 2.00

50%Improving resident and visitors satisfaction levels -2 to 2 To be defined # 6.88%

Score 0.00 -2.00 1.00 1.00 0.00 2.00Weighted Score (Tertiary) 0.00 -1.00 0.50 0.50 0.00 1.00

50% Increased public visitation -2 to 2 To be defined # 6.88%Score 0.00 0.00 1.00 1.00 2.00 2.00Weighted Score (Tertiary) 0.00 0.00 0.50 0.50 1.00 1.00

2 Deliverability 25.00% Weighted Score (Primary) 25.00% -0.48 -0.48 -0.20 -0.14 -0.18 0.482.1 20.00% Stakeholder issues Weighted Score (Secondary ) -1.40 -1.40 0.00 0.30 0.10 1.40

70% Stakeholder Support -2 to 2 To be defined Describe 17.50%Score -2.00 -2.00 0.00 0.00 1.00 2.00Weighted Score (Tertiary) -1.40 -1.40 0.00 0.00 0.70 1.40

30% Disruptions -2 to 2 To be defined Describe 7.50%Score 0.00 0.00 0.00 1.00 -2.00 0.00Weighted Score (Tertiary) 0.00 0.00 0.00 0.30 -0.60 0.00

2.2 80.00% Project risk profile Weighted Score (Secondary) -1.00 -1.00 -1.00 -1.00 -1.00 1.00100% Program Risk -2 to 2 To be defined Time 25.00%

Score -1.00 -1.00 -1.00 -1.00 -1.00 1.00Weighted Score (Tertiary) -1.00 -1.00 -1.00 -1.00 -1.00 1.00

3 Value for Money 20.00% Weighted Score (Primary) 20.00% 0.00 0.00 1.00 2.00 -0.35 3.003.2 35.00% BCR Weighted Score (Secondary) 7.0% 0.00 0.00 1.00 2.00 -1.00 3.00

100% BCR -2 to 2 To be defined 7.00%Score 0.00 0.00 1.00 2.00 -1.00 3.00Weighted Score (Tertiary) 0.00 0.00 1.00 2.00 -1.00 3.00

3.3 65.00% Economic Impact Weighted Score (Secondary ) 13.0% 0.00 0.00 1.00 2.00 0.00 3.0050% GSP -2 to 2 To be defined 6.50%


50% FTE -2 to 2 To be defined 6.50%Score 0.00 0.00 1.00 2.00 0.00 3.00Weighted Score (Tertiary) 0.00 0.00 0.50 1.00 0.00 1.50

Totals

Primary Criteria

Options EvaluationDRAFT ONLY - Version 1

City of Greater GeelongYarra Street Pier Reconstruction

Auto Footers On


Analysis - Option A Business as usualOption Description

Under the Business as Usual approach, no additional marine infrastructure would be developedPrimary Criteria Secondary Criteria Tertiary Criteria Description Scale Analysis Score


Greater economic returns for the State 1.1.1

Growth in tourism related expenditure

-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact

The State and region would fail to capitalise on the economic opportunities outline in the business case. Lack of infrastructure would result in further acceleration of the existing problems.

-2



Growth in tourism related employment

'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact

The State and region would fail to capitalise on the economic opportunities outline in the business case. Lack of infrastructure would result in further acceleration of the existing problems.

-2


Improved profile of port Phillip Bay as a marine destination 1.2.1

Increased maritime traffic in Corio Bay


There would be no impact towards the profile of Port Phillip Bay under this option.

0



Diversification of experience at the waterfront



0


Improved liveability and profile as Waterfront City 1.3.1

Improving resident and visitors satisfaction levels

'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact There would be no impact on liveability under this option

0


Improved liveability and profile as Waterfront City 1.3.1 Increased public visitation


0

Deliverability Stakeholder issues 2.1.1 Stakeholder Support

-2: significant adverse reaction from stakeholders anticipated-1: anticipated adverse community reaction0: some stakeholder and community issues may arise1: anticipated key stakeholder support, some community issues may arise2: anticipated external stakeholder and community support Anticipated adverse reaction from key stakeholders.

-2

Deliverability Stakeholder issues 2.2.1 Disruptions

-2: significant adverse impact on business continuity requiring intervention (eg. decant and/or interim facilities) 0: some impact on business continuity that can be internally managed 2: no impact on business continuity

Do Nothing' option would have no direct impact or cause no disruptions, but it would also fail to capture business opportunities provided through this proposal

0

Deliverability Project risk profile 2.2.2 Project risk profile


Constraint on growth in the waterfront areaConstraint on growth on cruise ships and larger vessels calling into GeelongInefficient transfer of passengers from cruise ship to shorePotentially unsafe transfer of passengers from cruise ship to shoreConstraint on growth of major events (eg Festival of Sails)Lack of protection for smaller craft in the existing marina

-1

Value for Money BCR 3.1.1 BCR

All costs are assessed relative to the base case.3: Best performing option in relation to BCR2: Second best performing option1: Third best performing option0: Base case or untested-1: Worst performing option relative to other assessments Base case

0

Economic Impact 3.2.1 GSP


0

Value for Money Economic Impact 3.2.2 FTE


0


Analysis - Option BDispersal of activitiesOption Description

This option was prepared without prejudice to assess to what degree a dispersal of waterfront activities into other existing locations would address the identified problems.

Primary Criteria Secondary Criteria Tertiary Criteria Description Scale Analysis Score





Some potential to utilise investment in stimulating economic growth in different areas.

1





Some potential to utilise investment in stimulating employment growth in different areas.

1



Increased maritime traffic in Corio bay



0






0





Levels of satisfaction within the CBD and waterfront areas would significantly drop.

-2




0


-2: significant adverse reaction from stakeholders anticipated-1: anticipated adverse community reaction0: some stakeholder and community issues may arise1: anticipated key stakeholder support, some community issues may arise2: anticipated external stakeholder and community support Anticipated adverse reaction from key stakeholders.

-2



Dispersal option would have no direct impact or cause no disruptions, but it would also fail to capture business opportunities provided through this proposal

0



Constraint on growth in the waterfront areaConstraint on growth on cruise ships and larger vessels calling into GeelongInefficient transfer of passengers from cruise ship to shorePotentially unsafe transfer of passengers from cruise ship to shoreConstraint on growth of major events (eg Festival of Sails)Lack of protection for smaller craft in the existing marina

-1


ll costs are assessed relative to the base case.3: Best performing option in relation to BCR2: Second best performing option1: Third best performing option0: Base case or untested-1: Worst performing option relative to other assessments

Not tested, however the investment required to achieve 'cruise-ship' benefits remains the same, however the overall benefits would be reduced. Therefore the BCR would be lowest.

0



Not tested, however the investment required to achieve 'cruise-ship' benefits remains the same, however the overall benefits would be reduced. Therefore the GSP would be the lowest.

0



Not tested, however the investment required to achieve 'cruise-ship' benefits remains the same, however the overall benefits would be reduced. Therefore the GSP would be the lowest.

0


Analysis - Option CRecreational jetty onlyOption Description

In summary, this option proposes to construct a 225m long recreational jetty which is 8m wide. It is assumed that the predominant load will be pedestrians and a light vehicle, with an ability to berth recreational boats alongside the jetty.






This option will contribute to the criteria through improved itinerant boating and new activities on the jetty

1




'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact No dirrect impact

0




'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Some opportunity to increase maritime traffic

1




'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Some opportunity to diversify experince at the waterfront

1





Levels of satisfaction within the CBD and waterfront could marginally improve

1



'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Some increased visitation

1


-2: significant adverse reaction from stakeholders anticipated-1: anticipated adverse community reaction0: some stakeholder and community issues may arise1: anticipated key stakeholder support, some community issues may arise2: anticipated external stakeholder and community support

Only a very limited support from stakeholders for this option is anticipated.

0



some impact on business continuity that can be internally managed

0



Constraint on growth on cruise ships and larger vessels calling into GeelongInefficient transfer of passengers from cruise ship to shorePotentially unsafe transfer of passengers from cruise ship to shoreConstraint on growth of major events (eg Festival of Sails)Lack of protection for smaller craft in the existing marina

-1


ll costs are assessed relative to the base case.3: Best performing option in relation to BCR2: Second best performing option1: Third best performing option0: Base case or untested-1: Worst performing option relative to other assessments BCR of 0.22

1


ll costs are assessed relative to the base case.3: Best performing option in relation to BCR2: Second best performing option1: Third best performing option0: Base case or untested-1: Worst performing option relative to other assessments $4.3 Million

1


ll costs are assessed relative to the base case.3: Best performing option in relation to BCR2: Second best performing option1: Third best performing option0: Base case or untested-1: Worst performing option relative to other assessments 38 FTE

1


Analysis - Option DRecreational jetty with marina protectionOption Description






This option will contribute to the criteria through improved itinerant boating and new activities on the jetty

1




'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Some positive impact

1




'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Some opportunity to increase maritime traffic

2




'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Opportunity to diversify experince at the waterfront

2





Levels of satisfaction within the CBD and waterfront could marginally improve

1



'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Some increased visitation

1


-2: significant adverse reaction from stakeholders anticipated-1: anticipated adverse community reaction0: some stakeholder and community issues may arise1: anticipated key stakeholder support, some community issues may arise2: anticipated external stakeholder and community support

Only a very limited support from stakeholders for this option is anticipated.

0



some impact on business continuity that can be internally managed

1



Constraint on growth on cruise ships and larger vessels calling into GeelongInefficient transfer of passengers from cruise ship to shorePotentially unsafe transfer of passengers from cruise ship to shore

-1


All costs are assessed relative to the base case.3: Best performing option in relation to BCR2: Second best performing option1: Third best performing option0: Base case or untested-1: Worst performing option relative to other assessments BCR of 0.41

2


ll costs are assessed relative to the base case.3: Best performing option in relation to BCR2: Second best performing option1: Third best performing option0: Base case or untested-1: Worst performing option relative to other assessments $21.1 Million

2


ll costs are assessed relative to the base case.3: Best performing option in relation to BCR2: Second best performing option1: Third best performing option0: Base case or untested-1: Worst performing option relative to other assessments 167 FTE

2

In summary, this option proposes to construct a recreational jetty 225m long and 8m wide, which incorporates wave protection along the jetty and running east-west at the end, along with a floating pontoon to the east of the new jetty. An additional 47 berths are proposed for the RGYC marina as well.


Analysis - Option FLarge ship jetty with marina protectionOption Description





-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Estimated $50.5 mill in GSP by 12/2025

2




'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Estimated additional 389 EFTs by 12/2025

2




'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Up to 100 aditional itinerant boats by 12/2025

2




'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact Increased revenue form water-based events by $545K by 2015

2




'-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact 80% satisfaction levels by 2020

2




10% increase (driven by volume not charge) in parking revenue by 2020

2


-2: significant adverse reaction from stakeholders anticipated-1: anticipated adverse community reaction0: some stakeholder and community issues may arise1: anticipated key stakeholder support, some community issues may arise2: anticipated external stakeholder and community support Strong support from all key stakeholders

2


-2: significant adverse impact on business continuity requiring intervention (eg. decant and/or interim facilities) 0: some impact on business continuity that can be internally managed 2: no impact on business continuity Some minor impact

0


-2: significant adverse impact-1: some adverse impact0: no impact1: some positive impact2: significant positive impact All idnetified risks can be effectively managed.

1


All costs are assessed relative to the base case.3: Best performing option in relation to BCR2: Second best performing option1: Third best performing option0: Base case or untested

BCR of 0.49

3



$52.4 million

3



403 FTE

3

Construction and operation of a 260m long jetty along the old alignment of the Yarra Street Pier capable of berthing large cruise ships. Incorporated into the design will be wave protection, additional marina berths, public berths, and dredging of an approach channel and swing basin to enable a cruise ship to access the facility.


Appendix C

Drawings of Options


Appendix D

Benefit Cost Assessment Methodology


Appendix D details the methodology behind the derivation of the costs and benefits in the benefit cost assessment.

