Jul 25, 2013

Speech to Infrastructure Partnerships Australia

Thank you for the invitation  to be with you here today.

You’ve asked me to speak  about the Federal Labor Government’s plan to solve Australia’s infrastructure  challenges.

It’s a big topic.

And it was exactly the  challenge I faced on that first day in late 2007 when Labor was elected to  office and I became the nation’s first Infrastructure Minister.

I could come here today and  give you a nice recitation of all the things we’ve done and all the things we  will do if re-elected later this year.

And you will hear a little  bit of that.

But when we are heading into  an election, I think an audience of infrastructure experts wants to hear what  makes us different to the team on the other side.

How our plan compares with  theirs.

What we are doing to tackle  the immense infrastructure challenges this country faces as our population  grows, our cities expand and our society adapts to massive technological and  workplace change.

And I can tell you that  across the government, it would be hard to find a portfolio where the gulf is  as great between Labor and the Coalition.

But to set the scene, let me  take you back a short way.

Their Record

It is common for incoming  Governments to damn the record of their predecessors.

When we took office,  however, it wasn’t just us saying it.

Years of cuts and  underinvestment had taken us to position 20 out of 25 OECD nations when it came  to investing in public infrastructure as a proportion of national income.

Investment in the nation’s  infrastructure had fallen by close to 20 per cent.

This lack of investment had  cut nearly one per cent off annual growth.

More than $2 billion had  been slashed from the Federal roads budget.

Freight rail suffered from  underinvestment.

There was zero investment in  urban public transport to curb the rising cost of congestion.

Not one zac.

Now we sit second on the  OECD scale, with spending now 26.5 per cent of GDP.

Just think about that—six  years ago we ranked 20 out of 25 nations.

Now we are second.

Total spending on the  nation’s public and private infrastructure is now 42 per cent higher than it  was under the former government.

Infrastructure Australia

Because  we had done the hard work in Opposition, we had a plan in place when we came to  Government.

We had developed this plan  by talking to experts and many of them are here in this room today.

We were in a position to act  and we have.

In early 2008, one of the  first pieces of legislation to pass the new Parliament was the creation of  Infrastructure Australia.

With its own board led by  Sir Rod Eddington, Infrastructure Australia has helped end the short-termism  that had beset the sector for far too long.

It has helped break once and  for all the nexus between the political cycle and the funding cycle.

No longer are funding  decisions made on the basis of election dates or a ribbon-snipping ceremony at  some convenient time in the future.

They say that imitation is  the sincerest form of flattery.

If that’s the case, we must  have got it right with IA.

Six years later, the IA  model has been adopted by the UK, by our neighbours in New Zealand and several  Australian States, including here in NSW.

And it’s working.

There is transparent rigour  now for everyone to see.

We now have a National  Priority List to guide investment in nationally-significant projects—those  that offer the highest economic, environmental and social returns.

We have committed funds to  all 15 projects so far identified as ‘ready to proceed’ on IA’s Priority list.

Coalition and IA

It was interesting to read  today that having opposed its creation, the Federal Coalition is now saying it  would keep Infrastructure Australia.

I welcome this about face.

But if the so-called  “reforms” foreshadowed in this morning’s press are accurate, then the policy to  be announced later today by Shadow Infrastructure and Transport Minister Warren  Truss is built on a surprising lack of understanding of how IA actually works.

It reinforces the fact that  this lazy Opposition simply hasn’t paid attention and hasn’t done the hard  policy work.

IA already publishes  cost-benefit analyses.

It already sets out its  assessment of individual projects.

It already has a long-term  pipeline of projects, which it updates annually.

It has already done  extensive work on attracting greater private investment for delivery of public  infrastructure.

And from Day One its  independence from the government has been guaranteed—the position of  Infrastructure Coordinator is a statutory appointment.

And despite this promise of  a “new approach”, the Federal Coalition is already failing to practice what it  preaches.

It has agreed it would take  the advice of Infrastructure Australia and only commit funds to projects with a  cost-benefit analysis.

Yet Tony Abbott has already  promised billions of dollars to projects not currently recommended by  Infrastructure Australia, well before any business case or cost-benefit analysis  has been conducted.

New Tax Incentive

As part of the IA process,  we formed the Infrastructure Finance Working Group.

It has been an extraordinary  help to the Government.

In particular, it has  thought creatively about ways we can attract private finance for public  infrastructure.

The fact is Governments face  an eternal tension between infinite demand and finite dollars.

There will never be enough  money from general taxation to fund our nation’s infrastructure needs.

At the same time, we know  there are large pools of private finance out there in the marketplace that  could step in if the incentives were right.

Based on the advice of the  Working Group, we announced in last year’s Budget a new tax incentive that came  into effect a couple of weeks ago.

The incentive supports up to  $25 billion in new private sector infrastructure investment.

