Channel Deepening S-EES
Department of Sustainability & Environment
Planning Panels Victoria
8 Nicholson St.
East Melbourne
VIC  3002                         Date:  30 April, 2007       

Dear Chairperson

Re: Channel Deepening Proposal

This document sets out my key observations, concerns and objections arising from the Supplementary Environment Effect Statement( SEES) prepared by the PoMC in respect to its desired Port Phillip Bay Channel Deepening Project (CDP) which it wants to do in order to achieve its aim “to promote the Port of Melbourne as Australia’s premier container port” ( page 5 of the SEES Summary Brochure) . 

This submission addresses the following key issues about the SEES:

  1. The fundamental premise and rationale of PoMC for channel deepening is flawed.
  2. Sensible alternatives to channel deepening have deliberately been excluded from the SEES and have not been properly considered .
  3. The risks associated with the project remain enormous, especially environmental/ecological impacts, and particularly in respect to highly toxic contaminated material being dumped in the Bay.
  4. The cost vs economic benefits vs risks of the project are questionable.
  5. The social and economic impacts on people residing around and/or using the Bay have been understated.

1. The Fundamental Premise And Rationale for Channel Deepening is Flawed

The SEES is predicated on the highly questionable hypothesis and PoMC “spin” that channel deepening is THE ONLY solution.  Having determined their one best solution, the PoMC has then worked backwards to gather and present what they believe is a compelling case in support of their solution.  Their views are not compelling because:
  • Global shipping behemoths like MAERSK have articulated their long-term strategy that aims to “deploy their vessels on the Europe-Asia trade routes”. To maximise their economies of scale, they aim to utilise large regional transit hubs like Singapore as their Australasian destination.  Conventional container ships (with current draughts of less than 14 metres) will then provide container feeder services to and from ports like Melbourne for at least several years into the future.
  • The CEO of the PoMC stated in the Age of 23 March 2007  that “the current trade volumes are too small to warrant larger vessels” and conceded it could be several years before larger ships (ie 14 metre draught ships) actually use the deepened channel.
  • Mr. Nick Easy (the PoMC’s CDP Project Manager) confirmed at a public meeting at Rosebud on 24 April 2007 that PoMC:
    • do not know when 14 metre draught ships will be using a deepened channel, conceeding it could be up-to 15 years away
    • do not know how many 14 metre draught ships will be using the deepened channel regularly  ( if any ) by 2030
    • is unable to quantify the incremental increase in container traffic attributable directly to Channel Deepening
    • has no commitments or guarantees from shipping operators that they will  send 14 metre draught ships to Melbourne.  Mr Easy also stated he does not believe it is PoMC’s responsibility to do so saying this is a matter for the stevedoring companies
  • The study by Pricewaterhouse Coopers ( PoMC’s consultant)  predicts “that container numbers will be the same[  by 203]  whether or not the project goes ahead.” 
  • There have been recent arrivals into the Port of Melbourne of container vessels carrying over 4,500 containers of imported goods (eg: OOCL Australia and China Shipping Line’s New York).  These vessels are large enough to cater for our needs and more.  These ships did not encounter draught limitations entering the port.     
  • There is absolutely NO guarantees that the shipping operators will continue to use Melbourne irrespective of whether the channel is deepened, particularly if incentives are offered by deep water ports such as Darwin, Sydney and Brisbane as acknowledged by Nick Easy( PoMC’s CDP Manager)  at a public meeting at Rosebud on Tuesday 24 April 2007.  The shipping operators have no loyalty to PoM and are only interested in maximising their profits.  They will act in whatever capricious manner suits their profit objectives.
  • The PoMC acknowledges that the Channel will continue to need large scale dredging throughout the life of the project on approximately the same scale as the original project.  This is, therefore, by definition, not a sustainable long term solution to the complex issue of freight movements in Australia.
  • The original EES Panel found that 14 metre draught vessels will still be tide restricted at The Heads and the Yarra River, requiring tide assistance to safely enter the Rip and tide and tugs to safely enter berths in port.  There is no new evidence in the SEES that challenges or changes this fact.
  • Prominent Age economist Kenneth Davidson succinctly captures the nub of the issue in his article on 10 April 2007 where he asserts: “ Containerisation is based on a very simple idea: to move trailer-size loads of goods seamlessly among trucks, trains and ships without the expense of breaking bulk. So goods going from Bangkok (which is not a port) to Dallas (also not a port) are arranged by shippers in one seamless exercise.
As a result not much of the value of the transaction attaches to the ports through which the container transits. The cost of moving high-value non-perishable goods around the world from factory to warehouse is about 1 per cent of the goods, compared with 10 to 20 per cent of the same retail value before containerisation.