AssumptionsTable 34 details all assumptions and key inputs into the economic benefit cost assessment. In short the economic benefit cost assessment evaluates the costs and benefits of the project to determine a benefit cost ratio and net present value for the shortlisted options. These indicators provide a relative measure of the economic merit of progressing the options.

Table 34 General Assumptions

General Input Value Units

Evaluation period 30 Years from year of opening

Assumed residual value of assets at end

Yarra Street Pier Option 1, 2 and 3


40

0

Per cent

Per cent

Assumed discount rate 6% Per cent

CostsTable 35 details the costs and construction profiles of the three assumptions.

Table 35 Cost assumptions used in benefit cost assessment


Recreational Jetty Recreational Jetty plus Marina Protection

Large Ship Jetty, plus Marina Protection


Total Capital Cost $8,600,000 $18,600,000 $33,200,000 $27,830,000


July 2012 - Dec 2013 July 2012 - Dec 2013

July 2012 - Dec 2014

July 2013 – Dec 2014

Construction Profile Start Design July 2012Start Construction Jan 2013End Construction Dec 2013

Start Design July 2012Start Construction Jan 2013End Construction Dec 2013

Start Design July 2012Start Construction July 2013End

Start Design July 2013 (post purchase)Start Construction Jan 2014


Option 1

Option 2 Option 3 Option 4

Open Jan 2014 Open Jan 2014 Construction Dec 2014 Open Jan 2015

End Construction Open Jan 2015

Capex spend 2013 (2012/13)

59% 52% 3% 1%

Capex spend 2014 (2013/14)

41% 48% 63% 79% (includes purchase)

Capex spend 2015 (2014/2015)

34% 20%

Annual Recurrent Costs

$ 21,500 maintenance per annum for first five years of operation and then


$ 46,500 maintenance per annum for first five years of operation of option and then


$ 133,000 per annum maintenance for first five years of operations and then


$249,000 maintenance per annum for first five years of operation and then $498,000 maintenance per annum for remainder of assessment

Benefits

Producer surplus from increased visitation to waterfrontAll of the options are likely to result in increased levels of visitation to the marina. A producer surplus of the level of 20%28 of the impact was applied across all options. As detailed in the assumptions behind this impact it was considered that for options 1 and 2 the facility will result in an extension of stay of 5% whilst for option 3 this was increased to 10% (from an increase in interstate overnight visitors and interstate day trip visitors and no change on overseas visitors).

Producer surplus from Events Options 2 and 3 are expected to result in an increase in spending in the region as a result of better participation in two major events – the Festival of Sails and a Major triathlon event. For the purposes of the benefit cost assessment 20% of the economic impact was considered to be the producer surplus and is incorporated as an economic benefit. As detailed in the base assumptions the value per annum of this economic impact is the same for both options. The difference in the present value of the economic benefit is a result of the later realisation of benefits in Option 3.

28 GHD and Econsearch Estimate


Reduction in marina maintenanceOptions 2 and 3 are expected to improve the protection of the marina from wave buffering. The value of this protection in terms of reduced maintenance costs and environmental degradation has been estimated at $20,000 per annum for both options. As with the producer surplus from events, the difference between the present value of the benefit between the options is a result of the later realisation of benefits in option 3.

Producer surplus from cruise ship visitsOptions 3 and 4 are expected to bring increased expenditure from cruise ship passengers and crew into the region and Victoria as detailed in the economic impact assessment. It is assumed that 20% of this per annum expenditure is a producer surplus and can be considered an economic benefit of the project.

Producer surplus from naval vessel visitsOptions 3 and 4 are expected to bring increased expenditure from naval vessel crews into the region and Victoria as detailed in the economic impact assessment. It is assumed that 20% of this per annum expenditure is a producer surplus and can be considered an economic benefit of the project.

Residual value of assetHold a residual value at the asset at the end of the economic assessment period, thirty years. The residual value has been estimated as 40 % of the total capital expenditure of each of Options 1, 2 and 3 and is valued on the last year of the economic assessment period. Therefore the present value listed below does not equal 40% of the current cost listed in Table 36. Option 4 has been considered to have zero residual value at the end because the asset is already over 100 years old.

Results Discounted (6% real) costs and benefits for the three options, the benefit cost ratio and the net present value of the three options is detailed in Table 36. All values are in $ million present value apart from the benefit cost ratios.

Based on the comparative assessment using BCR, Option 3 is the preferred option.


Table 36 Summary Results of economic assessment $m present value


Costs

Capital Costs $7.93 $17.07 $29.04 $24.50

Operating Costs $0.45 $1.14 $3.07 5.85

Total Costs $8.37 $18.21 $32.11 $30.35

Benefits

Producer surplus from increased visitation to waterfront

$1.34 $1.34 $2.52 $1.26

Producer surplus from Events - $4.85 $4.57 $1.60

Reduction in marina maintenance - $0.25 $0.23 $0.00

Producer surplus from cruise ship visits - - $6.16 2.54

Producer surplus from naval vessel visits - - $0.46 0.46

Residual value of asset $0.49 $1.06 $1.70 0.00

Total Benefits $1.83 $7.48 $15.65 $5.87

BCR 0.22 0.41 0.49 0.19

NPV -$6.55 -$10.72 -$16.46 -$24.50


Appendix E

Econsearch Report – Economic Impact Assessment


Economic Impact Assessment of the Yarra Street Pier Reconstruction:

Project Business Case

A report prepared for

GHD

Prepared by

27 March 2012

e c o n s e a r c h


EconSearch Pty Ltd214 Kensington Rd,

Marryatville SA 5068

Tel: (08) 8431 5533Fax: (08) 8431 7710

www.econsearch.com.au


http://www.econsearch/

e c o n s e a r c h

GHD Yarra Street Pier Reconstruction

Contents

List of Tables cxvii

Abbreviations cxviii

Document History and Status cxix

1. Introduction 2

2. An Input-Output Model for Geelong 3

2.1 Regional Definition3

2.2 Method of Analysis3

2.3 I-O Model Construction 3

2.4 Indicators of Economic Impact 5

3. Profile of Economic Activity in Geelong 7

4. Economic Impact of the Construction Phase 9

5. Economic Impact of the Operation Phase 13

References 18

Appendix 1 Intermediate Sector Specification 20

Appendix 2 An Overview of Economic Impact Analysis using the Input-Output Method 25

Appendix 3 Glossary of Input-Output Terminology 36

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List of TablesTable 2.1 The Geelong region by Local Government Area and

Statistical Local Area3

Table 3.1 Employment and output, Geelong region, 2008/09 7

Table 3.2 Household income, other value added and gross regional product, Geelong region, 2008/09 a 8

Table 4.1 Direct expenditure associated with the construction of the Yarra Street Pier Reconstruction options ($m)9

Table 4.2 Direct and flow-on GRP impacts of the construction of the Yarra Street Pier Reconstruction options, Geelong region ($m) a 10

Table 4.3 Direct and flow-on GSP impacts of the construction of the Yarra Street Pier Reconstruction options, Victoria ($m) a

10

Table 4.4 Direct and flow-on household income impacts of the construction of the Yarra Street Pier Reconstruction options, Geelong region ($m) a 11

Table 4.5 Direct and flow-on household income impacts of the construction of the Yarra Street Pier Reconstruction options, Victoria ($m) a 11

Table 4.6 Direct and indirect employment impacts of the construction of the Yarra Street Pier Reconstruction options, Geelong region (fte) 12

Table 4.7 Direct and indirect employment impacts of the construction of the Yarra Street Pier Reconstruction options, Victoria (fte)

12

Table 5.1 Direct expenditure associated with increased cruise ship and navy ship visitation to Port of Geelong 13

Table 5.2 Direct and flow-on GRP impacts of the operation of the Yarra Street Pier Reconstruction options, Geelong region ($m) a 14

Table 5.3 Direct and flow-on GSP impacts of the operation of the Yarra Street Pier Reconstruction options, Victoria ($m) a

15

Table 5.4 Direct and flow-on household income impacts of the operation of the Yarra Street Pier Reconstruction options, Geelong region ($m) a 15

Table 5.5 Direct and flow-on household income impacts of the operation of the Yarra Street Pier Reconstruction options, Victoria ($m) a 16

Table 5.6 Direct and indirect employment impacts of the operation of the Yarra Street Pier Reconstruction options, Geelong region (fte) 16

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Table 5.7 Direct and indirect employment impacts of the operation of the Yarra Street Pier Reconstruction options, Victoria (fte)

17

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AbbreviationsABS Australian Bureau of Statistics

ATO Australian Tax Office

DECON demographic-economic (model)

DEEWR Department of Employment, Education and Workplace Relations

fte full-time equivalent

GRP gross regional product

GSP gross state product

I-O input-output (model)

RISE Regional Industry Structure and Employment

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Document History and Status

Doc Ver Doc Status

Issued To Qty elec Qty hard

Date Reviewed Approved

1 Draft David Rolland 1 Word - 19/12/11 JBM JBM




5 Draft David Rolland 1 Word, 1 pdf

- 13/01/12 LMR JBM

6 Final David Rolland 1 Word, 1 pdf

- 13/01/12 LMR JBM


- 25/01/12 LMR JBM


- 27/03/12 LMR JBM

Printed: 27/06/2012 04:09:00 PMLast Saved: 4/12/2013 10:42:00 AMFile Name: /tt/file_convert/5a7187a87f8b9aa7538cf0cc/document.docProject Manager: Julian MorisonPrincipal Author/s: Lisa Rippin and Julian MorisonName of Client: GHDName of Project: Economic Impact Assessment of the Yarra Street Pier Reconstruction:

Project Business CaseDocument Version: 6Job Number: 1143

Page: cxxviii

1. IntroductionThe information and analysis presented in this report was prepared for GHD and represents a contribution to the project entitled; Yarra Street Pier Reconstruction: Project Business Case, for the City of Greater Geelong.

The objective of this analysis is to generate regional and state-level estimates of the economic impact of the construction and operation of the following options for the Yarra Street Pier Reconstruction:

1. recreational jetty;

2. recreational jetty with marine protection; and

3. cruise ship jetty with marine protection.

Input-output (I-O) models for Geelong and Victoria for 2008/09 (EconSearch 2010a) recently prepared for the Victorian Department of Primary Industries were updated and utilised in this analysis.

An outline of the method, data sources and indicators of economic impact used in the analysis are provided in Section 2. A profile of economic activity in Geelong is presented in Section 3. Section 4 provides estimates of the economic impacts of the proposed options at the construction phase on the economies of Geelong and Victoria. Estimates of the economic impact of the proposed options at the operational phase for the regional and state economies are provided in Section 5.

2. An Input-Output Model for Geelong

2.1 Regional Definition

The two local government areas (LGAs) that comprise the region are Greater Geelong (C) and Queenscliff (B). The relevant Local Government Areas and component Statistical Local Areas are listed in Table 2.1

Table 2.37 The Geelong region by Local Government Area and Statistical Local Area

Region Local Government Area Statistical Local AreaGeelong Greater Geelong City Bellarine - Inner

Queenscliff Borough Corio - InnerGeelongGeelong WestNewtownSouth Barwon - InnerGreater Geelong - Pt BGreater Geelong - Pt CQueenscliff

Source: EconSearch analysis

2.2 Method of Analysis

The estimates of economic impact presented in this report were based on the use of the input-output (I-O) method. I-O analysis provides a comprehensive economic framework that is extremely useful in the resource planning process. Broadly, there are two ways in which the method can be used.

First, the I-O transactions table provides a numerical picture of the size and shape of the economy and its essential features. It can be used to describe some of the important features of an economy, the interrelationships between sectors and the relative importance of the individual sectors.

Second, I-O analysis provides a standard approach for the estimation of the economic impact of a particular activity. The I-O model is used to calculate industry multipliers that can then be used to the estimate of economic impacts arising from some change in the local economy or the economic contribution of an existing industry.

2.3 I-O Model Construction

For the purpose of estimating the regional economic impact of current and projected cruise ship related activity and in order to describe the current level of economic activity in this region, a regional input-output (I-O) model was used. An Input-output (I-O) model for Geelong for 2008/09 (EconSearch 2010a) recently prepared for the Victorian Department of Primary Industries was updated and utilised in this analysis. Similarly, at the State level EconSearch has an in-house model of the Victorian economy. The data sources and method used to construct this model are detailed below.

