Thank you for having me here again today.

I seized the invitation to address you one year on from my last ‘State of the Nation’ address.

Because it’s been an eventful year.

What better time to review where we’ve been...where we are...and most importantly, where the Rudd Labor Government is going.

It’s no secret that I am a firm believer in this Government’s vision for Australia. The Rudd Government has a great story to tell on infrastructure and on the economy.

The alternative Government is not in fact an alternative.

It is a mish mash of opportunistic, unfunded promises and brutal cuts to infrastructure programs.

So this year, we will be prosecuting our case for re-election on the basis of the Rudd Government’s vision of the future state of our nation.

When I was here last year, I noted the extraordinary challenges the business community was facing, coping with a savage downturn in the global economy.

Disrupted financing...temporary downsizing...revisiting capital equipment decisions... and worst of all...reassessing business’ employment needs.

Heavy engineering and construction were feeling the brunt.

Yet curiously, a different story was emerging in Australia to others.

Consumer spending was holding up. The housing market was remaining strong. Australian businesses were sharing the burden, shortening hours but keeping employment levels up.

These things are very easy to say—it’s another thing to implement them. The Rudd Government is doing just that. The Prime Minister has envisaged a Building Decade to shape our cities, meet our demographic changes, better connect our goods and our people, lift productivity and improve our quality of life further still.

We’ve been busy laying the foundations for this decade. Today I’d like to tell you about what we’re doing, and what we plan to do.

Australia’s history boasts other significant achievements. In 1949 the Chifley Government oversaw the beginning of the Snowy Mountains Hydro Scheme.

It was a mammoth undertaking. 25 years in the making, the project used the labour of 100,000 men and women from more than 30 different countries.

Australians made up more than a third of the workforce.

When it was completed Australia had a scheme which today diverts the water which underpins some $3 billion in agricultural produce and provides 70% of the eastern mainland’s clean, renewable energy.

This is what Labor is about. Utilising imagination and innovation to build things that last. To build things which increase our productivity, underpin our economy and allow us to embrace the future confidently.

We have a positive agenda for our cities. We have a positive agenda for meeting our infrastructure challenges, securing our economic productivity and continuing our Building Decade.

The Economic Stimulus

That said, our country must support a significant infrastructure task to remain globally competitive. The world does not owe us a living, nor does the world stand still.

It’s this demand that the Rudd Government is determined to help meet. This is our Building Decade.

But it’s not just the Federal Government’s money that’s required. This isn’t about largesse.

It’s about responsible financing, microeconomic reform and establishing the right conditions to attract private sector investment.

Our Story so Far

Investment is important. It’s particularly important given the infrastructure deficit the Rudd Government has inherited.

The former government had no interest in our roads, our rail, our ports or our cities.

We are interested and have invested unprecedented levels into developing our country’s economic capacity.

Under the Nation Building Program the Rudd Government administers $37 billion for land transport infrastructure over six years through to 2013-14.

The Government is investing this $37 billion in capacity enlarging infrastructure such as road, rail and ports.

The most recent Budget continues this significant investment in Australia’s infrastructure, with funds being used to boost rail productivity; supporting the growth of the aviation industry; improving safety; and overhauling transport regulations as we move towards a seamless economy.

This investment is designed to provide Australia with a modern, safe and sophisticated transport network for the 21st century.

It’s about meeting our future with confidence.

But I want to focus today on the reform aspects of my portfolio. Because it’s these quiet events that will shape our productivity in years to come, and at the end of our first term, I believe it is now more evident how much this Government is keeping our Labor traditions of reform.

With this in mind, in 2008 COAG formally endorsed the National Public Private Partnerships (PPP) Policy and Guidelines developed by Infrastructure Australia in conjunction with the COAG Infrastructure Working Group. These guidelines aim to encourage greater participation by the private sector in delivering key infrastructure projects.

Labor Began Micro Reform

It’s just not enough to fund projects. For instance, since COAG first met in 1992, microeconomic reform has been recognised as being of real importance.

It’s been on the agenda for a long time.

But the need for regulatory reform stretches well past 1992. Since Federation we have suffered the inefficiencies which come with competing jurisdictions.

And despite our historic spend on infrastructure, financing transport infrastructure is still a major challenge that we will have to face in the coming years.

