Aug 29, 2018

Speech to the Ports Australia Conference – Inertia – The Enemy of the Public Interest – Wednesday, 29 August, 2018

INERTIA – THE ENEMY OF THE PUBLIC INTEREST

 

SPEECH TO THE PORTS AUSTRALIA CONFERENCE
DARWIN CONVENTION CENTRE
WEDNESDAY, 29 AUGUST, 2018

Thanks for inviting me to address you today after what could only be described as an tumultuous fortnight in Australian politics.

The cutting down of the fourth consecutive Prime Minister to have led a political party to victory in a general election has shaken public confidence in our political system.

It has also caused real frustration to those of us who are concerned with the national interest.

Australians have a right to be concerned when ideological battles and internal rivalries dominate events so overwhelmingly that they prevent the pursuit of the public interest.

That’s what has happened in recent times.

Ministers have not focussed on governing and the result has been policy inertia.

This is certainly the case when it comes to ports, which are central to the economic well-being of a nation that moves more than 90 per cent of its exports by sea.

The efficiency of ports, as well as the efficiency of the transport corridors that lead to them, should be a top priority for our nation.

Yet in recent years, there’s been very little progress in terms of policy development or government investment.

We’ve seen increasing encroachment on road and rail corridors, even though the former Labor Government, in 2010, produced a National Ports Strategy that provided a blueprint for the sensible advancement of the sector.

Today, that important strategy is on a shelf somewhere collecting dust along with its companion plan, the National Freight Strategy.

Also gathering dust is the important Infrastructure Australia report, produced early in 2017, which warned of the need for governments to adopt a national program of preserving rail and road corridors, particularly those leading to ports, to prevent them being built out by residential and other incompatible developments.

These policies were a response to serious challenges for our nation.

They pointed to ways to improve outcomes for port operators and users.

In recent years these challenges have been the subject of too much talk and too little action.

We can only hope that this changes under the Morrison Government.

Today I want to outline the approach that a future Labor Government would take to get ports policy back on track.

PORTS

Labor’s approach begins with an appreciation that prosperity in an exporting nation such as Australia is dependent upon an efficient transport system.

Indeed, the combined value of our sea-going exports is over $400 billion annually.

That’s about a quarter of our gross domestic product.

Australia’s shipping task, dominated by bulk exports, is the fifth biggest in the world.

It is therefore a no-brainer that Australia should prioritise the development and maintenance of efficient transport corridors to our ports.

We would be fools to pretend that our transport system will look after itself or that somehow the “invisible hand” of the market will deliver the productivity gains we need to drive prosperity and boost export income.

Even that champion of limited government – Adam Smith – noted in The Wealth of Nations that governments must see themselves as having a responsibility to facilitate efficient water transport.

Writing in 1776, Smith noted that a wagon drawn by eight horses and attended by two men could carry a four-ton load between London and Glasgow and back again in about six weeks.

By contrast, he wrote, a ship with a six-man crew could carry 200 tons over the same route in the same period of time.

In Smith’s time, it made sense to ensure that ports were fit for purpose.

It still does.

This is not an issue of political ideology. It’s just common sense.

FORMER LABOR GOVERNMENT

In the years before the 2007 election of the former Labor Government, it became clear that the nation’s infrastructure was inadequate for its export task.

The previous Howard Government had presided over a period of prosperity driven by the mining boom.

But despite windfall tax revenues flowing into Treasury coffers, the Government failed to prioritise greater investment in nation-building, productivity-enhancing infrastructure.

The public finally came to understand the issue when the media began publishing photographs of bulk freighters lining up for days outside ports such as Dalrymple Bay awaiting loading.

At the same time, there was a growing public appreciation of the need to prioritise transport corridors to and from ports in order to prevent bottlenecks.

One of the incoming Labor Government’s first acts was to create Infrastructure Australia as an independent adviser to government when it comes to long-term planning and the assessment of project proposals.

Infrastructure Australia was also tasked with policy advice and research, including conducting the first full audit of the nation’s infrastructure.

That first National Infrastructure Audit identified glaring gaps between ports and long-term planning for landside connectivity via road and rail.

Bottlenecks were holding up export goods and costing exporters and ports billions of dollars a year in lost revenue.

We then asked Infrastructure Australia to work with the National Transport Commission to develop the nation’s first-ever National Ports Strategy and National Land Freight Strategy.

