Sep 10, 2008

Address To the Sydney Institute

Address To the Sydney Institute

September 10 2008

Governor Phillip Tower, Sydney

The Hon Anthony Albanese MP

Minister for Infrastructure, Transport,

Regional Development and Local Government

Leader of the House

Federal Member for Grayndler

It is a great pleasure to have the opportunity to speak to the Sydney Institute as Australia’s first Commonwealth Infrastructure Minister.

Tonight we are not far from one of this nation’s most recognisable examples of well-planned infrastructure – the Sydney Harbour Bridge.

Built in the 1920s and early ‘30s, the designers had the foresight to build eight lanes in anticipation of future demand.

It is hard to imagine Sydney without it.

At the other end of the scale, we are also close to the mismatch of roads that is the Sydney CBD.

These roads were generally constructed by chain gangs on the basis of the lines of least resistance or the path most often used by goats or bullocks.

The results of this ad hoc approach to planning are more evident than ever, particularly at this time of the day when the city’s workers start to head home.

Well-designed infrastructure can literally shape a nation and deliver productivity benefits to the country for decades to come.

This is the context for the Rudd Government placing the national coordination of infrastructure as a central element of our economic reform agenda.

Our nation-building history

Tonight I want to discuss the Rudd Government’s nation building agenda and in particular the need for the Commonwealth to reengage in policies that impact on our cities.

The new Government’s approach is consistent with Labor’s traditions, but that doesn’t mean we are simply repeating what’s been done in the past.

Consistent with Labor’s tradition as a dynamic political Party that looks to the future, we are embarking on an innovative, comprehensive and transformative approach to delivering our vision.

From the construction of the Snowy Mountains Hydro Scheme under Chifley to the floating of the dollar under Hawke, we have always been willing to take the tough decisions to both meet immediate challenges, and also support the nation’s long term interests.

The last 18 years of economic growth had as their foundation reforms championed by Hawke and Keating which made the Australian economy competitive in a globalised world.

Infrastructure Australia

Today’s challenges require new approaches and new solutions.

Many of the previous Labor Government reforms were the product of constructive dialogue between Government, business and the community – including trade unions.

The introduction of the superannuation guarantee is just one example which will help to sustain the Australian economy in the long term.

The Rudd Government is once again engaging in constructive dialogue with the business sector in first framing and then fulfilling our agenda.

As I met with the business community at conferences and around boardroom tables in the 2 years prior to last November’s election, I was struck by the consistency of the message I received.

A need for national coordination, the development of a pipeline of projects, ending the ‘blame game’ and removing impediments to investment were messages so consistent they could have been on a pre-recorded loop.

This was in harmony with the message from the Australian public.

Infrastructure failings have a real impact on Australians everyday lives and they have become increasingly frustrated over urban congestion, water shortages and limited broadband capacity.

It’s truly remarkable that the Howard Government was deaf to the growing noise around infrastructure.

Even 20 warnings from the Reserve Bank of Australia about capacity constraints caused by infrastructure and skills shortages were ignored.

I put this down to their ideological view that markets would deliver by themselves and that public investment in infrastructure was just a cost.

As Infrastructure Minister I inherited a policy vacuum.

The Rudd Government has acted quickly to fill the void.

We established an Infrastructure Department in the Executive Orders and introduced legislation to create Infrastructure Australia in the first Parliamentary session.

Infrastructure Australia brings all levels of government together with the private sector.

The appointment of Sir Rod Eddington as the first Chair of Infrastructure Australia was followed by the appointment of the 12‑member Advisory Council.

This included Mark Birrell from Infrastructure Partnerships Australia; Phil Hennessy from KPMG; Heather Ridout from the Australian Industry Group; Ross Rolfe from Babcock and Brown; and Garry Weaven from Industry Funds Management, as well as senior public servants including Terry Moran and Ken Henry.

This collaborative approach is consistent with the Government’s overall policy of creating the environment for market based solutions, while also providing critical government leadership when required.

If Infrastructure Australia provides the way, our decision to set aside $20 billion for the Building Australia Fund provides the means – or at least its beginning.

This initial injection is from the surplus and is right for the times.

It is one of the reasons why the surplus is being defended by the government as an essential component of responsible economic management.

The Budget produced a surplus with a purpose.

A purpose in the short term because it puts downward pressure on inflation and interest rates.

A purpose in the long term because it provides for long term investment funds to address capacity constraints and lift productivity.

Every time the opposition votes in the Senate to diminish the surplus, they are voting to reduce infrastructure spending and are putting short-term political interest before long term national economic interests.

The global economic uncertainty created by the credit squeeze and rising global oil prices, makes the Budget decision to focus on infrastructure even more prescient.

But there is another factor beyond immediate economic and political considerations that underlines our approach.

Australia must break the link between the electoral cycle and the investment cycle.

Our predecessors squandered the opportunity presented by the resources boom to invest in our long term future.

They wasted opportunities which were presented by successive budget surpluses on solely boosting consumption, and ignored supply side issues including skills and infrastructure which would have boosted productivity and secured prosperity for years to come.

Governments will always be tempted to choose short term recurrent expenditure over long term capital expenditure.

The Minister who announces an infrastructure project rarely gets to preside over its opening.

Infrastructure Australia’s national audit, followed by the national priority list, will break this 3-year mindset.

The government sees our infrastructure agenda as an enduring reform which will exist well beyond current circumstances.

Getting down to work

Whilst the infrastructure priority list is critical, in the meantime, the government is progressing our nation building agenda.

