DEEGAN, Ms Tracey, Acting Director, Regional Development Australia Kimberley WALDRON, Mr Garry, Chair, Regional Development Australia Kimberley [13:55] CHAIR: Welcome. I understand that information on parliamentary privilege and the protection of witnesses giving evidence to committees has been provided to you. I now invite either of you to make an opening statement, and at the conclusion of any remarks I'll invite members of the committee to ask some questions. Ms Deegan : Thank you, Chair and committee members. Regional Development Australia Kimberley appreciates the opportunity to appear before you as part of this inquiry into emerging industries across northern Australia. As you've seen, heard and experienced in the last few days, the Kimberley operates at a scale across vast distances, with a dispersed population and a highly regionalised economy. The success of emerging industries comes down to how well enabling conditions are coordinated, if they are accessible and, importantly, if they can be designed for regional and remote operating environments. Our submission therefore focuses on six foundational enablers that cut across your terms of reference and apply broadly to emerging industries. Taken together, these represent the minimum settings required to support scale, attract investment and deliver lasting regional and economic outcomes. Those enablers are: access to finance through a Northern Australia Infrastructure Facility small-loans program; support for the Kimberley Designated Area Migration Agreement—the DAMA—transition; secure, affordable insurance for residents and businesses; continued investment in supply chain infrastructure and digital connectivity; an increased focus on defence and biosecurity; and, finally, targeting regional and remote areas through a discrete stream in the Housing Australia Future Fund. Today, we welcome the opportunity to expand on any of these and answer any questions you may have. CHAIR: Fantastic. Mr Waldron, do you want to add anything as the chair? Mr Waldron : Not really, no. Thank you. CHAIR: Okay! I'll hand over to Senator Smith. Senator DEAN SMITH: Thanks very much for your participation this afternoon. Let's focus on affordable insurance. What is the RDA advocating for in regard to insurance reforms, and what has been the level of success so far around those insurance reforms? Ms Deegan : There were 38 recommendations out of the ACCC review that was undertaken. None of them were implemented. However, the cyclone reinsurance pool was established, so that's been in place. What started to emerge out of that was, even with that in place, there wasn't any rebalance or rectification in the market, so the market continued to be quite dysfunctional and, in some places, constitute market failure. This review was really about identifying what the mechanisms are that need to change. That looks at a lot of the policy change that potentially could help balance the market back out. I'm not sure how many of you have had a chance to read the glossy little review that we've got—I've got some copies; I think you've got a copy on your desk already and am happy to share them around—but there were quite a number of recommendations that came out of that. Without government intervention, the market is highly unlikely to balance itself back out into a functional insurance space. Those recommendations—I'm still new, so I'm having to go back to my notes a lot, and I wrote them all down today. We were looking for (1) direct participation as a public provider to create a bit of a baseline level as a last resort to address the market competition and (2) an expansion of the timeframes beyond what the current cyclone reinsurance pool does, which is only 48 hours. Most of the issues that we've been having around insurance and what that covers is actually flooding. In the 2023 Kimberley floods, where we had all the flooding through Fitzroy Crossing, a lot of that damage was done outside that cyclone period, so it wasn't able to be covered. We're looking for an expansion of that duration or, alternatively, a review of the definition of that so that it's not just a cyclone period. It might be a disaster reinsurance pool period beyond that 48 hours. We're looking at some product standardisation similar to what the health insurance market has done, where you can now compare apples with apples, whereas, before, nobody could read the product disclaimers and work out what they were comparing. The insurance market is quite similar. It's quite difficult to ascertain whether you're comparing a similar insurance policy or not because the content is 300 pages long. We're recommending that as an outcome as well. We're then looking for some legislation against price walking and price optimisation. There is a whole raft of recommendations, but they were the key takeaways. Senator DEAN SMITH: What success have you had so far in advocating around these particular reforms with government? Ms Deegan : As you're aware, both Garry and Janine headed to Canberra last year. They knocked on some doors and visited some people. It's gone out as far and wide as we can get it. It has gone to both the state and federal level. It has gone to everyone that was involved in the writing of the review itself. It has gone to the ACCC. Who else did it go to? I had a list. It has gone far and wide! Mr Waldron : As you know, we presented to a number of parliamentarians in Canberra when we released the report. I will say it was supported by the Kimberley Development Commission. They also put some funding into it. The full report is a much bigger document than the glossy that we've printed. There are a couple of things that stand out in it for me. One was that we had a willingness of local businesses to come forward with their private business information. That really revealed that the Kimberley is underinsured by a long way. The challenge we have is keeping this document live and saying that no one body will provide the solution