Nov 24, 2017

Speech to AusRAIL – Infrastructure: The Great Enabler – South Brisbane

It is good to be back at Ausrail.

The great thing about the Australasian Railway Association and the rail industry in general is its willingness to look forward with optimism.

Too many people in this country look for excuses to resist change.

They put it off or pretend it is not an issue.

Forward thinkers accept change is inevitable and, as you are doing again this year at Ausrail, collaborate to harness it to their advantage.

Some of you look a bit tired today as the conference winds down.

No wonder.

I can see you have been busy exploring ideas about the ways in which the digital revolution is affecting your industry now and how it will continue to provide challenges into the future.

Across the board, from new technology, to supply chains, signaling systems, productivity and, perhaps most importantly, safety, you’ve been looking at how to best harness change for the good of your companies, your industry and the community in general.

I congratulate the ARA for staging such an important event.


While I am handing out plaudits, let me also commend the ARA on your call at this conference for the preparation of a National Rail Industry Plan for this country.

Our rail network, the sixth largest in the world, has served us well throughout our history.

It has been central to our economic development and it will continue be critical in the future.

Indeed, busy times are ahead, with $46 million of new rail investment planned for the next decade alone.

In that context, your suggestion of the need for an industry blueprint to take us forward is spot on.

The projects coming down the pipeline involve huge challenges.

But they also offer great opportunities.

Australia needs a plan to exploit those opportunities in the national interest.

We must ensure that Australian manufacturers are positioned to produce the new rolling stock that will be required for these new projects.

This requires collaboration between Governments and industry on procurement policies, as well as research and development.

It will also require investment in skills training.

Ensuring that Australians are involved in building this rolling stock is only half the job.

We also need to ensure that in the process, we train as many new apprentices as possible, so we build future skills capacity in advanced manufacturing including in regional Australia.

To that end I was encouraged by the recent announcement by the Palaszczuk Government that if it is re-elected on Saturday, it will ensure that rolling stock is produced in Maryborough, rather than offshore, which was the approach of its predecessor.

We must also co-ordinate the activities of the various state governments on procurement so we can iron out peaks and troughs in demand.

The right plan would also harmonise safety regulations and advance ongoing work being led by Victoria toward harmonizing standards relating to bogies and glazing.

There’s a clear role here for Commonwealth leadership.

Recently the Senate’s Rural and Regional Affairs and Transport References Committee recommended the creation of a National Rail Manufacturing Plan, including a specific procurement policy to address some of the issues I just mentioned.

The committee’s report included as an appendix part of the ARA’s impressive document A National Rail Industry Plan for the Benefit of Australia.

Its inclusion in the Senate’s report is a measure of its quality as a piece of policy work in the cause of microeconomic reform.

While the Senate Committee report focused largely on manufacturing and procurement, your plan is impressive because it also examines rail’s broader importance.

The first of the five key requirements in your plan is the need for greater recognition of “the importance of rail for Australia’s infrastructure development, urban planning and freight movements’’.

I could not agree more.

Too many policy makers in this country underestimate the role that rail can play not just in providing transport, but also in addressing some of the great economic and human challenges of our time.

For example, traffic congestion is reducing the quality of life of millions of Australians in our big cities. It is also acting as a handbrake on productivity and economic growth.

As your report notes, every passenger train reduces the cost of congestion to the economy by up to $8500.

Rail is also considerably safer than road travel.

It also produces lower levels of carbon emissions.

It can also be a catalyst for regional economic development through projects like High Speed Rail.

On top of this, people who use passenger rail gain health benefits walking to and from train stations, producing measurable economic benefits that are quantified in your plan.

Unfortunately, many policy makers addressing transport challenges don’t factor these benefits into their considerations.

That often leads them to make the wrong decisions.

The ARA’s National Rail Industry Plan for the Benefit of Australia should be required reading for every planner and policy maker in the nation.


Your report used the term “enablers’’.

I often think of infrastructure generally as the Great Enabler.

When governments invest in the right projects, they enable economic growth and development.

They unleash potential.

In the case of public transport projects, they enable people to develop their own potential by providing access to employment and educational opportunities.

Governments should always be careful with money.

But they should understand that when they invest in the right rail and road projects, they are not just investing in concrete and steel, but also in people.

The current Federal Government’s ongoing cuts to infrastructure investment indicate that they don’t quite understand this concept.

On an aggregate basis, government investment is increasing.

With traffic congestion now costing the economy $16 billion a year, State Governments are getting on with important projects like the Melbourne Metro, Brisbane’s Cross River Rail Link and Perth’s Metronet.

But it is the states that are bearing the burden.

In its Fiscal Outlook report last month, the independent Parliamentary Budget Office noted that state net capital investment would peak at 0.9 per cent of GDP in 2018-19 before falling to 0.3 per cent in 2020-21.

By contrast, Commonwealth infrastructure investment, in my view already way too low, will fall from 0.4 per cent of GDP to 0.2 per cent of GDP.

