Transcript of Interview: Sky News PM Agenda with David Speers
15 April 2015
David Speers: The Assistant Infrastructure Minister, Jamie Briggs, joins me now. Thank you for your time.
Jamie Briggs: Hello David.
David Speers: You had warned that getting out of this deal would cost taxpayers, well, possibly more than a billion dollars. Daniel Andrews is saying it's only $339 million. Do you believe that number?
Jamie Briggs: No, and he's being very misleading. He's trying to spin his way out of what is a substantially larger figure than that. It's at the very least $420 million when you add the $81 million in addition that they've had to spend in changing the structure of the credit vehicle that they have there. To claim that it's now there for Melbourne Metro is just completely false, because there is no Melbourne Metro project at this stage. There is no actual plan, there's no route, there's no business case, so that's just a furphy. Add to that, there's at least, we understand from members of the consortium, $200 million in costs relating to how they deal with the financing arrangements, which will cost in the end, we think, at least $640 million for Victorian taxpayers. So, the deal today is at least $640 million.
There then are, of course, the costs that were already spent by the Victorian Government on the Linking Melbourne Authority, on preparations for this project, and those costs are somewhere around $200 million as well. So, the final bill for the building of no road will be somewhere around $1 billion. At the very least, today's deal is $640 million worth. Mr Andrews is being very, very fast and loose with the truth today about how much Victorian taxpayers' money he's using to do something which is unprecedented in Australia: to tear up a contract of this magnitude, to risk our international rating, our credit rating as a country. Particularly as a state, tear up 7000 jobs, all because this was some attempt to sway Greens voters in the inner-city parts of Melbourne in the Victorian election campaign.
David Speers: Okay. Well, let me just go through a couple of the numbers you mentioned there. So on top of the $339 million …firstly there's the $81 million. Now, Daniel Andrews isn't denying that number, but he says that's simply a loan facilitation fee; they'll now use that loan, the three billion, for their preferred option, the Melbourne Metro. And admittedly there is no detailed plan there yet, but that money would be spent anyway on facilitating that loan.
Jamie Briggs: Well, this is a proposal that might begin in 2018. It might begin in three years' time if they put everything together. Now, the reality with infrastructure projects in Australia-
David Speers: But it is also a project that's the number one project of Infrastructure Australia, as he points out.
Jamie Briggs: No, that's not true. No that is not true. I mean, this is a furphy. There was priority put on a previous plan back in the late 2000s from the then head of Infrastructure Australia, who's no longer with Infrastructure Australia it might be noted. It is not true that that's the number one priority of Infrastructure Australia, that is another furphy in this debate. What Infrastructure Australia-
David Speers: [Interrupts] Well, it's still there on their website. It's still on the Infrastructure Australia website, there's no mention of East West Link.
Jamie Briggs: Well, there's no mention of a Melbourne Metro project, because it doesn't exist David. What they are proposing does not exist. There is no business case, there is no plan, there is no route, we don't know how much money it would cost to build this project. It's pie in the sky. Now, it may come to fruition, and we're not necessarily against Melbourne Metro being built, but the reality now in Victoria is there is no infrastructure project, no substantial infrastructure project for three years. Compare that to Sydney, where there is…
David Speers: [Interrupts] Alright. But if they put forward-
Jamie Briggs: Hang on, hang on.
David Speers: Okay.
Jamie Briggs: Well, I was just making the point. Compare that to Sydney where there are at least four very significant projects, which are underway, which are now started and underway.
David Speers: Alright.
Jamie Briggs: NorthConnex, WestConnex Stage One, WestConnext Stage Two, and the Western Sydney Airport Plan, with the roads around that. Four very substantial projects underway. The problem for Melbourne and Victoria now is that investors are going to flee. It is a real problem for the Victorian economy; it's a real problem for jobs.
David Speers: Well, the consortium has said they're willing to look at other projects. If the Victorian Government does put forward a detailed costed plan on Melbourne Metro, are you open to funding that at all?
Jamie Briggs: We've already said, if they put forward a costed plan, an actual plan, a route, some basic details like that, an actual cost, that through the Asset Recycling initiative…They would be absolutely able to access money to do that. Now, they even say themselves that they might get to do some early works in 2018 on this project. It is at least three years away. So, the cupboard is bare in Victoria on infrastructure.
David Speers: The Federal Government is taking a position not to fund federally leased urban rail projects. Would that apply to this, or is this a different category?
