Nov 26, 2015

Speech to Ausrail Conference – The Role of Rail in Meeting Australia’s Economic Challenges

Thanks for giving me the opportunity to address Ausrail once again.

It’s always a pleasure to rub shoulders with the key players in the rail industry and to hear your ideas about how we can better utilise rail in the national interest.

We meet at a challenging time for our national economy.

The mining expansion has moved from the construction to the production phase.

Growth has slowed.

If we are to retain our standard of living and create new jobs for the future, we need to boost productivity and develop new sources of income.

That’s daunting enough.

But our task is complicated by difficulties including drought in some parts of the country and worsening traffic congestion that is reducing productivity growth in our cities.

Today I would like to talk about the ways in which I believe the rail sector can make a meaningful contribution to mastering these challenges and setting up this nation for a positive future.

My starting point is very clear: Rail is underutilised in this country.

With an open mind and goodwill, the commonwealth can work with your industry to improve our national infrastructure in ways that serve both the industry and the national interest.


Anyone who has heard me speak on rail in the past two years would probably have heard me express dismay about the approach of current government when it comes to investing in passenger rail in cities.

The former Prime Minister, Tony Abbott, refused to invest in urban rail or any other form of public transport, claiming it was not a Commonwealth responsibility.

After taking office, the government cancelled every public transport project that was not under construction.

Brisbane’s Cross River Rail, the Melbourne Metro, the Gawler line electrification in Adelaide and light and heavy rail in Perth were all cancelled.

The government reallocated the money from these projects to new tolls roads like the discredited East-West Link in Melbourne, which would return 45 cents for every dollar invested.

These decisions were ill-advised and they contributed to Mr Abbott’s fate.

The new Prime Minister says he offers a different approach.

Indeed, during his long period of stalking Mr Abbott of the leadership, Mr Turnbull demonstrated his enthusiasm for public transport by incessantly tweeted pictures of himself aboard trains, buses and trams to draw a contrast with his rival.

But pictures mean nothing.

Investment is what matters – investment in concrete and steel.

I will judge Mr Turnbull on his actions, not his words.

But whatever he has in mind, the government is starting from a long way behind on Nation Building.

According to the Australian Bureau of Statistics, public infrastructure investment fell by more than 20 per cent between the September quarter of 2013 – Labor’s last quarter in office – and the June quarter of this year.

The freefall came at the very time the government should have been lifting spending to help make up for the loss of activity due to the end of the mining boom.


Labor is an unashamed supporter of investment in rail.

Between 2007 and 2013 we built or rebuilt more than 4000 km of railway lines.

We allocated more investment to urban rail than all commonwealth governments combined since federation.

We delivered the nation’s first national freight strategy.

We created Infrastructure Australia to examine and assess infrastructure projects according to their ability to boost national productivity.

Under Labor, per capita investment in infrastructure climbed from $132 to $225.

When we took office, Australia was 20th on a list of OECD countries in terms of infrastructure investment as a percentage of GDP.

When we left office Australia was 1st.

While investment has collapsed under the Coalition, Labor will build upon our record when we return to government.

The immediate problem is that our infrastructure needs are extensive, but our resources are limited.

Government revenues have fallen off since the days of the Howard Government, which squandered about $300 billion of windfall tax collections driven by the boom on pre-election handouts in the early part of last decade.

If the money had been invested in infrastructure back then, Australia would be a better position now.

In 2015, in the absence of windfall tax receipts, governments need to lift their own infrastructure investment as much as they reasonably can while also finding ways to lift private sector investment.

Historically, the private sector, including the superannuation industry, with $2 trillion under management, has struggled with infrastructure development because of long lead times and high upfront costs.

Last month Bill Shorten released a detailed policy that will make private investment in Nation Building easier using a $10 billion funding facility to be administered by Infrastructure Australia.

Subject to strict and transparent guidelines, Infrastructure Australia will work with private investors to help mitigate risk on big projects, using loan guarantees, loans, seed money and direct investment to get projects out of the ground.

The model will be similar to the highly successful Clean Energy Finance Corporation, which has been attracted $2.20 in private investment for every dollar of public investment.


Earlier this year Infrastructure Australia produced an update of the National Infrastructure Audit which predicted that without action, traffic congestion will cost this nation $53 billion a year by 2031.

In our cities, the problem is being driven in part by the mismatch between population growth in the suburbs and jobs growth, which is strongest in inner suburbs and CBDs.

Many Australians filling new jobs in areas like information technology and insurance and other services can’t afford homes close to the centre of the city and commute from the outer suburbs on increasingly congested roads.

This robs them of time with their families and prevents them from being participants in local community activities.

This trend is a hand brake on productivity and is also eroding family and community life.

People are watching their quality of life drifting away from them like the white line in their rear view mirror.

We must address this problem, investing in a properly integrated transport system that includes both road and rail.

Electorates like mine, in Sydney’s inner-west, or in Mr Turnbull’s in central Sydney, are already served by public transport.

We need to improve those services.

But if we are really serious about unlocking big productivity gains, the real challenge in public transport policy over the coming decade is to extend passenger rail to areas of our major cities that have no public transport whatsoever.



One infrastructure project the Coalition has tackled, with Labor support, is construction of a second Sydney airport at Badgerys Creek.

While I congratulate the government for its commitment, I am stunned by its short-sighted refusal to ensure the construction of a connection from the new airport to Sydney’s rail network.

It’s hard to understand how any government could build an airport without public transport access from opening day.

Labor believes the existing passenger line from Leppington should be extended through to the western line near St Marys via Badgerys Creek.

This would allow passengers and airport employees easier access and also complete a loop line around Sydney, improving public transport services throughout the region.

