The Department of Defence (Defence) seeks approval from the Committee to proceed with the proposed Point Wilson Waterside Infrastructure Remediation project, at Point Wilson, Victoria.
Point Wilson Explosives Area (PWEA) is located on the north shore of Corio Bay, approximately 50 kilometres west of Melbourne. According to Defence:
The PWEA is the sole Defence-owned importation facility capable of bulk movement of explosive ordnance (EO). It is a significant maritime asset, currently consisting of a 2.4 kilometre long jetty and 168 metre long wharf capable of accommodating EO container vessels.
Defence states that PWEA has been closed since 2008 due to ‘unsafe structural’ conditions, details of which can be found under the ‘Need for the works’ section of this Chapter. The purpose of this proposal is to ‘remediate the PWEA waterside infrastructure in order to enable to recommencement’ of EO importation at the site.
The estimated cost of the project is $218.9 million (excluding GST).
The project was referred to the Committee on 28 June 2018.
Conduct of the inquiry
Following referral, the inquiry was publicised on the Committee’s website and via media release.
The Committee received two submissions and two confidential submissions. A list of submissions can be found at Appendix A.
On 24 August 2018, the Committee conducted a site inspection at Point Wilson Explosives Area. On the same day, the Committee also conducted a public and in camera hearing. A transcript of the public hearing is available on the Committee’s website.
Need for the works
In its submission, Defence notes that the jetty and wharf at PWEA ‘were constructed between 1958 and 1961, and the facility was officially opened in 1961’. Further, according to Defence:
PWEA has exceeded its anticipated design life. In 2008, a structural report assessed that the wharf and jetty structure had deteriorated to the point that it is unsafe and inoperable until remediation work is completed. As a result, the waterside facility was deemed non-operational for bulk EO operations. In 2016, further safety shortcomings were identified, which led to a decision to restrict all access to the jetty and wharf, with access by exception to address critical safety issues only.
Defence outlined the safety issues identified:
Concrete deck deterioration. The deterioration of the concrete deck, due to chloride ingress into the concrete, has led to spalling of the concrete soffit and corrosion of the steel reinforcement resulting in loss of structural capacity.
Steel crosshead corrosion. The breakdown of the coating and subsequent corrosion of the steel crosshead has led to a reduction in the structural capacity of the members.
Steel stringer beam halving joints corrosion. The stiffeners and connection plates on the half joints on the stringers have corroded to such an extent that the structural capacity has been significantly impacted.
Steel piles corrosion. The protective coating that was installed to protect the steel piles has deteriorated over time. This, in conjunction with higher rates of corrosion in the splash zone, has resulted in the steel piles undergoing various rates of corrosion. The jetty piles have been assessed as being in reasonable condition (generally due to their protection by the existing cathodic protection system). The wharf and link span piles are not protected by cathodic protection and are in significantly worse condition than the jetty piles.
Dilapidated timber fender piles. Necking of the timber piles below the waterline and marine borers within the timber have significantly reduced the berthing load capacity of the timber fender piles. In 2017, this degradation reached a point where the risk of failure and subsequent collapse into the sea was considered a potential public safety risk to mariners and the environment. Due to this risk, all timber fender piles have recently been removed.
As a result of these issues, Defence has been importing EO through Port Alma, a privately owned port 60 kilometres south of Rockhampton, Queensland.
According to Defence, reliance on Port Alma as the sole point of importation represents the following risks:
Port Alma is a commercial port, and its availability is constrained due to continual competition for berthing slots with resource industry companies. Access is not guaranteed and quite often time pressures and difficult during high port congestion.
Port Alma does not have any onsite EO storage facilities and requires transfer to the Queensland storage reserve of Bajool, some 30 kilometres from Port Alma. Bajool has limited EO storage capacity, requiring further overflow storage in a disused quarry at the remote Shoalwater Bay Training Area, approximately 130 kilometres north of Port Alma. This leads to additional transport, security and handling risks, and costs due to limited infrastructure at Shoalwater Bay. This overflow storage access will be limited in the future with Shoalwater Bay experiencing increased training usage by the Australian Defence Force and foreign forces.