This suggests that whether a city is situated on a port or not now has little to do with its competitiveness. The value is added where the containers are packed and unpacked. For Melbourne it opens up the question of whether the estimated $800 million cost of the Port of Melbourne channel-deepening could be better spent improving the social and economic infrastructure of the city.If the business is here, the containers will arrive. Does it really matter if larger container ships have to reschedule their loads so they don't arrive in Melbourne fully laden or the containers come via Sydney, Portland or Westernport or the Port of Melbourne loses the through-container-traffic to Adelaide or Brisbane?”

Questions/Issues Not Addressed Adequately By The SEES In Respect To The Need For Channel Deepening
  • How many 14 metre draught ships will actually be coming to Melbourne and regularly using a deepened channel?
  • When will they be coming?
  • If they will not be here for upto 15 years as stated by PoMC representative Nick Easy, then why is the PoMC and State Government not considering all available alternatives?
  • If the number of containers will quadruple by 2030 as predicted by Pricewaterhouse Coopers whether the channel is deepened or not, then why proceed with the CDP?
  • How many ships will be using DUKC technology that enables deeper draught ships to navigate safely without deepening the channel?
  • There is an underlying premise that all ships will be fully laden in future .  They won’t be.
  • What guarantees do PoMC have from the Shipping Operators that they will continue to use PoM?
  • How will the already gridlocked roads leading into and out of the PoM cope with the vast increase in containers and the trucks needed to move them and what will the impact be on people living in these areas?
  • What will be the incremental in increase in container numbers directly attributable to the channel deepening?
2. Appropriate Alternatives To Channel Deepening Have Not Been Investigated

The PoMC has made no attempt to investigate and analyse alternatives to the CDP.  It is absolutely inconceivable that the CDP could proceed( particularly as significant amounts of taxpayer money is  going to be used as stated by Victorian Treasurer, John Brumby) without a detailed examination of appropriate viable alternatives which, prima facie, don’t carry the same level of environmental, ecological and social risks to ensure that the investment of $1Billion is being used to optimum effect for the benefit of all Victorians and Australians..

There is clearly time for this to occur as the CEO of the PoMC has publicly stated that the large ships will not be arriving for several years to come (upto 15 years out).

Questions/Issues Not Adequately Addressed By The SEES In Respect To Investigating Alternatives To CDP
  • Why has PoMC resolutely not been prepared to seriously consider appropriate alternatives?
  • Without having done that, how can any one ( particularly the PoMC and State Government) be genuinely satisfied that channel deepening is the best long term strategic solution for all affected stakeholders and the best use of $1 Billion?
  • Why is the PoMC (supported by the State Government) adopting a parochial, narrow, state-based, Melbourne –centric approach to this key strategic issue of freight movement ?
  • There is ample time to consider alternatives and the PoMC should be made to do so.
3. The Project Carries Enormous Environmental/Ecological Risks

The SEES acknowledges that there is very significant risks and effects flowing from the CDP and then proceeds to downplay these risks largely asserting that the effects will be temporary (but still conceding it will be for at least 2 years on their best case scenario) after which, PoMC believe  everything will return to normal.