For a project to be  considered, it must first be deemed by IA as “Ready to Proceed”.

The incentive will uplift  the value of carry forward losses by the ten-year Government bond rate.

It will also exempt the  carry forward losses and bad debt deductions from the continuity of ownership  and the same business tests.

The new tax breaks should  mean a queue of private investors outside the Infrastructure Coordinator’s  door.

Indeed, I am aware some of  you in the audience today are already in serious discussions with IA over  ‘private’ projects you would like to see advance into the ‘ready to proceed’  category.

Proponents need to make sure  these projects stack up.

And that is what this boils  down to.

Just like the Federal  Coalition, industry players must be consistent about the Government processes  they want to have implemented.

They must decide whether  they want rigour and backing of projects based upon proper cost-benefit analysis.

Or, whether projects should  be backed without a business case.

The backing of major  projects developed on the back of a napkin undermines proper  process.

Funding Model Brisbane Cross River Rail, Melbourne Metro

I’d like to turn now to two  public transport projects where the Federal Government has taken a unique  approach to encouraging private sector investment.

They are the Brisbane Cross  River rail and Melbourne Metro.

Both are desperately needed  to free up capacity on existing overloaded networks.

And both would test the  economic capacity of any Government.

That’s why Federal Labor has  offered an up-front financial contribution for both projects ($715 m for CRR  and $3bn for MM).

What’s more, we have put  forward an offer of 50 per cent of an ongoing availability payment for the  capital cost.

We are also offering an  Australian Government guarantee on any private debt.

This enhances a project’s  creditworthiness and will help reduce the cost of capital.

These are exceptional offers  that will grant certainty to long term investors such as superannuation funds  and should be welcome news for the market.

By absorbing a large  proportion of the upfront and ongoing risk, these projects become much more  attractive propositions.

These major projects, which  have been the subject of extensive investigation and Infrastructure Australia  review, are worthy investments.

They would both be eligible  for the new tax incentive.

They provide plenty of  opportunities for the private sector, whether as a contractor, an investor and  or an operator.

To bring these projects on,  industry might want to have a word to the Queensland and Victorian Governments.

I would like to emphasise  that anyone is entitled to bring forward a proposal for this new tax incentive.


We are also implementing a  different model to fund the multi-billion dollar Moorebank Intermodal in  Sydney’s south west.

This critical piece of  Sydney’s transport infrastructure will speed up the container movement from  Port Botany and serve as a much needed distribution point for freight movements  around the nation.

The facility will be built  on a large tract of Defence land and personnel are now in the process of  relocating.

Providing the land for the  intermodal forms part of the Federal Government’s contribution.

We have also established a  Government Business Enterprise which will oversee the construction of this  long-overdue project.

The company is led by Dr  Kerry Schott and is now seeking expressions of interest to design, build and  operate.

In this way, the Federal  Government is covering some of the pre-construction risk.

I cannot think of a better  use for this valuable national asset which will make a giant contribution to  our national productivity.

It will create thousands of  jobs both during construction and, once the facility is operational, will  remove 3,300 trucks from the road every day.

A win for motorists.

A win for the environment.

And a win for our economy.

F3 to M2

Private financing is also  crucial in building the missing link between the F3 and M2 Motorways here in  this city.

Both the NSW and Federal  Governments are making equal contributions of up to $405 million to this long  overdue 7.7 kilometre link road, with the balance of funds provided by the  private sector.

Our money up front has  helped reduce the cost of capital which makes the project viable.

Another great example of  this Federal Government harnessing private investment to build much-needed  public infrastructure.

Our Investment in Urban Rail

Next week I will be  releasing the 2013 edition of the State of Australian Cities, a report  that I hope will have a similar readership to its three predecessors, which  have now been downloaded over 3 million times.

That’s not bad going for a  Government report but more importantly, what it does show is the enormous  interest in the state of our cities.

This 2013 report confirms  what all of us living in a big city know, that reliable, safe public transport  is absolutely vital to our productivity, sustainability and liveability.

Urban congestion translates  into hours of time wasted, stuck behind the wheel of a car.

Hours that could be better  spent at home being a Mum or Dad, helping with the homework, kicking a ball,  volunteering at a local charity.

It is also time stolen from  the workplace.

Congestion is a giant anchor  dragging on our productivity as we try to move forward.

And one of the best ways to  curb congestion is public transport.

Building public transport is  expensive—we all know that.

But based on IA’s rigorous  assessment process, which does not discriminate on transport mode, Federal  Labor has committed $13.6 billion so far to a raft of public transport projects  around the country.

That $13.6 billion investment  is more than all other Federal Governments combined since Federation.

We are doing this because  our cities are too important to ignore.

They generate 85 per cent of  our national wealth and are the furnaces of our economy.

