Subjects: Commonwealth Auditor-General report into East-West Link released today; infrastructure funding; value capture; Badgerys Creek rail
ANTHONY ALBANESE: Today the Australian National Audit Office will release its report into the East West Link project in Melbourne and significantly, the Commonwealth’s involvement in providing funding for this project against its own Commonwealth Government policy.
This is as a result of a request made by myself as the Shadow Minister. I wrote to the National Audit Office because it was very clear that this farcical proposal needed proper investigation and scrutiny so that this never occurs again.
Today’s report follows the report of the Victorian Auditor-General just last week. What we know from the Commonwealth’s involvement is that it was totally contradictory to its own policy. They provided $3 billion for this project in the 2014 Budget. That’s without having seen a business case. Without any recommendation from Infrastructure Australia and without any cost-benefit analysis being undertaken.
Indeed, we know from the Victorian Government’s processes that what has actually occurred is that the former Coalition Government in Victoria deliberately kept information from Infrastructure Australia so that it couldn’t have a proper examination.
And yet, $3 billion was allocated with $1.5 billion as an advance payment that’s been sitting in the Victorian Government’s bank account since the 2013-14 financial year. So no transparency. No cost-benefit analysis. An advance payment in direct contradiction to the policy that says there should only be milestone payments based upon construction.
And at the same time, this funding was taken from projects that had been through cost-benefit analysis and recommended by Infrastructure Australia. Funding cut from the Melbourne Metro. Funding cut from the Manager Motorways program, and funding cut from the M80 project in Victoria.
What we also know is that the billion and a half dollars has since been removed from the Commonwealth Government’s funding for the second part of its funding for the East West Link, not to be replaced. And the $1.5 billion they have said to the Victorian Government can only be used for existing projects. So effectively, a $3 billion cut in funding from the Commonwealth for Victorian infrastructure.
A Commonwealth Government that says they will punish the state and people of Victoria for voting Labor. Completely unacceptable, and today’s Audit Office report will no doubt confirm the fact that all of these decisions directly contradicted the Government’s own policy and directly contradicted proper processes and care for taxpayers money.
REPORTER: How much do taxpayers have to fork out?
ALBANESE: Taxpayers forked out $1.5 billion. It was put aside in the 2014 Budget as an advance payment. In an extraordinary action, half a billion was for Stage 1. $1 billion was for Stage 2. Now, Stage 2 wasn’t due to commence for many years in advance.
This advance payment was deliberately designed to make the Commonwealth’s Budget look worse in 2013-4 and make the Victorian Government’s budget look better in the lead up to the Victorian state election.
So the Commonwealth Government playing games with Commonwealth taxpayer’s money in order to assist their colleagues in the Coalition in Victoria.
REPORTER: Anthony, I must admit I don’t know a whole lot about this but, if this doesn’t make sense, tell me. But why should federal money promised for the East West now be used on the Western Distributor?
ALBANESE: Because Victoria, now, is receiving 8 per cent of Commonwealth funding. It consists of 25 per cent of the national population. Melbourne is Australia’s fastest growing capital city.
Yet you have a Commonwealth Government that is starving the Victorian Government of funding for worthwhile projects like the Western Distributor, like the Melbourne Metro, like the level crossings removal program. All of these projects have positive cost-benefit analysis, unlike the East-West Link.
The East-West Link, as the Victorian Auditor-General’s report confirmed, would produce 45 cents of benefit for every dollar invested. Now, if I went up to anyone in the street and said if you give me a hundred dollars, I’ll invest it and I’ll give you $45 back down the track, you would be laughed at. And that’s precisely what the Commonwealth has done here in supporting this dud project, the East West Link.
Just to prop up the Victorian Coalition Government and secondly, because of the former Prime Minister Tony Abbott’s obsession with roads.
The Perth Freight Link in WA is very similar. No proper cost-benefit analysis, and for Stage 2, they don’t even have a route for the project and the whole design of the project is to take freight to a port that’s at capacity.
The port that actually will be growing is the outer harbour port. And yet we have the Commonwealth Government, through Malcolm Turnbull, still insisting on this roads-only approach, on not having proper analysis. So this is a very much a flawed approach from the Commonwealth and the ANAO will no doubt be confirming that today.
REPORTER: When you talk about Badgerys Creek rail, we are hearing a lot in NSW at the moment about this value capture idea. We heard it with the Western Sydney Light rail. Now we are looking at it in terms of the Badgerys Creek rail line. Do you think it’s fair for developers to pay a levy for this infrastructure to be built?
ALBANESE: Well, I’m glad that the NSW Government has woken up to something that was announced by myself and Luke Foley in the lead-up to the NSW state election that was held in March.
We announced precisely a value capture proposal to fund Badgerys Creek rail, value capture because of the increase in the value of the airport if it has a rail line attached and the lease, of course, hasn’t been granted to the private operators of the airport yet.
