Jun 15, 2016

Address to Australian Financial Review Infrastruture Summit – Four Seasons Hotel, Sydney

Time is our greatest teacher.

Over the past three years, time has reinforced the fundamental truth about how to deliver major infrastructure projects in the most efficient manner.

The clear lesson is that process is critical.

Before political parties commit funding to major projects, they must conduct proper, evidence-based analysis to ensure they stack up.

If they don’t observe this process, they risk failure.

Consider Melbourne’s collapsed East-West Link – funded by the current Commonwealth Government without a cost-benefit analysis.

In 2014 money was handed over to the Victorian Government in advance, no questions asked, for a project that it later transpired would have returned 45 cents for every dollar invested.

Then there is the Perth Freight Link –pulled out of a Weeties packet in the lead up to the 2014 budget.

Not even the WA State Government knew much about it at the time, except that it would have passed through an environmentally sensitive wetland.

Nevertheless, nearly a billion dollars was committed to the Perth Freight Link without cost-benefit analysis.

Now it’s been stopped by the WA Supreme Court on environmental grounds.

Sydney’s WestConnex is another project funded by the Commonwealth in advance in the absence of cost-benefit analysis.

Its budget has blown out from $10 billion to $16.8 billion and its funding is the subject of investigation by the Australian National Audit Office.

And because of a lack of proper process, it remains unclear where the exits to the tunnels will be, even whilst the project is under construction.

This is provoking a response from the local community who quite rightly regard the community consultation process as appalling.

This lack of proper process has cost our economy.

Australian Bureau of Statistics figures show that between the September quarter of 2013 and the September quarter of 2015, public sector infrastructure investment fell by 20 per cent.

This reduction came at the very time we needed to lift investment to sustain economic activity in the wake of the decline of the investment stage of the mining boom.

The common feature in each of these projects is that politics was put before process.

What makes this worse is that these toll road projects were funded by cutting projects that had been approved by Infrastructure Australia and that were ready to proceed, such as Brisbane’s Cross River Rail, the Melbourne Metro and the Tonsley Park upgrade in Adelaide.

Infrastructure Australia, created in 2008 by the former Labor Government to assess viability and value of proposed projects, was sidelined.

Any discussion of infrastructure policy today must begin with the recognition that where politics gets in the way of an evidence-based process, projects stall.

Economic activity is reduced.

Fewer jobs are created.

And we deny ourselves the opportunity to secure productivity gains that will set up future prosperity and, much more importantly, create jobs for future generations.

ELECTION

I’d like to thank the Australian Financial Review for convening this summit.

It’s an opportunity to look back at what has gone wrong, and to consider how we can achieve better outcomes in the future.

As both sides of politics agree, our nation needs to diversify its economy in the wake of the decline of mining.

We need new industries that create high-value jobs for the future.

And we need to strengthen and expand existing industries to meet the new opportunities such as the burgeoning demand from Asia for food products.

However, industries of the future require the infrastructure of the future.

They require roads, ports, railways, intermodal facilities and fibre-to-the-premises broadband.

This nation can’t afford any more costly failures.

PROCESS

I note that earlier this morning you held a panel discussion about how to exclude politics from the infrastructure development.

The answer is proper process.

Different governments will always have different priorities. That’s the nature of our system.

But if all sides of politics commit to evidence-based policy making, the political comings and goings should be less of a problem.

My aim when I created Infrastructure Australia was to create a pipeline of nation building projects that could attract bi-partisan support on the basis of demonstrated evidence.

I wanted to break the nexus between the infrastructure investment cycle, which is long-term, and the political cycle, which is short term.

That is still my aim.

But it takes political maturity from all sides to achieve it.

We’ve had three wasted years on infrastructure.

Last year Infrastructure Australia updated its 2008 audit of the nation’s infrastructure needs with an aim to producing a 15-year investment pipeline.