The SEES, inter alia, acknowledges that :
  • 2.1.million cubic metres of highly contaminated and toxic sediment will be dredged from the mouth of the Yarra and dumped further down the Bay
  • Upto 30 million cubic metres of material will be dredged ( ie 40 million tonnes of sand and silt habitat for Bay fish life and organisms)
  • Increased turbid plumes adversely affecting particularly snapper, salmon, anchovies, penguins and dolphins
  • Increased toxic algal blooms due to raised nitrogen levels
  • 500,000 tonnes of rock will be gouged from the Heads and falling rocks from dredging at the Heads will damage 18 hectares of highly sensitive reefs for 5 years
  • A serious adverse effect on commercial fishing and key popular spots such as the Warmies at Newport( where tailor. black bream and flathead will be dramatically reduced for at least a year after dredging is completed)
  • Recreational diving will be wiped out during dredging and  the $45 million commercial diving industry will be largely curtailed  for upto 2 years.
  • Upto 5% of crucial seagrasses will be permanently lost due to turbidity
  • Adverse effects on beaches ( dredge waste washing up on beaches, water clarity significantly reduced, etc)
  • Key fish populations are expected to reduce for at least 2 years
  • Aquaculture, recreational fishing, marine mammals, seagrass beds/shallow habitat, and various fish species face threats as a result of reduced light in the South of the Bay
The PoMC is using a best case scenario ( albeit resulting in  still very serious  impacts on the ecology of PPB as set out above) to justify the CDP.  What if they have simply got it wrong?  What if they have got it BADLY WRONG?

3.1 Toxic Sediment

PoMC sampling of the 2.1 million cubic metres of contaminated sediment has identified that it comprises the following toxic material:

    o    Cadmium
    o    Chromium
    o    Arsenic
    o    Mercury
    o    Lead
    o    Tributyltin (TBT)
    o    Organochlorine Pesticides- DDT and Deildren
    o    Polychlorinated Biphenols(PCB’s)
    o    Chlorinated Phenols
    o    Organophosphate Pesticides

These are highly toxic materials.  Material Safety Data Sheets (MSDS) from Chemwatch who is the independent authority used by all industries to evaluate chemical hazards and safety in workplaces reveal that:
  • Most of these are classified as extreme hazards ( the use of deildren has been completely discontinued in the USA)
  • Several are known to be carcinogenic and /or cause birth defects
  • They are very toxic to acquatic organisms
  • Are classified as “Eco Toxins” ie highly dangerous to the environment
  • Should not be released into sewers or waterways
  • They bio-accumulate and bio-concentrate in the food chain

In the Trial Dredge Study, it was found that State Environment Protection Policy was exceeded for arsenic, chromium, copper, lead, zinc, mercury and cadmium. These results were recorded over a few weeks but it is not possible to determine with any degree of accuracy the potential effects over an extended period of time.

To give some perspective to the dredging project:
  • the amount of contaminated material being dumped in the Bay is the equivalent of the entire Martha Cove development( 2. 1 million cubic metres)
  • the total amount being dredged is the equivalent of 10 Martha Cove developments, 2 Ayrs rocks or a 15 by 4 metre  trench from Melbourne to Sydney.

This is a massive undertaking on an unprecedented scale and the PoMC is trying to assert that it can accurately predict what the impacts will be on the environment in general and the contaminated material in particular.  The fact is they CANNOT.  Consequently their proposal is a huge and unacceptable gamble that is more likely to cause irreversible damage to the Bay than not.   Once the contaminated material is disturbed it cannot be contained.   It is the same principle as asbestos.  Once disturbed, it becomes highly dangerous. The PoMC cannot throw a magic net over this sediment and keep it under control.  The PoMC acknowledges there will be a toxic plume floating up the YARRA as far as Docklands and across to Williamstown, Altona, Port Melbourne and South Melbourne.  They will then dump this contaminated material in a bund of approximately 7.5 square kilometers off Sandringham and leave it there for a minimum of 140 days( but PoMC have now acknowledged it could be upto 12 months) enabling it to continue to contaminate the Bay at large.  They will then cap it with a 50 cm cap of clay and sediment and they believe this will hold permanently.

3.2 Algal Blooms

The PoMC acknowledge that there will be algal blooms as a result of the CDP.  In August 2005 the Port Phillip and Westernport Catchment Management Authority warned that frequent toxic algal blooms and marine pests could dominate the Bay if nitrogen thresholds were exceeded. They went on to say “this would fundamentally alter the Bay’s ecological processes, reducing its attractiveness and usefulness to humans for swimming, boating and fishing and its capacity to assimilate waste.  This would threaten the health and productivity of the natural system.  And because it would be extremely difficult to reverse, it could lead to a major social and political crisis for Victoria.”

