Address to Australian Local Government Association Local Roads and Transport Congress – Nation Building as Economic Stimulus -Toowoomba, QLD
I’m pleased once again to have the opportunity to address the Australian Local Government Association’s annual Roads and Transport Congress.
This is an important event.
Governments come and go, but the need for the construction and maintenance of an efficient system of roads is ever-present.
While much of the media discourse about roads concerns major highways funded by the states and the Commonwealth, local roads are central to the everyday life of Australians.
They are, as your president has described them, the capillaries of our communities, linking our homes, schools, farms and businesses.
Everyone here would have travelled on local roads to get to this congress today.
Ensuring our roads are properly maintained and that new road construction keeps pace with development is critical for two key reasons.
The first is road safety.
But it is also about the economy.
If roads are fit for purpose and kept in good condition, they facilitate the easy passage of goods and people throughout communities.
That can boost productivity, leading to economic and jobs growth.
Indeed, if we are serious in our desire to ensure there are jobs for our children and grandchildren, we must accept that we have a responsibility to keep our road system in good shape.
So thanks for holding this congress each year to keep the spotlight on this important issue.
FINANCIAL ASSISTANCE GRANTS
Let me start today with the words on everyone’s lips – Financial Assistance Grants.
It’s no news to anyone here that councils rely heavily on Financial Assistance Grants for road maintenance and construction.
That’s why the current Federal Government’s decision in its 2014 Budget to freeze indexation of those grants until 2017-18 was such a poor decision.
This cut reduced council budgets by $925 million over three years.
Small and regional councils have been the hardest hit.
They rely on Financial Assistance Grants more than bigger councils with larger rates bases and other sources of income.
Like your organisation, I opposed the cut when it was announced in the 2014 Budget.
I worried about the effect of the cuts on construction and maintenance of local roads and other council services.
Having read ALGA’s 2016-17 Budget submission, it is now clear these concerns have been realised.
Councils all over the nation have informed ALGA that the cuts have required them to postpone infrastructure works, lift fees for services or simply reduce council activity.
The submission confirms that small rural councils have been hardest hit.
Let me quote from it:
A number of rural councils (including West Wimmera, Wodonga and Toowong in Victoria; Collie in WA; and South Burnett in Queensland) have informed ALGA that as a result of the FAGS freeze they will be forced to postpone infrastructure work, look at substantial increases in the fees for services such as kindergartens; to reduce hours of operation of council facilities and look at possible rates increases.
It is clear that the cuts have not only affected road construction and maintenance, but have forced councils to reduce other services.
As well as having real practical implications, the cuts also represent a quite cynical move by the Commonwealth to outsource its cuts to other levels of government.
I say that is cynical because it’s not the Federal Government that has to account to ratepayers for the cuts.
When someone has a problem with a pothole or worries about snakes hiding in the long grass in a local park, it’s not the local Federal MP that gets the call.
It is the local councillor.
It’s you who are being held accountable for cuts that were imposed upon your communities.
ROADS TO RECOVERY
I am pleased that in June of 2015, the Labor Party was able to work with the Government to restore some of the funding via a boost to the Roads to Recovery Program.
As you will recall, in 2014 the Government proposed lifting a freeze on indexation of fuel excise.
After its 2014 Budget, it exercised its right to begin collecting the extra money.
However, that decision had to be approved by the Senate.
Had that approval not been given, the extra money collected would have been returned to fuel companies – not to road users who had paid it.
Instead, Labor delivered a compromise whereby the changes could proceed as long as the extra revenue was allocated to councils for spending on roads for the first two years.
It was distributed through the existing Roads to Recovery program.
That was a measure Labor insisted upon.
While the Roads to Recovery funding was no doubt welcome, I note the comments of your president, Troy Pickard, in the program for today’s event.
But the additional tied infrastructure funding cannot offset the general purpose funding foregone due to the indexation freeze on FAGs.
INFRASTRUCTURE AND THE ECONOMY
Let me turn to infrastructure investment more broadly.
At a time when the mining boom is moving from its construction phase to production, it makes sense for the Commonwealth to increase infrastructure investment.
In the short term, increased investment provides ongoing economic activity and jobs in construction and related industries.
And in the medium to long term, increased investment boosts productivity and supports future economic and jobs growth.
That’s why the former Labor Government invested heavily in railways, roads, ports and other critical infrastructure.
We doubled the roads budget and built or upgraded 7000km of road.
We rebuilt more than a third of the national rail network and allocated more investment to public transport than all other previous Commonwealth governments combined.
We had several motives, including a need to address under-investment by the former Howard Government.
We understood the importance of infrastructure investment to drive economic activity in the face of the global economic crisis.
But we could also see the writing on the wall in terms of the decline of the investment stage of the mining boom.
It was clear that as private sector investment dropped off, the jobs growth of the future would have to shift to other areas of the economy.
Governments have an important role in that transition.
They need to invest in capacity.
They need to ensure that our transport and communications infrastructure is able to support the needs of new industries and businesses.
The requirement for capacity building is even more urgent in 2016.
Both sides of politics are on the same page when it comes to the need for innovation to create the industries of the future.
But support for innovation to create new industries must also come with investment in the railways, roads and ports that those industries will require if they are to thrive and produce jobs.
