Mar 14, 2008

Bilfinger Berger Bot Global Conference


14 March 2008, Melbourne


  • The Hon Theo Theophanous, Victorian Minister for Industry and State Development; Minister for Major Projects, Minister for Information Technology

  •  Mr Fritz Syvertsen, CEO Bilfinger Berger BOT



It is a pleasure to be here as Australia’s first Federal Infrastructure Minister.

As many of you here would be aware, the Rudd Labor Government has now completed more than 100 days in office.

In that short time, we have seized the agenda – an agenda of nation-building.

In my own portfolios, I have set in motion an ambitious plan to address infrastructure bottlenecks that are holding back the nation from achieving its full potential.

The Reserve Bank of Australia has delivered 20 separate warnings about capacity constraints causing inflationary pressure on the economy.

And we know that infrastructure shortfalls are costing us 0.8 per cent of GDP in lost production every year.

The Government is providing the infrastructure policy framework that business leaders like many in this room have been seeking for the last twelve years.

Our plans for infrastructure have benefited from years of consultation with stakeholders, such as yourselves.

So we are confident that the Government is taking a sensible approach to establishing the foundations stone for long term infrastructure provision.

As you know the Prime Minister has put forward a five-point plan to lift productivity, fight inflation and sustain economic growth.

The five-point plan addresses both demand side and supply side pressures on inflation.

And national coordination of infrastructure is a key element of that plan.

We know that when our infrastructure networks are under-funded, over-stretched or out-of-date, not only is our economic prosperity threatened but so are our living standards.

And over the longer term infrastructure shortages leave us ill-equipped to respond to the challenges of climate change, an ageing population, and increasing globalisation.

The Rudd Labor Government is committed to a comprehensive and coordinated plan of action to tackle our infrastructure bottlenecks and boost the productive capacity of the nation.

And central to that plan is the creation of Infrastructure Australia.

Infrastructure Australia

On 21 January Federal Cabinet endorsed Infrastructure Australia, an independent statutory agency which will conduct an audit of nationally significant infrastructure by the end of this year.

It will help guide billions of investment dollars to priority infrastructure projects.

On 21 February, exactly one month later, I introduced legislation in the Parliament to establish Infrastructure Australia.

Then on 26 February, I announced that Sir Rod Eddington would be the inaugural chair of Infrastructure Australia.

Victorians have already had the opportunity to see Sir Rod at work.

He will bring strong leadership and formidable experience to this new national body as it begins work on long term solutions for infrastructure bottlenecks.

The Rudd Labor Government is serious about working with the private sector and the appointment of someone such as Sir Rod Eddington to Chair Infrastructure Australia is a sign of that commitment.

The Infrastructure Australia Advisory Council will consist of 5 members from the private sector including the Chair, 3 from the Commonwealth, 3 from the States, and 1 from Local Government.

Infrastructure Australia will be assisted by the Office of Infrastructure Coordination, which will be based in Sydney and headed by the Infrastructure Coordinator.

National coordination and leadership

People in this room would know more than most that the timely and coordinated planning and provision of infrastructure is a complex task

Nation-building requires coordinated solutions.

And governments must show leadership and approach the task systematically.

We know that different infrastructure types rarely operate in isolation – getting goods from the farm gate to port involves trucks, trains, ships, and different rules and regulation set by different levels of government.

Throw into the mix a few unions and different infrastructure owners and operators and you can see why national leadership and coordination are prerequisites for success.

The Rudd Labor Government has recognised this through the appointment of a Federal Infrastructure Minister


And by establishing Infrastructure Australia as a coordinating body. It will advise governments, investors, owners and users of infrastructure on national infrastructure priorities.

This will include advice on which infrastructure projects and networks need urgent attention and how they might be financed.

As well as advice on the policy and regulatory reforms needed to improve the way we use our existing infrastructure.

The pipeline of projects created through Infrastructure Australia’s Priority List will provide the construction, development and financing sectors with the long term certainty they need to make best use of skills and resources.

