Apr 19, 2013

The future of the Western Sydney economy – Speech to the NSW Business Chamber

Sydney is one of the world’s great global cities.

Cities are about more than mere geography.

They are about identity as well.

It’s their identity that sets them apart from one another.

Our city is blessed with not just sensational natural beauty, culture and lifestyle, but also one of the most vigorous economies of the world.

Despite the mining boom, Sydney still produces about a quarter of Australia’s GDP.

It is in the top ten of Asia Pacific cities and in the top tier of the world’s cities.

Western Sydney

Western Sydney is critical to this city’s future productivity.

In its own right, it is already Australia’s third largest economy and fourth most populous city.

By 2050, Western Sydney’s population will sit at around four million, the equivalent today of Brisbane and Perth combined.

This leaves no doubt that a major chapter of Australia’s future will be written right here in Sydney’s West.

Government Infrastructure Funding

Sydney has a long history of what we now see as visionary, or city-shaping, decisions.

And around us here today there is no shortage of grand colonial buildings, such as the Female Orphans’ School and the World Heritage-listed Old Government House in Parramatta Park.

Further east, there’s the Sydney Opera House and that much-loved feat of engineering, the Sydney Harbour Bridge.

The foresight of John Bradfield and his contemporaries to construct a bridge big enough for the future, rather than the moment, has shaped the way people have lived for generations.

Heading west, the Upper Nepean Water Supply Scheme built in the 1880s still supplies most of Sydney’s water.

These are classic examples of how good infrastructure can serve us for centuries.

As Sydney-siders we are rightly proud of these achievements.

But we know we must build on them to secure a better future—for Sydney, for NSW and for Australia.

And I am proud to say this Labor Government is a nation building government.

We are making long-term decisions that shape the future of our cities and improve the lives of all Australians.

For a nation building government, foresight is not just a virtue—it is the essential ingredient in shaping a better Australia for tomorrow.

By establishing Infrastructure Australia we have created a source of expert advice on Australia’s current and long-term infrastructure needs.

We have implemented the National Urban Policy and established an Urban Policy Forum to make our cities and regional centres even more productive, sustainable and liveable.

This Government has changed the rules on infrastructure— basing our funding priorities on needs and cost benefit analysis, not mode.

We’ve broken down the old ‘siloed’ way of thinking, that the Federal Government can fund roads but not urban rail.

You would have heard the Leader of the Opposition publicly disagree with me when he said two weeks ago that “the Commonwealth’s job is to stick to its knitting, and its knitting is roads”.

His thinking is not just out-dated in an academic sense, but it has real practical implications for life in our major cities.

Urban rail is critical to addressing our problem of urban congestion that if not addressed, will cost us $20 billion a year by 2020.

The Coalition’s ruling out of any support for urban rail also shreds the whole principle behind Infrastructure Australia’s process of making recommendations based on cost-benefit analysis, not mode.

As Infrastructure and Transport Minister, I am proud that this Labor Government, since 2007, has committed more to urban passenger rail than all Federal Governments combined since Federation.

We committed up to $2.1 billion to the Parramatta to Epping Rail Link, the missing link between Sydney’s second CBD and employment centres in the Macquarie Park area.

Had the NSW Government proceeded with this project, construction would have been well underway right now.

In last year’s Budget, we committed $25 million to advance the Sydney Motorways project to extend the M4 and M5.

The Prime Minister made it clear we are willing to give this project consideration for a major funding commitment, as long as the NSW Government puts the proper planning and business case in place.

This includes making sure we’ll have the right connections—taking people to the city and freight to the port.

We are also tackling the bottlenecks that have hampered productivity, often for decades.

For example, Sydney is the biggest bottleneck on the Interstate Rail Network, with freight trains facing frustrating delays.

The newly opened Southern Sydney Freight Line, and the Northern Sydney Freight Line, now under construction, will go a long way to fixing this.

These upgrades are not just about freight movement—they are very much about creating extra capacity on the crowded City Rail network on which passenger and freight trains are competing for access.

During peak hours, passenger trains are—quite rightly—given priority on the Sydney network.

But this results in freight not getting to its destination as quickly as it could.

During off-peak, passenger trains can get stuck behind slow freight trains, creating delays and frustrations.

The separation of passenger and freight lines will end this.

To give you an example, as part of the Northern Sydney Freight Line upgrade, the long standing issue of freight and passenger trains having to wait for one another at Strathfield will finally be resolved by the construction of a dedicated freight and passenger rail overpass.

Simply put, smoother passage for freight and passengers by separating the freight and passenger lines will help Sydney work better.

Our investment in the Moorebank Intermodal Terminal will remove 3300 trucks off Sydney’s roads every day and directly creates 1,700 ongoing jobs.

Forecasts suggest the Terminal will inject about $135 million a year into the economy of south-western Sydney alone.

There are smaller Federal investments that are also helping to shape our city.

Through the Regional and Local Community Infrastructure Program we have made more than $1 billion available so that local councils can build and modernise community infrastructure.

Here in the City of Parramatta, nearly $2.5 million was allocated for the ‘Main Street Enhancement’ of Granville.