and the answers. But, through this forum and others, we will continue to advocate for change as best we can, because, if we don't change, we will continue to be underinsured right across the region. As you know, finance relies on insurance. It's not an option. For many operators and almost every business, it's not an option. You have to have it. You have to build it into your price structure. To answer the question of where we're taking it—we're taking it everywhere. But, with where the response is, it'll be a slow burn. I can't see these things being resolved quickly. Senator DEAN SMITH: Do you know who the predominant insurer is around town? Mr Waldron : No, not off the top of my head. Ms Deegan : Out of the 960 requests for quotes that went out, there were 20 that came back as being insurable with provided insurance across the region. Of that, there were nine that feasibly could respond or cover a lot of what the market was looking at. Two of those were over $8,000 per annum—and this is just for housing—three sat between $4,000 and $8,000, and then the remainder were under $4,000. But, when you look at what they were insuring, you'd be lucky if it covered a whole lot. Mr Waldron : We've been unfortunate in the timing of this because there have been other major events in Queensland and that insurance conversation switched to Queensland. We are probably overdue for a cyclone. We had Rosita visit us in the early 2000s. These things are all statistically possible. Those events are on our horizon without doubt, so, the faster we can take action on this, the better it will be. Ms Deegan : I guess that's the other thing that came out of the review. Despite the fact that these sorts of policies are supposed to be driven by things like cyclone risk, when you unpack the data, Broome hasn't had a cyclone for 25 years. Given the way that the market works, the only place insurance was higher than it was in Broome was Port Hedland—they've had quite a few cyclones—so it didn't balance when you unpacked the cost versus what the actual risk was. As Garry referred to, we had some great case studies from businesses that talked about their insurance struggles. Kimberley Accommodation Group, who have a number of properties across the region, were expected to pay the same insurance for somewhere like Halls Creek. Similar to Broome, Halls Creek doesn't have cyclones because it's too far inland, but it's still classified under that same sort of risk. The mechanisms that are behind the driving and the building of the policies don't necessarily match the actual environment. Senator DEAN SMITH: Thank you. CHAIR: Senator Whiteaker. Senator WHITEAKER: In another committee that I sit on, we're doing an inquiry into small-business insurance and some of the challenges, so that might be another opportunity—perhaps we can talk about that later. Ms Deegan : That would be great. Senator WHITEAKER: I think that's worth a broader conversation. I really enjoyed reading your submission because it's got some very clear recommendations. I want to talk a bit about the finance through the Northern Australia Infrastructure Facility. In your submission, you mention that only two projects in the Kimberley have had loans approved through the NAIF. Have you had any feedback from the NAIF about why that is the case? Have you had any engagement with them on it? Ms Deegan : I was listening this morning, and I think it was Patrick who was talking about why Marine Biomedical haven't yet entered that space. The governance and the structure that are required in order to submit and meet NAIF requirements are quite arduous. It's quite time consuming. It's quite costly and expensive. Given the greenfield nature of a lot of the emerging businesses within the region—very small, quite isolated—that is a lot more than they can put in. If you look at the two proponents that have gotten NAIF loans so far, one is the Kimberley cotton gin and the other one is Kimberley Mineral Sands. They've both got significant backing behind them and they've got existing markets of structure, so they know what's achievable, whereas, when you look to something like what Marine Biomedical are doing, you see that it's very bespoke and it's very new. That entry gap for what NAIF offers—you don't really want to be looking at it for anything less than $10 million in order to make it economically viable and to be able to put all of that work in. A lot of the businesses here aren't up for that. We've got a big gap between what the Kimberley Development Commission can offer, which is up to $250,000, and the entry-level point for NAIF. It's that gap that we're looking to fill. I know that the Territory's small-loans program does and doesn't do things, so it's received mixed feedback. I haven't been specifically involved in it. But something like that, which has an appropriate level of due diligence in it but is not too onerous, is, I think, how we start to fill that gap. I'm sure that, once you put in something that's, like I said, appropriately levelled and enables organisations to get smaller amounts of money to kickstart, you're going to get greater levels of engagement from industry. You're going to get more levels of success. It becomes a stepping stone. I think the jump from the bottom step to the top step is too big at the minute. If we can find a couple of steps along the way, that's going to be really helpful. Senator WHITEAKER: Is it accurate to say that it's not necessarily that proponents from the Kimberley are applying for funding through NAIF and being unsuccessful, but, rather, that it's just not necessarily suited to the value of the— Ms Deegan : Yes. I think it's more of a suitability problem at this point. I did actually catch up with one of the NAIF staff yesterday, and they did indicate that they're having conversations with a lot of places around. But, even understanding the environment and the different businesses that are here, for those that I do speak to that are looking