The Miracle Economy that is South Australia 2040

 

In 2015, the South Australian Premier of the day, Jay Weatherall, conducted a Royal Commission into Nuclear energy. He did this in spite of the huge opposition to anything to do with the nuclear industry throughout his Australian Labor Party, and widely in the bureaucracy as well as some parts of industry. The findings of the Royal Commission were to be an historic turning point for both South Australia and Australia itself, and turned around the historic under achievement of the SA economy compared to most of the rest of Australia.

The Royal Commission was a brave move by the South Australian Labor Premier, as his party had been implacably opposed to both nuclear power, and acceptance of nuclear waste. But at the time, SA found itself caught in the middle of inaction on climate change by conservative forces, particularly the Liberal Party under Malcolm Turnbull, then in power in Canberra and SA’s desperate need for reliable sources of power. This was not helped in late 2016, when there was a state-wide blackout due to a convergence of unprecedented phenomena happening all at once: freak storms, the breakdown of a gas fired power station, and a breakdown of supply from the national grid. In other words, an unprecedented set of circumstances, but one nevertheless which need to be addressed urgently.

The conservatives’ response to this was to cynically blame the SA government’s “obsessive” commitment to alternative energy, pointing out that this would not happen if they relied on coal. Given that no financial institution globally was financing coal fired stations in the foreseeable future without government guarantees, Weatherall needed quickly to find a short term political fix this problem. But in the long term there was no alternative but to fundamentally “change the game”.

In April, 2017, he announced his short to medium solution. SA would invest in a large back up battery facility costing over $100m, which was largely inspired by the Tesla electric entrepreneur Elon Musk. In addition the government would build a gas fired power-station as a backup for the sort of extraordinary circumstances experienced in 2017.

But in September 2017, Weatherall announced the fundamental game changer which was destined to not only change Australia’s energy landscape, but also much of the rest of the world. He began his address:

“Ladies and gentlemen, it is my great pleasure today to outline an exciting future for our great state of South Australia. Ever since we elected Don Dunstan as premier in the 1970s, South Australia has had fair claim to being Australia’s most progressive state. After the Dunstan era, there followed further progressive reforms: land rights, an indigenous governor, decriminalising homosexuality and of course big, brave festivals.  

“Maintaining the trend, SA also became a heartland for political experiments — Steele Hall’s Liberal Movement, the Australia Party and the Australian Democrats. These days, it has been South Australian Labor in the Senate, with the support of independent thinkers such as Nick Xenophon who saved Australia from the ravages of the extreme right wing ideologues of the Abbott Government.

“We now want to match these progressive instincts with an equally progressive and visionary economic future for SA, one which will take us into a new era of economic prosperity which is not reliant on the boom industries of the past – the motor industry, consumer manufacturing and fossil fuel fired energy generation.

“Now opportunity beckons. There is a chance to embrace technological change the same way we embraced social change and create Australia’s first ultra-modern, sustainable economy. In short, we want to turn South Australia over the next twenty- five years into the greenest, most technically advanced environmental economy in the world. We have the infrastructure, the resources, the skills and the money to get it done. And we will. The surplus we generate from our nuclear activities, will be ploughed back into investments which will transform the economy from top to bottom to ensure our vision is reached”.

Weatherall’s speech coincided with the launch of the SA government’s policy prescriptions as a result of the recommendations from the Royal Commission into the Nuclear industry, and it is fair to say the vision staggered Australia and much of the world.

The vision, as subsequently outlined by Weatherall’s staff, came in a number of components:

  1. South Australia will commit to being THE greenest, most advanced and sustainable state in the world –economically, financially and environmentally;
  2. central to that future will be a clean, efficient, technologically advanced and extremely valuable nuclear industry. This will be broken into several parts:
  3. South Australia will be made the centre of the world nuclear industry by providing a ‘close loop’ industry, i.e. rather than selling its uranium oxide to the rest of the world, it will rent it to them, and have the waste returned to South Australia for storage and eventual use as additional fuel in new generation nuclear reactors. Just by this alone the Royal Commission estimated this will generate for the State an additional surplus over the next ten years of $60 billion;
  4. SA will commit to spend some of that surplus to support the creation of a new generation nuclear industry, and construct under licence a generation 4 reactor from one of several suppliers under open tender such as GE Hitachi with its PRISM reactor, Rosatom with its BN reactor, and possibly from new innovative players such as Terrestrial The Mission of SANC will be to:
  5. license the building of a fast breeder reactor which will produce electricity from spent fuel rods sourced from the clients of Australian uranium exporters and eventually from nuclear fuel stockpiles from around the world. SANC will be responsible for the running of this process, and the accumulation of revenue, until the technology is mature, at which time SANC will sell it to the highest bidder provided its operational headquarters remains in SA, but substantial royalties will still flow to the government;
  6. be responsible for the export of uranium and the return of the waste from around the world, and the development of the storage facilities in South Australia;

iii.      oversee the enforcement of strict standards agreed globally for the movement of uranium oxide and waste around the world to and from Australia;

