AFR National Infrastructure Summit
28 June 2017
Sofitel Wentworth, Sydney
Thank you for the kind introduction.
My thanks to the Australian Financial Review for each year putting infrastructure under the microscope, underscoring its immense economic and public policy importance.
My brief today is to discuss how Australia sits in the international infrastructure market.
I also want to touch on the key elements of our policy agenda:
- connecting communities and trade;
- responsible investment;
- getting ready for automation; and
- making our transport network safer, which is building on the real economic benefits we are already delivering as a government.
Not surprisingly, I will also touch on the politics of infrastructure and offer my views on how we must do it better to start winning back the trust of an increasingly cynical voting public.
I have the best job in the Australian Parliament because we can make a real difference in people's lives.
In my portfolio, we get to build things—the kind of things that Australians want.
Better roads, new railway lines and airports… the things that our kids and our grandkids will thank us for, if we get it right.
This portfolio is about building infrastructure that will change people's lives and save people's lives.
We change lives by reducing congestion, improving productivity, moving freight to market, getting people out of traffic jams and home to their families sooner.
And obviously we save lives by investing in projects which help to reduce the number of fatalities and serious injuries on our roads.
Road trauma costs our community more than $30 billion per year and I don't accept that another 1300 Australians have to die on our roads this year, along with tens of thousands of serious injuries.
Since taking on this role, I have worked with State Ministers and Police Commissioners to provide an infrastructure-based national focus on road safety and that will continue as we aim to reduce road trauma.
We all have a responsibility to each other to be as safe as possible on our roads… and that includes me. Building better, safer roads in our cities and in our regions where a disproportionate number of people are killed and injured each day.
The Federal Government's $75 billion, 10-year infrastructure commitment in this year's budget is all about delivering certainty and providing a pipeline of investments where we can work with the states to deliver the infrastructure Australians expect.
As a nation, Australia has been consistently rated by global investors as one of the most attractive markets for infrastructure investors in the world, and we are considered global infrastructure policy leaders.
There are many good reasons for that—we have well-established corporate and public governance, a skilled labour force, a broad infrastructure market, experienced public managers and a highly effective financial sector.
But perhaps foremost, is the enduring strength of the Australian economy.
Our journey to broader-based growth after the mining investment boom is now well advanced, and the very good news is that Australia is in its 26th year of consecutive growth.
Growth did slow in 2016–17 due to a variety of factors and the Budget forecasts some slowing linked to Cyclone Debbie.
Real GDP growth is expected to grow by 2.75% in 2017–18 building to 3 per cent in 2018–19.
The Treasurer said the Budget was about choices…
And one of the big choices we made was to build on that growth with an infrastructure investment program that delivers in our cities and in our regions.
It makes the right choices to secure better days ahead for Australians, and those choices are clear and spelt out in the Budget, including signature projects—Inland Rail and the Western Sydney airport development.
We are also maintaining our commitment to regions with targeted programs like Roads to Recovery, Bridges Renewal, Heavy Vehicle Safety and Productivity Program and Roads Blackspots.
But our global reputation is not without risks.
The decision by the Victorian Labor Government to cancel contracts for East West Link, and a similar situation in Western Australia regarding Perth Freight Link, have introduced an element of sovereign risk which we must overcome.
Investors want certainty and they want infrastructure decisions which last beyond the vagaries of the electoral cycle.
We can't allow a situation to develop where our international reputation is further damaged by political uncertainty or poor relationships between states and the Commonwealth.
As much as possible, our challenge is to get partisan politics out of infrastructure decisions.
To be blunt, the biggest bridge we have to build is the one that spans the trust deficit between governments and the voting public.
Building a bridge across the trust deficit is not going to be easy.
As we've seen in both the US and UK: there is a strong anti-establishment sentiment in Western democracies.
We have had a taste of it here in Australia with increased votes for minor parties and independents in recent elections and
infrastructure policy is one area where we can do better to win back community confidence.