to fill a financing gap, it's a lot less than that threshold. Senator WHITEAKER: How do you imagine a small-loans program running? Ms Deegan : I might have to take that question on notice. Senator WHITEAKER: Okay. Mr Waldron : I can say that in my experience the gap between the small and the large is big, and I think there's a smaller stepping stone, as Tracey said. I would think that there might be a number of people who would go: 'I'll have a go at this. Maybe I could start a construction company.' In the Indigenous space in particular, there are people who have got the expertise. You can imagine what it costs to put together a set of plant to do some road building et cetera. So those sorts of businesses might be interested in stepping into some small number of millions. But, without the availability, we won't see them, I don't think. To the question of what it would look like, it would look like what happens now but just with a lower threshold. Senator WHITEAKER: I've got a couple of questions about defence and biosecurity. Could you give us an overview of what the biosecurity threats are in this region? Ms Deegan : They're many and varied, depending on which industry you're looking at. Obviously, because of our proximity to South-East Asia, there are things like cow disease. Animal disease transmission and that kind of stuff are quite a risk. That's compounded by illegal boats coming in and the sorts of things that they bring as well. Biosecurity-wise, it's that proximity to Asia that's the biggest risk in that space, and, because of the breadth of the coastline, it's quite difficult to man the whole thing all day every day. Senator WHITEAKER: What kind of an impact do you think that has from day to day? Ms Deegan : The impact is quite difficult to quantify because, when you're looking at things like the cattle industry, a lot of that stuff can be a slow burn, so you don't know that it's a problem until it's a problem, and then it can be a very, very big problem very quickly, whereas, when you're looking at things like boat arrivals, if anything comes in off those, that might just be human-to-human contact and that, potentially, is easier to contain. So the risks are varied, and I'm sure somebody has done a lot of work somewhere on how that plays out. But, from a biosecurity perspective, it's just difficult to manage because of the breadth that we're looking at. Senator WHITEAKER: Finally, you talked a bit in your submission about connectivity and, in particular, telecommunications network disruptions and challenges. Could you give us a bit more detail on that and some of the challenges that that poses. Ms Deegan : Sure. Again, because of that dispersion of population centres and small communities, having consistent access to digital connectivity is quite challenging. Up until relatively recently, we had one major provider. Without competitive market opportunities, it means that there's no impetus to be the best on the block, because there's nobody else to compete with. It also means that you're relying on one provider to provide a consistent service, which isn't always the case. That's shifted slightly in the last few years. We've now got two providers. But what that means—we have quite a transient population; people will bounce between the top and the bottom of the region—is you might be connected with Telstra because you get the best service with Telstra where you're living, and then you go up to the east Kimberley and you can't get a connection with Telstra because the major provider up there is Optus. So the dual-market system isn't functioning well either, and it does mean that a lot of small communities in particular are getting left behind. The low-lying satellite option is becoming more and more popular because it tends to be a little bit more consistent, but that's quite costly and so it's not necessarily a realistic option for a lot of remote areas. Again, it's requiring a little bit of intervention in this space to make sure that the market stays competitive and the Kimberley doesn't fall behind and that those that are using government facilities or government infrastructure to provide that service are utilising it in the best way for the region as opposed to the best way for themselves. CHAIR: Ms Deegan, you mentioned the DAMA program. How critical is that in regions like that with the RDA? Ms Deegan : Up here it has been such a successful program. We have to give credit to the East Kimberley Chamber of Commerce for doing such a good job in how they've rolled that program out in the last couple of years. Because it's got some real bespoke conditions to it—it's got a wider age range, a lower level of literacy as an entry level and a slightly different list of occupations—it's actually filled a very important gap, particularly in the care sector and the social services sector, in filling employment spaces. That's particularly in the east Kimberley but certainly over here as well, where we have such high demand for workforce and just aren't able to get people to come in to do those roles. I know communities are working really hard to upskill and train people who are within those spaces and are looking for work, but, even with that, there are still gaps in the workforce. The DAMA program has been really successful. I wrote some numbers down. The number of businesses that were endorsed from 2022 through to 2025—they had 20 businesses in 2022, and it was up to 116 in 2025. The number of positions jumped from 90 in 2022 to 219 in 2025. That will be transitioning out at the end of 2027 to a state model. Unfortunately, because it is going to a state model, it's possible that a lot of those conditions and those special adaptations are likely to be lost, which would be really detrimental up here. We need to try and retain those conditions as much as we can and recognise that it's far more expensive to live and work in the Kimberley; it's difficult to find workers and difficult to find housing. Those