Transcript of Interview: 666 ABC Canberra Breakfast with Philip Clark
11 June 2015
Philip Clark: Jamie Briggs joins me this morning on the line. Mr Briggs, good morning.
Jamie Briggs: Good morning, Philip.
Philip Clark: Why is it economic lunacy?
Jamie Briggs: What I was referring to was the Victorian Government's decision to tear up a contract that had been signed in respect to the East West Link in Melbourne earlier this year. The front page of the Financial Review today reveals that comment to be true. You've got an international constructor who says that that decision has damaged Australia. And that is the point. The question I was asked yesterday is, do we support governments ripping up contracts, and the answer is no we don't.
The other point I made is it's one thing to promise in opposition that you don't like a particular project or project A just doesn't stack up, or project B is a bad choice, it's the perfect right of an opposition to make those points. But to follow through in government, as the Victorian Government did and tear up a contract, it does damage to our country and it means that infrastructure will become more expensive. Sovereign risk is not a big problem in Australia, which is a good thing, it's a great thing, and it's one of the strengths of our economy. However, it is increasingly being tested, these sorts of decisions, like the East West Link in Victoria, will put sovereign risk much higher on the level of issues that investors consider when they're making major, significant, long term investments in Australian infrastructure.
Philip Clark: Ok, so it's your view is that if contracts are signed, and construction has commenced, consortia have entered those contracts in good faith, then it would be wrong for a new government after October 2016 to cancel those contracts.
Jamie Briggs: Well, yes, the principle applies. The principle we applied to East West Link would apply to other governments doing the same thing. It is economically damaging, not just for the relevant jurisdictions, but more broadly, for our economy. And that is the point. We need more infrastructure investment in Australia, not less. This is the point that infrastructure Australia made very clearly. We've had a period where there's been a lack of infrastructure investment, particularly by the state governments across Australia, and it's led to congested cities, particularly in Sydney, Melbourne, Perth and Brisbane, and even in Adelaide there are congestion problems.
It is one of the reasons that we are having this debate, frankly, about the accessibility of houses. We cannot afford to put investors off. That's the very clear message I got when I travelled to Canada and the US last month on an investment tour; investors look for certainty in policy. They look for clarity in decision making. If there are questions about the legitimacy of a contract, or the threat of a contract, it will mean that projects become more expensive. Ultimately, the people who pay for projects being more expensive are the taxpayers who pay more than they ought to. In that sense, it is economically damaging. To threaten it is one thing, to follow through and deliver on tearing up contracts in government, will cause a whole lot of economic pain, not just for that relevant jurisdiction, but more broadly. And that is today very clearly outlined in the Financial Review.
Philip Clark: Alright. Doesn't the light rail project here in Canberra anyway have merit? I mean, your government's helped fund it through the asset recycling programme anyway.
Jamie Briggs: We are providing some contribution through the asset recycling initiative. Ultimately, that wasn't based on the decision on the merit of the project in itself, it was based on the fact that the criteria for the asset recycling initiative was: if a government sold an asset, which the ACT Government did, they were the first actual government to participate in the asset recycling initiative, and they used that for new infrastructure, a new productive infrastructure, then they would qualify. That was the basis on which the ACT Government qualified.
Now my view on the ACT light rail is… I think there would be better ways to address the transport issues in the ACT. I don't see the need for the light rail project, however that is, in essence, not really my role. Our role as far as the Federal Government is concerned is to facilitate more investment in infrastructure. On the East West Link, we've seen damage to Australia by a decision which has caused an economic pain to our country.
Philip Clark: Alright, Mr Briggs, good to talk with you, thank you.
Jamie Briggs: Thanks Philip.
Philip Clark: Jamie Briggs, the Federal Assistant Minister for Infrastructure.