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.
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.
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.