In the Budget, we brought forward expenditure on election commitments and announced new planning money and feasibility studies on potential projects.

This morning I joined with the Prime Minister in Townsville to turn the first sod on the Port Access Road.

This $190 million project could generation as much as $10 billion in economic activity for the North Queensland region.

Yesterday I was in Gladstone and Mackay announcing infrastructure funding for these booming regional centres.

The Townsville Port Access Road is a practical example of smart government investment having a significant multiplier effect on the economy.

It has been talked about for 30 years.

Kevin Rudd announced it last year as Opposition Leader and now, in conjunction with the Queensland Government, we are delivering it.

Even before Infrastructure Australia began its work, we began pushing for transport policy reform through the Australian Transport Council.

The Australian Transport Council has had three meetings to advance transport reforms that have been left on the shelf for many years.

Many of the constraints on the current transport system are the legacy of different jurisdictional approaches to transport regulation.

This inconsistent regulation places restrictions on the transport sector’s capacity to move people and freight as efficiently as a modern economy demands.

The Productivity Commission found in 2007 that improvements to the efficiency of the road and rail freight transport industry, including more streamlined regulation, could deliver as much as $2.4 billion to annual GDP.

The constitutional compromises made by the founding fathers more than a century ago are today creating real and significant disadvantages for the economy: higher prices; higher business costs; and fewer export dollars.

Commonsense dictates that in a country of just 21 million people, one consistent set of transport laws and regulations is the position we should be aspiring to.

Let me give you some examples of the areas where reform is needed.

Australia has seven rail safety regulators, three rail safety investigators and different rules in every state.

The European Union and the United States each have one.

It is extraordinary that in the 21st Century, trains are required to change their staffing ratios as they cross borders.

There are more than 50 pieces of legislation and subordinate legislative instruments pertaining to maritime safety along with eight independent maritime safety agencies.

States do not automatically recognise maritime qualifications granted in another state.

Different standards for commercial boat building apply in each jurisdiction.

When truckies cross state borders, they are subject to different laws and have to put up with different frameworks for their vehicles’ access to the roads.

That’s why the Australian Transport Council will be recommending to COAG in October that it give in-principle support to a number of policy initiatives to move Australia towards a truly national transport framework.

These include a single national system for heavy vehicle regulation, registration and driver licensing; a national system for maritime safety regulation; and the establishment of a National Road Safety Council.

Separately, ATC will be continuing work on a proposal for a national rail safety regulator and investigator.

Tonight I announce that the Rudd Government has allocated $4.5 million in this financial year to meet the costs of the detailed work involved in accurately assessing the implications of proposed changes on industry through regulatory impact statements.

This work will involve a thorough investigation of the costs, benefits and possible options for reform, providing a clear path to take these reforms forward.

The work we are undertaking with the states and territories, under the COAG umbrella, is helping to break down the ‘blame game’ which has afflicted our federation for far too long.

Much of this transport reform will inevitably focus on our major cities, where congestion is more acute.

Major Cities

The Rudd Government is engaging the Commonwealth in our cities.

This reflects our strong belief that the success of our cities, in large part, drives our economy.

Approximately 70 per cent of our population live in cities.

And that 70 per cent is delivering around 80 per cent of Australia’s economic activity.

The Major Cities Unit of the Commonwealth Government will be located within Infrastructure Australia here in Sydney.

It will focus attention on three objectives.

Firstly, productivity – reducing urban congestion and improving our freight networks so that people and goods can move more efficiently.

Secondly, sustainability, ensuring that planning assists in the critical task of reducing carbon pollution and securing our water supply.

And thirdly, liveability, linked to the first two objectives but remembering that there is indeed such a thing as society and that community participation and access to services is critical.

We want to cast our eyes over the ways in which our cities operate and assess them against these three objectives.

Our cities must learn from each other and from overseas cities, while still retaining their own unique characteristics.

There is a real opportunity here to make some small changes in our major cities to deliver big benefits.

Many of these initiatives involve infrastructure provision, particularly improvements to public transport and road network design.

However, much of the reform is broader than just infrastructure.

It is about encouraging flexible work hours to avoid the rush hour peaks on our urban networks.

It is about more distributed work centres to avoid concentrations in city centres.

It is about transforming old industrial suburbs to greenhouse friendly city developments.

It is about undertaking urban renewal projects in older housing estates.

Commonwealth re-engagement in our cities is also a necessary component of the whole-of-government response to climate change.

It is in Australia’s long term interests to start the transition to a carbon constrained economy.

Climate change must be a key consideration in the design and functioning of our cities and urban planning issues.

Conclusion

Infrastructure development is no longer a second order issue without a voice in cabinet, and without a dedicated commonwealth agency.

The Rudd Government has made modernising our nation building infrastructure a top priority because we understand the critical role it plays in driving higher productivity and greater prosperity.

This is not economic reform for its own sake; it is a means to an end.

We must never forget that infrastructure delivery impacts on the everyday lives of all Australians.

It affects the price they pay for fruit and vegetables at the local supermarket.

It determines whether there is enough water for their garden and electricity to power their homes.

It impacts directly on the quality of their lives.

It is indeed a tragedy that many working parents spend more time commuting to and from work than they do at home with their kids.

The Rudd Government is determined.

Determined to get the infrastructure right.

Determined to reform the Federation.

Determined through Infrastructure Australia to ensure that long term nation building receives more community support than short term political decision making.

If we don’t change the dynamic so that no future Government can disregard infrastructure investment, then it will be the community that suffers.

That is why the Rudd Government is passionate about pursuing our nation building agenda.