May 11, 2012

Post Budget Address: Driving Australia’s Productivity & Launch of the National Infrastructure Construction Schedule

INTRODUCTION

On Tuesday Treasurer Wayne Swan delivered the Government’s fifth Labor budget.

  • A budget that builds on the hard work of the last four years;
  • A budget that brings us back into surplus; and
  • A budget that recognises how important infrastructure and transport is to our national economy and productivity.

When Labor came to office in 2007 there’s no doubt we faced a big challenge.

Chronic underinvestment in infrastructure and transport had left a serious deficit.

The previous government had no clear plan for our cities and no Commonwealth investment whatsoever in urban public transport.

Our major highways – the Pacific, the Hume and the Bruce needed upgrading.

Rail, the shape of our cities and our urban infrastructure barely rated a mention in the national political conversation.

And there was a great lack of Commonwealth engagement with private finance to fund our infrastructure needs.

THE GOVERNMENT’S RESPONSE

The Australian Government moved quickly to address these shortfalls, delivering major reforms to the way we invest in, plan and build infrastructure.

We are reshaping our regulatory frameworks – no simple task.

This includes reforms to the maritime, rail and heavy vehicle sectors, replacing 23 regulatory authorities with just one for each sector.

Last week we achieved a milestone with the passing by the South Australian Parliament of national rail safety legislation.

It is hard to overstate the importance of this.

For the first time in Australian history, we now have one regulator and one 21st century regulatory system to replace the various state and territory regulators, remnants of a pre-Federation time.

Land transport regulatory reform alone is estimated to produce $30 billion in benefits over the next 20 years.

By setting up Infrastructure Australia in 2008 and creating a priority pipeline of projects, the Government now has a truly long-term infrastructure vision for this country.

Infrastructure Australia has also helped create two national plans to better connect our factories, farms and mines to our cities and ports.

They are the National Ports Strategy and the National Land Freight Strategy.

At the same time, we are targeting the productive capacity of our economy with unprecedented investment to drive jobs and growth.

Importantly, our fifth Labor Budget delivers a surplus but this has not been achieved at the expense of long-term investment.

We could easily have deferred infrastructure investment and stepped away from the Infrastructure Australia priority list.

But we have not, because we understand how critical investment is for future productivity, how important it is to maintain investment certainty for business.

While continuing the roll out of the $36 billion Nation Building One, this Budget includes additional investment in our national transport.

TORRENS AND GOODWOOD JUNCTION

I’m pleased to announce that this Budget has allowed us to reach a milestone.

With the announcement of $232 million for the Torrens and Goodwood Junctions Rail project in Adelaide, we have now committed to every single project that Infrastructure Australia had on its 2009 Priority List.

The Torrens and Goodwood Junction upgrade project embodies the Australian Government’s program of funding the right infrastructure.

Once completed, it will both improve both the liveability of Adelaide’s inner suburbs and the smooth operations of the freight system.

What it will do is finally separate the freight and passenger networks and allow the passage of 1800 metre trains – they are limited now to 1500 metres.

Currently these train routes directly cross each other, forcing one to wait, with all the delays that brings, not just to trains but to the surrounding arterial roads.

The result is that the key east-west rail corridor linking Melbourne, Adelaide and Perth operates well below potential.

This new work will rectify that and complement the $347 million that we have committed to a raft of other improvements along the Melbourne – Adelaide – Perth rail corridor.

MOOREBANK INTERMODAL TERMINAL

We are also making the Intermodal Terminal at Moorebank a reality.

The Commonwealth is using its assets at Moorebank to unlock private sector investment, so vital if we are to solve some of our biggest challenges in Sydney.

We are relocating the existing defence School of Military Engineering (SME) facility to free up a 220 hectare site large enough for a port shuttle and an interstate terminal.

With Port Botany freight forecast to continue to grow annually by seven per cent, we need both terminals to accommodate the growth requirements of the next 50 years.

That’s why we will be establishing a Government Business Enterprise (GBE) to conduct a competitive tender process for the private sector to design, build and operate the intermodal terminal facilities.

There has been much talk about the so-called ‘rival’ intermodal terminal proposed by the SIMTA consortium on the site across the road from the SME.

SIMTA claims its terminal could be up and running by the end of 2014 at no cost to the tax payer.

Yet there are a couple of inconvenient truths.

First, Defence logistics currently have a lease on the SIMTA site until 2013 with two five year options to extend to 2023.

You can’t just wish Defence away.

Second, it does not account for the cost of relocating the Defence logistics facilities on the SIMTA site.

Third, it does not consider the impacts on the SME which has made clear that its operations would be hindered by an Intermodal on the SIMTA site.

Fourth, the SIMTA proposal does not account for the costs of the associated infrastructure required such as the upgrade of Moorebank Avenue.

And finally, SIMTA will not develop the required interstate terminal.

This project delivers what many of you have argued for – the Commonwealth using its urban land holdings and programs to unlock opportunity for private financing of the big transformative projects that will shape our economy and our cities.

It is also about the Commonwealth taking on some of the risks that the private sector won’t wear.

The productivity gains will be considerable with thousands of jobs created during construction and then on-going.

Importantly, it will remove 3,300 trucks each day off the road, reducing congestion and improving air quality for the people of Sydney.

