Committee for Economic Development of Australia Transforming Australia's Freight and Rail Network

Speech

DCS006/2017

17 May 2017

Melbourne

In the Australian political event calendar, all eyes are focused on Parliament House in Canberra on Budget night. This year was a big one for my portfolio of Infrastructure and Transport. It was a privilege to be in the Chamber as Minister for Infrastructure and Transport as the Treasurer announced our $75 billion plan for my portfolio—politics is about making a difference using our time in office to deliver for all Australians.

The title of my address today highlights our Government's ambition for our freight and rail sector—which is to transform them.

Any dictionary will tell you that to ‘transform’ something is to change its shape or form. Usually permanently. For Inland Rail, that was my clear objective—to advance construction to the point where a future government could not shelve the project. To change the shape of Australia's freight transport market forever.

I am confident that we have done that in this year's Budget.

The format of today's event allows me some time to discuss the benefits of the Inland Rail project, to outline the steps to delivery we announced in the Budget, and then to explore our broader approach to a national freight strategy and infrastructure.

And given that we are here in my home state of Victoria, I'm not sure I'd get away without some comments on our plans to invest more in this state.

When completed, the Inland Rail will provide a high performance, 1700 kilometre freight rail corridor between Melbourne and Brisbane. It will be capable of moving double-stacked containers along this corridor in under twenty-four hours.

It is sometimes hard to grasp the sheer scale of this project: people want instant results—this will take 8 years to deliver.

Many goods may not begin their journey at either end of the Inland Rail at all, but in the middle—in regional Australia.

Higher capacity trains, supported by higher axle loads, have the potential to unlock new export markets for Australia's strategic coal reserves. For example, it will enable additional coal exports from the Clarence-Moreton and low Surat Basins through the Port of Brisbane.

The Inland Rail should also benefit bulk agricultural exports. West of the Great Dividing Range, the railway traverses some of Australia's most productive agricultural and resource-rich land, including the Darling Downs. It will enable faster, more efficient market access for primary producers, especially for large-volume grain and cotton harvests.

It is estimated that this project will attract two million tonnes of agricultural freight from road to rail.

The Inland Rail will be constructed against the background of improving the overall outlook for agricultural exports—driven by our free trade agreements.

For a wide variety of regionally based businesses—not just coal miners and farmers—the promise of the Inland Rail is not only to freight goods to Melbourne or Brisbane, but through Melbourne or Brisbane to our growing overseas markets.

The latest quarterly report for agricultural commodities published by the Australian Bureau of Agricultural and Resource Economics and Sciences—better known as ABARES—is very encouraging.

ABARE projections are that, in five years time, the value of farm exports will be around 46.6 billion dollars. Or an average of eight per cent higher than the average value of the past five years.

These numbers tell a story of growth and confidence in regional Australia.

They align with my own understanding of it, through day-to-day exchanges with constituents as a regional MP, and as a National Party minister who regularly visits the regions.

The prospect of significantly lowering the cost of transporting regionally produced goods to global markets is, in my view, one of the most exciting benefits of the Inland Rail.

It will give further confidence to regional enterprises who are considering engaging with Asia and other export markets—to encourage them to grasp those opportunities now available through our recent trifecta of trade deals with China, South Korea and Japan.

While the Inland Rail will be good for existing enterprises along the route, it also holds out the promise of growth for many transport-related service providers—as part of a network-wide solution to improve freight efficiency.

This is because the efficient movement of freight between our cities, our regions, and international gateways will rely on good connections between the Inland Rail with existing road and rail infrastructure on the east coast of Australia.

This project will encourage and enable private sector investment in logistics and industrial hubs adjacent to the rail corridor, as companies seek to leverage the benefits of co-location and the clustering of industries.

At the centre of it, the north-south Inland Rail will connect with the east-west transcontinental rail line at Parkes.

And in Melbourne and Brisbane themselves, new metropolitan intermodal terminals will be developed to improve multi-modal transport connectivity.

This is why one of the first tasks of the Prime Minister's new Infrastructure Projects Financing Unit will be to work with the private sector and state governments to look at opportunities to develop intermodal terminals along the Inland Rail route.

For goods travelling the entire route from Melbourne to Brisbane, freight costs will be reduced by ten dollars per tonne.