Importantly, Infrastructure Australia will look at ways in which barriers or disincentives to investing in nationally significant infrastructure can be removed.

Key to this will be the harmonisation of guidelines, legislation and regulations across jurisdictions.

I know that issues such as pricing and regulatory reform are critically important to further investment and these are areas where governments can take early action.

The standardisation of formats in tender documents and contracts will also be important to facilitate consideration of infrastructure proposals and to promote best practice procurement.

Encouraging private investment means making sure approval processes for infrastructure projects are not unnecessarily long, costly or complex.

I recently announced that best practice, nationally consistent guidelines for one procurement method – Public Private Partnerships – will be finalised by Infrastructure Australia by the end of this year.

Guidelines like these will ensure that PPPs, when considered to be the best procurement option, maximise value for money, transparency, and public accountability.

Nationally consistent, best practice PPP guidelines will make it simpler and less expensive for local and international financiers to invest in Australian infrastructure.

I know that firms can spend tens of millions of dollars on bids and engage hundreds of staff to finalise complex tenders.

Not only does this lock out some smaller investors and businesses but it also places a great burden on the public sector involved in evaluating these bids.

Frankly, it’s money that should be spent on improving project outcomes.

Financing Infrastructure

There is no doubt that overcoming our infrastructure backlog and preparing for the future will require substantial investment.

ABN AMRO has estimated that over the next decade, total infrastructure spending in Australia could reach $400 billion.

It is estimated that $30 to $35 billion worth of investment is required in the nation’s energy sector by 2020.

And the Bureau of Transport and Infrastructure Economics has estimated that urban congestion will cost a total of $20 billion by 2020.

While the Rudd Government will fulfil its obligation to fund some nationally significant infrastructure, we know that governments alone cannot deal with all infrastructure shortfalls.

The private sector must be involved.

And we must consider a range of financing options.

Infrastructure Australia will make recommendations on financing options for individual priority projects.

In determining the best financing option, the Government will not be driven by ideology.

Sometimes public provision will be required, sometimes private, or a combination of both.

I’m aware that Bilfinger has been involved in a number of infrastructure projects across various infrastructure types in different parts of Australia.

I know that you have worked closely and constructively with the Victorian State Government.

The Marngoneet Correctional Centre, the Melbourne Remand Centre, and the Royal Women’s Hospital are of course evidence of what can be achieved when healthy partnerships are formed.

I note too that Bilfinger has partnered with Brisbane City Council to build the North South Bypass Tunnel in Brisbane – a project further up the Eastern seaboard.

Infrastructure Australia’s audit will develop a pipeline of projects steadily on offer to potential investors – public and private.

This includes superannuation funds, which now hold $1.2 trillion in assets – more than Australia’s annual GDP.

Australia has the 4th largest funds management industry in the world, with fund managers seeking to create a balanced portfolio of investments.

Infrastructure assets offer a long term and secure option with a consistently good rate of return for investment of superannuation capital.


As leaders we must never lose sight of the fact that efficient and reliable infrastructure has the capacity to improve the quality of life of each and every Australian.

It’s about taking water from the Warragamba Dam in Sydney to the tap in our kitchens.

It is about efficiently transporting coal from the Surat Basin to the Kogan Creek power plant so that the light comes on when you flick a switch in suburban Brisbane.

It’s about using the internet to communicate in seconds, not minutes.

And it is about giving families more time together and less time stuck in traffic.

That is why it’s so important to capture the unique reform opportunity before us and the prosperity afforded by the mining boom to fundamentally reform infrastructure policy.

For the Labor Party, nation-building is our stock in trade.

After all, Labor governments began the Trans-Australian railway, originally between Port Augusta and Kalgoorlie, built the Snowy Mountains hydro-electric scheme and established the National Highway to connect Australia’s states and territories.

And it will be the Rudd Labor Government that will deliver a world-class national broadband network, establish a national emissions trading scheme, and create an education revolution to take Australia forward.

In that spirit, I look forward to a continued dialogue and a partnership with Australia’s business leaders to meet the significant challenges ahead.

Thank you.