Where to Next?

The challenge now is getting the settings right for encouraging greater private sector involvement in major transport infrastructure investment as part of the transition out of the global financial crisis.

We will need to be creative in examining financing options. The Government has a choice of financing mechanisms. The trick will be to get the right fit.

Public/Private Partnerships

The COAG Infrastructure Working Group recently agreed to submit the Commercial Principles for Economic Infrastructure to COAG for approval and public release as part of the National PPP Policy and Guidelines.

IA engaged KPMG to help identify and find practical solutions to the most significant barriers to competition and efficiency in the procurement of PPPs. The review responded to criticism that bid costs in Australia are excessive, that it takes too long to award contracts and that new local and overseas entrants face barriers to entering the Australian PPP market.

The review found that the biggest barrier to new entrants to the PPP market is the relatively small number of PPP projects in Australia in comparison with Canada and the UK.

This situation can deter new entrants from establishing the capability to go head to head with the existing highly competitive field of bidders.

The review also found that bid costs for contracts are significant – often running into tens of millions of dollars. Bid costs in Australia are, on average, around 25- 45% higher than in Canada for similarly sized projects, but significantly lower than in the United Kingdom – the two most comparable countries.

The Australian, State and Territory Governments are now developing their responses to the KPMG report.

The resulting plan will soon be publicly released.

National Prequalification System

The Rudd Government is also working with states and territories to develop a new national prequalification system which I announced this month.

Prequalification is a risk management tool that our states and territories use extensively for the delivery of infrastructure projects.

It’s simple: contractors wishing to tender for such projects submit to an assessment process.

This process identifies the right contractors for the right job. As a concept, it is hard to argue against prequalification.

While prequalification make sense, the way it currently operates is burdensome. Each state and territory operates its own prequalification system.

A contractor wishing to operate around the country therefore needs to deal with eight different systems, each one designed to do the same thing but in a different fashion. This means that contractors wanting to compete in more than one jurisdiction have to deal with unnecessary duplication and red tape. This acts as an entry barrier, reducing competition. It also means jurisdictions are incurring unnecessary costs.

The Department is working with states and territories to introduce important economic reforms into the market for the provision of major infrastructure projects. The reforms centre around the introduction of a new National Prequalification System to operate from 1 January 2011.

One of the key features of the new system is that it is harmonised. All states and territories will apply the same tests and benchmarks in determining whether an applicant is to be prequalified.

The second key feature of the new system is mutual recognition. A contractor who is prequalified in one state or territory will have that prequalification recognised in other states or territories.

Road, rail and maritime regulatory reform

The establishment of single national regulators for heavy vehicles, rail and maritime.

Nation Building is not merely the construction of road and rail; it is also about instituting legislative and regulatory reforms appropriate to meet the infrastructure challenges of the 21st Century.

The need for regulatory reform is long-standing; the issue was raised at the very first COAG meeting in 1992.

On rail, we have narrow, broad and standard gauge systems.

Our seven rail regulatory authorities use 22 separate communication systems.

We have 23 regulators for maritime, rail and heavy vehicles – in a country of 22 million people.

Some people say we’re not moving quickly enough.

I reject that – completely.

Corralling nine governments...agreeing common national laws...shared national funding arrangements...and responsible transition arrangements for business.

We are finishing in three years what previous governments could not do for decades.

Despite over 20 years of hard work, the transport industry operates within inconsistencies on fatigue laws, driving hours, axle weights, load restraints and emissions requirements.

The Australian Transport Council will bring the final National Partnership Agreement to COAG for approval by mid-2011 and full implementation of the single national regulator and investigator framework will be in place by 2013.

Similarly, we must lift productivity and improve safety with heavy vehicles. Currently, regulation carried out by up to nine governments means differences in the adoption, interpretation, application and enforcement of multiple pieces of heavy vehicle law.

COAG expects to be able to finalise its agreement through a National Partnership Agreement by the end of 2010, that a national regulator will be in place during 2011 and that full implementation of national heavy vehicle regulation will be complete by the end of 2012.

The third part of this – the maritime industry – is serviced by the Australian Maritime Safety Authority (AMSA), now the national agency for maritime safety, environmental protection, and search and rescue services. AMSA has a strong, pro-active culture of sponsoring maritime safety. Australia is well served by a strong, centralised body.