It will also increase capacity for freight and passenger services in New South Wales by reducing congestion along the busy coastal route, allowing for growth in passenger services particularly in the Sydney region.

The Inland Rail is a long term project which has many benefits. The ARTC has described some of the other benefits as including:

  • A boost to Australia's GDP of sixteen billion dollars during its construction and first fifty years of operation, with
  • Sixteen thousand new jobs at the peak of construction
  • Fifteen fewer serious road crashes per year, avoiding fatalities and serious injuries; and
  • A reduction in carbon emissions of 750,000 tonnes per annum

Any way you look at it, the Inland Rail will provide significant economic and social benefits to Australia.

Prior to last week's Budget announcements, much preparatory work had already been undertaken for this project.

Our Government had already committed nearly $895 million to the Inland Rail in previous budgets.

And last month I was pleased to announce the commencement of works to replace two timber bridges along the Parkes to Narromine section of the corridor, which will bring them up to Inland Rail standard. The new concrete culverts will be able to carry longer, heavier trains.

Just before the budget, I read a report that the National Farmers Federation was asking us to commit to more than one billion dollars in the Budget to show we were ‘fair dinkum’ about the Inland Rail.

I am delighted to say we have announced an additional $8.4 billion in equity funding for the Australian Rail Track Corporation (ARTC), to enable delivery of this project.

The ARTC will be working with the private sector to raise additional private debt.

The ARTC will also enter into a Public Private Partnership (PPP) to deliver the most technically complex section of the project between Toowoomba and Brisbane. Delivery of this section will include nearly nine kilometres of tunnelling works.

Delivery of the Toowoomba to Brisbane section of the Inland Rail will be handled via a PPP to allow the Government and the ARTC to better manage cost risks and to harness private sector innovation in design and construction.

Construction processes on the Inland Rail will begin soon, and major construction works will commence early next year, continuing through to 2024-2025, when Inland Rail operations are scheduled to commence.

This is a project of national significance but, as the name Inland Rail suggests, around ninety-eight per cent of the construction and capital expenditure will occur in regional areas. Particularly in south-east Queensland and north-west New South Wales.

However, the Inland Rail is not all that we are doing to transform Australia's Freight and Rail Network.

As I mentioned at the start of my remarks, the Australian Government is delivering $75 billion in infrastructure funding and financing for critical airport, road and rail infrastructure projects.

I am proud that we are investing on average over $8 billion per year on transport infrastructure. $2 billion more per year than the previous Rudd-Gillard-Rudd Labor Government.

All of you will be aware of our firm commitment, in last week's budget, to deliver a Western Sydney Airport.

We also announced a new $10 billion National Rail Program over the next decade, which will fund transformational projects to more efficiently connect our cities, suburbs and surrounding regional areas.

Within Victorian rail, we are investing in improvements to the North-East Line, the Gippsland Line and the Geelong Line, as well as a study into improving the Shepparton Line as part of our $1 billion injection into the state's infrastructure. In investment in regional rail that was called for by CEDA a couple of years ago.

Our total contribution to the Murray Basin Rail now stands at $240 million. And we are funding the development of a business case for the Melbourne Airport Rail Link.

Now there has been lots of public discussion around the level of infrastructure investment in this state. The Turnbull Government recognises that there is a lot of work to do to reduce congestion and help Victorians get around our state.

It would be fair to say that I am getting frustrated with the behaviour of the Andrews Labor Government.

We are dealing with a government that spent over $1.2 billion to NOT build a road, but we have continued to attempt to partner with the Victorian Government.

We offered significant financial support for Melbourne Metro —and they told us they didn't want the money

We provided funding—and agreed to partner with them—for the planning for North East Link, and they now are telling us they don't want our assistance.

We worked with them behind the scenes to see how we could collaborate to improve regional rail services—and the next thing we saw was the Premier doing a press conference announcing almost $1.5 billion worth of projects—and sending me the entire bill without a plan or business case of any description.

We stand ready to provide more funding to Victoria—but we need the Premier to grow up and to stop playing games.

Other existing Commonwealth-led projects are also well on track for delivery, including the Moorebank Intermodal Terminal Project in Sydney, and the Adelaide to Tarcoola Rail Upgrade Acceleration project.