The PBO figures reflect this year’s Federal Budget papers, which show that Commonwealth infrastructure grants to the states will fall off a cliff in coming years, from the $9.2 billion promised in the 2016 Budget to $4.2 billion by 2020-21.

That’s why, after several years of appealing to the Commonwealth for collaboration on urban rail, the States have given up waiting.

Here in Queensland, for example, the State Government has been forced to go it alone on the Cross River Rail project.

The Commonwealth has simply refused to get behind this project, which was approved by Infrastructure Australia in 2012.

As Infrastructure Minister in the previous Federal Labor Government, I reached a funding arrangement in 2013 with then Liberal National Party Premier Campbell Newman to deliver the project using a mixture of grants, value capture and availability payments.

Yet the Newman Government reneged on its own commitment after Tony Abbott said Coalition policy was strictly in favour of a roads-only approach.


Instead of lifting infrastructure grants to the states, the Commonwealth is seeking increased private investment in public infrastructure projects.

I am worried that this trend will distort infrastructure development toward projects that provide private commercial returns, like toll roads, and away from rail.

We saw that approach in 2013, when the incoming Coalition Federal Government cancelled all Commonwealth investment in urban rail that was under construction and transferred the money to toll road projects.

This shift is continuing with the Government’s recent creation of the Infrastructure Financing Unit (IFU) within the Department of Prime Minister and Cabinet, also known as the Infrastructure and Project Financing Agency.

The IFU’s job is to attract more private money into public infrastructure projects using “innovative financing’’ arrangements like value capture and availability payments.

The IFU is a solution looking for a problem that does not exist.

It is an attempt to sideline Infrastructure Australia, which already has the capacity to provide advice on financing and the legislative mandate under Part 2, Section 5, of the Infrastructure Australia Act 2008.

Indeed, the former Labor Government worked with Infrastructure Australia in 2013 to deliver the Melbourne Metro and the Cross River Rail projects.

Creation of the IFU also downplays the role of the states, which have experience of working with the private sector on financing.

Let me be clear here: I support innovative financing.

We didn’t just talk about it.

We did it.

The Gold Coast Light Rail Project is a prime example

The Melbourne Metro and Cross River Rail arrangements would have been other examples, had they been allowed to proceed under the agreed timetables.

But those who believe you can deliver an effective and integrated transport system without Government investment are kidding themselves.

In its pre-Budget submission earlier this year, Infrastructure Partnerships Australia made the same point as it rejected the need for the creation of the IFU.

The IPA said: Commonwealth Government funding support is needed for infrastructure. Commonwealth financing is not.’’

If we only ever built projects that could generate a financial return, we would only ever build toll roads, not railways.

In Sydney at the moment there is a proposal to extend the F6 to the city’s south via construction of a toll road.

Recent media reporting has revealed that when planners within the Government were told to develop the toll road proposal, they were ordered not to test it against the option of rail.

This was in spite of the fact that completing the Maldon-Dombarton rail freight project, with relatively minor upgrades to the Illawarra passenger line would be cheaper and produce greater travel time reductions.

That is absurd.

Governments should not make decisions about major projects based solely on whether they can provide a return to an investor, but based on their capacity to make a return to the national economy.

My concern with the creation of the IFU is that it will entrench the type of thinking that says infrastructure is only worth building if it can attract private investment.

A Labor Government will abolish the IFU.

We’ll allocate its resources back to Infrastructure Australia to support its activities and reinstate the Major Cities Unit to focus on the productivity, sustainability and liveability of the nation’s cities.


The Federal Government’s other investment strategy at present is the use of an equity injection into the Australian Rail Track Corporation to progress the proposed Inland Rail Line from Brisbane to Melbourne.

Delivered properly, Inland Rail would be an enabler.

It could drive export growth and boost rural and regional communities.

This is why the former Labor Government invested $600 million upgrading sections of existing railway lines that will be part of the project and allocated $300 million in our last Budget to progress the project.

The equity investment model has its place as long as projects have the capacity to make a return to the Budget.

The problem with Inland Rail is that it does not meet this important requirement.

In his 2015 Implementation Study into the project, former Deputy Prime Minister John Anderson noted that Inland Rail’s operating revenue over 50 years would not cover its construction cost.

Mr Anderson wrote: “Hence a substantial public funding contribution is required to deliver Inland Rail.’’

The Government ignored this advice.

It is basing its approach on the returns for equity for the ARTC as a whole rather than for the Inland Rail project itself.

In other words, the Government is fudging to justify its failure to meet Mr Anderson’s recommendation that it provide a substantial contribution to the project.

There’s also new controversy concerning the route.

In September Infrastructure Minister Darren Chester released a route for the project north of the Queensland border.

In October the Senate’s Rural and Regional Affairs and Transport Senate Estimates Committee heard this decision had been made on the basis of assumptions, rather than actual costings.