Standard I-O models for the above local and regional areas for 2008/09 were developed using the GRIT (Generation of Regional Input-Output Tables) method, a ‘hybrid’ method which utilises local/regional data

and computer methods to generate I-O tables. Whilst the majority of data compilation and manipulation was undertaken in Microsoft Excel® spreadsheets, the first stage of the GRIT procedure (based on the use of output-based location quotients) was undertaken using IO9 software (West 2009). The ‘parent’ table for the Geelong I-O model was an I-O table for Victoria for 2008/09.

An important characteristic of GRIT-produced I-O tables relates to their accuracy. A fundamental principle of the GRIT method is that not all cells in the table are equally important. Some will not be important because they are very small values and, therefore, have no possibility of generating inaccurate estimates of multipliers and economic impacts. Others will not be important because of the lack of linkages that relate to the particular sectors that are being studied.

The GRIT method involves determining those sectors and, in some cases, cells that are of particular significance for the analysis. Research resources are targeted to data gathering in these areas. For the remainder of the table, the aim is for it to be 'holistically' accurate (Jensen 1980). That means the table provides a generally accurate representation of the economy, but does not guarantee the accuracy of any particular cell.

Sources of data for the regional I-O model included:

the Australian Bureau of Statistics (ABS)

2006 Census of Population and Housing29;

2006 Agricultural Census (ABS 2008) and AgStats data for 2008/09 (ABS 2010b);

2003/04 Household Expenditure Survey (ABS 2006);

2009/10 Australian National Accounts, State Accounts (ABS 2010a);

Regional Population Growth, Australia and New Zealand (ABS 2010c);

Department of Employment and Workplace Relations (DEWR 2009); and

the Australian Taxation Office (ATO 2010).

Based on work undertaken by Mangan and Phibbs (1989), the I-O model developed for this project was extended as a demographic-economic (DECON) model. The two key characteristics of the DECON model, when compared with a standard economic model, are as follows.

The introduction of a population ‘sector’ (or row and column in the model) makes it possible to estimate the impact on local population levels of employment growth or decline.

The introduction of an unemployed ‘sector’ makes it possible to account for the consumption-induced impact of the unemployed in response to economic growth or decline.

A range of data for construction of the DECON model was obtained from the Australian Bureau of Statistics’ 2006 Census of Population and Housing (using the ABS TableBuilder database).

Another aspect of the I-O models developed for this project was the inclusion of an additional column in the final demand quadrant of the model, namely a profile of sales of goods and services to visitors to the region (i.e. expenditure by tourists). Data were sourced from Tourism Research Australia (2010) and ABS (2010d).

The data described above were incorporated into a Microsoft Excel® spreadsheet based economic impact model for the region (i.e. RISE v3.0)30. This type of model allows for description of the structure of the economy. It can also be used for the estimation of economic impacts over time in response to the

29 Detailed employment data from the 2006 Census of Population and Housing were extracted from the TableBuilder database and represent place of remuneration rather than place of residence. That is, they are a measure of the number of jobs in the region rather than the number of employed residents.

introduction of a new industry, the impact of an existing industry or a change in the final demand for the output of one or many sectors. Model assumptions can be modified to account for:

price changes between the model construction year (2008/09) and the base year for the analysis;

labour productivity change over time (as above and for the subsequent years); and

the level of regional migration (e.g. for a positive employment impact, the proportion of new jobs filled by previously unemployed locals).

The economic impact model developed for the Geelong region for this project (and for Victoria) was specified in terms of 66 intermediate sectors. Sector specification in terms of the national input-output sectors is detailed in Appendix 1. An overview of economic impact analysis methodology, including a description of extending the standard I-O model as a DECON model and incorporating a tourism demand profile, is provided in Appendix 2. A glossary of I-O terminology is provided in Appendix 3.

2.4 Indicators of Economic Impact

The following indicators of economic impact were generated using the economic modelling framework described above:

gross regional product (GRP)/ gross state product (GSP)

household income

employment.

Gross regional product (GRP)/ gross state product (GSP) is a measure of the net contribution of an activity to the regional economy. GRP is measured as value of output less the cost of goods and services (including imports) used in producing the output. In other words, it can be measured as the sum of household income, 'gross operating surplus and gross mixed income net of payments to owner managers' and 'taxes less subsidies on products and production'. It represents payments to the primary inputs of production (labour, capital and land). Using GRP as a measure of economic impact avoids the problem of double counting that may arise from using value of output for this purpose.

Household income is a component of GRP and is a measure of wages and salaries paid in cash and in-kind, drawings by owner operators and other payments to labour including overtime payments, employer’s superannuation contributions and income tax, but excluding payroll tax.

Employment is a measure of the number of working proprietors, managers, directors and other employees, in terms of the number of full-time equivalent (fte) jobs. Employment is measured by place of remuneration rather than place of residence.

Estimates of economic impact are presented in terms of:

direct (or initial) impacts

indirect (or flow-on) impacts

total impacts.

Direct (or initial) impacts are an estimate of the change in final demand or level of economic activity that is the stimulus for the total impacts.

Indirect (or flow-on) impacts are the sum of production-induced impacts, consumption-induced impacts and offsetting consumption effects.

30 For further details on the use and application of this type of model see EconSearch (2010a and 2010b).

Production-induced impacts are the sum of first-round impacts (i.e. estimates of the requirement for or purchases of goods and services from other sectors in the economy generated by the initial economic activity) and industrial support impacts (i.e. output and employment resulting from second, third and subsequent rounds of spending by firms). Production-induced impacts are sometimes referred to as 'indirect effects'.

Consumption-induced impacts are additional output and employment resulting from re-spending by households that receive income from employment in direct and indirect activities. Consumption-induced effects are sometimes referred to as 'induced effects'.

Offsetting consumption effects are 'lost' consumption expenditure by the local unemployed before taking a job or 'new' consumption expenditure of those losing a job as they shift to welfare payments.

Total impacts are the sum of direct and indirect (flow-on) impacts.

3. Profile of Economic Activity in GeelongIn order to set the context for the estimates of local economic impact of the construction and the operation of the options for the Yarra Street Pier Reconstruction (which follow), a brief profile of economic activity in the Geelong region in 2008/09 is provided below. These data were derived from the I-O database utilised for this project. Estimates of employment and output by sector are detailed in Table3.38 and gross regional product (GRP) in Table 3.39.

Table 3.38 Employment and output, Geelong region, 2008/09

Sector

no. of jobs % fte % $m %

Agriculture, forestry and fishing 1,327 1.3% 1,277 1.4% 133 0.7%

Mining 152 0.1% 176 0.2% 59 0.3%

Manufacturing 14,826 14.5% 15,829 17.0% 6,081 31.1%

Electricity, gas and water 788 0.8% 824 0.9% 485 2.5%

Building and construction 7,977 7.8% 8,390 9.0% 2,429 12.4%

Wholesale trade 3,713 3.6% 3,729 4.0% 957 4.9%

Retail trade 18,648 18.3% 14,485 15.5% 1,070 5.5%

Accommodation, cafes & restaurants 4,843 4.7% 3,602 3.9% 512 2.6%

Transport and storage 4,055 4.0% 4,420 4.7% 952 4.9%

Communication services 995 1.0% 932 1.0% 443 2.3%

Finance and insurance 1,769 1.7% 1,716 1.8% 800 4.1%

Ownership of dwellings a 0 0.0% 0 0.0% 1,043 5.3%

Property and business services 8,455 8.3% 7,914 8.5% 1,828 9.4%

Public administration and defence 4,187 4.1% 3,902 4.2% 609 3.1%

Education 9,697 9.5% 8,922 9.6% 752 3.9%

Health and community services 14,191 13.9% 11,587 12.4% 907 4.6%

Cultural and recreational services 2,260 2.2% 1,806 1.9% 169 0.9%

Personal services 4,099 4.0% 3,725 4.0% 301 1.5%

Total 101,982 100.0% 93,236 100.0% 19,530 100.0%

Total employment Employment Value of output

a The ownership of dwellings sector is a notional sector designed to impute a return to the region’s housing stock. Total value of output in this sector is an estimate of rent earned on leased dwellings and imputed rent on the balance of owner-occupied dwellings.

Source: ABS 2006 Census of Population and Housing, DEWR (2009) and EconSearch analysis

The top five contributors to total jobs in the region in 2008/09 were:

retail trade (18 per cent); manufacturing (15 per cent); health and community services (14 per cent); education (10 per cent); and property and business services (8 per cent).

Table 3.39 Household income, other value added and gross regional product, Geelong region, 2008/09 a

Sector

$m % $m % $m %

Agriculture, forestry and fishing 48 0.9% 25 0.8% 74 0.8%

Mining 21 0.4% 23 0.7% 44 0.5%

Manufacturing 739 14.4% 629 19.9% 1,369 15.1%

Electricity, gas and water 76 1.5% 197 6.2% 274 3.0%

Building and construction 501 9.8% 168 5.3% 669 7.4%

Wholesale trade 271 5.3% 120 3.8% 391 4.3%

Retail trade 410 8.0% 139 4.4% 549 6.1%

Accommodation, cafes & restaurants 150 2.9% 65 2.1% 215 2.4%

Transport and storage 233 4.6% 174 5.5% 407 4.5%

Communication services 81 1.6% 123 3.9% 204 2.3%

Finance and insurance 269 5.3% 252 8.0% 521 5.8%

Ownership of dwellings 0 0.0% 816 25.8% 816 9.0%

Property and business services 694 13.6% 167 5.3% 862 9.5%

Public administration and defence 261 5.1% 67 2.1% 328 3.6%

Education 534 10.4% 51 1.6% 584 6.4%

Health and community services 629 12.3% 93 3.0% 723 8.0%

Cultural and recreational services 50 1.0% 14 0.4% 64 0.7%

Personal services 150 2.9% 38 1.2% 188 2.1%

Intermediate total 5,117 100.0% 3,164 100.0% 8,280 91.4%

Net taxes in final demand b - - - - 777 8.6%

Total 5,117 100.0% 3,164 100.0% 9,058 100.0%

Household income Other value added Gross state product

a Household income and other value added are the two components of GRP. Using the income method to derive GRP enables its estimation on a sector-by-sector basis.

b Includes net taxes (i.e. taxes less subsidies on products and production) paid by households and other components of final demand.

Source: ABS (2010a) and EconSearch analysis

The top five contributors to GRP were:

manufacturing (14 per cent); property and business services (14 per cent); health and community services (12 per cent); education (10 per cent); and building and construction (10 per cent).

Economic activity in the Geelong region is dominated by manufacturing but it also has a significant resident population (approximately 209,000 persons in 2008/09) (ABS 2010c) with associated housing stock and service sectors.

4. Economic Impact of the Construction PhaseThe Yarra Street Pier Reconstruction considers the following three options:

1. recreational jetty;

2. recreational jetty with marine protection; and

3. cruise ship jetty with marine protection.

Total construction expenditure associated with the three options is detailed in Table 4.1 and is expected to begin in 2012/13. Options 1 and 2 are estimated to be completed in 2013/14 whereas Option 3 is expected to take an additional year to complete (finish construction in 2014/15).

Consideration was given to those expenditures expected to occur in the Geelong region, elsewhere in Victoria or elsewhere in Australia or overseas.

Table 4.40 Direct expenditure associated with the construction of the Yarra Street Pier Reconstruction options ($m)

Total 2012/13 2013/14 2014/15

Option 1 - Recreational Jetty 8.6 5.1 3.5 0.0Option 2 - Recreational jetty with Marina Protection 18.6 9.6 9.0 0.0Option 3 - Cruise Ship Jetty with Marina Protection 33.2 1.0 21.0 11.2

Impacts for Geelong were modelled on those expenditures expected to occur in the Geelong region only. Impacts for Victoria include those expenditures that will occur in Geelong and those that will occur elsewhere in Victoria. Expenditure that will occur elsewhere in Australia or overseas has been excluded from the analysis.