Decisions that are more transparent, well considered and demonstrably good for our nation will survive the short-term electoral cycles and partisan politics that have added to the voters' lack of trust in major parties.
My aim is to engage earlier with the states on projects of significance and ensure the planning work is done properly as we strive to deliver a pipeline of projects that provides greater certainty for all stakeholders.
Given the inter-generational nature of our work, I'm confident that our biggest stakeholders—the Australian public—will reward good infrastructure decision making that delivers a long-term vision for our nation.
Overcoming these domestic challenges will influence our global position where Australia is becoming increasingly visible.
There has been international interest in Australian policy initiatives including our approach to cost estimation and Public Private Partnership.
Australia's presidency of the G20 in 2014 was an unprecedented opportunity for us to lead and influence the global economic community at a critical time.
The creation of the Sydney-based Global Infrastructure Hub was central to that role, and was up and running two years later.
Commercially, TTG Transportation Technology is helping Indian Railways double its capacity to carry rail freight more quickly, cheaply and reliably.1
Our A$2 trillion superannuation system is the fourth largest in the world.
This investible pool of pension assets is projected to double in the next 10 years and is increasingly in global assets infrastructure.2
We are also seeing more European construction companies successfully entering and operating in the Australian market.
This has brought increased competitive tension and assisted in driving value for money for public investment.
As an example, we currently have Spanish firm ACCIONA involved as a partner in the consortium building the Toowoomba Second Range Crossing in Queensland after previously being a major partner in the construction of the Legacy Way tunnel in Brisbane.
Global companies are bringing tunneling innovation and expertise to Australia, working alongside local construction companies.
Infrastructure matters more than ever. In addition to addressing productivity growth, it can also help to better distribute and move our population, improve our cities and unlock affordable housing.
Our population growth now exceeds that of our peers, outstripping countries like the UK, Canada and the United States.
By 2031, more than 30 million people will call Australia home, and most of them will live in our four largest cities—Sydney, Melbourne, Brisbane and Perth.3
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.
To address these challenges, it is critical that we take an integrated, long-term approach to planning Australia's future infrastructure and we actively pursue our decentralization agenda.
The Infrastructure Australia National Plan identified the need to support fast-growing regions with coordinated, long-term planning and investment to support population growth.
And we are already acting—yesterday the Prime Minister and I announced a $1.6 billion regional rail package for Victoria.
This will reduce congestion, better connect the regions to Melbourne, and create over one thousand jobs.
With greater fiscal constraints on Australian governments than ever before, we need to identify new, sustainable sources of funding. We cannot rely solely on funding from general government revenue.
A key part of the Government's strategy is to leverage private sector funding to assist deliver the productivity-enhancing infrastructure Australia needs.
We know from engaging with pension funds and institutional investors around the world that they want to invest in Australian infrastructure.
The money is there; the market is ready to invest in the right infrastructure projects.
Productivity growth is essential to growing national income and the infrastructure portfolio has a central role to play.
The right decisions improve long-run productivity.
Despite the dramatic improvements in technology over the past three decades, multi-factor productivity growth has remained stubbornly flat.
Late last year, the Government delivered its response to Infrastructure Australia's Australian Infrastructure Plan.
The response set out the Government's forward vision for infrastructure planning and investing, including being a more informed investor.
What we have seen in the 2017–18 Budget is a shift in the Government's approach to that of an investor, rather than simply a funder.
We have announced a package of equity, debt and grant funded investments.
The Government's investments in equity are in nation shaping, longer term projects, where the private sector is reluctant to take the risk.
The announcements on Inland Rail and Western Sydney airport underscore this strategy.
Opportunities for growth are only maximised by investing in the right projects.
The Government's room for discretionary spending is limited and likely to become more so.
Having said that: Rail was the big story of the budget.
The $8.4 billion of additional equity to be injected into the 1,700 kilometre Inland Rail route will cut travel times between Brisbane and Melbourne by 10 hours to less than 24 hours.