Jamie Briggs: No, we've said that the Asset Recycling Initiative—like we are here in New South Wales—we'll be providing money to the Asset Recycling Initiative, when the poles and wires are sold—or leased I should say, by Premier Baird. We will be providing money which will go to another public transport rail crossing of the harbour. We are providing money for public transport. We're providing Asset Recycling Money in the ACT for public transport, David. So, that is again a story that's been created by the Labor Party.
David Speers: Getting back to the East West Link then.
Jamie Briggs: There's a fundamental issue here for Victoria and the economy, which is that the infrastructure cupboard is bare in Victoria. The emperor has no clothes. There is no project.
David Speers: Hold on. Now, just back to the East West Link and what it's going to cost—the figure that you cite there of an extra $200 million, you said the consortium have suggested to you. What is that $200 million that Daniel Andrews didn't mention today?
Jamie Briggs: Well, that's made up of the cost of the finance fees that they will have to pay for cancelling the different finance arrangements, what are called swaps, if you like. Simply, it is a fee you pay to change the finance arrangements that were put in place by the consortium to build the project. The consortium had gone to market, had funded this project. What the Victorian Government has done today is taken all that debt onto their books, and in doing that they will have a significant amount of costs. Now, Mr Andrews has not…
David Speers: So, like a penalty for breaking a home loan, for example?
Jamie Briggs: Exactly.
David Speers: The consortium have suggested that this is the fee and it's built into their arrangement to break it or change it. A $200 million fee.
Jamie Briggs: All up they understand that the cost will be about $200 million. So, it's at least $640 million that the Victorian taxpayers will have to stump up to pay out in compensation, something that Premier Andrews promised that he would not have to do in the election campaign. He said he would never pay compensation. Well, there's at least $640 million worth that's been paid today by the Andrews Government for no road. For no road.
It's a disaster for Victoria. We cannot put a strong enough point on this. We want infrastructure in Victoria; in Melbourne. We want Melbourne to work better; to be more productive. There is no alternative project here.
David Speers: Now, turning away from all of that to the GST carve-up that's been debated in the lead up to Friday's meeting of state and territory leaders with the Prime Minister here in Canberra. Western Australia is fighting hard for a change to the formula or the carve-up that's been suggested by the Commonwealth Grants Commission. Your Federal colleague, the Finance Minister Mathias Cormann has also agreed. In his words, we should free the GST relativities for next year at the same level as this year. Do you agree with your colleague Mathias Cormann and the West Australian Government, or do you take the parochial South Australian view with Jay Weatherill saying there should be no change—or that we should stick with what the Commonwealth Grants Commission's put on the table?
Jamie Briggs: Well, can I make a couple of points—firstly, I agree with the Finance Minister that there is a problem. You can't in any realistic situation think that the fact that for every dollar spent on GST in Western Australia, receiving 28 cents back is an appropriate or fair situation. It is clearly an unfair situation on Western Australia. However, one of the problems with fiscal equalisation is that states which are performing very badly, like South Australia, my home state, the economy is a complete basket case, need more from the Commonwealth to prop them up. So, making a change now will of course affect the capacity of South Australia to be able to deal with the disastrous circumstance it has. So, it is a difficult situation, however, the premiers, I think, on Friday have the opportunity to be a mature group of leaders and work through with the Prime Minister an appropriate fix for the future.
David Speers: And if they can't agree amongst themselves, what should the Commonwealth do?
Jamie Briggs: Well, this is ultimately a state tax. They receive all the money. We would hope that they could play nicely together and sort these issues out. As a South Australian, if somehow miraculously, the Labor Government in South Australia changes the habit of a lifetime and grows the economy in South Australia, and we're in the same position in two years' time, do you really think Jay Weatherill wouldn't be arguing the same case? It is, I think, very difficult to justify that Western Australia is in this situation where it's only receiving 28 cents, when no other state has ever dropped below 80 cents before. So, the premiers really do need to be mature about this on Friday to find a way through. And certainly the Federal Government would like to find a way through with them. And what that looks like at the same time is ensuring that the states that need the assistance to prop them up, if you like… We shouldn't forget that South Australia's debt next year, total debt, will be worse than when the State Bank when broke in the early 1990s. That's the disaster that South Australia now faces. So, it is a tricky situation. We need to ensure that there is a reasonable amount of GST returns to the states who contribute and the formula works to support a sustainable federation. That is not an unreasonable aim, I would have thought.
David Speers: Assistant Infrastructure Minister and South Australian, Jamie Briggs, thank you very much for joining us.
Jamie Briggs: Thank you David from Canberra.