The next wrecking of Great Keppel Island
Two weeks after Josh Frydenberg became minister for the environment and energy in Malcolm Turnbull’s newly re-elected government, his department made a decision that helps clear the path for a controversial major island resort development on Queensland’s Great Barrier Reef.
For years, a sprawling high-end hotel complex has been on the drawing board for the former backpackers’ playground of Great Keppel Island, where the dilapidated and defunct original resort’s slogan once famously encouraged the tourists to “get wrecked”.
The proposed private-sector development covers an area much larger than that first resort, including a sprawling 1100-villa hotel complex with a marina, a Greg Norman-designed golf course and, the developer hopes, a casino.
For years, changes of state and federal governments have seen the proposal advance and then stall, dividing the local community between those whose primary concern is turbocharging regional tourism and those convinced it will be the island that gets wrecked.
But delays in proceeding with the approved development, which will take an estimated 12 years from commencement, have frustrated even some of its most ardent supporters.
Now the Environment Department’s decision to vary the conditions of approval has removed some of the obstacles that could have seen the proposal lapse before a sod was turned.
It has also increased the likelihood that the Australian company behind the proposal will secure overseas investors or possibly sell it to an overseas buyer.
The federal government is keen to encourage development in northern Australia and particularly in Queensland, where the mining downturn has put pressure on the economy.
When Australian property developer Tower Holdings bought the still-functioning old Great Keppel Resort a decade ago, locals thought the partying hotspot would be rejuvenated, providing more jobs and drawing tourists back to the island, 15 kilometres off Yeppoon.
But instead, the resort was shut and its 110 employees put out of work. Tower Holdings had bigger things in mind.
In 2008, the then federal Labor member for Capricornia, Kirsten Livermore, told federal parliament the closure had cost the local economy $35 million.
“While I would welcome an appropriate redevelopment of the now closed resort on Great Keppel Island and the benefits this would bring to our community in central Queensland, I do not believe it is possible to place some thousands of people on the environmentally sensitive and very beautiful Great Keppel Island without destroying the island and all it has to offer,” Livermore said at the time.
Tower Holdings’ first development proposal – involving two golf courses, three resorts and an international airport – did not proceed.
Federal Labor environment minister Peter Garrett knocked back a second proposal, deeming its scale potentially damaging to native vegetation and wildlife habitats both onshore and on the surrounding Great Barrier Reef.
By the time a third version was lodged, complete with a detailed environmental impact statement, there was a new minister in charge. The proposal covered 972.5 hectares of the 1308-hectare island.
In March 2013, with a federal election looming and Queensland a crucial patchwork of marginal seats, Garrett’s successor, Labor’s Tony Burke, approved the plans. He attached a list of 96 conditions, including a raft of requirements that aspects of the development begin within three years.
Provided they were all fulfilled, the development could proceed. If they weren’t, approval would be voided.
It is these conditions that have now been varied for a second time – the first was in 2014 – allowing the developer more time to secure investment backing.
One condition in the environmental approval that hasn’t been varied is that the Indigenous owners of the area, native title claimants the Woppaburra people, must be consulted before construction.
The Woppaburra argue both they and the condition have been ignored.
Last month, Woppaburra Land Trust chairwoman Christine Doherty wrote to federal minister Frydenberg and Queensland State Development Minister Anthony Lynham, protesting the lack of consultation.
She noted the strict conditions attached to both state and federal approvals related to before, during and after construction. The federal conditions “include consultation with traditional owners to formulate a cultural heritage management plan”.
Doherty says that “no such consultation with the Woppaburra traditional owners occurred during the EIS [environmental impact statement] process, nor has it occurred since. The Woppaburra have so far been very quiet and very patient but the cumulative impact … has now exhausted our silence and our patience.”
Doherty told The Saturday Paper she had not received a reply from either minister. But it is understood the official view is that the condition has not been triggered because Tower has not indicated when construction will commence.
It appears Tower chief executive Terry Agnew does not intend to build and run the resort without at least an investment partner.
Locals are convinced he is more likely to sell the leasehold title complete with plans and associated approvals.
Tower Holdings did not return The Saturday Paper’s calls this week.
Push for casino
Agnew’s plan has changed shape significantly since he first proposed it. What was described as a $600 million resort proposal is now routinely given a $2 billion price tag and until recently the company was adamant it will only be viable if a casino licence is granted.
After a meeting with the state Labor MP for Keppel, Brittany Lauga, in March this year, Tower Holdings’ development manager Anthony Aiossa told journalists the company considered the licence essential. “We made it very clear that without some form of a boutique gaming licence there would be no project finance,” Aiossa said. “A casino licence is absolutely critical.”
Tower’s original EIS did not mention the casino.
But after the Liberal National Party won power in Queensland in 2012, Terry Agnew had been confident a licence would be issued. The proposed island development had already been approved under state law and the Newman government had helped it along by rezoning land on the island from recreational-use-only to allow for tourism development, issuing the company a 99-year lease on what is known as Lot 21, covering areas well beyond the original resort.
The LNP government approved two boutique gaming licences in Queensland for Brisbane and the Gold Coast and it seems Tower expected to also receive one for the island, after the 2015 election.