However, bickering between the Commonwealth and NSW governments over who will pay has created a needless standoff.
The line could be funded at minimal public cost by understanding that the land around the airport will be more valuable if the airport was served by a railway line than if it was not.

The Commonwealth can capture this uplift value by factoring in the rail line to the lease price of the airport.

The airport operator would then be able to lease out land to aviation-related businesses in the area at higher rates than could be achieved otherwise.

The existence of the rail link would also increase land values of the employment lands in the nearby precinct owned by the NSW Government  – something the NSW government should factor into its contribution.

The construction of a second Sydney airport must be more than simply a terminal and a runway.

Properly planned, the airport can become an aerotropolis, a large aviation-related precinct that can provide high-value jobs for thousands of people in a region of Sydney that has endured high unemployment rates for too long.


Another important project that seems to have stalled is the Inland Rail Link between Brisbane and Melbourne.

The former Labor Government invested almost $600 million on improvements to existing railway network that will form part of line.

In 2013, we also allocated $300 million to begin work on new sections.

But I am concerned that under the current government, very little progress has been made to deliver Inland Rail, despite Infrastructure Minister Warren Truss’s 2013 election promise to “fast track’’ the project.

In two years nothing has happened.

Not a single dollar has been allocated to Inland Rail beyond the additional $300 million put in place by Labor in 2013.

If this is fast tracking I would hate to see where we would be if Mr Truss had put Inland Rail on the backburner.

It’s time to stop talking about Inland Rail and get on with it.



We should also progress the High Speed Rail Link between Brisbane and Melbourne via Sydney and Canberra.

This project would revolutionise interstate travel, allowing for movement between capital cities in as little as three hours.

It would also turbo charge development in the regional centres along its path, with stations proposed for Gold Coast, Casino, Grafton, Coffs Harbour, Port Macquarie, Taree, Newcastle, the Central Coast, Southern Highlands, Wagga Wagga, Albury-Wodonga and Shepparton.

That’s important for job growth in those communities, but also for our congested cities.

Linking regional cities to High Speed Rail will allow those cities to take some of the development pressure of our capitals.

A feasibility study conducted during the period for the former Labor Government found the project was viable.

For example, on the Melbourne to Sydney leg, it would return $2.15 in public benefit for every dollar invested.

In 2013 an expert panel including former Deputy Prime Minister Tim Fischer, the Business Council of Australia’s chief executive, Jennifer Westacott, and then Australasian Railway Association Chief Executive Bryan Nye, recommended the creation of a planning authority to take the project forward.

The panel proposed that the authority include representatives of industry and affected jurisdictions and should advance detailed planning and begin to acquire the corridor before it is built out by urban sprawl.

Accordingly, the former Labor Government agreed and allocated $50 million to implement these recommendations.

However, the Coalition scrapped this funding in its 2013 Budget.

Rather than advance High Speed Rail, it has stalled the project.

No-one is saying it is possible to build the entire High Speed Rail line tomorrow.

But we need to get cracking before our window of opportunity is slammed shut by urban sprawl.

There is no shortage of international expertise to advise on options, just as there is significant interest overseas when it comes to financing.

Indeed, just next week I will again be meeting a representative of the Central Japan Railway to be briefed on the latest developments in maglev technology being applied in Japan.

The Commonwealth should be providing leadership on High Speed Rail, but has instead tossed the issue into the too-hard basket along with, it seems, Inland Rail.

At the start of the current parliamentary term, I proposed a Private Member’s Bill that would have created the planning authority.

But Mr Abbott refused to facilitate debate of the bill, which lapsed.

I reintroduced the Bill last month.

It should be voted on and the Authority established so that the infrastructure of tomorrow isn’t ruled out by the prevarication of today.


Labor created Infrastructure Australia so there would be a pipeline of projects to create investor certainty and to smooth out peaks and troughs in the investment cycle.

The same motivation should also be applied to procurement, where there is a role for national government in facilitating the co-operation of states with regard to purchasing timeframes.

Such an approach could enhance Australian manufacturing, which is so critical for our engineering skills base beyond the specifics of any one company or any single project.

The Government must pursue this issue through the Council of Australian Governments as soon as possible.

All governments have their own pressures and their own deadlines.

But if we can create a mechanism for better co-ordination of delivery of major projects, all governments will benefit.

Jobs will be created in manufacturing, which will have a multiplier effect, particularly in regional communities.

There is no doubt that such a plan would have considerable public support and the Andrews Labor Government here in Victoria deserves credit for the leadership it has shown.



The government also has a proposal which would undermine the competitiveness of rail compared with shipping around our coast.

Your sector would not be allowed to bring in rail carriages from overseas which do not meet Australian standards and employ foreign workers to operate and maintain that rail.

You certainly wouldn’t be able to pay those workers foreign wage rates.

But this is precisely what the government wants foreign ships to be able to do.

This will distort the competitive market in the logistics sector at the expense particularly of the rail industry and will cost jobs in your sector.

No advanced nation allows this approach of removing all cabotage.

This is unilateral economic disarmament. And you will pay for it.



Let me finish where I began.

This nation faces some real economic challenges.

And our progress in tackling those challenges and securing long-term economic growth are being hampered by problems like traffic congestion.

One way to address this is to make better use of railways, particularly when it comes to moving freight and to public transport in cities.

Events like Ausrail are important to the national debate.

They provide an opportunity to lay out the facts about what is possible if we embrace a future in which rail plays a greater role, particularly in our cities.

So thanks again for the chance to address you today.

I will leave you with the words of John F Kennedy, who once had excellent advice for politicians who were too timid to get on the front foot on nation building.

“Things do not just happen,’’ Kennedy said.

“They are made to happen.’’

When it comes to issues like better urban rail, the Inland Rail and High Speed Rail, we should heed Kennedy’s advice and get on with it.