Here are just some of the  public transport projects we are funding today, employing thousands of  Australians in the process.

There’s the 48 kilometre  Melbourne Regional Rail link, Perth’s visionary City Link, the Gold Coast Rapid  Transit, the Moreton Bay Rail Link, the Noralunga to Seaford Rail Extension and  the Gawler Rail Line Modernisation in South Australia, and the Northern Sydney  Freight Line.

Today, I can announce that  planning approval has just been granted for a third track from Epping to  Thornleigh, the biggest section of the $1.1 billion Northern Sydney Freight  Line project.

This new six kilometre track  will separate passenger services from slower moving freight trains.

It will mean a more reliable  service for passengers and extra capacity for northbound freight trains.

The second announcement this  morning is that I have just approved a new dedicated radio spectrum for rail  networks.

This is very significant.

Until now, different State  rail authorities have used different sections of the spectrum.

This common sense move  harmonises rail communications nationally.

Just like the move to  standard rail gauges, we now have a standard rail spectrum.

It means that 50 per cent  more services can run safely at peak periods.

Deloitte Access Economics  estimates this will mean a further 51,000 passengers per hour in Sydney, and  64,000 per hour in Melbourne.

It’s a brilliant example of  employing the latest technology to get more out of what we’ve already built.

Put simply, we will now be  able to run more trains, more frequently without jeopardising safety.

A win for commuters and  taxpayers.

Tony Abbott and Urban Rail

This brings me back to the  outset where I said that infrastructure was a big point of difference between  Federal Labor and the Coalition.

I am sure all of you here  today would have read or heard about Tony Abbott’s recent comments on funding  of urban rail.

This is what he said in  April in Victoria:

“Now the Commonwealth  Government has a long history of funding roads. We have no history of funding  urban rail and I think it’s important that we stick to our knitting and the  Commonwealth’s knitting when it comes to funding infrastructure is roads.”

This statement—and it’s  wasn’t a slip of the tongue because he’s repeated it several times since—is  concerning on several fronts.

Firstly, it says a lot about  the alternative Prime Minister’s knowledge and attitude towards transport  infrastructure policy.

He didn’t even know that in  the very State in which he made those comments, the largest ever Federally-funded  public transport project—Melbourne’s Regional Rail Link—was well underway.

Secondly, you’d have to  wonder what it means for Infrastructure Australia.

The whole basis of IA  is that it does not discriminate by mode.

It supports projects based  on merit.

Surely no-one in this 21st  century could sensibly argue that building more roads is the sole answer to  moving people.

I believe it would be  nothing short of negligence for a Federal Government to return us to the  thinking of the 20th century, abandoning our cities to the gridlock  that will surely come.

Abbott and the NBN

Let me outline the key  differences between Labor’s National Broadband Network and what the Coalition  is proposing.

We are nation building.

We are building a network  for the future, a network that will meet our needs now and for decades to come.

They want to build a network  that relies on last century’s copper, a network that will be obsolete by the  time it is built.

We are investing $30.4  billion on a network that can deliver 1,000 megabits per second and an upload  speed of 400 megabits per second, a network that can be easily upgraded in the  future.

They plan to spend $29.5  billion and can only guarantee 25 megabits per second—and cannot guarantee any  upload speed at all.

Labor’s NBN treats regional  Australians as equals, with a universal price guarantee built in.

This means that you pay the  same wholesale price for the same broadband service, whether you live in Dubbo  or the middle of Sydney.

The Coalition will abolish  this guarantee, meaning people in rural and remote Australia will pay more for  broadband than people in the cities.

Under Labor, there is no  charge to have your business or home connected to fibre.

Under the Coalition, you  will pay up to $5,000 to be connected to fibre, or you’ll be left with copper.

We believe that you should  do it once, and do it right.

Do it with fibre.

On every measure—on speed,  on cost, on fairness, on building for the future—the National Broadband Network  is superior to the Coalition alternative.


In closing, I’ve been asking  Shadow Minister Warren Truss for a debate on infrastructure transport for so  many years now that he dodges me whenever he sees me in the halls of Parliament  House.

I have had only one question  from him in Question Time over this last term.

We know the Coalition won’t  fund urban rail or a proper broadband network because they think last century’s  technology will do.

But beyond that there’s  almost no other detail.

On the other hand, Federal  Labor has a clear plan for the future.

Through Infrastructure  Australia, we have completely overhauled the way we assess, finance and build  the roads and rail of the 21st century.

We are delivering a record  investment in our nation’s transport infrastructure.

We are attracting private  finance to help tackle the infrastructure deficit.

And unlike the Federal  Coalition we know that public transport is key to our productivity,  sustainability and liveability.

We also know that with  infrastructure, you do it once and you do it right.

The Australian Labor Party  is the party of nation building.

And we will continue  building our nation into the future.

Thank you.