A50—Australian Economic Forum

Speech

DCS001/2017

02 February 2017

Sydney Opera House, Bennelong Point

Investment in nationally significant transport infrastructure, which will underpin Australia's future economic growth and job creation, is a priority for our Coalition Government.

It is central to growing Australia's productivity, and to improving the living standards for all Australians—now and in the future.

But we as a government, don't have all the ideas, the funding, or all the know-how on delivering this infrastructure—no government does.

With greater fiscal constraints on Australian governments than ever before, we need to identify and leverage new, sustainable sources of funding.

You've already heard from my colleagues who manage the Trade, and Revenue and Financial Services portfolios.

They in their roles provide the economic foundations for investment, while it is infrastructure's role, and mine as Minister for Infrastructure and Transport, to provide certainty around a pipeline of projects so medium and long term investment decisions can be made with confidence.

Together, our message to the private sector is that we're open for business.

We welcome investment from Australia and overseas because we know if you encourage investment and business innovation, you will create more jobs and better jobs.

What we as a government can do for you is provide a stable, reliant and buoyant economy, an increasing trade footprint and a platform for expansion into Asia, all of which are driving an unprecedented need for investment in, and better use of, infrastructure.

What you as investors can do for us … be bold in your thinking, be willing to expand your horizons and be open to working with us.

Infrastructure investment is the bedrock of our macro economy and has cushioned the impacts of falling mining investment as we continue to transition to broader based growth.

This is supported by historically low interest rates and a lower Australian dollar.

Our transport and infrastructure needs are also growing:

  • Between 2010 and 2030, our domestic freight task is expected to grow by 80 per cent and air passenger movements will increase to 279.2 million per year.
  • By 2050, Australia's population will jump to 37.6 million and Sydney and Melbourne will both have populations around eight million people.

Urban congestion is one of our greatest productivity problems, and while most of our exports come from our regions, our cities generate most of our economic activity.

Long commute times are locking people out of jobs.

By 2030, the avoidable cost of urban congestion is expected to be around $30 billion annually.

At the same time we need to grow our regional communities and improve connectivity in all its forms.

To address these challenges, it is critical we take an integrated, long term approach to planning Australia's future infrastructure.

Our focus is, and must continue to be, investing in high quality and value for money infrastructure projects that get people moving, reduce commute times, improve safety outcomes, and better connect cities to regional centres, and housing to jobs.

That includes a strong commitment to public transport, particularly rail.

Careful planning is essential to delivering value for money infrastructure. This takes time to do well—to identify and protect sites and corridors to accommodate major future projects such as airports, and the supporting infrastructure such as rail lines, motorways and of course regional roads.

It also means we have to be smarter about linking transport investment with long term planning, so people have an easier time connecting to jobs, schools, hospitals and affordable housing.

The Coalition Government will be investing more than $50 billion in new and upgraded transport infrastructure by the end of the decade.

We are expecting to invest $9 billion on land transport infrastructure projects this financial year alone.

There are more than 1,000 projects currently underway around the country—transformative projects such as WestConnex in Sydney, the Toowoomba Second Range Crossing in Queensland and the Perth Freight Link in Western Australia, as well as major upgrades to the Pacific Highway in NSW and the Bruce Highway in Queensland, to mention just a few.

A key challenge in Australia's infrastructure investment landscape is to align planning and investment across three levels of government.

Each level of government has different areas of responsibility. The federal government takes the national approach, and is the largest single funder.

State, territory and local governments build, own and operate the majority of road and rail assets.

We are currently looking at a more collaborative decision-making process to ensure projects and policy settings support national and regional priorities, and deliver a more effective transport system.

In terms of funding, the model of the Australian Government as an ATM is gone.

We are committed to being a more active and informed investor who engages early in the development of projects that we consider have national significance.

This includes using the Commonwealth's balance sheet position to apply more innovative funding and financing measures rather than grant funding.

This early engagement approach supports Infrastructure Australia to maintain its project pipeline and maintain a Priority List, both of which assist industry and investor decision making.

Out of that process, the two largest projects underway at the moment are the Western Sydney Airport and Melbourne to Brisbane Inland Rail.

Our government is committed to see the Western Sydney Airport operational by the mid-2020s, generating tens of thousands of new jobs and upwards of a billion dollars in economic activity for the region.

Western Sydney is our third largest economy and currently home to two million people, which is expected to grow to three million by 2030.

