Subject/s: Senate Estimates – East-West Link, Infrastructure Australia, Budget infrastructure video, John Fitzgerald, Perth Freight Link.
ALBANESE: Today we’ve had the Senate estimates into infrastructure and transport. And it’s been a shocking day for those people who had hoped the incoming government would take infrastructure policy development seriously.
What we’ve seen is that the independent process that was established of IA giving advice to government and that being then followed by investment by government has been broken.
This is a government that has made purely political decisions.
In the budget of course we know that they simply took money off some existing projects in terms of rail projects but also some road projects confirmed such as the M80 in Victoria and put them onto its own projects rather than providing new investment.
Apart from that they’ve been running around the country claiming projects as new.
Even projects like the Majura Parkway here in the ACT, they have tried to take some credit for. All they had to do was look to their right as they drove in from the airport to Parliament House last night or this morning and they’d see a project that was two years underway and more than half completed.
This morning though we’ve had some quite extraordinary revelations.
With regards to the East West Link in Victoria, we had evidence from John Fitzgerald who is the Acting Infrastructure Coordinator.
Mr Fitzgerald put out a release on the 29^th of April saying that it was a ‘meritorious project’.  Today he indicated that as a Victorian official of Treasury but also as a private consultant for KPMG doing work on this project, he advocated for the project.
You can’t be an advocate and an independent adviser to government.
And indeed he indicated that he would be at Infrastructure Australia he thought for a period of 6 months leave from his existing job at KPMG and I’d ask people draw their own conclusions but certainly the government needs to assure people that appropriate protections have been put in place to make sure that that independent role of the public service is kept intact because the integrity of the system requires that.
With regard to the East-West project, today also we learnt what we didn’t know on Budget night. We didn’t know because it was kept from the Australian people.
The fact that the East-West Stage 2 project in Victoria has not had a business case, hasn’t had proper environmental assessment, but was given $1.5 billion of commitments out of the Federal Government for a project that is due, according to their own papers, to commence in the financial year 2015-16.
Now the government says that it has some ‘fiscal issues’, that it ‘needs to be careful with Australians’ money.
But what it’s doing is giving $1 billion over the next 8 weeks for a project that not only wont commence in 8 months or 18 months, but is from today more than two financial years off even commencing and has not had a business case.
The funding profile of a billion dollars being giving this financial year prior to June 30 must be seen as providing assistance to their friends in the Victorian Government because the only thing that that billion dollars will produce before it starts, if it ever does, if it ever has a business case, if it ever gets environmental approval sometime after 2015-16 is interest to the Victorian Government interest lost for the Australian Government.
Joe Hockey and Mathias Cormann have to explain why it is after last week’s horror Budget they’re putting a billion dollars into someone else’s bank account for no production whatsoever.
Secondly was the extraordinary WA Freight Link project. The old Roe 8 that they’ve renamed.
Now I was Infrastructure Minister for 6 years. I’ve had lots of meetings with WA Ministers particularly Troy Buswell but WA officials.
At no stage was this project on the agenda.
When it was announced on Budget night the WA Freight Logistics Council said they didn’t know where this had come from. It had been rejected due the issues that it had, a similar project, as not achieving the outcomes desired and because of environmental impediments some years ago by the WA State Government.
And yet $925 million of taxpayers money allocated. Today in Senate estimates the Senators weren’t allowed to see the business case.
They weren’t allowed to see any modelling that had been done on traffic projections.
They weren’t allowed any information because they said it was commercial in confidence.
It’s pretty clear that this is a project that hasn’t been properly worked up and the answers from the officials made that absolutely clear where they said it was in an early stage.
Well I’ll give a big hint to the Government. What they should do is do the work first and then provide then funding.
Not provide the funding, and then go back and backfill and build the case for it and see whether it works or not. But that’s what we’ve seen from this government.
All that we’ve seen from the government I think to is highlighted by the evidence today that some $70,000 was spent on a video that was sent out by Jamie Briggs at 4.30pm on Budget night in order to spruik the government’s message that somehow it was doing something other than just relocating money and trying to take credit for projects that were already underway.
$70,000 for a video that’s been seen 2000 times.
That’s about $35 a view at the moment it cost for this political propaganda from the government. The government needs to address substance rather than just spin when it comes to infrastructure. Happy to take questions.
JOURNALIST: So are you actively saying that this Acting Infrastructure Coordinator is not independent?
ALBANESE: No I’m saying that very clearly he has indicated that he is on leave from his existing job at KPMG that does work and provides advice on infrastructure.
So if he’s going back there we need to make absolutely clear that the lines need to be drawn and we need to make sure that any issues of conflict of interest need to be dealt with by making sure that he is not involved in projects of which he has had previously a commercial role in KPMG, particularly because he’s going back there.
I’m not against people going from the private sector into the public service.
That can be a good thing to bring that experience and Mr Fitzgerald in the contact I had with him was a professional public servant from Victoria.
But we need to make sure particularly given the extraordinary controversy that is there over that East-West project.
Controversy that I think after today with a billion dollars just being put into a bank account for a project that won’t even be commenced for years is quite extraordinary.