The port can only handle shipping containers rather than pallets, limiting its utility. It has ageing and limited facilities (some of which are 50 years old), there is potential that it may close for refurbishment or upgrade in the near to medium future. There is also no guarantee on the future use of Port Alma as Defence is not seen as a priority for a commercial port.
Port Alma is vulnerable to inclement weather; being closed due to king tides and weather events on a number of occasions. The roads to Bajool are poor and subject to risks and constraints as they are single lane width and have closed shoulders.
Increased workarounds and inefficiencies incur an extra cost of approximately $1 to $1.5 million per shipment in additional transport, handling, security, and port fees, all of which leads to increased inefficiencies and operational stress on the EO supply chain. There are considerable distances to the main EO depot sites in New South Wales and Victoria, and it can take months before all EO is finally distributed around the EO network.
It creates complexity in quarantine management with a number of local agreements in place regarding the transport of contaminated containers at Bajool, which could be cancelled at any stage. Defence has on occasion been instructed to unload within 24 hours, making it difficult to organise biosecurity officers to support this.
At the public hearing, Defence gave the Committee further detail on how the contaminated container issue added additional risks to Defence’s handling of EO through Port Alma:
The biosecurity aspects at Port Alma are very limited, and they can’t hold explosive containers on the site for any length of time. So those containers, if they come through with any sort of biocontaminant… are currently plastic wrapped and then trucked the 40 kilometres to Bajool, where there is a treatment capacity.
Defence told the Committee that ‘returning PWEA to operational status is therefore critical to the sustainment and surety of the Defence EO supply chain, and will contribute to a broad range of Defence capabilities’.
At the public hearing, Defence further stated that:
Point Wilson provides us with the additional strategic capacity to import our explosives. It is a dedicated, Defence-owned and controlled site. Once refurbished, it provides a guaranteed secure and reliable importation capacity, mitigates our quarantine risks that we currently have and minimises the amount of road transport that [Defence subjects its] munitions to.
The PWEA acting as the single point of entry for bulk EO importation is important for the realisation of the objectives of the Explosives Ordnance Logistics Reform Program (EOLRP), examined by the Committee in 2017.
Furthermore, according to Defence:
If the project does not proceed, the entire dilapidated wharf and jetty would need to be demolished for public safety at an estimated cost of $60-100 million.
The Committee is satisfied that the need for the works exists.
Defence considered a range of options in developing this proposal. Firstly, Defence stated that it considered the suitability of other bulk EO importation sites, such as Twofold Bay in New South Wales and Wyndham Port in Western Australia.
According to Defence:
Twofold Bay was considered not suitable due to an insufficient EO licence, a lack of onsite EO storage, no ability to manage or accommodate importation levels of EO containers, no direct access to major roads and rail networks, close proximity to private and commercial businesses and public beaches. The Wyndham Port was found to be extremely remote with no major roads and rail infrastructure access, limited access through the wet season, increased operating costs due to remote location and ship limitations due to tidal ranges of eight metres.
Once other potential, existing sites were ruled out, Defence told the Committee that it considered a ‘broad range of options’ to ‘meet the requirements of EO bulk’ importation at PWEA:
In the initial development phase, options ranged from minimal refurbishment to complete replacement and it was determined that major refurbishment was the preferred option as it best meets the capability requirements and is best value for money.
As a result of this, Defence considered two options in further detail:
Option One – Remediate wharf with 2.4 kilometre single lane jetty. The remediation of the 2.4 kilometre jetty consists of a 2,255 metre single lane jetty and 125 metre link span connecting to the new wharf, with associated supporting infrastructure. This was considered a low risk option, which operationally represents the status quo. This option was considered to have significant benefits despite the larger capital cost as it decreases the risk of inoperability or a serious incident.