The aim was not a Federal takeover of roles that traditionally sat with state and local governments, but to provide policy leadership to help them align their decision-making processes with the broader national interest.

Our particular concern was the development and maintenance of efficient transport corridors to boost productivity and underpin ongoing export growth.

Key principles of the National Ports Strategy included:

  • Better long-term planning on the waterfront;
  • Better planning in the vicinity of ports including the implementation of buffer zones to prevent urban encroachment;
  • A streamlined and consistent environmental approval process; and
  • A greater focus on performance through the use of data and international benchmarking.

Port owners were required to publish master plans, to be updated every five years, which not only considered the ports themselves, but also supply chains and the needs of specific industries.

In addition, the former Labor Government began to address the infrastructure deficit that we inherited.

We rebuilt a third of the Interstate Rail Network – or some 3,800 kilometres of track.

The work included re-railing, installing new passing loops and extending existing ones, and replacing the ageing timber sleepers with 3.4 million new Australian-made concrete sleepers which don’t buckle on hot days.

As a result of this work we reduced the travel times from Perth to the east coast by eleven hours and by nine hours between Melbourne and Brisbane.

We also eliminated freight rail bottlenecks around our ports.

In Sydney, for example, we began upgrading and duplicating the rail connection to Port Botany to speed up the movement of freight into and out of what is the nation’s second largest container port.

Unbelievably, this vital project was put on hold by the incoming Abbott Government – and is still yet to be completed; the bottleneck remains.

And we also reduced red tape, by cutting the number of transport regulators from 23 to three, including in area of maritime safety.

COALITION GOVERNMENT

In 2013, I ended my time as Federal Infrastructure and Transport Minister satisfied that the Labor Government I had been part of had established the building blocks to lead to further improvements in and around ports.

However, five years later, progress has stagnated.

There has been very little new freight rail investment by the Coalition.

And the policy recommendations outlined in the national port and land freight strategies have not been acted upon.

It took more than three years in office before the Government rediscovered the transport and logistics sector and began its Inquiry into National Freight and Supply Chain Priorities.

This work, which will not be completed until May of next year, is reinventing the wheel.

The work has already been done.

The blueprint exists in the National Ports and National Land Freight strategies.

So when everything is boiled down, by the next election we will have clocked up six wasted years.

That’s six years in which we could have done the long-term planning necessary to support the growth of your ports.

The record on Federal infrastructure investment is little better.

The independent Parliamentary Budget Office has calculated that over the next decade, Commonwealth infrastructure grants to the states will halve from 0.4 per cent of GDP to 0.2 per cent.

When it comes to specific grants aimed at improving landside access to ports, the quantum of funding is lamentable.

But the lack of planning is even worse.

Let me give you a couple of examples.

Not long after taking office, the Abbott Government provided $3 billion to the NSW Government to deliver the Westconnex toll road project.

Westconnex was put forward by Infrastructure NSW as a way of easing congestion around and improving access to both Sydney Airport and Port Botany.

Now it doesn’t go to the Port or the Airport.

The cost of project has blown out several times and now stands at $16.8 billion.

In future planning text books, Westconnex will be cited as the rolled gold example of how not to plan an infrastructure project.

Perhaps even worse is the current Federal Government’s mishandling of the proposed Inland Rail project between Brisbane and Melbourne through the nation’s eastern agricultural food bowl.

It has taken the term “Inland” literally, as it doesn’t go to either Brisbane or Melbourne Port.

It stops 38km short of the Port of Brisbane at Acacia Ridge.

An Infrastructure Australia report entitled Corridor Protection: Planning and Investing for the Long Term, published last year, found that it would cost $1.3 billion to build a dedicated rail line to the Port of Brisbane if work began immediately on protecting and acquiring the corridor.

Then there was the ill-fated Perth Freight Link – a proposed toll road to the Port of Fremantle.

This project appeared out of nowhere in the 2014 Budget.

No serious planning had been conducted on it, including by the Western Australian Government.

Indeed, the WA Parliamentary Secretary for Transport, Jim Chown, said in June 2014 that there were “no design plans … worthy of public scrutiny’’.

The toll road would have stopped 3 kilometres short of the Port.

It was cancelled by the incoming McGowan Labor Government in 2017.

The common denominator amongst the projects I have just highlighted is poor planning.

All were chosen to meet short term political imperatives rather than demonstrated public interest outcomes.

They confirm that unless you get the planning right, you risk wasting public money.