But the government wasn’t re-elected. In a surprise result, Labor swept to power in Queensland. Tower applied for the licence but the new government of Annastacia Palaszczuk knocked it back.
The Queensland state LNP opposition continues to advocate for an offshore licence to be issued and has suggested that if it wins the next election, it will be. Without it, Tower Holdings has needed to buy time to chase investors for the project.
In March this year, the state government warned Tower Holdings it had to pay what had become a year’s rent arrears or risk losing its right to proceed with the development. Its period of grace was expiring and it didn’t have the investors it needed.
Five months later, apparently retrospectively, the Environment Department relaxed the time-limiting conditions in its federal approval, meaning the company’s deadline to start work has been extended.
In August, two weeks after the federal approval conditions were varied, Agnew told ABC Radio in Rockhampton that the casino licence was no longer essential and he was in discussions with potential investors from China.
“We are talking to three similar groups on Keppel at the moment, and we’ll see how we go.” He predicted work would begin “before October”. It has not.
Some local citizens and organisations remain concerned about the Tower proposal.
Capricorn Conservation Council co-ordinator Michael McCabe says his group does not oppose a resort development, provided it is limited to the existing former resort site.
“Our preference would be that they come forward with a proposal for a reduced marina on the original footprint and we would give it a big, green tick,” McCabe told The Saturday Paper. “That would be building on already modified and disturbed land. The concern is putting 1100 units and a golf course in the central part of the island above the sandy aquifer.”
Michael McCabe also supports the Woppaburra people’s complaint. “Ideally Tower itself or whoever they flog it off to can come back to the table with the Woppaburra,” he says.
Opposition and support
But while there is strong local opposition to the development, there is equally strong support from others.
A group calling itself Our Keppel, Our Future (OKOF) has been campaigning for the development because it would bring jobs – 1500 by the company’s estimate – and tourism revenue to the Capricorn Coast region.
One of the project’s strongest advocates has been Yeppoon business executive Karla McPhail, who served as an OKOF director until June this year.
McPhail runs Coal Train, which trains people in the coal industry.
“I wish we’d got the casino licence on the island but we’re still working on it and definitely not giving up,” McPhail told Rockhampton’s Morning Bulletin late last year.
Through its Facebook page, OKOF assured locals last year that with a casino licence, work on the proposed “GKI revitalisation plan” could begin within six months and the first stage would be open to the public “within two years”.
Big money at stake
But the development remained heavily reliant on securing investment.
In her meeting with Tower Holdings in March, Brittany Lauga suggested the company consider applying to the federal government’s then-impending Northern Australia Infrastructure Facility (NAIF) for a concessional loan to get associated work on the development under way.
The NAIF was unveiled in the 2015 federal budget and began operation in July this year, offering up to $5 billion in concessional loans to boost private-sector investment in infrastructure.
Lauga’s office did not return The Saturday Paper’s calls this week. But after her March meeting, she told journalists: “I made inquiries and was advised Tower would be eligible.”
The MP, who before entering state parliament led the team that drafted the EIS for the Tower Holdings development, offered to work with the company and the federal government to secure a loan through the facility.
This week’s federal budget update, the Mid-Year Economic and Fiscal Outlook, allocated $935 million for NAIF this financial year.
The government won’t divulge details of what it says are 14 active applications for NAIF loans, citing commercial-in-confidence considerations.
It has confirmed the existence of just one: from Indian coal giant Adani, proponent of the controversial Carmichael mine and rail link.
That company was revealed by the ABC to be under investigation in India for alleged financial crime and corruption.
The NAIF’s senior project and policy officer, Catherine Kaehne, sent The Saturday Paper a brief written response to questions about possible discussions about the Great Keppel Island resort project and potential conflicts of interest.
“NAIF has an independent board whose members are committed to meeting NAIF’s obligations to maintain the confidentiality of its dealings,” Kaehne said.
“It will also comply with its statutory obligations in relation to the organisation’s public reporting requirements. This will be its approach to each application that comes before it over its five-year mandate.”
Despite those confidentiality obligations, when Karla McPhail resigned as a director of Our Keppel, Our Future in June after having been appointed to the NAIF board the previous month, she revealed that proponents of the Great Keppel Island development were among those applying to NAIF for a concessional loan.
“NAIF is really positive and will be very good for the region,” she told The Morning Bulletin in late June.
“It has some incredible applications and GKI is definitely one of them.”
She said at the time she was mindful of the risk of conflict of interest and was resigning from OKOF accordingly.
NAIF declined to confirm the status of any GKI application, whether a board meeting scheduled for last month had considered it or even whether the meeting had taken place.
It is obliged to publish basic details of any approved loans 30 days after approving them. But its processes remain opaque.
The networks involved in the Great Keppel Island resort are complex and big money is at stake.
For all that’s good about improving things for holidaymakers in the Sunshine State when it comes to economic development, perhaps a little more sunlight is required.
This article was first published in the print edition of The Saturday Paper on Dec 24, 2016 as "The next wrecking of Great Keppel ". Subscribe here.