Option Two – Use of a floating deck to reduce jetty length. A floating deck is a large steel, subdivided pontoon which is capable of carrying EO via transhipment between the commercial EO ship, at anchor, and an unloading wharf. A floating deck can be considered to provide the same capability as a standard wharf (albeit significantly larger as EO containers are temporarily stored on the floating deck) and would be equipped with a range of similar fittings, services and buildings to that of a traditional wharf. Several floating deck sub-options were considered and a medium sized floating deck, and an 880 metre single lane jetty including passing bays to allow two way traffic was found to be the most suitable.
Defence informed the Committee that Option One was selected, despite requiring higher capital expenditure. This is because Option Two required the introduction of a new platform, technology, and operating model, which in turn would bring increased complexity, and safety and other risks.
Scope of the works
Defence split the proposed works into five project elements:
Project Element One: Jetty. Refurbish the 2,255 metre single lane (two-way) jetty with passing bays, consisting of a new jetty deck and stringer beams with strengthened existing piles, and crossheads where required.
Project Element Two: Wharf. Construct a new 135 metre wharf and 125 metre link span consisting of a new deck with new piles, crossheads and stringer beams, comprising of:
Demolition of the existing wharf.
Construct new steel piles, concrete beams, and deck in an enhanced configuration that is 30 metres shorter and six metres wider for improved safety and operational capability. This will accommodate EO ships up to 136 metres in length, 18,000 tonnage displacement and laden draft of 8.5 metres.
Install new mooring dolphins.
Construct a single boat landing abutting the end of the Amenities building for use by line boats and/or security vessels.
Project Element Three: Waterside amenities. A new single-storey waterside amenities building to provide working accommodation and amenities for the stevedores, line crew and operators.
Project Element Four: Landside infrastructure. Landside infrastructure upgrades comprising:
Demolition of existing buildings.
A new single-storey concrete facility to house the pump sets supporting the waterside fire and potable water infrastructure.
Remediation of the causeway and approach road, including associated landscaping.
Project Element Five: Engineering Services. Services upgrades, comprising:
The waterside infrastructure is planned to be powered from an extended 22 kilovolts cable supply that is reticulated along the wharf to the substation located within the Amenities building.
The site’s combined water and fire main shall be upgraded and reticulated to the Pump House and Tanks. A new potable water main shall service the Amenities Building and wharf wash-down facility. The fire main shall be reticulated along the wharf to the fire hydrants, hose reals and monitors on the wharf.
A new septic holding tank will be replaced below the Amenities building.
New communications cabling shall be reticulated to the Fire Pump House and Amenities building for the emergency phones and fire control cabling.
The installation of an electrical cathodic protection system on the marine infrastructure to protect against corrosion.
Subject to Parliamentary approval, construction is expected to commence late 2018 and be completed in mid-2021.
The Committee finds that the proposed scope of works is suitable for the works to meet its purpose.
As it does for all projects examined by the Committee, Defence provided a report on its community consultation process for this project.
According to this submission, Defence placed advertisements in the Geelong Advertiser and Herald Sun newspapers, regarding two community information sessions which were held at Corio Central Shopping Centre and Cobradah House, Bell Post Hill, both on 11 June 2018.
Additionally, Defence wrote letters offering formal briefings to a range of potential stakeholders, including state and federal Members of Parliament, local government representatives, relevant Victorian Government departments and authorities, business and commercial groups, and a range of community groups and local businesses and organisations.
At the public hearing, Defence was questioned about the extent of its community consultation, and specifically whether Melbourne Water – Point Wilson’s nearest neighbour – had been contacted directly.
Defence responded that while Melbourne Water had not been directly contacted, Melbourne Water would still have had access to ‘the normal community consultation’ with details of the project being available ‘on a website and advertised’.
