Nov 19, 2015

Address to the Australian Local Government Association Roads Congress

Ballarat

I’m pleased to have the opportunity to address the Australian Local Government Association’s roads congress.

Your organisation is an important participant in the national debate across a range of government policy areas, roads being among the most important.

Indeed, it was the first ALGA Roads Congress, held in 2000, that led to the creation of the Roads to Recovery program, which helps councils to deliver and maintain local infrastructure in communities across the country.

Much has changed on the Australian political scene since I last spoke to ALGA, including the leadership of the Government and a possible shift in policy away from its previous absurd refusal to invest in public transport.

But the biggest change when it comes to roads came in June, when the Labor Opposition was able to secure a breakthrough compromise over indexation of fuel excise that will pump $1.1 billion into regional roads over the next two years.

As you will recall, in its 2013 Budget, the government proposed lifting a freeze on fuel excise indexation and immediately exercised its right to begin collecting the extra revenue.

However, the change required Senate approval, or else any money collected in the interim would have been retained by fuel companies.

While Labor was concerned about the impact of higher excise on consumers, we were even more concerned about the idea of handing a windfall gain to fuel companies.

So we proposed an effective compromise under which the change would go ahead, as long as the first two years’ revenue was allocated to councils for investment in local roads.

Importantly, the money will be distributed under the successful Roads to Recovery program formula.

That’s as it should be.

While Canberra allocates the money, it is Local Government that is best placed to understand local priorities.

This important development means that while motorists will pay more for fuel, the revenue will be invested in roads and road safety.

This might never have happened without the strong advocacy of the Australian Local Government Association.

Your advocacy is important.

The state of our nation’s roads is not just about economic productivity and the financial position of councils, as important as they are.

It’s also about road safety – human lives.

We hear much in the media about National Highway Network roads like the Pacific Highway and the Bruce Highway, which is understandable given that these important national arteries are long and carry vast amounts of traffic.

But we hear less about local roads, even though they account for about 85 per cent of our nation’s road network.

Too often, people forget that just about every road journey in this country starts and ends on a local road.

Most of us live on a local road.

When we pile our kids into the car to go to school, a weekend sporting event or a summer holiday, our journey starts on a local road.

And many of our exports start their journey overseas on local roads.

These roads are built and maintained by local government.

And maintenance is not cheap.

Neither is construction of new roads.

Local government spends about $7 billion a year on roads.

Today I’d like to review what I see as the current state of road funding, how it can be improved, and where the commonwealth and Local government can intensify our collaboration in the national interest.

A TIME OF CHANGE

It certainly is a time of change in Canberra.

We have a new Prime Minister.

A new cabinet and new cabinet ministers.

And much talk about a new policy approach that ends the former prime minister’s absurd ban on investment in public transport and refusal to engage in urban policy at any level.

I welcome the fact that Malcolm Turnbull is talking about public transport and cities, although, I’m more interested in outcomes than rhetoric.

In any event, the infrastructure inaction of the first two years of Coalition Government means the government now has a lot of catching up to do.

Australian Bureau of Statistics figures show public infrastructure investment declined by 20 per cent between the September quarter of 2013 and the June quarter of this year.

We should not be shocked by this.

As soon as the Coalition took office in 2013 it cancelled billions of dollars of investment in public transport projects including the Melbourne Metro, Brisbane’s Cross River Rail Project, Adelaide’s Tonsley Park and Gawler projects and rail in Perth.

Funding was also cut for Tasmania’s Midland Highway Upgrade, Melbourne’s M80 and the Managed Motorways Program, which increases the efficiency of existing road assets with the use of smart technology.

Some of this funding was reallocated to toll road projects including the discredited East-West Link in Melbourne and the Perth Freight Link.

In the area of funding for councils, the Government used its unfair and short-sighted 2013 Budget to freeze indexation of Financial Assistance Grants – creating a $925 million cut that had to be absorbed by councils.

This cut will particularly impact regional Councils, with Ballarat losing $5 million.

The Government also reversed the policy that I put in place as Local Government Minister, to ensure that it was elected local councils that determined local infrastructure priorities.

I am very proud of the 5,500 projects funded through the Regional and Local Community Infrastructure Program that created jobs in the short term, but have created long term community benefit.

LABOR’S RECORD

Labor comes to the infrastructure funding debate with a proud record.

The former Labor Government doubled the national roads Budget, building or upgrading more than 7,500 km of road.

We also created Infrastructure Australia, designed to provide an evidence-based approach to infrastructure by giving decision makers facts about the productivity benefits of major projects to help guide their considerations.