The indirect/flow-on impacts were calculated using I-O models and they measure the economic effects in other sectors of the economy (trade, health, manufacturing, business services, etc.) generated by these direct activities, that is, the multiplier effect. In addition to the assumptions embodied in the input-output model itself (see Appendix 2), it was necessary to make a number of other general assumptions in estimating the economic impacts:

The impacts were measured using models that represent the structure of the regional and state economies for the year in which the most recent data are available (2008/09). However, over time there are likely to be improvements in primary factor productivity in these economies. To allow for the improvements an across-the-board (all sectors) labour productivity improvement rates of 0.5 per cent per annum for subsequent years of the construction have been incorporated into the modelling.

When new jobs are created, it should be determined where the people come from to fill those jobs people. In some cases the jobs will be taken by previously unemployed locals or by someone who is currently employed locally but whose own job is taken by a previously unemployed local. In both cases the impact of the newly created job and associated income is partially offset by the fact that someone who is previously receiving unemployment benefits, for example, is no longer doing so. To calculate this effect requires estimates of the parameter rho (see Appendix 2), the proportion of new jobs that are likely to be filled by previously unemployed

locals. For the construction phase, it was estimated to be 80 per cent for the local area and 90 per cent for Victoria as a whole.

Gross regional product/ Gross state product...

GRP/GSP is a measure of the net contribution of an activity or industry to the regional economy. It represents payments to the primary inputs of production (labour, capital and land) and is a regional/state level equivalent of gross domestic product. Estimates for the 3-year construction period are provided in Table 4.2 for the Geelong region and in Table 4.3 for Victoria.

Table 4.41 Direct and flow-on GRP impacts of the construction of the Yarra Street Pier Reconstruction options, Geelong region ($m) a

2012/13 2013/14 2014/15 TotalOption 1

Direct 1.0 0.7 0.0 1.7Flow-on 0.7 0.5 0.0 1.2Total 1.7 1.2 0.0 2.9

Option 2Direct 1.6 1.5 0.0 3.1Flow-on 1.2 1.1 0.0 2.3Total 2.8 2.6 0.0 5.4


a GRP impacts are a measure of gross regional product (i.e. household income, gross operating surplus and all taxes, less subsidies).


Table 4.42 Direct and flow-on GSP impacts of the construction of the Yarra Street Pier Reconstruction options, Victoria ($m) a

2012/13 2013/14 2014/15 TotalOption 1




a GSP impacts are a measure of gross state product (i.e. household income, gross operating surplus and all taxes, less subsidies).

Source: EconSearch analysisHousehold income...

Household income is a component of GRP and is therefore an important indicator of both regional economic activity and the welfare of regional households. The estimates presented in Table 4.4 show

household income in the Geelong region and those presented in Table 4.5 show household income in Victoria generated from the three options.

Table 4.43 Direct and flow-on household income impacts of the construction of the Yarra Street Pier Reconstruction options, Geelong region ($m) a

2012/13 2013/14 2014/15 TotalOption 1




a Household income impacts are measured as wages and salaries paid in cash and in kind, drawings by owner operators and other payments to labour including overtime payments, employers’ superannuation contributions and income tax, but excluding payroll tax.


Table 4.44 Direct and flow-on household income impacts of the construction of the Yarra Street Pier Reconstruction options, Victoria ($m) a

2012/13 2013/14 2014/15 TotalOption 1






Employment (fte)...

Like household income, employment is a key indicator of both regional economic activity and the welfare of regional households. The estimates presented in Table 4.6 show employment in the Geelong region and those presented in Table 4.7 show employment in Victoria generated from the three options.

Table 4.45 Direct and indirect employment impacts of the construction of the Yarra Street Pier Reconstruction options, Geelong region (fte)

2012/13 2013/14 2014/15 TotalOption 1

Direct 12 8 0 19Flow-on 6 4 0 11Total 18 12 0 30

Option 2Direct 21 19 0 40Flow-on 11 10 0 21Total 31 29 0 60



Table 4.46 Direct and indirect employment impacts of the construction of the Yarra Street Pier Reconstruction options, Victoria (fte)

2012/13 2013/14 2014/15 TotalOption 1





5. Economic Impact of the Operation PhaseOperating expenditure associated with the three options is detailed in Table 5.47. The top section of the table details the assumptions around the number of cruise ships, the number of passengers and crew and the expenditure likely to take place in the Geelong region. Consideration was given to those expenditures expected to occur in the Geelong region, elsewhere in Victoria or elsewhere in Australia or overseas.

Table 5.47 Direct expenditure associated with increased cruise ship and navy ship visitation to Port of Geelong

Cruise Ships Base Case Option 1 Option 2 Option 3Number of vessels 2011 3 3 3 3Number of vessels 2015 3 3 3 4Number of vessels 2025 3 3 3 22Number of vessels 2026 3 3 3 22Passengers per vessel 500 500 500 1100Australia Passengers 90% 90% 90% 90%International Passengers 10% 10% 10% 10%Crew Per Vessel 350 350 350 650Australia Crew 50% 50% 50% 50%International Crew 50% 50% 50% 50%Type of Stop Anchoring

with tenderAnchoring with tender


Berth

Passengers Disembarking 70% 70% 70% 90%Crew Disembarking 50% 50% 50% 50%No. of passengers disembarking 350 350 350 990No. of crew Disembarking 175 175 175 325Avg spend/passenger/day $154 $154 $154 $154Avg spend/crew/day $74 $74 $74 $74Avg spend/passenger ship $53,900 $53,900 $53,900 $152,460Avg spend/crew/ship $12,950 $12,950 $12,950 $24,050Avg spend/cruise ship/annum $200,550 $200,550 $200,550 $706,040New Spend 2015 $0 $0 $0 $505,490New Spend 2025 $0 $0 $0 $3,682,670Cruise ship operator and Geelong Council Expenditure on cruise ships arriving at Geelong:Cruise Ship opex/vessel (all local) $41,000 $41,000 $41,000 $63,000COGG expenditure (local) $25,000 $25,000 $25,000 $29,000Total expenditure by vessel $66,000 $66,000 $66,000 $92,000Total expenditure/annum 2015 $198,000 $198,000 $198,000 $368,0002015 Additional Expenditure 0 0 0 $170,0002025 Additional Expenditure 0 0 0 $1,826,000Navy Ships:Number of ships/annum 0 0 0 4

Spend/ship by crew (all local) 0 0 0 $30,000Spend/ship by COGG (all local) 0 0 0 $20,000Navy Ship spend/annum 0 0 0 $140,000

Source: GHD and EconSearch analysis

The second section of Table 5.47 shows the expenditure that is anticipated by the City of Greater Geelong and that expected by the cruise ship operators in bringing the vessels into and out of the port (tugs, pilots, wharfage, fuel bunkering, provisions, etc.).

The bottom section of Table 5.47 shows the expenditure that is likely to be associated with visits by Navy vessels. This will include expenditure by crew as well as additional expenditure by City of Greater Geelong.

In the case of cruise ships and navy vessels, it is only under Option 3 that there will be any increase in numbers (visitors and ships) over the base case. In the case of cruise ships the numbers are anticipated to rise to 4 per annum in 2015 and to 22 per annum by 2025.

As well as the ship-related expenditure, there will be additional jetty-related operating/maintenance expenditure, as follows:Option 1 - $43,000Option 2 - $93,000Option 3 - $266,000

As with the construction impacts, the operating phase impacts for Geelong were modelled on those expenditures expected to occur in the Geelong region only; impacts for Victoria include those expenditures that will occur in Geelong and those that will occur elsewhere in Victoria; and expenditure that will occur elsewhere in Australia or overseas has been excluded from the analysis.

The indirect/flow-on impacts were calculated using I-O models for Geelong and Victoria.

Gross regional product/ Gross state product...

Estimates for the first 10-year operation period are provided in Table 5.48 for the Geelong region and in Table 5.49 for Victoria. The total column is a simple, undiscounted summation of the estimated GRP/GSP in each of the 10 years and therefore represents an estimate of total GRP/GSP that would be generated over the 10-year period for each of the options compared to the base case.

Table 5.48 Direct and flow-on GRP impacts of the operation of the Yarra Street Pier Reconstruction options, Geelong region ($m) a

Year 1 Year 5 Year 10 TotalOption 1


Option 2 Direct 1.3 1.3 1.3 13.5Flow-on 0.4 0.4 0.4 3.6Total 1.7 1.7 1.7 17.1


a GRP impacts are a measure of gross regional product (i.e. household income, gross operating surplus and all taxes, less subsidies).


Table 5.49 Direct and flow-on GSP impacts of the operation of the Yarra Street Pier Reconstruction options, Victoria ($m) a





a GSP impacts are a measure of gross state product (i.e. household income, gross operating surplus and all taxes, less subsidies).


Household income...

The estimates presented in Table 5.50 show household income in the Geelong region and those presented in Table 5.51 show household income in Victoria generated from the three options over the first 10-year operation period. As with GRP/GSP, the total column is a simple, undiscounted summation of estimated household income in each of the 10 years and therefore represents an estimate of total household income that would be generated over the 10-year period for each of the options compared to the base case.

Table 5.50 Direct and flow-on household income impacts of the operation of the Yarra Street Pier Reconstruction options, Geelong region ($m) a







Table 5.51 Direct and flow-on household income impacts of the operation of the Yarra Street Pier Reconstruction options, Victoria ($m) a







Employment (fte)...

The estimates presented in Table 5.52 show employment in the Geelong region and those presented in Table 5.53 show employment in Victoria generated from the three options over the first 10-year operation period. The total column is a simple summation of the estimated employment in each of the 10 years and therefore represents the total employment in person years for each of the options. This is over and above any employment that would be generated under the base case.

Table 5.52 Direct and indirect employment impacts of the operation of the Yarra Street Pier Reconstruction options, Geelong region (fte)



Option 2 Direct 11 11 11 111Flow-on 3 3 3 30Total 14 14 14 141



Table 5.53 Direct and indirect employment impacts of the operation of the Yarra Street Pier Reconstruction options, Victoria (fte)






ReferencesAustralian Bureau of Statistics (ABS) 2006, 2003/04 Household Expenditure Survey Summary of

Results, ABS Cat. No. 6530.0, Canberra, electronic version (and previous issues).

Australian Bureau of Statistics 2008, Agricultural Commodities: Small Area Data, Australia, 2005/06, ABS Cat. No. 7125.0, Canberra.

Australian Bureau of Statistics 2009, Australian National Accounts: Input-Output Tables - Electronic Publication 2005-06, ABS Cat. No. 5209.0.55.001, Canberra.

Australian Bureau of Statistics 2010a, 2009/10 Australian National Accounts, State Accounts, ABS Cat. No. 5220.0, Canberra.

Australian Bureau of Statistics 2010b, Value of Agricultural Commodities Produced, Australia, 2008/09, ABS Cat. No. 7503.0, Canberra.

Australian Bureau of Statistics 2010c, Regional Population Growth, Australia and New Zealand, ABS Cat. No. 3218.0, Canberra.

Australian Bureau of Statistics 2010d, Australian National Accounts, Tourism Satellite Account, 2009/10, ABS Cat. No. 5249.0, Canberra.

Australian Taxation Office 2010, Taxation Statistics 2008/09, Table 3: Personal Tax, Selected items, by state/territory and postcode, for taxable individuals, 2008/09 income year.

Department of Employment and Workplace Relations (DEWR) 2009, Small Area Labour Markets, Australia, June Quarter 2009 (and previous issues).

EconSearch 2009, Input-Output Tables for South Australia and its Regions, 2006/07: Technical Report, report prepared for the Department of Trade and Economic Development, May.

EconSearch 2010a, Local Input-Output Modelling of Victorian Primary Industries, report prepared for the Department of Primary Industries (Victoria), June.

EconSearch 2010b, User Notes for the RISE Version 3.0 Impact Model, report prepared for the Department of Primary Industries (Victoria), June.

Jensen, R.C. 1980, 'The Concept of Accuracy in Input-Output Models', International Regional Science Review 5(2), 139-54.

Jensen, R.C. and West, G.R. 1986, Input-Output for Practitioners, Vol.1, Theory and Applications, Office of Local Government, Department of Local Government and Administrative Services, AGPS, Canberra.

