History reinforces what we know so well today - the extraordinary nexus between transport and economic growth.

You just have to look back to Britain at the time of the Industrial Revolution to see this.

The driving industries of the day - cotton, steam and iron – all created the possibility of mass production and mass consumption.

But alone they were not enough.

A modern industrial economy needed to link these productive elements together.

What was needed was a transport system.

And in England on the 27th of September 1825, large crowds saw the future right before their eyes.

They watched George Stephenson’s steam locomotive, the first in the world, pull 36 wagons of coal, flour and excited guests and workers between Stockton and Darlington.

The nine mile trip took two hours and fairly soon, the train ran every day except Sunday with colliery owners reporting that locomotive transport was one-third cheaper than horse power.

But it was not applauded by all.

The Duke of Wellington complained that such a system ‘would encourage the lower classes to travel about’.

Fortunately, this early version of fear campaigning over progress did not win out.

However, the huge potential of rail to boost productivity and development was quickly recognised.

And soon, rail was spanning North America, India and linking Vladivostok to Europe.

THE AUSTRALIAN-EUROPEAN CONNECTION

The links between Australia and Europe come from a shared history and common outlook.

Waves of European immigrants have helped shape our national identity.

This included those post-war migrants who left Europe to build the Snowy Mountains Hydro Electric Scheme.

Over its 25 years of construction, the scheme employed more than 100,000 people, a melting pot of nationalities.

They built 16 dams, seven power stations and 225 kilometres of tunnels, pipelines and aqueducts.

Despite extraordinary hardship and isolation they built an infrastructure and engineering marvel that helped drive Australia’s post war development. Today our links to Europe go well beyond common heritage and immigration.

Consider our investment relationship.

The European Union (EU) is the largest foreign investor in Australia.

And the second largest destination for Australian investment abroad.

The EU is Australia’s second largest trading partner after China and Australia’s largest source of imports, ahead of both China and the US.

Australia is also very much ‘open for business’ when it comes to foreign participation in construction and engineering.

This is because we are keen to attract international companies with skills and experience in infrastructure financing and delivery and increase domestic competition.

More and more European companies are now working in the Australian construction and infrastructure sectors.

The German companies Hochtief and Bilfinger Berger are large players across the commercial and engineering construction sectors.

French and Spanish companies have been awarded big projects in transport, renewable energy, water desalination, and road and tunnel construction.

The Transcity consortium – with tunnel construction experts from Italy and Spain – will build Brisbane’s $1.53 billion Northern Link road and tunnel project.

And companies from Italy are heavily involved in the design and construction of Australian ship loader and stacker projects.

As a Government, we want to extend these links further.

This year, Infrastructure Australia has held high level meetings in Britain and with the OECD and been part of talks with trade, development and infrastructure organisations in Brussels and Geneva.

Since becoming Infrastructure Minister, I have spoken to infrastructure forums in Brussels, London, Paris, Berlin and Rome.

MACROECONOMIC OUTLOOK

In Europe, no one questions how well the Australian economy is fairing.

Whether at the London G20 meeting or in other forums, there is universal praise for our economic stimulus package that steered us through the GFC.

We acted quickly with a stimulus package that was far reaching.

It boosted demand in the short term and increased our long term productive capacity.

Two-thirds of the economic stimulus package went to infrastructure.

We did this while keeping Government net debt to a peak of just 7.2 per cent of GDP, with a plan to return the Budget to surplus by 2012-13.

The IMF saw our stimulus package as a major factor in avoiding recession.

In fact the former World Bank Chief Economist, Joseph Stiglitz, said our management of the global downturn was, ‘probably the best-designed stimulus program in the world and you should be happy that in fact it worked in exactly the way it was designed to work’.

While the advanced world shed some 30 million jobs, there are now 740,000 more Australians in work than before the global financial crisis struck.

BOOSTING PRODUCTIVITY

Another key challenge for all governments is the need to boost productivity.

After surging in the 1990s, Australia’s productivity growth slumped in the decade that followed – from 2.3 per cent, the second fastest among key OECD countries, to just 1.4 per cent.

This is why our Prime Minister has set out a comprehensive productivity agenda.