We created the Major Cities Unit within the Department of Infrastructure and Regional Development, to drive investment in the nation’s cities.

When we took office in 2007, Australia was 20th among OECD nations when it came to infrastructure spending as a proportion of GDP.

When we left office, Australia was 1st.

In Opposition, Labor has continued to develop policies aimed at lifting infrastructure investment.

This is important.

The decline of the investment phase of the mining boom means we need more economic activity if we are to return to higher growth rates.

That’s what makes the more than 20 per cent reduction in investment such a poor outcome for this country.

Of course, the immediate problem is how to fund new infrastructure investment at a time of economic downturn.

There are two ways.

For a start, we should accept that borrowing money to fund infrastructure developments that boost productivity can make real sense.

An unfortunate by-product of the past few years or negativity and partisanship in Australian politics has been the demonisation of all debt.

But if we are serious we must draw a clear distinction between debt for capital expenditure, which can be a good thing, and debt to fund recurrent expenditure.

When average Australians decide they want to buy a house, most of them borrow money.

They don’t decide that because they don’t have the money upfront they will rent for the rest of their lives.

They borrow. And they understand that overall, they are better off borrowing in the long-term because they will one day own their home and it will increase in value over time.

In the same way, borrowing money to fund, for example, a new railway line or a road that alleviates traffic congestion and boosts economic productivity, can be a good thing.

The productivity gains can drive economic and jobs growth which deliver higher returns to government through income tax.

We also need to work harder to attract private investment.

Almost $2 trillion is sitting in the superannuation accounts of Australians and funds are always looking for investment opportunities.

For years governments have sought to unlock these savings for investment in Nation Building.

But for a range of reasons, private investment in this nation’s infrastructure has never taken off to the extent it should.

Last month Bill Shorten announced new Labor policies that will seek to address this shortfall.

A Labor Government will task the independent Infrastructure Australia with administering a new $10 billion infrastructure financing facility.

It will seek to work directly with private investors to mitigate risk to make investment in public infrastructure projects more attractive.

It will do so using a range of methods including direct investment, debt guarantees, seed funding, value uplift and other innovative funding arrangements to enter into partnerships with industry.

Within 100 days of being elected, a Labor Government will set up a panel of experts to create appropriate arrangements around Infrastructure Australia’s new funding mandate.

One critical element of the design of this new approach is the need for governments to respect Infrastructure Australia’s advice about proposed infrastructure projects.

In its current form Infrastructure Australia assesses the cost-benefit analysis of projects that are competing for public funding to ensure governments invest in projects that will genuinely boost economic productivity.

Regrettably, the current commonwealth government has marginalised Infrastructure Australia, ignoring its advice and instead investing in projects that have not been through the proper process.

Under Labor’s plan to elevate Infrastructure Australia’s role on the infrastructure scene to one that also includes a funding element, it will be essential that any project funded through the new financing facility is fully checked and endorsed by Infrastructure Australia.

PARTNERSHIP

There’s another aspect to Labor’s approach that will resonate with councils.

Labor operates, and has for many years, from the starting point that the best way to improve the daily quality of life for average citizens is to work with local councils on infrastructure and services.

We believe the commonwealth should invest in communities.

But we believe it is councils which are best placed to advise on the best forms that investment should take, whether we are talking about roads or community infrastructure projects.

After all, local government is far more aware of local priorities than bureaucrats sitting in Canberra.

Local Government representatives are also accountable to their communities through the ballot box.

Labor’s partnership with local government started with Gough Whitlam, who insisted that any government that was not investing in the nation’s cities had no real understanding of the life of the Australia nation.

Whitlam pioneered partnerships with councils in areas including provision of sewerage, public transport and heritage protection.

Utilising the talents of my great friend, the late Tom Uren, Whitlam reached out to local government.

He made councils legitimate partners in national progress, which is exactly what they should be.

Tom continued the same approach working with Bob Hawke in the 1980s.

The same principle of working with councils lies at the heart of the Roads to Recovery program.

It also informed my own actions as Minister for Local Government and Infrastructure in the former Labor Government.

In an effective inter-governmental partnership, the national government sets overriding principles, but it is the local government that is best placed to set local priorities.

A DEEPER PARTNERSHIP

The next Labor federal government will seek to broaden this co-operative partnership, particularly when it comes to improving the productivity, sustainability and liveability of the nation’s cities.

It is more than a year since I released a 10-point plan for better cities at the National Press Club.

I spoke at length about the need for an attack on urban traffic congestion, noting that concentrated jobs growth in inner city areas meant many commuters were spending increasing amounts of time on the roads.