If both sides commit fully to evidence-based decision-making through Infrastructure Australia, we’ll be able to use that pipeline to the national benefit.

That’s why a Labor Government will bring Infrastructure Australia in from the cold and back to the centre of the process, where it belongs.

But as well as returning to evidence-based process, Labor will expand Infrastructure Australia’s role to attempt to unlock more private capital for public infrastructure.

PRIVATE INVESTMENT

We would invest $10 billion into an infrastructure financing facility which would be independently administered by Infrastructure Australia.

We recognise that while there is no shortage of private money available for infrastructure investment, potential investors stay on the sidelines because of concern about risks in the early stages.

Under Labor, Infrastructure Australia will work with investors to secure their involvement using loan guarantees, discounted loans, seed funding and direct investment.

We’d seek to provide a bridge for private investors to commit to projects earlier on so that they get off the drawing board and into construction.

Our model is based on the successful Clean Energy Finance Corporation.

Within 100 days of a change of government, Labor would appoint a panel of experts to lay out the parameters for this new funding mandate.

We won’t go at the problem like a bull at a gate.

We’ll seek the advice of the private sector and experts to find a formula that can work better for everyone.

PUBLIC TRANSPORT

Later today this summit will turn its attention to public transport.

Your starting point should be Infrastructure Australia’s warning that unless we act to address traffic congestion in this country, it will cost the nation $53 billion a year in lost productivity by 2031.

Investing in public transport is the logical place to begin to address this problem.

That is why it is so unfortunate that in 2013 the Coalition cancelled all Commonwealth investment in public transport that was not the subject of contracts.

That was an absurd decision.

The Commonwealth needs to invest in roads and rail – not one or the other.

In this election campaign, Labor has already announced funding commitments to the Perth Metronet and the Adelink public transport system, as well as bringing forward the electrification of Adelaide’s Gawler Line.

In Bill Shorten’s Budget Reply we recommitted to the Melbourne Metro and Cross River Rail projects and re-announced our support for Western Sydney Rail access to Badgerys Creek Airport.

There’s a lot of ground to make up on public transport.

Take the example of Cross River Rail – a project that was ready to proceed in 2013.

At present, there is only one rail crossing of the Brisbane River in the Brisbane CBD – the Merivale Bridge.

It can take a maximum of 24 trains an hour.

But within five years, demand will hit 28 trains an hour.

Failure to act will mean that within five years, the ongoing development of Australia’s third largest city will be captive to a capacity constraint.

We should address it now.

We need to act whoever wins on July 2.

Infrastructure Australia declared Cross River Rail ready to proceed years ago, which is why it was funded in the 2013 Budget.

Three years later, we are running out of time.

ROADS

To better understand the challenges of traffic congestion, policy makers need to get their heads around changes in the Australian workforce.

In previous decades, Australians could find jobs near their suburban homes in industries like manufacturing.

But in 2016, jobs growth has shifted to areas in and around central business districts in service sectors like banking, insurance and information technology.

Our problem is that high housing prices in and around city centres mean many workers cannot afford to live near their workplaces.

They waste a lot of time commuting to and from drive-in drive-out suburbs.

It is a tragedy that many Australian parents spend more time driving to and from work than at home with their children.

CITIES

To achieve better outcomes, governments need to start looking at cities in their entirety, rather than according to which party holds which seats in which part of town.

And they need to look at a multi-faceted approach to enhancing the productivity, sustainability and liveability of urban Australia.

Four out of five Australians live in cities.

They are also the location the majority of our national economic activity.

The efficiency of our cities is therefore crucial to the health of our national economy, making it important that we confront issues like the phenomenon of drive-in, drive out suburbs.

It’s not just about whether people have time to spend with their children.

It’s about a stronger economy.

The current Prime Minister has had much to say about the need for integrated urban planning.

But as yet, he has failed to put any meat on the bones beyond offering vague ideas about value capture and even vaguer plans about City Deals.