Mangan, J. and Phibbs, P. 1989, Demo-Economic Input-Output Modelling with Special Reference to the Wollongong Economy, Australian Regional Developments 20, AGPS, Canberra.

West, G.R. 2009, IO9 Users’ Guide and Reference, Part B (DRAFT), Department of Economics, University of Queensland, St Lucia.

Disclaimer

We have prepared the above report exclusively for the use and benefit of our client. Neither the firm nor any employee of the firm undertakes responsibility in any way whatsoever to any person (other than to the above mentioned client) in respect of the report including any errors or omissions therein however caused.

Appendix 1 Intermediate Sector Specification

Appendix Table 1.1 Intermediate sector specifications for the input-output model

Geelong Region(66 sectors)

National I-O Table (2005/06)(109 sectors)

1 Sheep 1 0101 Sheep

2 Grains 2 0102 Grains

3 Beef cattle 3 0103 Beef cattle

4 Dairy cattle 4 0104 Dairy cattle

5 Pigs 5 0105 Pigs

6 Poultry 6 0106 Poultry

7 Viticulture 7 0107 (part) Other agriculture

8 Vegetables 0107 (part) Other agriculture

9 Fruit and nuts 0107 (part) Other agriculture

10 Other agriculture 0107 (part) Other agriculture

11 Services to agriculture 8 0200 Services to agric., hunting & trapping

12 Forestry 9 0300 Forestry and logging

13 Commercial fishing 10 0400 Commercial fishing

14 Coal 11 1101 Coal

15 Oil and gas 12 1201 Oil and gas

16 Iron & non-ferrous ores 13 1301 Iron ores

14 1302 Non-ferrous metal ores

17 Other mining 15 1400 Other mining

18 Services to mining 16 1500 Services to mining

19 Meat & meat products 17 2101 Meat & meat products

20 Dairy products 18 2102 Dairy products

21 Fruit & vegetable products 19 2103 Fruit and vegetable products

22 Oils & fats 20 2104 Oils and fats

23 Flour mill products & cereal foods 21 2105 Flour mill products & cereal foods

24 Other food products 22 2106 Bakery products

23 2107 Confectionery

24 2108 Other food products

25 Wine 25 2113 Wine, spirits and tobacco products



26 Other beverages 26 2109 Soft drinks, cordials and syrups

27 2110 Beer and malt

27 Textiles, clothing and footwear 28 2201 Textile fibres, yarns etc.

29 2202 Textile products

30 2203 Knitting mill products

31 2204 Clothing

32 2205 Footwear

33 2206 Leather & leather products

28 Sawmill products 34 2301 Sawmill products

29 Other wood products 35 2302 Other wood products

30 Pulp, paper & paperboard 36 2303 Pulp, paper & paperboard

31 Paper containers & products 37 2304 Paper containers and products

32 Printing & services to printing 38 2401 Printing & services to printing

33 Publishing, recorded media, etc. 39 2402 Publishing; recorded media etc

34 Petrochemical & other chemical products 40 2501 Petroleum & coal products

41 2502 Basic chemicals

42 2503 Paints

43 2504 Medicinal & pharmaceuticals products, pesticides

44 2505 Soap & detergents

45 2506 Cosmetics & toiletry preparations

46 2507 Other chemical products

47 2508 Rubber products

48 2509 Plastic products

35 Non-metallic mineral products 49 2601 Glass & glass products

50 2602 Ceramic products

51 2603 Cement, lime and concrete slurry

52 2604 Plaster & other concrete products

53 2605 Other non-metallic mineral products

36 Iron and steel 54 2701 Iron & steel

37 Basic non-ferrous metals & products 55 2702 Basic non-ferrous metals & products

38 Metal products 56 2703 Structural metal products

57 2704 Sheet metal products



58 2705 Fabricated metal products

39 Motor vehicles & parts; other transport equip

59 2801 Motor vehicles & parts; other transport equip

40 Other machinery & equipment 60 2802 Ships and boats

61 2803 Railway equipment

62 2804 Aircraft

63 2805 Photographic & scientific equipment

64 2806 Electronic equipment

65 2807 Household appliances

66 2808 Other electrical equipment

67 2809 Agricultural, mining etc. machinery

68 2810 Other machinery & equipment

41 Furniture 69 2902 Furniture

42 Other manufacturing 70 2901 Prefabricated buildings

71 2903 Other manufacturing

43 Electricity supply 72 3601 Electricity supply

44 Gas supply 73 3602 Gas supply

45 Water supply, sewerage & drainage services

74 3701 Water supply, sewerage & drainage services

46 Residential building 75 4101 Residential building

47 Other construction 76 4102 Other construction

48 Construction trade services 77 4201 Construction trade services

49 Wholesale trade 78 4501 Wholesale trade

79 4502 Wholesale mechanical repairs

80 4503 Other wholesale repairs

50 Retail trade 81 5101 Retail trade

82 5102 Retail mechanical repairs

83 5103 Other retail repairs

51 Accommodation, cafes & restaurants 84 5701 Accommodation, cafes & restaurants

52 Road transport 85 6101 Road transport

53 Rail, pipeline & other transport 86 6201 Rail, pipeline & other transport

54 Water transport 87 6301 Water transport

55 Air & space transport 88 6401 Air & space transport

56 Services to transport; storage 89 6601 Services to transport; storage



57 Communication services 90 7101 Communication services

58 Finance & insurance 91 7301 Banking

92 7302 Non-bank finance

93 7401 Insurance

94 7501 Services to finance investment & insurance

59 Ownership of dwellings 95 7701 Ownership of dwellings

60 Property & business services 96 7702 Other property services

97 7801 Scientific research, technical & computer serv.

98 7802 Legal, accounting, marketing & business serv.

99 7803 Other business services

61 Government administration 100 8101 Government administration

62 Defence 101 8201 Defence

63 Education 102 8401 Education

64 Health & community services 103 8601 Health services

104 8701 Community services

65 Cultural & recreational services 105 9101 Motion picture, radio and television services

106 9201 Libraries, museums & the arts

107 9301 Sport, gambling and recreational services

66 Personal services 108 9501 Personal services

109 9601 Other services

Source: EconSearch analysis and ABS (2009)

Appendix 2 An Overview of Economic Impact Analysis using the Input-Output Method

Economic impact analysis based on an input-output (I-O) model provides a comprehensive economic framework that is extremely useful in the resource planning process. Broadly, there are two ways in which the I-O method can be used.

First, the I-O model provides a numerical picture of the size and shape of an economy and its essential features. The I-O model can be used to describe some of the important features of an economy, the interrelationships between sectors and the relative importance of the individual sectors.

Second, I-O analysis provides a standard approach for the estimation of the economic impact of a particular activity. The I-O model is used to calculate industry multipliers that can then be applied to various development or change scenarios.

The input-output database

Input-output analysis, as an accounting system of inter-industry transactions, is based on the notion that no industry exists in isolation. This assumes, within any economy, each firm depends on the existence of other firms to purchase inputs from, or sell products to, for further processing. The firms also depend on final consumers of the product and labour inputs to production. An I-O database is a convenient way to illustrate the purchases and sales of goods and services taking place in an economy at a given point in time.

As noted above, I-O models provide a numerical picture of the size and shape of the economy. Products produced in the economy are aggregated into a number of groups of industries and the transactions between them recorded in the transactions table. The rows and columns of the I-O table can be interpreted in the following way:

The rows of the I-O table illustrate sales for intermediate usage (i.e. to other firms in the region) and for final demand (e.g. household consumption, exports or capital formation).

The columns of the I-O table illustrate purchases of intermediate inputs (i.e. from other firms in the region), imported goods and services and purchases of primary inputs (i.e. labour, land and capital).

Each item is shown as a purchase by one sector and a sale by another, thus constructing two sides of a double accounting schedule.

In summary, the I-O model can be used to describe some of the important features of a state or regional economy, the interrelationships between sectors and the relative importance of the individual sectors. The model is also used for the calculation of sector multipliers and the estimation of economic impacts arising from some change in the economy.

Using input-output analysis for estimation of economic impacts

The I-O model conceives the economy of the region as being divided up into a number of sectors and this allows the analyst to trace expenditure flows. To illustrate this, consider the example of a vineyard that, in the course of its operation, purchases goods and services from other sectors. These goods and services would include fertiliser, chemicals, transport services, and, of course, labour. The direct employment created by the vineyard is regarded in the model as an expenditure flow into the household sector, which is one of several non-industrial sectors recognised in the I-O model.

Upon receiving expenditure by the vineyard, the other sectors in the regional economy engage in their own expenditures. For example, as a consequence of winning a contract for work with vineyard, a spraying contractor buys materials from its suppliers and labour from its own employees. Suppliers and employees in turn engage in further expenditure, and so on. These indirect and induced (or flow-on) effects31, as they are called, are part of the impact of the vineyard on the regional economy. They must be added to the direct effects (which are expenditures made in immediate support of the vineyard itself) in order to arrive at a measure of the total impact of the vineyard.

It may be thought that these flow-on effects (or impacts) go on indefinitely and that their amount adds up without limit. The presence of leakages, however, prevents this from occurring. In the context of the impact on a regional economy, an important leakage is expenditure on imports, that is, products or services that originate from outside the region, state or country (e.g. machinery).

Thus, some of the expenditure by the vineyard (i.e. expenditure on imports to the region) is lost to the regional economy. Consequently, the flow-on effects get smaller and smaller in successive expenditure rounds due to this and other leakages. Hence the total expenditure created in the regional economy is limited in amount, and so (in principle) it can be measured.

Using I-O analysis for estimation of regional economic impacts requires a great deal of information. The analyst needs to know the magnitude of various expenditures and where they occur. Also needed is information on how the sectors receiving this expenditure share their expenditures among the various sectors from whom they buy, and so on, for the further expenditure rounds.

In applying the I-O model to economic impact analysis, the standard procedure is to determine the direct or first-round expenditures only. No attempt is made to pursue such inquiries on expenditure in subsequent rounds, not even, for example, to trace the effects in the regional economy on household expenditures by vineyard employees on food, clothing, entertainment, and so on, as it is impracticable to measure these effects for an individual case, here the vineyard.

The I-O model is instead based on a set of assumptions about constant and uniform proportions of expenditure. If households in general in the regional economy spend, for example, 13.3 per cent of their income on food and non-alcoholic beverages, it is assumed that those working in vineyards do likewise. Indeed, the effects of all expenditure rounds after the first are calculated by using such standard proportions (i.e. multiplier calculations). Once a transactions table has been compiled, simple mathematical procedures can be applied to derive multipliers for each sector in the economy.

Input-output multipliers

Input-output multipliers are an indication of the strength of the linkages between a particular sector and the rest of the state or regional economy. As well, they can be used to estimate the impact of a change in that particular sector on the rest of the economy.

Detailed explanations on calculating I-O multipliers, including the underlying assumptions, are provided in any regional economics or I-O analysis textbook (see, for example, Jensen and West (1986)). They

31 A glossary of I-O terminology is provided in Appendix 3.

are calculated through a routine set of mathematical operations based on coefficients derived from the I-O transactions model, as outlined below.

The transactions table may be represented by a series of equations thus:

where Xi = total output of intermediate sector i (row totals);Xij = output of sector i purchased by sector j (elements of the intermediate quadrant); andYj = total final demand for the output of sector i.

It is possible, by dividing the elements of the columns of the transactions table by the respective column totals to derive coefficients, which represent more clearly the purchasing pattern of each sector. These coefficients, termed 'direct' or 'I-O' coefficients, are normally denoted as aij, and represent the direct or first round requirements from the output of each sector following an increase in output of any sector.

In equation terms the model becomes:

where aij (the direct coefficient ) = Xij/Xj. This may be represented in matrix terms:

X = AX + Y

where A = [aij], the matrix of direct coefficients.

The previous equation can be extended to:(I-A)X = Y

where (I-A) is termed the Leontief matrix,

or X = (I-A)-1Y

where (I-A)-1 is termed the 'general solution', the 'Leontief inverse' or simply the inverse of the open model.