3.3 Water Levels

The PoMC is now predicting a range of change in average sea level of around 1cm (albeit they previously claimed there would be no effect).  The manner in which this fact is dismissed is a cause for concern. The Bruun Rule which is an accepted method for calculating this sort of scenario states that for every one unit that water rises vertically,  it can spread 50 -100 units horizontally on flat land. Therefore, an increase by 1cm in water level as acknowledged by the PoMC could cause upto 1 metre inundation of flat beach/coastal land.  Added to this, no where in the SEES is an analysis done of the impact of the wash on the Bay’s beaches and low lying areas deriving from the larger 14 metre draught vessel.  This would have to be significant.
Questions/Issues Not Adequately Addressed By The SEES In Respect To The Impact On The Bay’s Environment/Ecology

  • How can the PoMC guarantee ABSOLUTELY that the contaminated sediment will not cause major detrimental effect to both human and marine health?
  • How can the PoMC guarantee that the Main Trunk Sewer under the Yarra will not be ruptured by accident thereby causing raw sewage to enter the Yarra?
  • How can the PoMC be sure that their proposed bund will forever contain the highly toxic sediments from the Yarra?
  • Where else in the world has this technique been successfully used to contain this volume of contaminated sediment?
  • What will be the monitoring processes to ensure there is no seepage from the bund?
  • Who will be responsible for the monitoring of the bund?  
  • What will be the effect of the wash from the 14 metre draught ships on PPB’s beaches?  Will the large ships be required to slow down as the much smaller Spirit of Tasmania is to minimise the impact of damage to beaches from their wash?
  • How will PoMC contain toxic algal blooms and at what cost?
  • Having regard to the known toxic hazardous risks of the contaminated sediment  (of which PoMC must be currently fully aware via the MSDS’s which are readily available), PoMC would be criminally irresponsible and negligent to proceed with dumping the contaminated material in the Bay.  Why then was the PoMC being indemnified by the State Government via the Channel Deepening( Facilitation) Act 2004 from Common Law damages claims in the event that they cause major and /or irreparable damage to PPB or the people who use it for recreation or commerce ?   Does the Stae Government intend to reintroduce and enact this Bill?
  • Why has the State Government stopped the Toxic Dump at Mildura which is land based and involves significantly less toxic material and significantly less environmental risk and yet is determined to proceed with this significantly riskier project with potential for widespread consequences ?
  • Why are steps being taken ( quite properly) to  cease the sewage outflow at Gunnamatta and yet a far more toxic situation for the Bay is being supported? 
  • Why is the PoMC not treating and disposing of highly toxic sediment on land or taking it out into Bass Strait?.  If it is purely because it would make the project cost prohibitive, then what value does PoMC place on serious damage to human and marine life and health?  If it is due to translocation of marine pests and contamination to Bass Strait, then why is it acceptable to contaminate the Bay?
  • What if the PoMC estimate of a 2 year recovery of some aspects of the environmental impact is wrong?  What if it takes 5 years to recover?. What if it takes 10 years to recover?

The PoMC’s attitude appears to be that people are jumping at shadows about something that will never occur.  Chenobyl was not supposed to occur either.  Nor was the City Link tunnel accident. Nor was the Exxon Valdez. Nor was the Oil Tanker ”Desh Rakshak” which grounded at the Heads on 4 January 2006. The fact is things can and do go wrong.

Port Phillip Bay is not the PoMC’s or the State Government’s possesion to impose their will in respect to channel deepening in pursuit of commercial interests or Victorian pride over-riding environmental interests.  A key principle of the Environment Protection Act is the principle of Inter-Generational Equity which requires that “the present generation ensure that the health, diversity and productivity of the environment is maintained for the benefit of future generations.”  Channel Deepening clearly places this at very significant risk and is in contravention of this principle.