It’s about capability, including investing in our human capital, our national infrastructure, and innovation.

It’s about macroeconomic stability, through low inflation, low debt and a return to surplus.

And it’s about a flexible economy that sees resources go where they are best used.

At the core of this is the vital role that transport and infrastructure play in growth.

We know that the work we are doing to improve our highways, interstate rail network and urban public transport systems will return $2.65 for every $1 invested.

Infrastructure is the key to dealing with a growing population, growing congestion in our cities, and a freight task that is forecast to almost double by 2030.

INFRASTRUCTURE PLANNING

To be ready for the future we need to be planning today.

That’s why in 2008 we established Infrastructure Australia to look beyond the short-term nature of the political cycle.

One of its first tasks was to undertake the first ever national audit of infrastructure – looking at critical gaps and establishing economic priorities.

It then prepared a priority list of projects, a Public Private Partnership policy and a set of national strategies for our ports, and freight network.

Three years on and Infrastructure Australia has become an international model for management and coordination of transport infrastructure.

Infrastructure UK, formed in 2009, is based largely on our own IA model and that many other European countries, including Italy, Spain, Belgium and Germany are drawing on the work of IA for their own land transport and port strategies.

In December, for a second year in a row, IA has been invited to present at the World Infrastructure Summit, this time in Paris.

HIGH SPEED RAIL

Recently, I announced results of the first stage of detailed work into the viability of a high speed rail system for Australia.

There is still a great deal of work to be done, but early research shows high speed rail could connect almost 65 percent of Australians and attract up to 54 million passengers a year.

Europe certainly knows about the benefits of High Speed Rail, but imagine the possibilities in Australia.

Three hours from central Sydney to the middle of Melbourne in air conditioned comfort.

The cost is, of course, a major consideration.

Construction costs alone are estimated to be between $61 billion and $108 billion in today’s dollars, depending on the route.

Stage Two of the study will look in more detail at patronage, capital and operating cost estimates, revenue forecasts and potential financing and staging models.

AUSTRALIAN GOVERNMENT INVESTMENT

It is all very well to have superb project ideas.

But to complete the job you need funding.

The Australian Government has been putting serious dollars into infrastructure construction.

Since being elected in 2007, we have doubled the federal roads budget.

We’re rebuilding one third of the interstate rail freight network.

We have committed more to urban passenger rail than all other Commonwealth Governments combined, since Federation.

Over the six year period to 2013-14, the Government is investing $36 billion to improve our roads, rail and ports.

This is the largest ever investment in transport infrastructure in Australia’s history.

It’s a very big list – with 158 major projects.

We are building on these investment dollars with important reforms.

We are revitalising the Australian shipping industry with the support of industry and unions.

We have in place the nation’s first ports strategy – a practical framework so that our major ports can cope with an expected tripling of our trade load over the next two decades.

FINANCING INFRASTRUCTURE

The Australian Government’s nation building agenda is clearly a comprehensive one – from the National Broadband Network to the massive investment in health, education and transport.

It points to an equally large financing task.

There is only so much that governments can do, or should do.

We need the private sector to step up if we are to tackle the infrastructure backlog.

And this includes foreign investment.

This is why in this year’s budget we announced a new incentive for projects judged by Infrastructure Australia as nationally significant.

Such projects could be eligible to have the value of early stage losses uplifted over time.

These losses could be exempted from tax rules which prevent tax losses being used where there is a change of ownership.

This will make such projects more attractive for the private sector to invest in productive projects.

This tax incentive is aimed at attracting up to $25 billion in private investment.

We are also establishing a National Infrastructure Construction Schedule.

This will provide potential investors with detailed information on upcoming infrastructure projects across all levels of government.

CONCLUSION

I’ve covered a lot of territory today.

I hope I’ve given you a sense of exactly why Australia is a great place for our European partners to do business.

There is strong domestic demand from an economy that performed well through the global financial crisis.

There is the confidence provided by low inflation, an independent central bank, a robust Budget and a stable financial system.

And, very importantly, there is a reformist government determined to keep making this country a better place.

Just as the Snowy Mountains Hydro Electric Scheme was powered by post-war European labour, so too we welcome European investment and know-how to help fuel our nation building program.

Thank you.

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