My colleague, Minister Cormann, joined me last month to turn the first sod on Moorebank, marking the commencement of construction.

This project will enable import-export freight travelling through Sydney to and from Port Botany to use rail instead of road, providing cheaper and more efficient transport.

Up to $1.5 billion in private investment will support the Commonwealth's own investment, with total economic benefits projected to be in the order of $11 billion.

Of course, the states and territories are also heavily engaged in freight and supply chain policy.

To bring it all together, my Department is currently leading an Inquiry into National Freight and Supply Chain Priorities.

This work will inform the development of a twenty-year national strategy which is expected to be agreed with state and territory governments, through the COAG Transport and Infrastructure Council, by the middle of next year.

Developing a National Freight and Supply Chain Strategy was a key recommendation by Infrastructure Australia in their Australian Infrastructure Plan.

The current Inquiry is being assisted by expert panellists, including a board member of Infrastructure Australia, Nicole Lockwood; the Managing Director of Qube, Maurice James; and the CEO of New South Wales Ports, Marika Calfas.

I am delighted to announce today that David Simon, the Managing Director of Simon National Carriers has also joined the expert panel.

I am pleased that these experts have accepted our invitation to be involved in reviewing findings and advising on priorities on industry engagement.

The issues to be explored through this Inquiry—set out in the Terms of Reference which I announced earlier this year—are very broad.

They include how to protect existing and future transport corridors, including shipping channels, from encroachment; the efficient pricing and competitive access arrangements for key infrastructure assets; both Road and Supply chain safety; and the better use of big and open data to maximise innovation.

Expectations about significant growth in Australia's freight task provides the underlying context of this Inquiry.

Australia's transport network currently encompasses approximately 875,000 kilometres of roads, over 33,000 kilometres of heavy rail, forty significant airports (including ten international airports) and 37 ports with an annual throughput of over $1 billion.

This network caters for our current resident population of 24.4 million people.

However, Australia's population is expected to increase to over 30 million people by 2031, and over 41 million people by 2061.

Acknowledging the upwards trend, Australia's freight task is expected to also increase. For example, estimates for road freight are that it will grow faster than the expected rate of population growth over the similar initial period, to 2030.

It is worth noting here, that the Inland Rail will reduce the number of B-Double trucks travelling along the entire length of the railway corridor by thousands.

Clearly however, Australia's freight supply chains, including road, rail shipping and air, need to continue to adapt to meet the increasing freight task.

I will soon be releasing a discussion paper for this Inquiry, as part of my Department's approach to consulting a wide range of stakeholders.I would encourage anyone who is interested in the topic, to seek out this discussion paper and respond with your views.

The Inquiry is particularly interested in drawing on the real-life experiences of those who are providing freight infrastructure to the Australian market, those who are supplying services to this market. Or those who have experienced the freight market as consumers.

This is your chance to have input to a national strategy. One we hope will guide governments at all levels, for the next twenty years.

Earlier I referred to the National Farmers' Federation pre-budget call for at least one billion dollars to be committed to the Inland Rail.

Pre-budget calls are part and parcel of life in Australian public policy.

Just two years ago, ahead of the 2015 budget, the Australian Logistics Council published an open letter in the press entitled ‘Now is the time to invest in Inland Rail’.

In this open letter, seven key transport companies commended the Coalition government for our initial allocation of three hundred million dollars to this project, and called for full construction funding to be provided—arguing it would have a ‘transformative impact on Australia’s supply chain for generations to come'.

Clearly, we agree. Which bring my remarks today back full circle to where I began, with the title of my address—Transforming Australia's Freight and Rail Network.

Funding in previous budgets totalled over eight hundred and ninety million dollars. Our funding announcement in this budget—which is to provide the additional $8.4 billion investment necessary to guarantee delivery of the project—will transform the freight network in Australia.

It will complete the backbone of the national freight network between Melbourne and Brisbane, and will be the catalyst for complementary supply chain investment along the corridor.

It will give confidence to many businesses in Australia, including mining and agricultural businesses, which can now consider their opportunities for growth in the certainty that the Inland Rail will be built within eight years.

It will be transformative and I am proud to be part of a Government that is guaranteeing its delivery.

I said at the outset politics is about making a difference— the decisions we are making will change people's lives and save people's lives.

Thank you for your time.