4. Cost /Benefits and Risk

The cost benefits as stated in the SEES do not stand up to scrutiny.  At best the figure are “rubbery”.
  • The predicted return on investment (viz, $2.2 Billion over a 30 year time frame) against an investment of $750 million is paltry by any reasonable commercial standard.  It represents a 34% return over a 30 year period. 
  • However the figure of $750m needs to be significantly increased as it does not include the full cost to taxpayers of undertaking all the necessary related projects including moving Melbourne Markets, moving Footscray Rd., construction of the proposed rail bridge/tunnel adjacent to Docklands, as well as the community costs of the projected quadrupling of truck traffic by 2035 regardless of any improved rail connections.  This means that the ROI will be even less again.
  • Moreover, the Mornington Peninsula already boasts $1 billion in tourism dollars annually. That figure can only increase if the current beach-oriented attraction of the region remains part of the appeal. Therefore any losses to the local economy resulting from the channel deepening project have to be deducted from the predicted return of $2.2 Billion. The cost benefit is looking sicker all the time.
  • Added to this, the PoMC has failed to put a price on irreplaceable Bay assets in its  PriceWaterhouseCoopers (PWC) economic analysis of the contribution of the Port to the economy, but it fails to value the contribution of the Bay to society and the economy. The PWC consultant advised that this would be too difficult and beyond the scope of the study.  This is absolutely relevant and germaine to an objective evaluation of the cost benefits of the CDP.
  • At the EES Panel hearing, the PoMC Economic Experts Witness admitted under cross- examination that financial benefits to individual Victorians would be “ Immeasurably minor”
  • Mr. Brumby claims industry would save $582 million by 2035 if the project proceeds, whilst the SEES claims industry would bear $450 million in extra costs by 2035 if the project did not proceed. PoMC estimates it will handle over 7 million containers by 2035. That’s an additional cost per container of around $65. That’s a miniscule 0.16% extra cost per container by 2035 if the project did not proceed.  On average, I understand container contents are valued at $40,000, so even if there were extra costs they are a tiny proportion of the contents value. Using Mr Brumby's figures, if the project did proceed industry might save around $80 per container by 2035 – but we might also have irrevocably damaged our Bay. What hasn’t been discussed is who is going to pay for the project, and who would pay if the Bay was damaged!
  • If industry is levied the proposed $20 per container, increasing by $5 per year as previously mooted by PoMC, the $80 savings by 2035 is entirely illusory. So if industry doesn’t want to pay, who will? Obviously the taxpayer.
  • You cannot place much credence in the PoMC cost estimates.  In July 2004 they estimated the project would cost $400M. In September 2006 they estimated the cost to be $545M.  By the time the SEES was released in March 2007 the costs were estimated to be $590M.  In the space of a mere 30 months the cost estimates have increased by 67.8%.   Added to this there is clear examples of where large infrastructure projects have had costs seriously under-estimated and benefits seriously over-estimated (eg The Fast Train Project) which provides no confidence in the economic modelling contained in the SEES or in the government’s enthusiasm for the project.
  • The SEES acknowledges adverse impacts on dive businesses, and that fish stocks might be reduced for at least 2 years which will obviously have a “knock –on” effect on related industries  industries such as boating, tackle and bait supplies, accommodation and tourism.  In spite of this, the underpinning philosophy of the SEES is that if any business suffers loss as a result of the project, it would be at its expense to pursue compensation via civil action .
Questions/Issues Not Adequately Addressed By The SEES In Respect To The Cost Benefits

  • What is the full total cost of the project including the cost of moving Melbourne Markets, moving Footscray Rd., construction of the proposed rail bridge/tunnel adjacent to Docklands, as well as the community costs of the projected quadrupling of truck traffic by 2035?
  • Who will meet the cost of the CDP? Will it be the PoMC?  Will it be passed on to the Ship Operators?( in which case it will be less attractive for them to come to Melbourne) Will it be passed onto Taxpayers? 
  • How much precisely are taxpayers expected to pay for this project?
  • Why did not the Government advise the electorate of this figure during the election campaign and seek a mandate to undertake the CDP?
  • Who will pay for the major damage to the environment and bay ecology when it occurs?
  • How will industries adversely affected by the CDP  be compensated and why has not PoMC provisioned for this and includeds as part of the cost benefit analysis?
  • Why have the serious adverse effects on the Mornington Peninsula’s tourist industry (particularly loss of revenue and loss of jobs) not been quantified and included as part of the cost benefit study?
5. The Impacts On The Quality Of Life Of People