JOURNALIST: Benefit cost ratio, business case essentially for the East West Link, do you have concerns about that?  Some estimates say it’s sort of $1.40 for every dollar spent, others put it at about 80 cents for every dollar spent.
ALBANESE: Well the evidence this morning was about two pieces of work. One that put it at 80 cents for every dollar spent, the other that indicated it was 50 cents for every dollar spent before the work was done on that particular project. Now that is of real concern.
The whole idea of IA was that you would have independent analysis showing whether there was a positive economic analysis and then the funding would go toward the projects which would deliver the greatest productivity benefit, the greatest number of number of jobs and the greatest growth for the Australian economy.
This is not a pro-growth budget, and one of the areas in which this is highlighted is the choice of projects that have been made in terms of taking money for example off the M80 that had a $2.20 return for every dollar and putting it onto a project where really the best cast scenario is 0.8. And it was also indicated today that even for the first section of the project a full business case has not been seen and no independent analysis has been done by Infrastructure Australia or the department about this project .
JOURNALIST: Are you surprised about how the Roe 8 proposal in WA there wasn’t the full business case put together before it was announced and it appears that only parts of pre-existing cost-benefit analyses were cobbled together.
 ALBANESE: Well look, there are no traffic projections, there’s no business case, there’s no environmental assessment. Where did this come from? You know, you can’t decide infrastructure projects on the back of a napkin between a few people sitting around having a chat. You’ve got to have proper analysis.
It is very clear that the proper analysis has not happened here. It is very clear that in terms of the other sections of Roe that have already been completed were done because they were priority projects.
And there’s a real question about what will happen at the Port of Freemantle comparatively to the Port of Kwinana in terms of where the growth will be and therefore what should be prioritised in terms of investment.
But it was quite extraordinary today that you have $925 million being committed for this project a small amount of which I think in the order of about $70 million or thereabouts will form a part of the larger project but with no analysis.
We did the Gateway WA project that is under construction now. Right now more than 2000 people are being employed on that project. Once again where Mr truss and his errand boy Jamie Briggs think is somehow a new project.
Well I say to Mr Truss take the errand boy over there, have a look at the project, you’ll see that it’s underway, people are working, there are cranes are in the sky. Indeed, one of the ramps is already open. We did that because it had a positive economic benefit.
Proper cost-benefit analysis, proper environmental assessment, funding there in partnership with the state government.
Here we have a lump of money from the federal government that they say they’ve committed. They’re no sure where the rest of the money will come from. They can’t tell anyone information because suddenly it’s a state secret. Well I’ve got news for the government. This is taxpayer’s money and they deserve to know exactly how it is that this has come about, and to know about the detail. This is a very controversial project due to the issue of the wetlands and where the project will go through. They couldn’t even say this morning whether it’ll go along the ground or whether it will be an elevated roadway.
Now I don’t blame the officials for that. I blame the federal government that has come into a government with a plan to get there but not a plan to actually govern once they got there after they were elected last September.
JOURNALIST: Infrastructure Australia obviously has no influence, no power. What can be done to fix that or should we just get rid of them altogether?
ALBANESE: Well they used to have influence and power. They had 15 priority projects and we funded every one of them. Including the Majura Parkway. Including the Goodwood to Torrens Freight project in SA, including the Pacific Highway, the Hunter Expressway that’s now open. Investment was going towards projects that were properly assessed. Now IA needs to be free of political interference, it needs to be listened to. It needs to be able to assess projects prior to funding being delivered.
That’s why projects like the Regional Rail Link in Victoria, $3.225 billion of the Commonwealth’s money, the largest ever investment in public transport, that has kept the Victorian economy going in recent years. More than 3000 people employed at its peak. New stations, upgrades, places like Footscray West Station. All being upgraded and a big benefit to the economy of Melbourne, Geelong, Bendigo and Ballarat. That’s why we did the proper work on the Melbourne Metro. $40 million for the planning work, so you get all the detail right.
We’ve got all the detail right, but as the answer from Infrastructure Australia itself that was published in the SMH today shows, the fact is that the Commonwealth not funding rail projects at all is distorting the market and will lead to state governments also not making a contribution to rail because if you’re a state Treasurer and you have a road project worth a billion dollars and a rail project worth a billion dollars and if you pick the road projects you’ll get co-investment, you’ll get greater economic activity of two or three or million billion in your state but if you pick the rail project you’re on your own. Guess what? You’d be a complete nong to pick the rail project because you need that co-investment.
JOURNALIST: Can I just clarify one more thing Mr Albanese because they mentioned your name this morning in Senate estimates about a meeting with Deegan earlier this year. Anything unusual about that?
ALBANESE: I have meetings with people all the time. I’ve had meetings with Mr Mrdak as well.
JOURNALIST: Do you have concerns about the circumstances in which the new person was appointed to the role?
ALBANESE: That’s a matter for the new government to deal with, but you do have two people being appointed to the same job. Mr Deegan is still the Infrastructure Coordinator. And someone  else has been appointed Acting Infrastructure Coordinator, and we’re told today from his own evidence, Mr Fitzgerald that he was just on leave from KPMG. Thanks very much.