This is a once-in-a-generation opportunity to build an airport where Western Sydney businesses need it. By the early 2060s, the airport is forecast to generate more than 60,000 direct jobs and $1.5 billion per year in value add for the Western Sydney region.

Unlike Kingsford Smith Airport, it will operate without a curfew, thanks to three decades of careful planning restrictions that have protected the airport from encroaching residential development.

We are focussed on the things we need to do now to get an airport delivered, such as broader transport and land use planning in the surrounding region and allowing for extra road traffic.

We are also looking very carefully at the options for rail, including what it would take for rail to be in service when the airport opens or, if not, as soon as possible thereafter.

Another project to keep an eye on is the Melbourne to Brisbane Inland Rail.

It is a significant piece of national infrastructure and a great example of thinking in the long term.

The benefits will start accruing from day one, but it will serve Australia for at least the next 100 years.

As a regional MP, I know how important efficient freight links are in giving regional economies the best chance for growth.

My challenge in this term of government is to get some serious momentum behind this projects and make its development inevitable.

It's a simple project to grasp—a 1700 kilometre freight rail connection between Melbourne and Brisbane that offers an alternative to the existing coastal route and bypasses the congested Sydney area.

Inland rail will connect our regions to our ports, reduce congestion in our cities and make our roads safer—and we can build it within a decade.

The project is expected to create thousands of direct and indirect jobs during peak construction and hundreds of ongoing jobs per year once fully operational.

The future of such a project inevitably comes down to money—in this case around $10 billion.

We're very keen to work with the private sector.

There is the potential for involvement in constructing the core rail line, as well as complementary infrastructure such as intermodal terminals and supporting infrastructure.

And because we want private sector involvement, we're undertaking a thorough market testing process to determine the most appropriate delivery model.

Our first stage of market testing with more than 40 international and Australian investors was most encouraging.

We know there's general support; the construction risks are considered manageable; and private sector financing is available.

Our second market testing process is currently underway.

While I'm on funding, it is our government's belief that governments cannot, and should not, fund all infrastructure projects.

The cost of transport projects should be shared between those who benefit most and the broader Australian community.

We are looking for greater contributions from the private sector to fund and deliver high-quality infrastructure and at a greater use of innovate financing solutions.

Just on a year ago we released our Principles for Innovative Financing.

These Principles set out goals for the Government's substantial investment in Australia's land transport infrastructure and our expectations regarding project selection as well as alternative funding and financing decisions.

On this basis, preference will be given to proposals that have considered, and where appropriate applied, innovative funding solutions beyond capital grants.

Alternative funding streams for new projects can help to share the burden of funding new infrastructure.

Government investment and policy changes generate enormous value, which can, and should be shared more widely.

The Government is keen to see how we can take a more active role in supporting value capture strategies, so we put it to industry and the community.

We also announced the establishment of an Infrastructure Financing Unit within the Department of Prime Minister and Cabinet.

This Unit's role will be to work with my department and other Commonwealth agencies, state territory and local governments and the private sector to develop advice on optimum funding and financing structure for major projects.

I don't want to finish today without acknowledging that technology advances will fundamentally change the way we do transport infrastructure—that is plan, deliver and manage it.

And while there is debate about the timing and impacts of technology adoption, there is no debate that governments must invest smarter to drive tax payer dollars further, and that building new infrastructure is not always the most efficient solution, particularly at a time of constrained budgets.

It is critical that we use existing, and of course new infrastructure, more efficiently. This means ensuring investment and policy and regulatory settings keep pace with technological advancement, and maximising the efficiency our existing infrastructure stock.

Moving forward, we need to better utilise data in making infrastructure investment decisions as well as managing existing and planning future transport network needs.

At the same time, new techniques in digital engineering are helping to more effectively plan projects, better integrate project design and asset management plans and identify efficient solutions to potential construction problems—long before the first shovel hits the ground.

A key challenge for governments and industry is to get better at predicting and preparing for new opportunities.

The pace of change is so rapid it will require increasingly dynamic and agile government responses.

I'm pleased to say that Australian governments at every level are proactively taking steps to address these challenges.

Our Government doesn't have all the ideas, the funding, or all the know-how on delivering infrastructure—no government does.

We are looking to the private sector. We want to hear your ideas. We are receptive to unsolicited proposals.

We want to work with you.