  1. provide technical advice to the federal government to ensure compliance to global standards; and
  2. provide the management and running of the generation 4 reactor and the distribution of the electricity to South Australia and elsewhere in Australia and offshore

The generation 4 fast breeder reactors had been a dream of the nuclear industry for decades, but no one has had the cash, the socio-political and geological environment nor the political will to make it happen. The Royal Commission though, after extensive global examination of the issue, came to the view that given the right commitment, skills and finance it would be possible for it to not only work but for it to be ready within ten years: and so it proved to be.

By 2025, the consortium charged with developing the reactor had not only had a pilot plant operating for 12 months, but was in the process of constructing a full-blown plant. This meant that via this new plant, it was possible to recycle nuclear waste from spent fuel rods with only 5% waste, and even that was then capable of recycling and so it too eventually ended up as fuel. South Australia was therefore in a position to deliver its promise of providing the world with a “close loop” nuclear industry, and the world came flocking to its door.

Between the time when South Australia started the closed loop policy in 2018, and the time the pilot generation 4 pilot reactor was commissioned in 2022, South Australia had earned over $40 billion in fees from those countries needing immediate resolution to managing used nuclear fuel. And all SA then did was to begin the process of turning it into green electricity, which eventually no only fed into Australia’s national energy grid supplying over 50% of national demand, but Australia became a major exporter of electricity once the power link was established across the Timor Sea to Indonesia and beyond to South East Asia.

As a direct result of the announcement of the SA government’s change of policy, and its commitment to a closed loop nuclear cycle, BHP Billiton announced it had decided to reopen for development the Roxby Downs mineral site in Northern South Australia– the biggest single deposit of uranium oxide and copper in the world, as well as numerous other minerals. This had been shelved in 2013 in view of the falling commodity prices and the uncertain future of the nuclear power industry. In the words of BHP: “South Australia changes everything”. From 2018 to 2030, BHP spent $10 billion developing the mine, but estimated over the 50 year life of the mine will make over $100 million dollars from it. It rapidly became SA’s biggest export earner, until the nuclear industry and its associated power generation and recycling overtook it in the early 2030’s.

Once the nuclear waste earnings started coming in in late 2017, SA rapidly began to commit to “greening” its economy. SA had long had a number of natural advantages, both from natural resources and its perceived redundant manufacturing and technology base. Weatherall now set about turning them into real economic opportunities.

First there was Elon Musk’s  Tesla electric car, his SpaceX – the most successful private provider of space travel, and his SolarCity – the US’s most successful solar energy company. Musk was a perfect fit for South Australia: redundant car factories, an operational space station in Wimmera Rocket Range, and the world’s second highest penetration of solar panels per household (after Queensland). Further, it had abundant sunlight both in winter and summer.

In 2018, in a joint news conference between Weatherall and Musk it was announced that:

  1. South Australia would hand over for nothing all the redundant car plants in South Australia to Tesla. Further, the government would provide $1billion dollars to adapt those plants for production of the Tesla Model S, X and the coming 3 provided these factories became the supply hub in the Asia Pacific region;
  2. Tesla would commit to developing and manufacturing an electric “peoples’” car which would be provided for every one at a fraction the cost of taxis, and ordered from the net and in the street. They would be all driverless;
  3. South Australia would progressively over 5 years make their major arterial roads into electric roads i.e. roads which are configured to charge electric cars as they drive along the roads which were in use in Europe in 2016 on a pilot basis, and have been increasingly charging buses as they drive along freeways. By 2025, most major roads in SA were electrified. The energy for these roads were provided by SolarCity with solar cells dotted along their fringes together with Tesla battery packs, as well as from the nuclear power stations. In the words of Musk: “it is a world first, but an incredibly exciting first”;
  4. SpaceX set up a manufacturing and development centre at Woomera for their state of the art rockets, but the actual launch pads were located in the Gulf of Carpentaria owing to the need for launch pads to be closer to the equator. By 2030, there were more rocket launches from the Cape than in North America owing to the insatiable demand from Asia and the lowest cost provider status of SpaceX.

South Australia had traditionally a vibrant Agribusiness sector, mostly centred on seafood of various kinds, world famous wines, and strong sheep, cattle and crops of various kinds. In 2017, for the first time in half a century Agribusiness passed the mining industry as Australia’s biggest export earner, and was seen to have as much potential as extractive industries because of the need to support the world’s growing population in the face of climate change and rapidly more variable weather.