At the same time, eight Nationals backbenchers signed a letter demanding a change of route and warning the proposed line would cause flooding.

There’s a golden rule for delivering major infrastructure projects: You’ve got to get the planning right.


It is equally important that we get the planning right for the new Western Sydney Airport.

The project offers a great opportunity to recast the economic and social equation in Western Sydney.
To achieve this vision, the airport must be more than just a terminal and runway.

Handled properly, its development will be a catalyst for the development of thousands of jobs in aviation-related industries like tourism, education, advanced manufacturing, logistics and residential development.

Getting it right requires construction of a North-South line Rail line in Western Sydney.

That line must be operational when the airport opens, not sometime years down the track, as has been the Federal Government’s intention.

Federal Labor has already proposed the construction of a North-South line that will not only provide access to the airport, but also make it easier for people to move around the entire Western Sydney region.

The project would extend Sydney’s South-West Rail link from Leppington via Bringelly to the new airport and also involve construction of a new outer orbital train line from Macarthur in the south to St Marys in the north, which would also service the airport.

A second stage would complete Sydney’s outer orbital rail link with construction of a new line connecting St Marys to the Sydney Metro Northwest at Rouse Hill, scheduled to open in 2019.

I can’t overstate the importance of the Western Sydney Rail.

To this point in history, Sydney’s public transport system has developed on a wheel-and-spoke model centred on the Sydney CBD.

Because of this, connectivity within the region itself is sub-standard.

With investors lining up to deliver major projects in the region, we must build this rail line to ensure that the people of western Sydney can access the opportunities this investment will create.

As an example, the proposed Sydney Science Park is an ambitious $5 billion project near the airport that promises to turn 280 hectares of paddocks into an epicentre of research, innovation and education.

It will bring more than 12,000 knowledge jobs to the region – well paid jobs in a region that needs them.

It will also host Australia’s first kindergarten to year 12 science, technology, engineering and mathematics school, and house more than 10,000 residents.

Just as I want to see adults accessing new jobs in Western Sydney, I want their children to access that school.


Just as a Western Sydney Rail Line would be a game-changer in Sydney’s West, a High Speed Rail line between Brisbane and Melbourne via Sydney and Canberra would turbo charge economic growth of regional centres along its path.

I’m talking about communities like the Gold Coast, Casino, Grafton, Coffs Harbour, Port Macquarie, Taree, Newcastle, the Central Coast, Wagga Wagga, the Southern Highlands, Albury-Wodonga and Shepparton.

Quicker access from those centres to capital cities would make them more attractive places to establish businesses.

I am disappointed that there has been no action on High Speed Rail since 2013.

Infrastructure Australia appears to share that view.

In July it released a report urging the Government to preserve or protect the corridor for the project before it is built out by urban sprawl.

The report also called for corridor preservation for a range of other rail projects including the Outer Sydney Orbital, the Outer Melbourne Ring, the Western Sydney Freight Line, the Hunter Valley Freight Line and the Port of Brisbane Freight Line.

It said preservation or protection of these corridors could save taxpayers as much as $11 billion down the track in land purchase and construction costs.

A future Labor Government will advance High Speed Rail.

Indeed, I have a Private Member’s Bill before the Parliament which would deliver our commitment to create a High Speed Rail Authority.

We could pass that legislation next week at the sittings that have been scheduled since 2016.

Of course, that would require a Government that hadn’t given up on actually governing.


Before I finish I would like to briefly mention my concern about proposed changes to maritime laws because of the way they might affect your industry.

The Federal Government has legislation before Parliament which will significantly relax conditions under which overseas-flagged ships can operate in Australian waters.

The changes would expose Australian vessels paying Australian-level wages to more competition from overseas vessels with crews that are paid lower wages.

Understandably, the owners of Australian vessels are deeply concerned that the changes will put them out of business.

But of course, giving overseas vessels a leg up over local operators would also have consequences for your industry.

In a submission responding to a discussion paper on the proposed changes, the Freight on Rail Group outlined the risk very clearly.

Exemptions would allow foreign ships to incur substantially lower wages, conditions and associated workplace relations cost when compared to rail, road and Australian-based costal shipping companies.

It’s hard to believe that the Government wants to legislate to put Australian companies at a competitive disadvantage in this way.

The Government tried to introduce similar reforms in 2015 but failed to win the necessary support of the Senate crossbench.

I want to assure this audience that the Opposition will not support any piece of legislation that would undermine freight rail.


Once again let me congratulate you on Ausrail, and particularly for your work advancing the case for the creation of a National Rail Industry Plan.

Your contributions to the public debate, as usual, are positive, constructive and clearly motivated by your industry’s desire to advance the national interest.

Governments come and go. Policies change.

In the past decade they seem to have changed more frequently than not.

But when it comes to commonsense advocacy in the cause of national progress on rail, the ARA is a welcome constant in the public debate.