Through the Liveable Cities Program—we’re supporting the Parramatta River City Renewal project, with a cycling and walking link between the University of Western Sydney, housing developments and the Parramatta City Centre.

This will mean fewer people climbing into the driver’s seat to get around, and a more liveable city.

Second Airport

There is one big infrastructure issue in Sydney that has gone unaddressed—a second airport for Sydney.

Last year, 25 million domestic and 12 million international passengers passed through Sydney Airport.

Sydney is, and will continue to be, Australia’s top destination for both international and domestic visitors.

Over the next 20 years, demand for air travel in Sydney will double—and quadruple by 2060.

Not just Sydney’s, but Australia’s continued economic growth depends on meeting this demand.

The 3,200 page Joint Study of Aviation Capacity in the Sydney Region was the most comprehensive study undertaken on this issue.

As its name suggests, it was the joint effort of the NSW and Federal Governments.

Unlike previous studies, it was not merely a site selection exercise.

It looked at the entire region, from Canberra in the south to Newcastle in the north.

And its findings were absolutely clear—Sydney’s existing airport simply can’t meet this growing demand.

Congestion on the tarmac extends to the surrounding roads, with regular delays and congestion.

Because 40 per cent of aircraft fly through Sydney at some time during the day, this has a knock on effect and is a national productivity issue.

Sydney Airport cannot expand any further, and any tinkering around the edges will make no practical difference.

We need a second airport sooner rather than later.

If we do not act, the cost of turning away flights would be $6 billion in foregone GDP by 2035, and $2.3 billion in NSW Gross State Product alone.

By 2060, Australia will have foregone $34 billion, and NSW $17.5 billion.

Let’s put this into perspective.

$17.5 billion is comparable to the economic contribution of the NSW retail sector last year.

Or try it from another angle.

Over the next 20 years, China and India will together account for one fifth in the growth in international passenger movements through Sydney.

In the last decade alone, those countries have doubled their per capita incomes.

Such staggering growth presents opportunities that we can’t afford to lose.

The first port of call is our airports—they must be able to accommodate this unprecedented Asian affluence.

Economic Contribution of Airports

Not only are airports economic gateways to the world, they are also great economic generators in themselves.

I said recently that if magic dust could be sprinkled over a raw patch of land to create the greatest number of jobs, you’d be hard pressed to find something better than an airport.

In this region, we have the University of Western Sydney and Westmead—both generate major employment opportunities across the range of skill levels.

Airports are actually mini cities.

And they are the only piece of transport infrastructure that generates more jobs in operation, than during construction.

Right now, we are looking at the suitability of Wilton and the potential use of RAAF Base Richmond for limited civil operations.

This work is drawing to a close and I expect to receive the report from my Department in coming weeks, when I will release it for full public discussion.

This is consistent with my approach that public policy must be thoroughly grounded in evidence and then be made available for everyone to examine and digest.

As I have said before, a decision on Sydney’s second airport must be bi- partisan if it is to be realised.

Meeting the Jobs Challenge

Today you will hear more about the challenges resulting from population growth and the task ahead to meet Western Sydney’s employment targets.

But it should not just be about numbers—it is also the quality and variety.

In terms of economic functions, Australian cities are shrinking in on themselves.

The forces driving the spread of our cities since the war, predominantly manufacturing, are being replaced by knowledge industries—the banking, legal, insurance and myriad of other business services.

Yet, whereas manufacturing plants were traditionally located on the city fringe or in industrial zones, the job-rich knowledge industries tend to concentrate in the heart of our cities.

This trend is seeing more and more workers commuting into our city centres.

At the same time housing growth continues to creep outwards, making the journey to these jobs increasingly difficult.

For workers living in Western Sydney, this means increasing commutes and congestion on our roads and trains.

Currently, at least 150 of our top 500 companies have a presence in Western Sydney.

The overwhelming focus, however, has been on logistics, manufacturing and construction jobs.

This needs to diversify.

Aviation generates this diversity better than any other industry.

Not only are there the obvious jobs in the terminal and on the tarmac, but the thousands of upstream jobs that supply the enormous variety of goods and services needed to keep an airport ticking over each day.

Generating local employment for local people is critical to obtaining a sustainable lifestyle and economy for the whole of Sydney.

A second airport would help free thousands of daily commuters from jobs based well away from home.

It would give back time better spent with families and friends, and the opportunity to be more involved with pleasures of community and neighbourhood activities.

Conclusion

It is symbolic that we are discussing productivity and the Western Sydney economy here at this venue on James Ruse Drive.

Because it was James Ruse, a former convict, who in 1789 produced the first successful wheat harvest.

For a colony on the verge of starvation, this great act of productivity earned James Ruse a 30 acre land grant plus some much prized pigs and chickens.

It was the first land ever granted by Governor Phillip, and with it James Ruse created Experiment Farm.

From that tiny farm has emerged one of the most productive agricultural nations in the history of the world.

Today, Western Sydney retains that great tradition of innovation and endeavour.

This Federal Government stands ready to support you as you continue to grow even stronger.