It will more closely connect Melbourne to Brisbane, and Brisbane with Adelaide and Perth.
This will help alleviate congestion on Sydney's road and rail networks by allowing freight to bypass Sydney.
The railway will enable faster and more efficient market access for producers.
The project will make rail competitive with heavy road transport and it will help save lives by taking trucks off the Newell Highway.
With the expected growth in the freight task, it will work to de-congest our inland road ways and reduce transport costs for freight.
The Australian Rail Track Corporation will deliver the project which includes a PPP for the section between Toowoomba and Brisbane.
The benefits are wide reaching, but it will take time to deliver and requires patient capital to fully realise.
Over the next decade you will see the transformation of Australia's freight network into a modern integrated and more efficient network of rail, motorway, airport, port and intermodal infrastructure.
The Budget also includes a commitment by the Australian Government to investigate improvements to the rail connections between our cities and regional areas… Again, engaging with the states earlier and taking political uncertainty out of decision making processes.
In short, this is about faster rail connections; making rail more efficient and improving connections between our cities—so they can prosper from population growth.
Taking some of the growth pressure off our cities through strategic infrastructure investments will deliver longer term spin offs for housing affordability and regional growth.
There are two parts to our passenger rail investment strategy.
Firstly, the Government has allocated $20 million in funding in 2017–18 to support the development of up to three business cases for faster rail.
These three selected business case proposals will receive a funding contribution of up to 50 per cent for the Government to partner with the proponent.
I look forward to seeing which proposals are brought forward through the process.
Secondly, the Budget also announced a $10 billion, decade long National Rail Program to move people around more efficiently and better connect our cities, suburbs and surrounding regional areas.
As the Government announced last year, urban rail plans are being developed for our five largest cities to inform our investment decisions.
This program puts money on the table to support high priority projects, subject to completion of robust planning and preparation work and business case development.
This is consistent with our commitment to work with the new Western Australian Government to develop the Metronet project, where a funding decision on construction is reserved for a favourable business case assessment from Infrastructure Australia.
Speaking of transformational projects—the Australian Government will now build the Western Sydney airport through the newly established WSA Co, injecting up to $5.3 billion in equity over the next 10 years.
The airport offers a considerable opportunity for Western Sydney and Australia as a whole.
Far beyond a favourable cost benefit ratio, the project will deliver thousands of jobs through construction and operation, and present opportunities, rebalancing the shape of Sydney and improving the liveability and opportunity for those who live in the west.
There is also future opportunity to lease or sell the airport to the private sector once its operation is firmly established.
Well-functioning cities are critical for the economy and the Australian community. Liveable and well-planned cities attract businesses, create jobs and opportunities, and support growth and economic success.
In April 2016, the Prime Minister launched the Smart Cities Plan, setting out a national vision for Australia's cities and a commitment to smart investment, smart policy and smart technology.
City Deals are the main tool for delivering the Smart Cities Plan.
The Townsville City Deal—Australia's first—is the city's roadmap for the future.
All of the 16 commitments in the Deal are geared towards growing the economy of Townsville and strengthening it as a prosperous and lifestyle-rich city.
The Townsville Eastern Access Rail Corridor, which proposes an alternative rail route to the Port of Townsville, is a key component of the deal.
Australia's second City Deal for Launceston was signed in April this year, and we are progressing one for Western Sydney in partnership with the NSW Government and eight local councils.
The Government intends to develop City Deals for other metropolitan and regional cities over the coming years, where other levels of government are willing.
While we are focused on keeping our cities moving, we also need to drive opportunities for regional growth, including reducing transport costs for getting goods to market.
As the Treasurer noted in his Budget night address, some areas of regional Australia have been disconnected from our national growth.
Around two thirds of Australia's export earnings come from regional industries such as agriculture, tourism, retail, services and manufacturing.
We are concentrating on projects that improve regional connectivity to markets and reduce transport costs to boost local opportunity and make Australian products more competitive in the global market.