This also includes provision of 21st century, fibre-based high speed broadband, which is particularly important for rural and regional Australia.
In 2016, we need a strong and forward looking infrastructure program.
The case for greater investment is even more compelling when you consider that interest rates are extremely low.
Indeed, both former Reserve Bank Governor Glenn Stevens and his successor Philip Lowe have recently noted that there is only so much they can do with monetary policy to stimulate the economy.
Both have advocated infrastructure investment for economic stimulus, provided the projects built offer returns to the public.
The current Federal Government’s rhetoric suggests that it understands the economic need for increased infrastructure investment.
But there’s a growing gap between the rhetoric and the reality.
In the lead-up to this year’s Federal election the Government cut its actual investment on infrastructure to fund an advertising campaign claiming it was delivering record investment.
But the facts tell a different story.
The Australian Bureau of Statistics has found that in the first two years under the current government, total public sector infrastructure investment fell by 20 percent.
More recent figures show that the decline in investment is ongoing at the federal level.
In every quarter since the Government was elected, the public sector has invested less than the amount that was invested in the September quarter of 2013.
In its 2014 Budget, the Government said it would invest $8 billion on transport infrastructure in 2015-16.
But the Final Budget Outcome document shows its actual expenditure on transport infrastructure in 2015-16 was only $5.5 billion.
And that included a $490 million payment to the Western Australian Government as GST compensation.
That means all up, the Government cut its planned infrastructure investment by nearly $3 billion over what it promised.
That’s about 35 per cent.
The Government’s excuse for this huge underspend is that some projects have been re-phased and moved into future financial years.
But that was the excuse in the previous year, when it underspent its planned investment by $1 billion.
The truth is that the Government has reduced investment.
It has done this via a combination of scrapping some projects, postponing the commencement of others and slowing the pace of ongoing major projects like the upgrades of the Bruce and Pacific Highways.
The cuts to roads include important programs that support the work of councils.
Take last financial year.
Actual spending on the Black Spots program was 55 per cent less than the 2014 Budget forecast.
Actual spending on the Government’s own Bridges Renewal program was down 40 percent on the forecast.
Investment in the Heavy Vehicle Safety and Productivity program was down 70 per cent on the 2014 forecast.
These programs are of particular importance to local governments, particularly those in rural and regional Australia.
Let’s take the Bridges Renewal Program which I know is of real assistance to smaller councils because it improves bridges while also generating local economic activity.
The 40 per cent cut in actual spending in 2015-16 over what was forecast in 2014 represents $25 million.
That’s $25 million that should have been being invested in rural and regional Australia in 2015-16.
That’s $25 million that should be stimulating local economy right now: creating jobs; driving local demand; keeping things moving.
I’m surprised by this lethargy.
If the Government was actually delivering on its bridges program, Black Spots and the Heavy Vehicle Safety and Productivity program, the investment might go some way toward helping councils deal with the impact of the cuts to Financial Assistance Grants.
It’s not enough just to talk about the jobs of the future.
Serious governments invest the jobs of the future by building the infrastructure that will make those jobs real.
In Australia at this stage of our development, that has to include significant investment in public transport and better roads to address traffic congestion.
In cities all over Australia, traffic congestion is eating away at economic productivity and damaging our quality of life.
According to Infrastructure Australia, traffic congestion will cost the nation $53 billion in lost productivity each year unless we take action now.
We need to invest.
And we need to do it now.
Traffic congestion not only erodes economic productivity and acts as a hand brake on jobs growth.
It is also eroding the Australian quality of life and keeping people on the road when they should be in their communities or their homes.
It’s a tragedy that many Australian parents spend more time in their cars travelling to and from work than they spend at home playing with their kids.
We also need to invest in roads, including local roads in rural and regional areas.
And from my perspective, the best way to do that is to work with local councils.
That’s an approach Labor has taken for many years now.
We see investment in communities, whether in roads or other community projects, as a partnership with local government.
Here in Queensland this partnership delivered some great outcomes.
The former Labor Government worked with the Gold Coast City Council and the State Government to deliver the highly successful Gold Coast Light Rail.
We worked with the Moreton Bay Regional Council and the State Government on the Redcliffe Peninsula Rail Link, which opened in September, connecting the Redcliffe Peninsula to the Brisbane suburban rail network.
We also partnered with the Brisbane City Council on Legacy Way, an important road project delivered without a state government contribution.
Let me finish up by restating my firm view that local government should be recognised in the Australian Constitution.
Allowing local government to exist purely in state legislation means it is subject to the political whims of the state government of the day.
We’ve seen this from the ongoing process of forced amalgamations in NSW, which have left communities without accountable local representation for two years.
Communities feel angry and betrayed.
And people’s voices are not heard.
Be assured that a future Labor Government will pick up where we left off on this issue.
We’ll also return to an orderly, evidence-based approach to infrastructure investment, working with other levels of government in partnership.
During the election campaign we proposed significant investment right across the nation.
We offered support for public transport and better roads.
But we also backed important freight rail projects including Inland Rail and the Port Botany Freight Line.
I’m strongly of the view that infrastructure investment is the key to future prosperity.
It’s no good just talking about it.
You need to invest in the right projects based on evidence of economic return.
Then you need to roll up your sleeves and get on with it.