Something as central to the nation’s economic wellbeing as getting our exports on to ships as quickly as possible requires good public policies and strong public institutions.

It requires industry consultation and close co-operation between different levels of government.

That brings me back to the National Ports Strategy and Infrastructure Australia.

GETTING THE PLANNING RIGHT

If Labor is privileged to form government after the next federal election, we will use the National Ports Strategy as our initial guide.

We will of course take on board the current Government’s work on its freight and supply chain inquiry.

As Minister, I will reinvigorate the Transport and Infrastructure Council, the forum that brings together Commonwealth, State and Territory transport and infrastructure ministers, as well as the Australian Local Government Association.

And one of its first tasks will be to properly co-ordinate the activities of governments, most notably when it comes to long-term land use planning around ports and corridor preservation.

We will also restore Infrastructure Australia to the centre of policy making and provide it with the resources it needs to perform its core functions, including assessing projects, producing an infrastructure pipeline and recommending financing mechanisms.

And we will respect its independence.

Over the past several years, Infrastructure Australia’s Priority List seems to have progressively morphed into a retrospective vindication of the Government’s political priorities.

A Federal Labor Government will listen to the experts.

In a democratic system, it is important that elected representatives be accountable for decisions on big infrastructure projects.

But if their only reference when it comes to making those decisions is their political instincts, then there is a very good chance they will get it wrong.

Achieving outcomes that serve the public interest demands arm’s length, objective advice.

It demands that we examine projects from the perspective of how they will promote or detract from productivity and economic growth.

The whole idea of creating Infrastructure Australia was to break the nexus between the political cycle and infrastructure investment cycle.

A Federal Labor Government will also get serious about corridor acquisition.

The Infrastructure Australia report that I referred to earlier noted that protection and early acquisition of the seven corridors identified as national priorities on its Priority List, could save Australian taxpayers as much as $11 billion in land purchase and construction costs.

The argument is simple: if we know we are likely to build a particular project in the future, we should take steps sooner rather than later to secure and protect the land that will required.

If we don’t, we will simple pay more in the future.

Infrastructure Australia’s report recommended action now to secure corridors for projects including the Outer Sydney Orbital, Outer Melbourne Ring Road, Western Sydney Airport Rail Line, Western Sydney Freight Line, Hunter Valley Freight Line, and the Port of Brisbane Freight Line.

MARITIME

Before I wind up today, let me briefly address issues relating to the Australian maritime sector.

I note that this conference will focus on this topic later today.

I understand that Ports Australia supports the Government’s Coastal Shipping legislation.

Labor opposes this legislation.

It is designed to remove the Australian flag from around our coast.

That would be a betrayal of the national interest.

There are strong economic, environmental and security reasons for Australia having a shipping industry.

Economically, the changes would put Australians out of work and see them replaced by overseas mariners who do not pay taxes in this country.

On the environmental front, all the major maritime accidents that have occurred in our waters in recent decades, including on our precious Great Barrier Reef, have involved foreign-flagged and foreign manned vessels.

National security is also enhanced by having Australian-flagged merchant fleet work around our coastline.  Indeed, there are real synergies between our merchant seafarers and our navy, not just in terms of our security interests, but also in terms of skills development.

Importantly, these skills are also transferable to those who work in our ports and harbours.

A Labor Government will not be party to destroying a proud Australian industry.

We want to see more Australian seafarers crewing more Australian flagged ships carrying more Australian goods around the Australian coastline.

We want a strong domestic maritime sector, one that provides careers for our young people and develops the skills needed in and around our nation’s ports.

Our long-term national interest demands nothing less.

Given the reduction of our national politics to a Monty Python sketch, I say to you today in reference to this legislation: This parrot is dead. It’s not pining, it’s passed on! This is a late parrot! It’s a stiff!

Labor stands ready to be constructive but we will not entertain destroying Australian jobs and nor will the Greens Party, One Nation, the Katter Party or Centre Alliance.

CONCLUSION

Once again, let me thank you for inviting me to speak to you today.

The success of your industry is critical to the success of our island continent.

Your work allows us to dispatch our exports to a world that is desperate for our minerals and food products.

And it provides the gateway for the imported goods which we rely upon for our high standard of living.

I wish you the best for the rest of your conference.

And I look forward to addressing you again in the future, hopefully without the word ‘Shadow’ in front of my job title.

ENDS

WEDNESDAY, 29 AUGUST, 2018