SA is a very large state – it is twice the size of France for instance, and has always been constrained in its agribusiness growth by its lack of water. The nuclear opportunity opened up possibilities here too. With Nuclear desalination plants already in operation in Japan and Europe, and operating at a fraction of the cost of fossil fuel driven ones – even solar ones – nuclear energy seemed an obvious direction to pursue secure water for what was going to be a very fast growing population.

In 2021, the SA government announced the construction under the direction of the SANC of a  300-megawatt nuclear plant at Whyalla which would be required to drive a desalination facility with a capacity of 1 million cubic meters of potable water a day. That is enough water to support a population of between 3 or 4 million people. That same population would require between 4,000 and 6,000 megawatts of installed capacity to meet its electricity needs. Over time that facility not only supported SA’s very fast growing population, but enabled a range of new agribusiness industries to develop in the SA desert which would not have been possible otherwise

In addition, in 2017, Weatherall announced that he would invest $5 billion per annum into research in environmental technologies, funded from the nuclear royalties. The decisions about the funding allocations would be by an independent panel made up of a variety of the best environmental scientists in the world.  The only caveat was that the research and subsequent commercialization should be headquartered in South Australia. The result was that most major universities in the world opened campuses in South Australia and by 2040 SA per capita had more Phds than anywhere else in the western world. SA became the Australian hub of innovation and research for environmental industries, and the subsequent spin off companies remained head quartered in SA.

In April 2019, the new Federal Labor Government and Weatherall produced an even bigger shock than he did 18 months earlier. Surrounded by much of the new Federal Labor Cabinet: new PM Chris Evans; Penny Wong – Foreign Affairs; Tanya Plibersek – Treasurer; Richard Marles – Defence; and Anthony Albanese – Infrastructure. With them were the President of France, the Honorable Emmanuel Macron; and the Prime Minister of New Zealand, the right Honorable Bill English. Chris Evans started off:

“Today, ANZAC day, I am delighted to announce a major step forward in the modernisation of the Australian Economy which will make us, and especially South Australia, a pivotal player in Asia/Pacific region.

“Following our election mid last year we have been conducting a root and branch study of government expenditures and what opportunities exist for us to modernise and make our economy even more competitive. One of those opportunities is to help SA accelerate its transition to a clean green high tech economy. In doing so we recognised that SA’s ship- building capabilities together with its transition to a safe nuclear environment represented a very significant chance for our country.

“In 2015, the then LCP Government announced its intention to build up to 12 French designed ‘Shortfin Barracuda’. These French submarines are currently serving with the French navy as nuclear submarines and require expensive and extensive redesign to become diesel driven equivalents. Conventional power also considerably restricts its range.

“After extensive consultation with the French Government and the French builders, and strong support from our Department of Defence and the RAN, we have decided to build almost identical boats to their French equivalents including their nuclear power trains. In making this decision we believe this should be and will be above politics as it is so important to our future. I therefore thank the Leader of the Opposition for her provisional support which I received after I briefed her last night.

 Both parties, and the State Government, realise this is a big step but will be a major boost to SA transition to a nuclear future and provide us with leading edge capabilities in the Asia Pacific region. In recognition of the significance of this announcement to Australia and France, we welcome the French President the Honourable Emmanuel Macron to his first visit to Australia as President.

“My great friend and colleague, New Zealand’s PM Bill English, we also welcome. Bill is not only a great friend of Australia, he also leads the government of our greatest friend and ally, and fellow ANZAC partner, New Zealand. In doing so I would like to reveal that NZ has agreed not only to buy an additional two boats, but also take a 20% equity in the project. Over time we intend to make SA a nuclear hub in the Asia Pacific in partnership with our French partners, and intend to sell a number of additional boats to friendly allies around the Pacific rim. We estimate this could be as many as 20 boats over the life of the project. By going nuclear, there is no doubt we vastly improve the attractiveness of these boats to other buyers.

“I have to emphasise that none of this would have been possible without the visionary stance taken by the SA government in developing a “closed loop” nuclear economy, something I know our French partners are very very keen to capitalise on in the years ahead”.

To put it mildly, this caused a huge stir around the world, and certainly accelerated considerable additional interest in SA’s direction. It also played a critical role in helping SA successfully transform itself into the most prosperous economy in Australia such that today, in 2040, South Australia has the highest per capita income of all Australian states, is regarded as a model in sustainable development throughout the world, and has a population of over 5 million people, having overtaken WA and Queensland since 2020. Oh yes, and by 2040, in addition to the 12 submarines the RAN purchased, and the two for the  RNZN, so far there have been 21 sold to navies on the Pacific rim, and the Barracudas are regarded as amongst the most lethal weapons afloat and has caused many navies to play “catch up” when their power was realised. Nearly all of these boats use SA as a maintenance and technical base.