The general solution is often represented by:

Z = (I-A)-1 = [zij]

The I-O table can be 'closed' with respect to certain elements of the table. Closure involves the transfer of items from the exogenous portions of the table (final demand and primary input quadrants) to the endogenous section of the table (intermediate quadrant). This implies that the analyst considers that the transferred item is related more to the level of local activity than to external influences. Closure of I-O tables with respect to households is common and has been adopted in this project.

X X X X YX X X X YX X X X Y

n

n

n n n nn n

1 11 12 1 1

2 21 22 2 2

1 2

............................................................

X a X a X a X YX a X a X a X YX a X a X a X Y

n n

n n

n n n nn n n

1 11 1 12 2 1 1

2 21 1 22 2 2 2

1 11 2 2

............................................................

The 'closed' direct coefficients matrix may be referred to as A*. The inverse of the Leontief matrix formed from A* is given by:

Z* = (I- A*)-1 = [z*ij]

Z* is referred to as the 'closed inverse' matrix.

A multiplier is essentially a measurement of the impact of an economic stimulus. In the case of I-O multipliers the stimulus is normally assumed to be an increase of one dollar in sales to final demand by a sector. The impact in terms of output, contribution to gross regional product, household income and employment can be identified in the categories discussed below.

(i) The initial impact: refers to the assumed dollar increase in sales. It is the stimulus or the cause of the impacts. It is the unity base of the output multiplier and provides the identity matrix of the Leontief matrix. Associated directly with this dollar increase in output is an own-sector increase in household income (wages and salaries, drawings by owner operators etc.) used in the production of that dollar. This is the household income coefficient hj. Household income, together with other value added (OVA), provide the total gross regional product from the production of that dollar of output. The gross regional product coefficient is denoted vj. Associated also will be an own-sector increase in employment, represented by the size of the employment coefficient. This employment coefficient ej represents an employment/output ratio and is usually calculated as 'employment per million dollars of output'.

(ii) The first round impact: refers to the effect of the first round of purchases by the sector providing the additional dollar of output. In the case of the output multiplier this is shown by the direct coefficients matrix [aij]. The disaggregated effects are given by individual aij coefficients and the total first-round effect by aij. First-round household income effects are calculated by multiplying the first-round output effects by the appropriate household income coefficient (hj). Similarly, the first-round gross regional product and employment effects are calculated by multiplying the first-round output effects by the appropriate gross regional product (vj) and employment (ej) coefficients.

(iii) Industrial-support impacts. This term is applied to 'second and subsequent round' effects as successive waves of output increases occur in the economy to provide industrial support, as a response to the original dollar increase in sales to final demand. The term excludes any increases caused by increased household consumption. Output effects are calculated from the open Z inverse, as a measure of industrial response to the first-round effects. The industrial-support output requirements are calculated as the elements of the columns of the Z inverse, less the initial dollar stimulus and the first-round effects. The industrial support household income, gross regional product and employment effects are defined as the output effects multiplied by the respective household income, gross regional product and employment coefficients. The first-round and industrial-support impacts are together termed the production-induced impacts.

(iv) Consumption-induced impacts: are defined as those induced by increased household income associated with the original dollar stimulus in output. The consumption-induced output effects are calculated in disaggregated form as the difference between the corresponding elements in the open and closed inverse (i.e. z*ij - zij, and in total as (z*ij - zij). The consumption-induced household income, gross regional product and employment effects are simply the output effects multiplied by the respective household income, gross regional product and employment coefficients.

(v) Flow-on impacts: are calculated as total impact less the initial impact. This allows for the separation of 'cause and effect' factors in the multipliers. The cause of the impact is given by the initial impact (the original dollar increase in sales to final demand), and the effect is represented by the first-round, industrial-support and consumption-induced effects, which together constitute the flow-on effects.

Each of the five impacts are summarised in Appendix Table 2.1. It should be noted that household income, gross regional product and employment multipliers are parallel concepts, differing only by their respective coefficients hj, vj and ej.

The output multipliers are calculated on a 'per unit of initial effect' basis (i.e. output responses to a one dollar change in output). Household income, gross regional product and employment multipliers, as described above, refer to changes in household income per initial change in output, changes to gross regional product per initial change in output and changes in employment per initial change in output. These multipliers are conventionally converted to ratios, expressing a 'per unit' measurement, and described as Type I and Type II ratios. For example, with respect to employment:

Type I employment ratio = [initial + first round + industrial support]/initial

and

Type II employment ratio = [initial + production induced32 + consumption induced]/initial

32 Where (first round + industrial support) = production induced.

Appendix Table 2.1 The structure of input-output multipliers for sector i a

Impacts General formula

Output multipliers ($) Initial 1 First-round iaij

Industrial-support izij-1-iaij

Consumption-induced iz*ij-izij

Total iz*ij

Flow-on iz*ij-1

Household Income multipliers ($) Initial hj

First-round iaijhi

Industrial-support izijhi- hj-iaijhi

Consumption-induced iz*ijhi-izijhi

Total iz*ijhi

Flow-on iz*ijhi-hj

Gross regional product multipliers ($) Initial vj

First-round iaijvi

Industrial-support izijvi- vj-iaijvi

Consumption-induced iz*ijvi-izijvi

Total iz*ijvi

Flow-on iz*ijvi-vj

Employment multipliers (full time equivalents) Initial ej

First-round iaijei

Industrial-support izijei- ej-iaijei

Consumption-induced iz*ijei-izijei

Total iz*ijei

Flow-on iz*ijei-ej

a In a DECON model, Z* (the ‘closed inverse’ matrix), includes a population and an unemployed row and column (see below for details).

Model assumptions

There are a number of important assumptions in the I-O model that are relevant in interpreting the analytical results.

Industries in the model have a linear production function, which implies constant returns to scale and fixed input proportions.

Another model assumption is that firms within a sector are homogeneous, which implies they produce a fixed set of products that are not produced by any other sector and that the input structure of the firms are the same. Thus it is preferable to have as many sectors as possible specified in the models and the standard models for this study were compiled with 66 sectors (see Appendix 1 for further detail).

The model is a static model that does not take account of the dynamic processes involved in the adjustment to an external change, such as a permanent change in natural resources management.

Extending the standard economic impact model as a DECON model

Based on work undertaken by EconSearch (2009 and 2010a) and consistent with Mangan and Phibbs (1989), the I-O model developed for this project was extended as demographic-economic (DECON) model. The two key characteristics of the DECON model, when compared with a standard economic model, are as follows.

1. The introduction of a population ‘sector’ (or row and column in the model) makes it possible to estimate the impact on local population levels of employment growth or decline.

2. The introduction of an unemployed ‘sector’ makes it possible to account for the consumption-induced impact of the unemployed in response to economic growth or decline.

The population ‘sector’

The introduction of a population ‘sector’ to the standard I-O model allows for the calculation of population multipliers. These multipliers measure the flow-on population impact resulting from an initial population change attributable to employment growth or decline in a particular sector of the regional economy.

Calculation of population multipliers is made possible by inclusion of a population row and column in the 'closed' direct coefficients matrix of the I-O model.

Population row: the population coefficient (pj) for sector j of the DECON model is represented as:

pj = -rhoj * ej * family sizej

where rhoj = the proportion of employees in sector j who remain in the region after they lose their job (negative employment impact) or the proportion of new jobs in sector j filled by previously unemployed locals (positive employment impact);

ej = the employment coefficient for sector j; and

family sizej = average family size for sector j.

Population column: the population column of the DECON model is designed to account for growth or decline in those sectors of the economy that are primarily population-driven (i.e. influenced by the size of the population) rather than market-driven (i.e. dependent upon monetary transactions). Clearly, many of the services provided by the public sector fit this description and, for the purpose of this analysis, it was assumed that the following intermediate sectors were primarily population-driven:

public administration and defence;

education;

health and community services; and

cultural and recreational services.

Thus, the non-market coefficient for sector j of the DECON model is represented as expenditure on that non-market service (by governments) in $million per head of population.

The population multiplier for sector j is represented as: z*pj / ppj

where z*pj = coefficient of the ‘closed inverse’ matrix in the population row for sector j; and

ppj = coefficient of the direct coefficients matrix in the population row for sector j.

Sources of local data for the population sector of the DECON models used in this project included the following.

rho: little or no published data are available to assist with estimation of this variable, particularly at a regional level. The DECON models have been constructed to enable the analyst to estimate this variable on the basis of the availability superior data or assumptions.

Family size: in order to estimate average family size by industry, relevant data were extracted from the Australian Bureau of Statistics 2006 Census of Population and Housing using the TableBuilder database. These data were modified by the consultants in order to ensure consistency with the specification and conventions of the I-O models.

The unemployed ‘sector’

As outlined above, the introduction of an unemployed ‘sector’ to the standard I-O model makes it possible to account for the consumption-induced impact of the unemployed in response to economic growth or decline.

Through the inclusion of an unemployed row and column in the 'closed' direct coefficients matrix of the standard I-O model it is possible to calculate Type III multipliers (for output, gross regional product, household income and employment).

The key point to note is that, in the situation where at least some of the unemployed remain in a region after losing their job (negative employment impact) or some of the new jobs in a region are filled by previously unemployed locals (positive employment impact), Type III multipliers will be smaller than the more frequently used Type II multipliers.

Unemployed row: the unemployed coefficient (uj) for sector j of the DECON model is represented as:

uj = -rhoj * (1-essj) * ej

where rhoj = the proportion of employees in sector j who remain in the region after they lose their job (negative employment impact) or the proportion of new jobs in sector j filled by previously unemployed locals (positive employment impact);

essj = the proportion of employed in sector j who are not eligible for welfare benefits when they lose their job; and

ej = the employment coefficient for sector j.

Unemployed column: the unemployed column of the DECON model is an approximation of total consumption expenditure and the consumption pattern of the unemployed. It is represented as dollars per unemployed person rather than $million for the region as a whole, as is the case for the household expenditure column in a standard I-O model.

Sources of local (i.e. state and regional) data for the unemployed sector of the DECON models used in this study included the following.

ess: in order to estimate the proportion of employed by industry who are not eligible for welfare benefits when they lose their job, relevant data were were extracted from the Australian Bureau of Statistics 2006 Census of Population and Housing using the TableBuilder database. These data were modified by the consultants in order to ensure consistency with the specification and conventions of the I-O models.

Unemployed consumption: total consumption expenditure by the unemployed was based on an estimate of the Newstart Allowance whilst the pattern of consumption expenditure was derived from household income quintiles in the 2003/04 Household Expenditure Survey (ABS 2006).

Incorporating a tourism demand profile in the I-O model

Tourism expenditure is a measure of the value of sales of goods and services to visitors to the state or region. The following method and data sources were used to estimate tourism expenditure by industry sector for the region.

The primary data were sourced from Tourism Research Australia (TRA).

Base datasets included total tourism expenditure by TRA tourism region and average expenditure profiles, by region, across a range of goods and services (e.g. food and drink, fuel, shopping, etc.).

Estimates were available for domestic day, domestic overnight and international visitor expenditure.

The first adjustment to the base data was the development of a concordance between the TRA tourism regions and I-O model regions and the allocation of these base data to the relevant I-O model region. These allocations were based, in turn, on an ABS concordance between TRA tourism regions and SLAs.

The second adjustment to the base data was the application of a more detailed expenditure breakdown from the ABS Australian National Accounts: Tourism Satellite Account for both domestic and international visitor expenditure (ABS 2010d).

The third adjustment to the base data was the conversion of tourism expenditure estimates from purchasers’ to basic prices (i.e. reallocation of net taxes (taxes minus subsidies) and marketing and transport margins) to make the data consistent with accounting conventions used in the national, state and regional I-O models. Purchasers’ to basic price ratios for tourism expenditure categories were derived from ABS data.

The final adjustment to the base data was the allocation of the tourism expenditure data in basic prices to the relevant input-output sectors (intermediate sectors, taxes less subsidies or imports) in which the expenditure occurred, thus compiling a profile of sales to final demand. This process was undertaken for each type of tourism expenditure (domestic day, domestic overnight and international visitor) and the results aggregated to form a single tourism demand profile. Profiles were developed at the state and regional levels.