All these reforms together will generate a range of benefits for businesses consistent with COAG’s agreed outcomes for the seamless national economy. For example, there will be reduced costs for businesses and workers operating across state and territory borders due to a more efficient national market with the seamless transfer of labour and goods between jurisdictions.

In all reforms, however, there is much work still to be jointly undertaken by all jurisdictions to work through the different arrangements and laws with the aim to implement one law that applies nation-wide.

OUR CITIES

It is a sad fact that for too long urban policy and the state of our cities has been absent from the Federal arena. This is all the more remarkable when you consider that Australia is one of the most urbanised countries in the world—despite our “wide and sunburnt land” tag 75 per cent of our population reside in our major cities.

The need for a co-ordinated and integrated approach to our cities is now as urgent as it’s ever been. The Federal Government’s long absence from urban policy is over.

The third intergenerational report released earlier this year projects Australia’s population will grow from 22 million to 36 million by 2050. This presents a challenge in itself, considering the associated increase in demand for services and infrastructure, but a further challenge is presented by the makeup of that population: the percentage of our population aged 65 and over will nearly double from 14 percent to 23 percent.

These figures are projections—they are not carved in stone. But a responsible government must respond today to our future challenges.

The implications for our cities are clear. Sydney and Melbourne are forecast to have 7 million citizens respectively by 2050.

Brisbane’s population is expected to increase to 4 million, and Perth’s population is expected to increase to almost that number.

Canberra, Hobart, Adelaide and Darwin are all expected to continue their expansion.

These challenges of population growth emphasises the need for national leadership on the state of our cities.

This does not mean we are taking our eye off our rural and remote areas. Our regions contribute massively to Australia’s prosperity and every Australian should have equal access to social, educational and economic opportunity regardless of where you live.

That egalitarianism is a proud feature of Australian life and the Federal Government’s record investment in our regions is proof of our commitment.

While our cities contribute 60 percent of our export income, there is no doubt that our major cities are the heartbeat of our economy.

Major cities contribute 80 percent of our nation’s GDP, despite the fact that they employ only 73 percent of the country’s workforce. This demonstrates a great productivity premium.

Our major cities are also estimated to have provided 80 percent of employment growth during the period of 2001-2006.

Our major cities are the major manufacturers, and our principal cultural and academic hubs.

They also attract significant numbers of tourists and skilled migrants.

But I don’t want to help reinforce the illusion that our cities and our regions are so separate. Cities connect the commodities of our farms and mines to world markets.

Cities often house the corporate headquarters of regional businesses.

Cities and our regions are dependent upon each other—and our country’s economic growth is dependent upon both.

The challenges we face—population increases, climate change, traffic congestion—have new angles reflecting the specific challenges of the 21st century. But the challenge of planning sustainable, liveable and productive cities is not new.

Housing Affordability

A related challenge is housing affordability. As cheaper properties become available on our city’s fringes, the potential savings are lost when residents must rely on their cars to drive to work or social occasions.

In other words, those with the least income are often the hardest hit by high oil prices as suburban fringe dwellers can’t rely on integrated public transport systems.

Government is sensitive to the issue of housing affordability and suburban sprawl and today’s report provides data upon which we can make sensible decisions.

Traffic congestion

Another challenge is reducing traffic congestion. Urban congestion is increasing, and so is the cost of doing nothing about it.

The Bureau of Infrastructure, Transport and Regional Economics puts the avoidable cost of urban congestion at $10 billion a year, and expects that figure to double by 2020 if we do nothing about it. They’re grimly impressive figures—$20 billion by 2020.

Congestion costs are real and they’re substantial. Urban congestion contributes to traffic delays, increased greenhouse gas emissions, higher vehicle running costs and more accidents. And for your regular commuter, it leads to missed meetings, a missed hour with your family after work, a missed lunch date. It leads to frustration and tedium and anger. To relieve urban congestion is to improve our quality of life.

Cities: What we’ve done

But what’s the role of Federal Government in matters of urban planning and our cities? There’s an argument for whether the Commonwealth should even be involved in urban planning.

We believe there is.