Furthermore, the Committee questioned whether Defence had undertaken consultations in the areas through which EO received at Point Wilson would transit on its way to EO storage and distribution facilities. Defence responded that:
The specific roads taken become highly sensitive in terms of not wanting to tell the public, but more so from a security point of view. Broadcasting widely where the EO is moving around potentially opens up some form of threat from people who may have nefarious ideas in their heads about how to use EO.
Cost of the works
The project has a budget of $218.9 million, exclusive of GST. It includes the cost of construction, management and design fees, contingencies and an escalation allowance.
Defence provided further detail on project costings in its confidential submission and during an in-camera hearing.
The Committee is satisfied that the costings for the project provided to it have been adequately assessed by the proponent entity.
The Committee is aware that the need for this project is to support one to three bulk importations of EO per year. The cost of the project is $218.9 million and Defence has indicated efficiencies that could be achieved through this project, as opposed to continuing to rely on Port Alma as the primary site of EO bulk importation to Australia.
The Committee was informed that the jetty and wharf at PWEA were assessed as being non-operational in 2008 for bulk EO importation and Defence was required to use a commercial port, Port Alma, for importation of bulk EO. The Committee was informed that there were significant risks in using Port Alma as it is a commercial port and also subject to transport and biosecurity risks.
The Committee notes that the conduct of these works is important to achieving efficiencies in both the EO network and Defence expenditure on maintaining and using this network. The Committee is also aware that the EO network efficiencies that will be achieved under the EOLRP can only be fully realised if Point Wilson is refurbished and again acts as the primary point for bulk EO importation.
The Committee’s function, however, is not to ensure efficiencies for Defence but to ensure that the most effective use is made of the moneys to be expended on the work.
The Committee did not feel that the necessity for carrying out the works, presented by Defence, was entirely compelling in relation to the redevelopment of Point Wilson purely on the basis of the two or three importations a year, given that it has already been using Port Alma since the decommissioning of the wharf and jetty at PWEA.
The Committee therefore requests that Defence keeps it updated on progress and costings in relation to each of the project elements by providing an annual progress report as well as detailed reports which provide the final costs of each element once completed. Defence should also provide detail of any commercial sharing opportunities or use that it has been able to pursue.
On community consultation, the Committee notes that in its consultations for this project, Defence omitted Point Wilson’s nearest neighbour from being directly contacted. The Committee encourages Defence to continue to consult widely on this project, as it generally does for all its projects.
Furthermore, the Committee is aware that the Victorian Government has confirmed that these proposed works are unlikely to impact current or future port projects in Victoria. This was a key issue for the Committee, especially in light of the fact that the Victorian Government is considering future options for the development of a second container port in the Bay West area. The Committee encourages Defence to continue to consult with the relevant state government ministers in relation to this project, particularly as the option for a Bay West second container port is finalised.
Additionally, the Committee is not convinced by the argument put by Defence that consulting with communities along the EO transportation routes is not desirable. In the Committee’s view, it is entirely possible for Defence to consult with local and state members between Point Wilson and key EO storage and distribution sites like Myambat and Mangalore.
As such, the Committee encourages Defence to further widen its consultation in regard to EO importation and distribution routes, so as to ensure that local communities know that dangerous goods are being transported through their general area. This can be done without disclosing the specific routes that will be taken, thereby incurring additional security risks, and will act to ensure that local residents in these areas have a forum to raise concerns and have these concerns addressed.
The Committee recommends that the House of Representatives resolve, pursuant to Section 18(7) of the Public Works Committee Act 1969, that it is expedient to carry out the following proposed works: Point Wilson Waterside Infrastructure Remediation project.
Proponent entities must notify the Committee of any changes to the project scope, time, cost, function or design. The Committee also requires that a post-implementation report be provided within three months of a project completion. A report template can be found on the Committee’s website.
The Committee requests that the Department of Defence provide the Committee with an annual progress report for the Point Wilson Waterside Infrastructure Remediation project as well as detailed reports which provide the final costs of each element once completed. Defence should also provide the detail of any commercial sharing opportunities or use that it has been able to pursue.