From Labor’s perspective, investing in better roads and ending the three-year ban on public transport is just the starting point to better cities.

We also need to address housing affordability, so that people who work close to the CBD can live closer to the CBD.

The Commonwealth should also be working more closely with other levels of government to increase population densities along established public transport corridors.

We must also look for ways to restore jobs growth in the suburbs by investing in research precincts around hospitals and universities.

There’s also scope for working with councils to encourage the development of second and third CBDs in our cities.

We should be encouraging greater use of active travel options like walking and cycling.

And we should also be looking at funding mechanisms that allow for greater value capture to help fund infrastructure.

The Badgerys Creek Airport is a great example.

Tony Abbott made the right decision in proceeding with a second airport for Sydney.

The Labor Party offered him our full support, knowing that a project of this scale is unachievable without bipartisanship.

However, under current plans, the airport will not be linked to Sydney’s passenger railway network from the day it opens.

This will deny governments the opportunity to access the full benefit of value uplift.

Badgerys Creek must be more than a runway and an airport terminal. It must be an Aerotropolis.

Developed properly, it will be a catalyst for thousands of jobs in the region.

Ensuring the airport is connected to public transport from the day it opens will make the land in its vicinity more valuable than it would be otherwise, something that can be reflected in the lease of the airport to its operator.

The existence of the rail link would also increase land values of the employment lands in the nearby precinct owned by the NSW government.

RAIL

Before I finish let me mention two projects that need to be progressed over coming years in the interests of national productivity.

The first is the proposed Inland Rail Link between Brisbane and Melbourne.

Talked about for years, Inland Rail would enhance our nation’s export potential, particularly when it comes to meeting Asia’s burgeoning demand for food.

But it has been on the backburner for the past three years despite the Coalition’s 2013 promise to fast track its construction.

In its first two Budgets, the Government failed to invest a dollar beyond the $300 million that had been allocated by the previous Labor Government, which had also invested $600 million upgrading existing rail line that will be part of the Inland Rail.

Finally, some money was allocated in the 2016 Budget, although we have no construction timetable.

It’s time to stop talking and start progressing Inland Rail.

The same goes for the proposed High Speed Rail Link from Brisbane to Melbourne via Sydney and Canberra.

High Speed Rail would revolutionise interstate travel, allowing people to travel between capital cities in as little as three hours.

But it would also turbo charge the economic development of the regional centres along its route.

I’m talking about places like the Gold Coast, Casino, Grafton, Coffs Harbour, Port Macquarie, Taree, Newcastle, the Central Coast, Southern Highlands, Wagga Wagga, Albury-Wodonga and Shepparton.

In 2013, the former Labor Government proposed creating a High Speed Rail Authority to begin detailed planning and the process of corridor acquisition.

We made that decision on the advice of an expert panel which included former Deputy Prime Minister Tim Fischer, Business Council of Australian chief executive Jennifer Westacott and former Australasian Railways Association chief Bryan Nye.

But the incoming Coalition Government scrapped that plan.

If elected on July 2 Labor will create a High Speed Rail Authority.

But we’ll go one step further.

International railway construction companies from China, Japan, Korea and several European nations have expressed interest in an Australian High Speed Railway.

A Labor Government will ask the authority to move toward an expressions-of-interest process to see what these international firms have to offer.

VISION

These types of infrastructure projects require vision.

Good governments think years and decades ahead.

They imagine a better future and then take steps to realise their vision.

Right now, both sides of politics are trying to imagine an Australia that has a broader economic base, more productive cities and greater productivity.

We won’t achieve that vision without great roads, railways, ports and the intermodal facilities to ensure they work together.

We won’t achieve it without 21st century broadband.

And perhaps most of all, we won’t take our nation forward unless we make our decisions on the basis of the national interest, not on the basis of the electoral map.

Contact Anthony

(02) 9564 3588 Electorate Office

Email: A.Albanese.MP@aph.gov.au

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