Constructing a RISE v3.0 economic impact model

In the final model construction stage the data described above were incorporated into a Microsoft Excel® spreadsheet based economic impact model for the region and state (i.e. RISE v3.0)33. This model allows for description of the structure of the economy. It can also be used for the estimation of economic impacts over time in response to the introduction of a new industry or a change in the final demand for the output of one or many sectors. Model assumptions can be modified to account for:

price changes between the model construction year (2009/10) and the base year for the analysis;

labour productivity change over time (as above and for the subsequent years);

the level of regional migration (e.g. for a positive employment impact, the proportion of new jobs filled by previously unemployed locals).

33 For further details on the use and application of this type of model see EconSearch (2010b).

Appendix 3 Glossary of Input-Output Terminology

Basic price is the price received for a good or service by the producer. It is also known as the producers' price. It excludes indirect taxes and transport, trade and other margins.

Changes in inventories (stocks) "consist of stocks of outputs that are held at the end of a period by the units that produced them prior to their being further processed, sold, delivered to other units or used in other ways and stocks of products acquired from other units that are intended to be used for intermediate consumption or for resale without further processing" (ABS 2008b).

Consumption-induced impacts are additional output and employment resulting from re-spending by households that receive income from employment in direct and indirect activities. Consumption-induced effects are sometimes referred to as 'induced effects'.

DECON model is a demographic-economic model based on a traditional input-output model. The introduction of a population ‘sector’ (or row and column in the model) makes it possible to estimate the impact on local population levels of employment growth or decline. The introduction of an unemployed ‘sector’ makes it possible to account for the consumption-induced impact of the unemployed in response to economic growth or decline.

Direct (or initial) impacts are an estimate of the change in final demand or level of economic activity that is the stimulus for the total impacts.

Employment is a measure of the number of working proprietors, managers, directors and other employees, in terms of the number of full-time equivalents and total (i.e. full-time and part-time) jobs. Employment is measured by place of remuneration rather than place of residence.

ess is an estimate of the proportion of employed who are not eligible for welfare benefits when they lose their job.

Exports (other) are a measure of the value of goods and services sold from the region/state of interest to consumers in other regions, interstate and overseas, net of sales to visitors to the region.

Final demand quadrant (components of) includes household and government consumption expenditure, gross fixed capital formation, changes in inventories (stocks), tourism expenditure and 'other' exports.

First-round impacts are estimates of the requirement for (or purchases of) goods and services from other sectors in the economy generated by the initial economic activity.

Flow-on impacts are the sum of production-induced impacts, consumption-induced impacts and offsetting consumption effects.

Government consumption expenditure includes "net expenditure on goods and services by public authorities, other than those classified as public corporations, which does not result in the creation of fixed assets or inventories or in the acquisition of land and existing buildings or second-hand assets. It comprises expenditure on compensation of employees (other than those charged to capital works, etc.), goods and services (other than fixed assets and inventories) and consumption of fixed capital. Expenditure on repair and maintenance of roads is included. Fees, etc., charged by general government bodies for goods sold and services rendered are offset against purchases. Net expenditure overseas by general government bodies and purchases from public corporations are included. Expenditure on defence assets that are used in a fashion similar to civilian assets is classified as gross fixed capital formation; expenditure on weapons of destruction and weapon delivery systems is classified as final consumption expenditure" (ABS 2008b).

Gross fixed capital formation (GFCF) includes government, private and public corporation expenditure on new fixed assets plus net expenditure on second-hand fixed assets, including both additions and replacements (see ABS 2008b for further detail).

Gross operating surplus and gross mixed income. Gross operating surplus (GOS) is a measure of the operating surplus accruing to all enterprises, except unincorporated enterprises. It is the excess of gross output over the sum of intermediate consumption, household income and taxes less subsidies on production and imports. Gross mixed income (GMI) is a measure of the surplus or deficit accruing from production by unincorporated enterprises (ABS 2008b). The National Accounts definition of this indicator, as specified in the 2004/05 National I-O table (ABS 2008a), includes drawings by owner operators (or managers). In the state model used in this project, drawings by owner operators have been included in household income.

Gross regional/state product (GRP/GSP) is a measure of the net contribution of an activity to the regional/state economy. GRP/GSP is measured as value of output less the cost of goods and services (including imports) used in producing the output. In other words, it can be measured as the sum of household income, 'gross operating surplus and gross mixed income net of payments to owner managers' and 'taxes less subsidies on products and production'. It represents payments to the primary inputs of production (labour, capital and land). Using GRP/GSP as a measure of economic impact avoids the problem of double counting that may arise from using value of output for this purpose.

Household consumption expenditure includes "net expenditure on goods and services by persons and expenditure of a current nature by private non-profit institutions serving households. This item excludes expenditures by unincorporated businesses and expenditures on assets by non-profit institutions (included in gross fixed capital formation). Also excluded is expenditure on maintenance of dwellings (treated as intermediate expenses of private enterprises), but personal expenditure on motor vehicles and other durable goods and the imputed rent of owner-occupied dwellings are included. The value of 'backyard' production (including food produced and consumed on farms) is included in household final consumption expenditure and the payment of wages and salaries in kind (e.g. food and lodging supplied free to employees) is counted in both household income and household final consumption expenditure" (ABS 2008b).

Household income is a component of GRP/GSP and is a measure of wages and salaries paid in cash and in-kind, drawings by owner operators and other payments to labour including overtime payments, employer’s superannuation contributions and income tax, but excluding payroll tax.

Imports are a measure of the value of goods and services purchased by intermediate sectors and by components of final demand in the region/state of interest from other regions, interstate and overseas.

Industrial-support impacts are output and employment resulting from second, third and subsequent rounds of spending by firms.

Input-output analysis is an accounting system of inter-industry transactions based on the notion that no industry exists in isolation.

Input-output model is a transactions table that illustrates and quantifies the purchases and sales of goods and services taking place in an economy at a given point in time. It provides a numerical picture of the size and shape of the economy and its essential features. Each item is shown as a purchase by one sector and a sale by another, thus constructing two sides of a double accounting schedule.

Multiplier is an index (ratio) indicating the overall change in the level of activity that results from an initial change in economic activity. They are an indication of the strength of the linkages between a particular sector and the rest of the state or regional economy. They can be used to estimate the impact of a change in that particular sector on the rest of the economy.

Offsetting consumption effects are 'lost' consumption expenditure by the local unemployed before taking a job or 'new' consumption expenditure of those losing a job as they shift to welfare payments.

Output (Value of) is a measure of the gross revenue of goods and services produced by commercial organisations (e.g. farm-gate value of production) and gross expenditure by government agencies. Total output needs to be used with care as it can include elements of double counting when the output of integrated industries is added together (e.g. the value of winery output includes the farm-gate value of grapes). For sectors where superior regional data are not available, value of output by industry is allocated across regions on an employment basis, rather than in terms of the location of other factors of production such as land and capital.

Purchasers' price is the price paid for a good or service paid by the purchaser. It includes indirect taxes and transport, trade and other margins.

Primary input quadrant (components of) includes household income, gross operating surplus and gross mixed income net of payments to owner managers, taxes less subsidies on products and production and imports.

Production-induced impacts are the sum of first-round and industrial support impacts. Production-induced impacts are sometimes referred to as 'indirect effects'.

rho is an estimate of the proportion of employees who remain in the region after they lose their job (negative employment impact) or the proportion of new jobs filled by previously unemployed locals (positive employment impact).

Taxes less subsidies on products and production (TLSPP) is defined as 'taxes on products' plus 'other taxes on production' less 'subsidies on products' less 'other subsidies on production'. Taxes on products are taxes payable per unit of some good or service. Other taxes on production consist of all taxes that enterprises incur as a result of engaging in production, except taxes on products. Subsidies on products are subsidies payable per unit of a good or service. Other subsidies on production consist of all subsidies, except subsidies on products, which resident enterprises may receive as a consequence of engaging in production (ABS 2008b).

Tourism expenditure is a measure of the value of sales of goods and services to visitors to the state or region.

Total impacts are the sum of initial (or direct) and flow-on impacts.

Type I multiplier is calculated as (direct effects + production-induced effects)/direct effects.

Type II multiplier is calculated as (direct effects + production-induced effects + consumption-induced effects)/direct effects.

Type III multiplier is a modified Type II multiplier, calculated by including a population and unemployed row and column in the 'closed' direct coefficients matrix of the standard I-O model. Calculated as (direct effects + production-induced effects + consumption-induced effects + offsetting consumption effects)/direct effects.

Appendix F

Navigation Channel Options

Appendix G

Review of Strategic Planning Reports for the Area

Review of strategic planning reports for the area

The desktop review revealed a number of current strategic planning documents specifically address the reconstruction of Yarra Street Pier. These documents are outlined in greater detail below.

Central Geelong: Looking Forward Structure Plan July 2007

The Structure Plan nominates a vision for Central Geelong as:

Geelong is an international Waterfront city. It has world-class facilities and is a highly desirable place to be.

The Structure Plan locates the Yarra Street pier within the Waterfront Precinct, which is nominated to constitute a tourist and leisure destination.

Relevant overview objectives nominated within the Structure Plan, include:

Increase the range of visitor activities on the waterfront and enhance its visual appearance as Central Geelong’s most iconic feature;

To encourage innovative and contemporary architecture, that complements the existing heritage and waterfront character, retains and shares key views, and incorporates ecological sustainable design.

Relevant Land Use and Function Objectives include:

Consolidate and strengthen existing land use precincts and encourage the expansion of activity clusters as defined in the Strategic Land Use Plan;

Encourage and protect the primary function of each land use precinct.

Relevant Waterfront Precinct Objectives include:

Strengthen the Waterfront precinct of Central Geelong as a tourist and leisure destination.

Relevant Waterfront Precinct Strategic Directions include:

Support tourist, lifestyle and entertainments activities;

Ensure development over water maintains and enhances public access.

Relevant Environment and Community Strategic directions include:

Redevelop the Yarra Street pier in a way that enables public access and increases the attractiveness of the Waterfront for recreation and leisure.

Central Geelong Waterfront Masterplan 2011

The Central Geelong Waterfront Masterplan 2011 (the Masterplan) is noted to update the earlier Waterfront Geelong Design and Development Code 1996 (the Code). The Code is still a reference document within Clause 21.09 of the Greater Geelong Planning Scheme.

The Masterplan includes design principles to inform future development of the waterfront. Relevant design principles include:

Protect and enhance the coastal environment;

Ensure the waterfront is an attractive, accessible destination offering a range of experiences and places, including access to and engagement with the water;

Prevent the alienation of public open space and maximise public access throughout the waterfront precinct;

Ensure that developments make a positive contribution to adjoining public space and contribute to the prevailing character of the precinct;

Protect and enhance important views across, and to Corio Bay, as well as vistas to buildings and other landmarks of heritage and cultural significance;

Protect and enhance the views of the waterfront from the north-south streets of Central Geelong;

Promote waterfront development that is environmentally, socially and economically sustainable and responsible;

Further, ongoing management of the waterfront should aim for the orderly and harmonious coordination of a variety of activities and events while maintenance of public open space should continue to a high standard.

In addition to the general design principles listed above, the Masterplan includes a specific section relating to the Yarra Street Pier. It highlights that the original Yarra Street Pier, built in the 1800’s, was destroyed by fire in 1988. It further highlights that the rebuilding of the pier is viewed as a crucial development to Geelong which will have a range of benefits including: provision of a safe harbour; itinerant berthing; re-fuelling; sullage removal; public access for promenading and fishing; ferry berth; large ship berth; tourism or maritime related retail activities; small hospitality retailing (cafes); and wave attenuation for the Royal Geelong Yacht Club marina.