Moorebank will be a case study in how infrastructure can link our ports, drive productivity and improve logistics, all the while creating long-term efficiencies, employment and environmental benefits.

It also complements our billion dollar upgrade of the Northern Sydney Freight Corridor plus the major program of works to improve the rail network at Port Botany.

THE PACIFIC HIGHWAY

This budget reaffirms our commitment to the complete duplication of the Pacific Highway.

We have provided an offer of an additional $3.56 billion for this critical road, contingent on the NSW Government matching it.

If the NSW Government agrees, Federal Labor Government will have committed over $7.7 billion to the Pacific Highway – the largest investment in a single road corridor ever made by a Federal Government.

With the Hume Highway nearing full duplication by mid next year, we would  then have 1700 continuous kilometres of duplicated road linking Brisbane, Sydney and Melbourne.

The benefits for Australia would be profound.

Improved safety, reduced emissions, increased capacity and decreased travel times.

And of course, significant job creation, economic stimulus and productivity growth.

NATION BUILDING 

The 2012-13 Budget commitments to the Pacific Highway, Moorebank Intermodal and the Goodwood Torrens rail line are big announcements in a very tight Budget environment.

They add to the existing pipeline created by this Labor Government’s $36 billion Nation Building Program which is the largest ever by an Australian Government.

They also mark the beginning of the next phase of the Nation Building Program which will begin in 2014-15.

The details of Phase Two will form the core of next year’s budget.

I am pleased that we have already locked down some key components that have been particularly successful in the program’s first phase.

These are Roads to Recovery, the Black Spot program and our heavy vehicle rest stop program which provides new and upgraded rest areas and decoupling bays for our truck drivers, making the roads safer for everyone.

Afterwards, you might like to read through the glossy brochure on each of your tables which sets out the framework for Nation Building Two.

FINANCING

Before finishing, I would like to tell you about the progress we have made to find new ways to finance our infrastructure.

Last budget, the Federal Government established the Infrastructure Finance Working Group to provide advice on how we could attract greater private sector investment.

This panel of experts consulted widely and its findings are now contained in a report which has been endorsed by Infrastructure Australia.

The IA Chairman, Sir Rod Eddington, will shortly be presenting me with the report.

I look forward to industry feedback.

But already, our work at Moorebank shows how we are opening up new opportunities by de-risking the early development stages of a project and opening up land to brownfield investors.

We are also willing to provide $25 million to establish a Special Purpose Vehicle to bring critical road projects to market.

This Vehicle, which has been recommended by Infrastructure Australia, will be used to bring the M5 East and F3 to M2 projects to a stage where they can seek private sector investment.

All this is aimed at increasing private sector confidence with a sharper focus on value for money, accountability and independence in setting pricing, ultimately reducing the risk of cost overruns.

Governments alone can never meet our national infrastructure needs.

These measures I believe will encourage private sector interest in Australian infrastructure, and help address our deficit.

They further demonstrate this Government’s commitment to take on the difficult and long-term infrastructure challenges rather than putting them in the too hard basket.

JOINT STUDY ON AVIATION CAPACITY FOR THE SYDNEY REGION

This brings me to the issue of addressing Sydney’s aviation capacity.

The 3,200 page Joint Study on Aviation Capacity for the Sydney Region is the most comprehensive examination ever undertaken into the aviation needs of this region.

The resounding conclusion, by the combined NSW and Federal Government report team, is that Sydney Airport cannot cope with future demand.

If we do nothing, we’ll forgo 78,000 jobs and $34 billion in GDP.

There is no single, simple solution.

Tough decisions are needed.

Regardless, the Australian Government is taking immediate steps to address capacity constraints.

These include:

  • An investigation into the suitability of Wilton
  • making sure Sydney Airport invests in terminal, apron and taxiway improvements so that it can operate at maximum capacity
  • working with the NSW Government to tackle demand on the road and rail networks servicing Sydney Airport, and
  • we are assessing the use of the Richmond RAAF base for some civilian operations.

There is still a great deal of work to be done, but we are determined to get the ball rolling after years of inaction.

To that end I call on the state government and industry to work willingly and constructively with us.

CONCLUSION AND PUBLICATION LAUNCH

As you can see, whether it is in our outback towns, regional centres or capital cities, the Australian Government has reaffirmed its commitment to revitalising our national infrastructure.

We know that transport and infrastructure are critical ‘enablers’ of productivity, and that productivity informs us about the efficiency of our economy.

I have no doubt that these investments will help prepare Australia for the 21st century challenges ahead.

And to be honest, I’ve only scratched the surface of our hard work here today.

That’s why I’m pleased to now launch a glamorous bundle of glossy brochures which outline for you in more detail our reforms and investments.

And there’s more!

I’m also delighted to be launching Volume 2 of the Infrastructure Planning and Delivery: Best Practice Case Studies developed through the Infrastructure Working Group that I chair.

Building on Volume One, it outlines a further eight case studies that exemplify “best practice” in major infrastructure projects.

These case studies are a great way of revealing and then understanding the complexities of planning and delivering large infrastructure projects.

I commend it to you.

After lunch I will be launching the National Infrastructure Construction Schedule – but more about that later.

Until then, enjoy your lunch.

Thank you.