And I warned that this phenomenon was not only acting as a hand brake on productivity, but also that it was having negative consequences for family and community life.

This drive-in, drive-out phenomenon is one of the more serious social issues facing this nation.

Yet the current government has done nothing to address it over its two years in office.

Actions we can take include building better roads, more public transport and higher housing densities, particularly along established public transport corridors.

But by their nature, these problems can’t be solved by only one level of government.

We must work together.

And with issues like town planning sitting at the centre of this challenge, local government will be critical.

Just as Labor sees it as essential that we work with councils on local road funding and community infrastructure projects, we must also forge a firm partnership on urban policy if we hope to have any significant impact.

I want to assure you today that the next Labor Government will place real emphasis on addressing the productivity, sustainability and liveability of Australian cities.

I am flagging it today, in this forum, to make absolutely clear that we will need the help of councils in urban areas across the country – not just in capital cities, but also in regional centres.

Economic change is altering our cities by shifting the centres of jobs growth from outer suburbs of cities to inner suburbs and CBDs.

We need to respond to that change in ways that facilitate productivity and jobs growth while also addressing sustainability and liveability.

TOWARDS MORE EFFECTIVE FUNDING

One problem facing this nation when it comes to maintaining our local roads is the lack of data available about the state of those roads.

As a nation we spend $20 billion a year building and upgrading roads.

But, as Infrastructure Australia pointed out in 2013, there is a shortage of evidence to guide decision-making when it comes to local roads.

That’s not the case when it comes to major projects.

As I mentioned earlier, the former Labor Government established Infrastructure Australia in 2007 to provide independent analysis of major infrastructure projects to give decision makers advice on which projects would deliver the most value for the public dollar.

Infrastructure Australia does not make funding decisions. That is the proper role of elected representatives.

It provides information – hard facts which inform decisions.

But there is no such mechanism available to councils.

There should be.

Consider, for example, the dilemma of having two pot-holed local roads requiring upgrading but having enough money to fix only one.

Beyond local knowledge and gut feel, what should determine the priority?

Infrastructure Australia considered this very issue in a report issued in March 2013 based on its work with eight local councils clustered around the Queensland-NSW border.

These councils, including Bal­onne, Goondiwindi, Moree Plains and Narrabri, produce more than $2 billion a year in agricultural production.

Despite warnings from bur­eaucrats that such an approach was impossible, it took council inspectors and workers only three months to assemble reliable comparative data on the condition of more than 2200 local roads covering more than 13,000km.

Their surveys covered issues like the importance of a road to local economic activity, amenity and safety.

The councils involved signed the Bingara Accord, agreeing to use this information to focus their road-funding decisions on driving economic prosperity.

The Bingara approach, championed by more than 100 rural and regional councils that are part of the Australian Rural Roads Group, equips councils to invest in projects that will have the greatest potential to boost economic prosperity in their region.

The ARRG believes the data can open the door to harnessing private capital to help fund road works.

For example, if several dozen grain producers living along a pothole-ridden rural road all made a contribution to upgrading the road, it is possible the productivity gains delivered by upgrading the road would boost their profits by an amount greater than they contributed to its repair.

In turn, their greater prosperity could drive further economic activity and investment in the local community.

But to make such judgments, you need data – data that can be made public to give citizens a basis upon which to assess the quality of decision-making.

Such an approach could make a real difference.

I’m not saying council representatives should cede their decision making to some obscure economic formula.

But I am saying that if you had greater access to evidence upon which to make decisions, it could increase your chances of lifting productivity in your communities.

That means new jobs.

I must say that I am extremely disappointed that since the Infrastructure Australia report on the Bingara Accord was produced, the current government, at least as far as I know, has done little to advance the idea of bringing hard evidence to local road funding.

I can assure you that a Labor Government will examine this issue closely.

Public money is scarce. It must be used to its best effect.

CONCLUSION

I’d like to conclude by once again thanking you for the opportunity to speak to you today.

I’ve been lucky enough to address your organisation many times, as a minister and a shadow minister.

I have seen people come and go from your organisation, just as I have seen people come and go from the Federal Parliament.

But throughout nearly 20 years in politics, your organisation has been a level-headed constant on the Australian political and policy scene.

Your members come from all sides of politics and represent a very wide range of views.

But at all times your organisation seeks to serve the national interest and to influence national policy in ways that benefit people in their everyday lives.

Thank you for that, and I wish your roads congress well in its ongoing deliberations.

Contact Anthony

(02) 9564 3588 Electorate Office

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

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