Value capture in terms of the increase in the value of the employment lands of the western Sydney employment zone that is just to the north of the airport. And of course value capture that will occur with some of the residential development that will occur along the route of that line from Leppington to St Marys.
So this isn’t rocket science and it’s not new. This is catch-up from the Coalition which it appears from today’s article in The Australian that they have just read that. I spoke about it at the speech at the Australasian Railway Association national conference last month. I’ve spoken about it in Parliament. We have done opinion pieces in the Daily Telegraph and other publications calling for just that.
Now, if you have an asset like the western Sydney employment lands or the airport and their value is increased by the rail line, then of course that should be included because it increases the value of the land that is there so it is just a common sense approach to it.
What we’ve had up to this point is a Commonwealth government and a state government saying that airport rail won’t be necessary until later on down the track – we’ll just have an airport without a rail line. That’s absurd. The people of western Sydney know it’s absurd. Western Sydney Region of Councils have called it absurd, as has the business community.
So it’s good that finally a couple of people at the Commonwealth level are starting to talk about Labor’s policy that we announced prior to the NSW state election.
REPORTER: So if property developers are chipping in, where is the bulk of the money going to come from?
ALBANESE: Well, if you’ve got the airport, that’s increased in value, if you’ve got the western Sydney employment lands, that’s increased in value because workers can get to and from work without getting into their car and working there becomes more attractive. The value of the property becomes more attractive.
Residential development along the line becomes more attractive. Then the sale of that land, that is owned by either the Commonwealth or the state government can, in my view, capture a substantial amount of funding for such a rail line’s construction given that, thanks to the Rees Labor Government’s commitment to build the rail line to Leppington, much of the project has already been completed and my view was very clear, which is why I was calling for it at the time, was for construction to just continue from Leppington through to Badgerys Creek.
We’ve been calling for this for a long period. If that had of occurred as I called on the State Government to do and the Commonwealth Government to do that would have made a lot of sense because you would have saved money on construction costs if they’d just kept going. Just like it makes sense to build the rail line, have it open from day one, because it’s a lot cheaper than to go back to retrofit the station and new stations after the airport is there.
REPORTER: Can we talk Ian Macfarlane. He’s in front of the LNP in Queensland today. Do you think the executive in Canberra is sort of washing its hands of him just trying to keep him at arm’s length?
ALBANESE: I think Ian Macfarlane is symbolic of a lot of the chaos that is there in the federal Coalition. I mean you’ve got Malcolm Turnbull who is at war with the Tony Abbott forces in the Liberal Party, who is at war with his Deputy Prime Minister who is poaching his members from under his nose in Warren Truss having secret discussions with Ian Macfarlane to get him across to the National Party so that they secure an extra seat in the Cabinet and in the ministry.
You’ve had of course, most significantly, Malcolm Turnbull at war with himself – Malcolm Turnbull at war with the position that he has held historically on climate change, on public transport and roads funding, such as over this East West Link, such as over the Perth Freight Link, at war with his own position on marriage equality. So you have I think a trauma within the Federal Coalition.
Ian Macfarlane is showing a real snub to the coalition. Ian Macfarlane is someone who was seen as a competent minister, who was dumped by Malcolm Turnbull because Malcolm Turnbull wanted to pay back all of the people who were part of his little cabal at Peter Hendy’s house on the Sunday evening including Peter Hendy, Wyatt Roy and Mal Brough.
Now Wyatt Roy and Mal Brough have their own problems. Wyatt Roy is going to have great difficulty being a minister given he can’t even recall the assistance that he gave to James Ashby in terms of the Ashbygate issues. And of course the appointment of Mal Brough, I mean, if you were Ian Macfarlane you’d think to yourself: Well here is a bloke who Malcolm Turnbull knew was under investigation, knew was under a cloud.
Tony Abbott knew that and had the good sense to not make him a minister and he has appointed him to, of all things, Special Minister of State so he is in charge of government integrity. It’s no wonder that with Mal Brough promoted and Ian Macfarlane demoted that Ian Macfarlane has taken his bat and ball and run across to the National Party.
REPORTER: Do you reckon he’ll slide back into the ministry?
ALBANESE: Well that will be a decision for the National Party. But what is very clear is that he is moving with that intention. He said it himself. And that is a recipe for ongoing tension within the Coalition and we see that as a result of the Paris conference decision as well whereby already you have backbenchers out there sniping at the government for signing up to the Paris agreement.
That will of course mean higher cuts and will mean that they need to get rid of their fraud of a policy when it comes to climate change and get real about reducing emissions. The days of trickery are over post the Paris conference.
REPORTER: What about Bill Shorten – 14 per cent. Is it time for Mr Albanese to step up?
ALBANESE: Bill Shorten will lead us to the next election. I think the political party that has internal problems is the Coalition. Labor is united. We are a team and we are all working toward that in the lead up to the 2016 election. Thanks very much.
Leader of the Australian Labor Party, MP for Grayndler, Rabbitohs Life Member. Authorised by Anthony Albanese, ALP, Canberra.