customisations were put in place to help offset the challenges of getting workforce into the region, because it's so expensive, it's difficult to find housing—all those sorts of things. Once you go to that state model—you don't have that level of challenge further down south, so those conditions are potentially at risk of disappearing. CHAIR: To add to what Senator Whiteaker said about doing that inquiry with small business—there was a federal inquiry which I chaired with one of our colleagues, Andrew Willcox, on the cyclone reinsurance pool, and the 48-hour issue was put to the parliament. I think it's sitting with the relevant minister. So, just to let you know, there is a report in the federal parliament in terms of the cyclone reinsurance pool and the implications for northern Australia. Maybe the 48-hour issue is something the committee could look at again, because that was through the northern Australia committee. Ms Deegan : I'm happy to leave these here, if you want. CHAIR: I'd be interested in looking at what you've got there. That'd be really good. Mr Waldron? Mr Waldron : With the DAMA, I think we need to understand that it's sort of in the name—'designated area migration agreement'. The concern we have across the Kimberley is that, once we're managed out of Perth, there will be a constant argument about taking away the local management, the local knowledge. I acknowledge the work that the east Kimberley have put into this, both for that area as well as across to the west Kimberley. The knowledge they have and the way they provide the service to the people using that service has been excellent. And the bonus of having people on the ground up here is that, if there's somebody who's in an employment situation and the employer is struggling or whatever, those people can be moved around and helped out rather than having to go back to the city to get that assistance. So I'm not sure I've got absolute confidence in the state taking over this process. They're putting things in place, but we were very disappointed when we learnt that these things were going to be rolled up into a state DAMA because, as I say, it takes it away from the name, where we're no longer local people managing that local issue. CHAIR: Thanks, Mr Waldron. I'm just trying to think whether it was in Kununurra, but somebody else raised the issue—and I know it was in this state because it was raised with us—that, if it moved towards the state, it would take away the ability for the region to be able to manage that more appropriately. It was raised with us earlier this week, so we'll take that up. Mr Waldron : Thank you. CHAIR: Senator Smith. Senator DEAN SMITH: To be clear, you're saying the risk in moving to a statewide DAMA that would be administered by the Government of Western Australia is that you lose the local knowledge and the local flexibility? And that part of that local knowledge that you might lose is the ability to make sure that people are using the DAMA legitimately? Mr Waldron : True. Senator DEAN SMITH: In a state as big as Western Australia, where there are a number of regions utilising DAMAs—Kalgoorlie and the Goldfields, for example, and, I think, the Great Southern—why would the Western Australian government want to give away all the local knowledge, local flexibility and local intelligence? Why would they want to take a risk doing something when this has been proven to be successful? Ms Deegan : I don't have the answer to that. Senator DEAN SMITH: Perhaps they're listening. Mr Waldron : The challenge is that they'll have to re-establish the business that's already happening in the Kimberley, but we don't need to reinvent the wheel. Obviously, then it comes down to, for them, if they can locate somebody in the Kimberley, with housing, staffing and that whole thing; whereas, I guess, it's a bespoke model, possibly, because it's not dealing with lots of people. The other thing too, of course, is that people who are looking to take up these agreements have also got this massive area to choose from, so why would you come to the Kimberley? We probably lose a bit of our appeal when these things are opened out to everybody. It's not that coming to the Kimberley is the last gasp—the people that I know that have a DAMA love being here—but, if you opened it right out, would this have been their first choice? I don't know, but that's one of the problems. We lose that uniqueness of that business attraction. Ms Deegan : To add to that, one of the additional concessions is adjusted salary thresholds. On some occasions up here, we're having to pay more than the minimum salary to be able to attract people to the region. If we lose that particular threshold and it drops back down, then the region becomes ineligible to offer it, or you have to offer lower amounts, which might be equivalent to what they would earn in the south-west or Perth. But the cost of living is higher up here, so it becomes, as Garry alluded to, less attractive for them to want to choose up here versus somewhere else. Senator DEAN SMITH: Is the RDA engaged in those discussions? Who is the primary liaison or negotiator with the state government around the DAMA? Ms Deegan : I believe the DTWD—the Department of Training and Workforce Development—are working with East Kimberley Chamber of Commerce directly. Mr Waldron : We're one step back. CHAIR: Is there anything further you wanted to add? Ms Deegan : Not off the top of my head. Mr Waldron : No, thank you very much. CHAIR: Thank you for your evidence today. I know that there was a question on notice. I think Senator Whiteaker asked that question and she can work with the secretariat to provide that to you. The committee's agreed that responses to any questions on notice will be provided within two weeks of you receiving a copy of the Hansard transcript. We might get the committee to provide to you, also, that cyclone reinsurance stuff because it touches on that 48-hour period. Proceedings suspended from 14:23 to 14:39 .