The Masterplan also makes a range of further recommendations relating to the Yarra Street Pier, including:

Proposals for the reconstruction of the Yarra Street Pier should be considered in the context of any similar or competing development ideas being suggested for Fishermen's Basin, Cunningham Pier, the Waterfront Pavilion site and Steampacket Quay;

Public use and access to the entire pier should be given the highest priority in any development proposal;

Development should seek active maritime or tourism uses;

The design of the pier should ensure it is capable of accommodating a range of uses and structures;

Any structures proposed for a pier should be architecturally designed, visually light, allow for cross-bay views and present well on all elevations;

Building heights on the pier should be subservient to the built form of the waterfront and generally be less than 16 metres of four storeys in height;

Exceptions to this should only be allowed in the case of singular 'iconic' building that delivers a net community gain;

Ensure that any horizontal built form includes wide 'breaks' rather than constituting a single continuous form along the pier;

Pier development should include a traffic management solution at the termination of Yarra Street to ensure pedestrian priority and maintain continuity of the Baywalk;

Any new developments must include on-site screened enclosures for rubbish, recycling and other utilities to ensure they are visually unobtrusive.

Following the desktop review of the City of Greater Geelong Planning Scheme and relevant strategic planning documents (as outlined above), it is clear that there is both high level and specific strategic support for the reconstruction of the Yarra Street pier.

Appendix HAppendix H

Bill of Quantities

Appendix I

Project Risks

1. Risk Assessment Methodology

A Risk Assessment was undertaken using a methodology consistent with Australian Risk Management Guidelines (AS/NZS 4360:2004) and using the State Government’s Risk Management Framework.

The following consequence table incorporates the risk rating for business continuity and risk ratings taken from the Risk Management Guidelines.

Table 54 Consequence Table

Risk Rating

Business Continuity

Financial

Health and Safety

Natural Environment

Social/cultural heritage

Community Gov’tReputation /Media

Legal

Critical Disaster with potential to lead to business failure

>$10M Multiple fatalities, significant irreversible effects to >50 persons

Very serious long-term environmental impairment of ecosystem functions

NA NA Significant prosecution and fines. Very serious litigation including class action

Major Critical event which will be endured with proper management

$1M – $10M

Single fatality and/or irreversible disability to one or more persons

Very serious long-term environmental impairment of ecosystem functions

On-going serious social issues. Significant damage to structures/items of cultural significant

Serious public or media outcry (international coverage)

Major breach of regulation. Major litigation

Moderate Significant event which can be managed under normal circumstances

$100,000 - $1M

Moderate but irreversible disability or impairment to one or more persons

Serious medium term environmental effects

Significant adverse national media/public

NGO attention

Serious breach of regulation with investigation or report to authority with prosecution and/or moderate fine possible

Minor Event with consequences which can be readily absorbed but requires

$10,000 - $100,000

Moderate, short-term effects but not affecting ecosyste

Moderate, short-term effects but not affecting ecosystem

On-going social issues. Permanent damage to items of cultural significance

Attention from media and/or heightened concern by local community.

Minor legal issues, non-compliance and breaches or

Risk Rating

Business Continuity

Financial

Health and Safety

Natural Environment

Social/cultural heritage

Community Gov’tReputation /Media

Legal

management effort to minimise the impact

m functions

Criticism by NGOs

regulation

Insignificant

Not worth worrying about. Existing treatments and procedures will cope with event

<$10,000

No medical treatment required

Minor effect on biological or physical environment

Minor medium-term social impacts on local population. Most repairable

Minor, adverse local public or media attention or complaints

Minor legal issues, non-compliance and breaches or regulation

Table 55 provides the categories and definitions of likelihood used in the risk assessment.

Table 55 Likelihood Table

Risk Rating Description of Event

Almost certain The event is expected in most circumstances (daily/weekly)

High level of known incidents (records/experiences)

Strong likelihood of re-occurring, with opportunities / means to re-occur

Likely The event will probably occur in most circumstances (monthly)

Regular incidents known (recorded / experienced)

Considerable opportunity / means to occur

Moderate The event should occur at some time (over 12 months)

Few infrequent, random occurrences (recorded / experienced)

Some opportunity / means to occur

Unlikely The event could occur at some time (2-5 years)

No known incidents recorded or experienced

Little opportunity / mean or reason to occur

Rare The event many occur only in exceptional circumstances (10 years)

High unheard of

Almost no opportunity to occur

Using support materials such as existing risk assessments developed for the business case and risk assessments from other similar projects, the assessment focussed on capturing the major risks at each project phase of the project.

The risk assessment matrix used is presented below.

Table 56 Risk Assessment Matrix

Assessment Matrix

Consequence

Likelihood Critical Major Moderate Minor Insignificant

Almost certain H H H S S

Likely H H S S M

Moderate H H S M L

Unlikely H S M L L

Rare

S S M L L

High Significant Medium Low

Detailed risk assessment is attached.

Greater Geelong City CouncilRisk Assessment - Geelong Maritime Infrastructure Project

Created: 18-Dec-11

By: Tomas Nohel

Last Updated: 27-Jan-12

BY: GHD Team

Residual Risk Residual Risk

RISK ID Risk Type Risk Description Likelihood Likelihood

Risk (likelihood x consequence) Proposed Mitigation and Management strategy

Residual Likelihood

Residual Likelihood

Residual Consequen

ce

Residual Consequ

ence

Risk (likelihood

x consequenc

e)

Rare (1) - Almost Certain

(5)

Rare (1) - Almost

Certain (5)insignificant - catastrophic

insignificant - catastrophic

Rare (1) - Almost

Certain (5)

Rare (1) - Almost

Certain (5)

insignificant -

catastrophic

insignificant -

catastrophic

1 Site

Unexpected site conditions. A key risk in developing structures in water is that ground conditions are softer than expected. Inadequate assessment of the ground conditions may result in the initial design being inadequate to hold the structure once it has been constructed.

Likely 4 Major D 4. High Undertake geotechnical investigation Unlikely 2 Moderate C 2. Medium

2 Site Unexpected ground conditions for dredging of the approach channels in regards to geotechnical properties

Moderate 3 Major D 4. High Undertake geotechnical investigation Unlikely 2 Major D 3. Significant

3 Site Dredge material is contaminated

Likely 4 Major D 4. High Undertake sediment sampling and testing in accordance with relevant guidelines and regulations Unlikely 2 Major D 3. Significant

4 Design Ability to dispose of dredge material in existing dredge material grounds

Likely 4 Major D 4. High Assess various options for disposal and seek approval for preferred through relevant legislation Unlikely 2 Moderate C 2. Medium

5 Design Adverse building conditions may be present where the existing pier used to lie.

Likely 4 Moderate C 3. Significant Align new pier away from old pier or design new piles around the existing pile or extract piles prior to construction Unlikely 2 Moderate C 2. Medium

6 Design The pier does not provide boaters with adequate access to the land, specifically the Geelong waterfront.

Moderate 3 Moderate C 3. Significant Consider relevant range of boats to use the facilityIntegrate design of jetty with onshore infrastructureDesign to appropriate levels

Unlikely 2 Moderate C 2. Medium

7 DesignThere is a risk that the new design does not interface reliably with the existing site configuration of the Geelong waterfront.

Moderate 3 Moderate C 3. Significant Consider relevant range of boats to be using the facilityDuring design liaise with relevant stakeholdersIntegrate design of jetty with onshore infrastructureDesign to appropriate levels


8 Design The design of the Pier may not fit with CCGG asset management approach

Likely 4 Moderate C 3. Significant Confirm with CCGG their asset management approach Unlikely 2 Moderate C 2. Medium

9 Project Development

Third party objectors do not approve the plans prepared for the Yarra Pier redevelopment.

Moderate 3 Moderate C 3. Significant Prepare a consultation strategy with all interested stakeholders and implement it Unlikely 2 Major D 3. Significant

10 Design Design does not result in the creation of a safe harbour.

Moderate 3 Moderate C 3. Significant Collect additional wave and wind data, undertake additional modelling and incorporate findings into design parameters Unlikely 2 Major D 3. Significant

11 Construction Rate of price change for key components (labour, materials and escalation) exceed budget.

Moderate 3 Major D 4. High Procurement strategySuitable allowance for contingency and escalation in cost estimates

Unlikely 2 Major D 3. Significant

Consequence

Risk Register

The table below represents a risk assessment undertaken as part of development of master plan development. This has been enhanced via a risk workshop on 24 September. It is intended that this remain a live document to be added to and amended throughout project development.

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12 Construction Design changes are required during construction delaying the construction completion.

Moderate 3 Moderate C 3. Significant Procurement strategyPrepare detailed design including sign-off by all relevant approval authorities prior to tender process


13 ConstructionUnforeseen bad weather and unavailability of specialised equipment is experienced during the construction period.

Moderate 3 Moderate C 3. Significant Allow sufficient float in the programEngage with suitable contractor prior to tender to determine availability of required plant and resources


14 Construction There are restrictions to access the construction site due to unforeseen site constraints.

Moderate 3 Moderate C 3. Significant Through consultation with stakeholders specify site access requirements in the contract Unlikely 2 Moderate C 2. Medium

15 Project Development Risk of insufficient community support for the Project

Moderate 3 Minor B 2. Medium Communication strategy Unlikely 2 Minor B 1. Low

16 DesignThe specified design of the pier will not withstand unforseen events, e.g. worse than predicted weather, larger than expected vessels docking at the pier.

Unlikely 2 Major D 3. Significant Design to relevant codes and guidelines including use of load factors is expected to mitigate this risk Unlikely 2 Major D 3. Significant

17 Operation Annual operating costs of the Pier are underestimated

Moderate 3 Moderate C 3. Significant Ensure that estimates allow sufficient contingency and reflect the scope of the future operation including the asset management plan


18 Demand Naval vessels and other large vessels don't call at Geelong

Moderate 3 Moderate C 3. Significant Ongoing dialogue with naval command and the maritime industry Unlikely 2 Moderate C 2. Medium

19 Demand Recreational boaters don't visit Geelong

Moderate 3 Moderate C 3. Significant Promotion of the facility by CoGG and other relevant agencies Unlikely 2 Moderate C 2. Medium

20 Demand Cruise ship growth is below expectation

Moderate 3 Major D 4. High Ensure diverse/multi-use of the proposed facility Unlikely 2 Major D 3. Significant

21 Demand Cruise ships opt for alternative existing or future ports

Moderate 3 Major D 4. High CoGG actively promotes the destinationConsult with the operators during the design phase to meet expectationsEnsure commercial and service offering is competitive


22 Operation Risk of inadequate resourcing and governance for the ongoing management of the facility

Moderate 3 Moderate C 3. Significant CoGG prepares the project operations plan including resourcing levels, governance arrangements and funding for the operation of the facility



Risk of inadequate resourcing and governance for the project implementation

Moderate 3 Moderate C 3. Significant CoGG prepares the project execution plan including resourcing levels, governance arrangements and funding for the project implementation


24 Project Development Risk of insufficient funding allocation

Moderate 3 Major D 4. High modify project scope to meet funding available or adjust he investment contributions from other parties Unlikely 2 Major D 3. Significant

25 SiteRisk that the site will be subject to heritage/archaelogocal restrictions impacting successful delivery, resulting in increased costs and program overruns

Likely 4 Moderate C 3. Significant Undertake survey to locate and design new infrastructure to reduce impact Unlikely 2 Moderate C 2. Medium

26 DesignExisting utilities and services not adequate and additional works required resulting in increase program and budget overrun

Likely 4 Moderate C 3. Significant Early identification during the project development phase including consultation with cruise industry and service providers




Moderate 3 Major D 4. High Thorough investigations completedProactive engagement with approval authoritiesAdopt learning’s from previous approvals (e.g. Port Phillip Channel Deepening Project)Current VRCA approvals


GHD

180 Lonsdale StreetMelbourne, Victoria 3000T: (03) 8687 8377 F: (03) 8687 8111 E: [email protected]

© GHD 2012

This document is and shall remain the property of GHD. The document may only be used for the purpose for which it was commissioned and in accordance with the Terms of Engagement for the commission. Unauthorised use of this document in any form whatsoever is prohibited.

Document Status

Rev No. Author

Reviewer Approved for Issue

Name Signature Name Signature Date

1 B.RichardsT. Nohel

D.Rolland D.Rolland 28/03/2012

2 T.Nohel D.Rolland D.Rolland 16/04/2012

3 T.Nohel D.Rolland D. Rolland 23/04/2012

4 T.Nohel D.Rolland D.Rolland 27/06/2012


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