I mentioned earlier the enormous population growth barreling down on us. As would also be expected, our freight task is forecast to increase—by 80 per cent between 2010 and 2030.
Our supply chains, including road, rail, shipping and air must adapt. There are also large-scale implications for the performance of the national economy.
Australian Logistics Council research shows that a 1 per cent increase in supply chain efficiency will deliver a $2 billion benefit to the national economy.4
Developing a National Freight and Supply Chain Strategy was a key recommendation by Infrastructure Australia and we are getting on with the job.
Of course, the states and territories are heavily engaged in freight and supply chain policy.
To bring it all together, our Inquiry into National Freight and Supply Chain Priorities guided by an expert panel of people from industry.
I recently released a discussion paper examining how our investment in the freight network can boost the nation's prosperity and meet community expectations for safety, security and environmental amenity.
This work will inform the development of a twenty-year national strategy, which is expected to be agreed with state and territory governments by the middle of next year, through the COAG Transport and Infrastructure Council.
As much as we need to invest in new infrastructure, given the cost and disruption involved, we need to make sure we are smart about it.
The transport sector is undergoing a period of rapid technological change, and recent developments have the potential to fundamentally transform how we deliver transport.
Quite simply, before we start digging, we need to fully utilize the assets we already have.
Technology and innovation are key parts of the picture, in maximising both the benefits provided by infrastructure investment, and in our existing infrastructure stock.
New and emerging technologies such as automated and connected vehicles, big data, 3D printing, aerial drones and the sharing economy present enormous opportunities for transport infrastructure and how we invest in it.
To ensure Australia is positioned not only to adopt disruptive technology, but able to lead it, governments must strike a balance between allowing innovation to flourish, and ensuring safeguards are in place to protect privacy, security and safety.
By achieving this balance, we will get the most from the benefits that technology and innovation have to offer Australian businesses, consumers and communities, and at the same time ensure Australia's economy remains strong.
The Government is actively adapting to technological change, allowing us to make smarter use of our existing infrastructure.
For example, Data61, managed by CSIRO, is implementing a monitoring system using 2,400 sensors to assist Roads and Maritime
Services NSW to maximise the service life of the Sydney Harbour Bridge road deck, without significantly increasing expenditure.
Smart ICT is increasingly able to provide such data on Australia's infrastructure usage in real-time.
This will allow greater use of predictive analytics to better manage existing networks and plan future network needs.
Technology also offers unprecedented opportunities to improve transport safety.
Technological advancements and innovation in vehicle design such as speed limit advisories, lane departure warnings, and autonomous emergency braking, as well as emerging technologies like connected and automated vehicles, are just some of the examples of innovations that can help drive improved safety outcomes.
It is important to note that while technology improves and becomes standard, we are also improving safety on our roads and infrastructure projects.
One example is the impact of completed works along the Bruce Highway with recent flood resilience measures, particularly across the Yeppen Floodplain south of Rockhampton.
These works ensured areas of Queensland were not isolated during the recent floods, and essential supplies and services were able to be delivered.
Our Pacific Highway duplication project is predicted to save 1000 lives by 2040 compared to the business as usual case.
An extraordinary saving in lives with a measurable economic benefit not to mention the social outcomes for families who would otherwise have suffered enormously.
In conclusion, what is absolutely clear, is that there will always be more projects than governments can fund, and the private sector can have a significant role in contributing and building these key projects.
As a government, we are determined to work in partnership with other levels of government and the private sector to deliver the infrastructure our kids and grandkids will thank us for.
Infrastructure investment changes lives and saves lives—it delivers economic and social outcomes.
Done well, it can be a catalyst for growth and it can add to the political stability of our nation by rebuilding trust between voters and their elected representatives.
If the public has confidence that infrastructure decisions are being made for the right reasons, they are more likely to have trust in other important decisions made by politicians.
I'm working with my colleagues to deliver a safer, stronger, better Australia—where everyone can get ahead.
I said at the outset: I have the best job in Australian politics.
Thank you for allowing me to explain why.