The dredging is planned to occur 24 hours a day 7 days a week for 2 years.. Speaking for myself at the South end of the Bay, it is anticipated that the dredging will continue day and night for 41 weeks.  Those of us who had to live through the trial dredging know how disruptive to our sleep it was.  There was a constant grinding noise that is very unsettling.
The beaches will be unusable for at least 2 years but arguably may never recover.  This will restrict people’s enjoyment and quality of life as they will not be able to undertake their recreational and commercial activities and interests.

6. Concluding Remarks

The PoMC’s SEES clearly does not establish a compelling case for Channel Deepening because:

  • There is fundamentally no discernable change in PoMC’s approach to this project which was rejected by the EES Panel.  The PoMC propose to use the same dredging contractor, technology and methodology and invoke the same environmental risks. 
  • There are superior alternatives that will better meet the medium to long-term strategic needs of Victoria and Australia and generate more benefits to a wider group of stakeholders in an eco-friendly manner. (albeit it may not achieve PoMC’s insular and narrow aim to be the premier container port in Australia)
  • PwC have clearly stated that the number of containers will quadruple by 2030 whether the CDP proceeds or not.
  • Despite their best “guesstimates” contained in the SEES, the PoMC do not and cannot know what the real environmental impacts will be on a project of this scale.  The environmental/ecological risks are enormous (particularly with 2.3 million cubic meters of known toxic contaminated sediment) and, very evidently, has the potential to permanently damage the Bay, a treasured and crucial natural resource that has to be preserved and handed on to future generations.
  • According to the 15,000-page Port of Melbourne Corporation's Supplementary Environmental Effects Statement, the dredging of 22.9 million cubic metres of sediment from the bay's floor will create excessive turbidity, release toxic contaminants, create 18 hectares of rockfalls, spawn algal blooms, reduce fish stocks, damage crucial sea-grasses and affect recreational and commercial use of Melbourne's waterfront.
  • The predicted economic return of $2.2 Billion over 30 years on an investment of $750M(as best case ), but more likely to be $1B ( in the worst case) is paltry and would not be considered by companies such as BHP Billiton or Rio as an acceptable Return on Investment(ROI).  Added to this there is clear examples of where large infrastructure projects have had costs seriously under-estimated and benefits seriously over-estimated (eg The Fast Train Project) which provides no confidence in the economic modelling contained in the SEES. In any event, the cost-benefit analysis still fails to include the contribution that our healthy Bay makes to the Victorian economy and does not factor in the restoration, compensation and related “necessary” projects such as moving Melbourne Markets, Footscray Road and enlarging Swanson Dock or the adverse impact on various industries.
  • There will be a savage impact on people’s quality of life during the 2 year, 24/7 dredging project where sleep will be disturbed, beaches covered in washed up stinking dredge waste, drastically compromised water quality due to turbidity, reduced recreation activities such as: fishing, swimming, sail boarding, diving  and toxic plumes spreading throughout the Bay which have serious health and well-being implications for both human and marine life.
It seems then that PoMC is seeking to invest >$750m using a flawed business case to
  • attract larger container ships to Melbourne that they acknowledge may never arrive
  • treble container traffic volumes that they acknowledge will occur anyway
  • put at significant risk the environment/ecosystem of the Bay and the health of future generations (both human and marine)
  • promote PoM as Australia’s premier container port
How can such an investment be justified when there are so many other more demanding, attractive investment options to benefit the Victorian community?

This is an opportunity for you and your Panel to exercise the independence, courage and wisdom vested in you to recognise that channel deepening is not the answer.  Finally, I request that you not approve the Channel Deepening Project for all the reasons outlined above.

Yours sincerely

Bill and Fran Dowling                   
McCrae        


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