And we believe that the evidence for that can be seen in the effects of the previous Government’s self-imposed exile from our cities and infrastructure. Our cities have sprawled and sprawled; congestion has increased; public transport hasn’t caught up with growth; and lower income families are doing it tough out in the fringe suburbs when the greatest concentration of employment is very far away in the city.

Once you’ve answered the question of Federal involvement, the next logical question is: what should that Federal involvement look like?

We are not interested in a Federal takeover. What we are interested in is a partnership with our State colleagues. What we are interested in is encouraging State governments to plan their cities for the long-term, and in accordance with judicious criteria.

We’re also interested in serious investment.

For starters, we understand how vital public transport is in combating climate change, reducing urban congestion, providing social and economic connection and revitalising urban areas.

Public transport is not a silver bullet for our urban challenges, but clean, well-integrated public transport systems will go a long way in helping us meet them.

This is why The Rudd Government is investing $4.6 billion into the planning, development and construction of nine metropolitan rail projects in major cities across the country.

Adelaide, Brisbane, the Gold Coast, Perth, Melbourne and Sydney will all benefit from this historic involvement by the Rudd Government.

Never before has a national government invested so significantly into passenger rail in our cities. That our involvement is historic demonstrates how important the Rudd Government considers our cities.

We are also developing meaningful partnerships with our State colleagues. We are not interested in riding rough-shod over State transport priorities. We are not interested in blame games.

What we are interested in is providing support—support for State-based research into transport needs and financial support for the major projects we will undertake together.

The Rudd Government will work co-operatively with the States to deliver the nine projects which will modernise existing rail systems, enlarging capacities and increasing speeds and connectivity. The projects will make it cleaner, easier and faster to move around our cities.

The connectivity of this country and its continued, competitive participation in a global market demands that we develop roads and rail and ports in an integrated way.

The Federal Government respects public transport. We acknowledge its capacity to inspire urban revitalisation as we respect its ability to cut carbon emissions. A clean, modern, safe, and efficient urban rail system will also relieve urban congestion.

We have also mapped out an ambitious $43 billion National Broadband Network. In a digital age, connectivity is about more than cars and buses. Fast, reliable internet connections are vital for individuals and businesses all over the country. Like transport systems, the internet connects Australians with each other and with economic and social opportunity. It also connects us with the rest of the world.

The National Broadband Network will connect 90 percent of Australian homes, schools and workplaces with internet speeds of up to 100 megabits per second. This is up to 100 times faster than today’s average speeds.

The remaining 10 percent of premises will be connected to wireless and satellite technologies and will enjoy far superior connection speeds than those experienced today.

Every Australian, regardless of where you live, will have access to fast, modern broadband connections.

This is a 21st century extension of our egalitarian culture. It will also boost productivity and play its own part in reducing urban congestion—with faster, more reliable internet connections, more people will be encouraged to work from home.

The Major Cities Unit was created to identify opportunities where federal leadership could make a difference to the prosperity of our cities and the wellbeing of their residents.

It was created to provide a focal point of the Federal Government’s vision for more sustainable, productive and liveable cities.

As you know, and as today’s speech suggests, urban planning is complex. Our cities are dynamic, shifting things with incredibly complex components.

Given this complexity—and given the importance of our cities—the Federal Government believes in input of Local, State and Federal government, the integration of services and infrastructure bodies, and industry and community participation.

This is precisely why the Major Cities Unit was established—to provide a more coordinated and integrated approach to the planning and infrastructure needs of major cities.

Underpinning our policy frameworks and our investment in our cities is an understanding—that we are here to improve the lives of Australians and the future of this country.

It’s people that bridge policy with outcomes. And it’s people who will benefit from ensuring we develop sustainable, productive and liveable cities for the 21st century.

The urban challenges we face are large. But so too is our ambition to match them.

Conclusion

Australia has enormous cause for confidence going forward. As we look around, at Europe, at the United States, we have reason for optimism.

A surplus.

Strong growth, low unemployment.

Record investment in infrastructure – a Building Decade.

A plan for reform, to invest wisely in the future of this country, lift productivity and living standards, and ensure fairness in our society.

This is not in fact a plan for re-election; it is a plan for good government, for an evolving story, and for safe hands to steer the economy.