Building The Roads of the 21st Century



30 October 2013

BIC 2013 National Conference
Adelaide Convention Centre

Thank you for having me here today. It is a great that you are here in Adelaide. Adelaide is, in my unbiased view, Australia's best city. In fact, just a couple of days ago, we were listed in the top ten places to visit. It is my hope that by the time I leave politics it will be in the top ten places to do business as well.

It is a great privilege to be here today representing the Prime Minister and speaking to you as the Assistant Minister for Infrastructure and Regional Development on our ambitious plans to build the roads of the 21st century in Australia.

This is my first major contribution to the debate since the Prime Minister appointed me to the Ministry. And it comes at a very interesting time in the infrastructure space.

I think we have seen over the last few weeks, increasing discussion in national newspapers about our plans for infrastructure and the importance of that investment.

Your industry knows it better than most. With 87,000 buses across the country and employing around 10,000 Australians—you appreciate the importance of decent and safe roads, roads that link our major cities and regional centres, and roads that link communities with public transport hubs.

Better roads not only help drivers get to and from work quicker, and help truck drivers reach their destination more effectively, they also improve the efficiency of the public transport systems.

The new Coalition Government has announced an ambitious investment programme to ensure we have the productive infrastructure we need to meet the challenges of our future.

As the Prime Minister has said repeatedly, he wants to be known as the Infrastructure Prime Minister when his time as Prime Minister comes to an end.

In this convention centre two Saturdays ago, he made it clear that he expected me to help deliver that title, so there is of course no pressure at all.

To achieve this aim, the government will commit substantial additional resources to already announced programs to build roads across Australia, to improve our economic productivity and to make our cities work.

Amongst other things, my role specifically, and to put it very simply, is to ensure that our commitment to building those roads in the major urban centres are delivered on time and below the current cost projections.

This will also include working with state governments and the private sector on possible sources of alternative finance and an economic reform agenda to reduce the spiralling cost of building major road projects and on infrastructure in our country.

Our desire to get on with the job is driven by our belief that Australia needs to move quickly to improve our economic performance so that future generations can enjoy the rising living standards and prosperity that we have come to expect.

As a government, we want to achieve the historic aim of leaving the country to the next generation better than how we found it.

The existing infrastructure in our modern cities is cracking under the pressures of a growing economy and expanding population.

While as a society we are ageing, putting substantial pressure on our revenue base, our population is growing more quickly than any of our developed western competitors—meaning more people in our major, sprawling cities.

This is increasingly being highlighted by ludicrous travel times in and out of our major cities—even questioning the historic and proud moniker that Adelaide holds as the 20 minute city.

Add to this the macroeconomic challenge of the drop in mining investment without a relative pick up in the civil construction sector—and our economy becomes more exposed to potentially lower growth and falling productivity.

Just this week, the September edition of the Deloitte Access Economics “Investment Monitor”, a quarterly snapshot of major business and government investment projects in Australia, stated that the total value of investment projects fell by $3.4 billion to $873.7 billion—a 0.4% fall from the June quarter, but a 5.7% fall from a year ago.

Australia is particularly dependent on the supply and efficient use of transport infrastructure, given our large distances from major international markets and dispersed industries and population.

Australia's future productivity growth will be significantly influenced by our capacity to efficiently deliver and use infrastructure and transport.

Conversely, failure to address systemic inefficiencies and impediments will undermine other productivity improvements.

As Alan Mitchell writes in today's Australian Financial Review, “Accelerated infrastructure investment will help fill the hole left in domestic demand by weak business investment. It also should increase productivity in the years ahead and help reduce another persistent problem in Australian economic management: the effective shortage of land in our major cities.”

These are some of the reasons why we have such a comprehensive plan to invest in economically productive infrastructure in the coming years.

In every state and capital, and in regions, the incoming Coalition Government has plans to fund significant, productivity building infrastructure that will help ensure that our cities work for generations to come.

For instance, we have guaranteed $5.64 billion for the Pacific Highway to finally fund the federal share of its duplication from Sydney to the Queensland border. It will be completed within this decade.

We have announced the biggest works program ever undertaken on the Bruce Highway, committing to a $8.5 billion package with the Queensland Government to boost capacity, reduce flooding and improve safety on the most treacherous road in Australia.

We have also committed:

  • $1.5 billion to get Melbourne's East-West Link underway, including $500 million in this financial year to get an early start to that project. It is a vital project for Melbourne's sprawling suburbs.
  • $1.5 billion to get Sydney's Westconnex project underway, and tomorrow I will be speaking at the Investors briefing in Sydney, and that project is moving along—such a vital project after so many years of a lack of infrastructure investment in Sydney.
  • $1 billion to support the Gateway motorway in Brisbane.
  • $615 million to build the Swan Valley bypass in Perth and $500 million to finish the Perth Gateway project, which is such an impressive project in our economic powerhouse in Perth.
  • $400 million to upgrade the Midland Highway in Tasmania.
  • And of course here, $500 million to begin a full upgrade of South Road, aiming to achieve the complete upgrade, within a decade.

Add to this massive investment our commitment to the Roads to Recovery and Black Spots programmes, along with investments in other regional freight routes, and you can see that our agenda is ambitious, because we are ambitious about Australia's future.

And certainly road infrastructure is more than just investment in urban roads. The Deputy Prime Minister has a broad agenda on other infrastructure needs such as airports, freight rail and ports.

A first step in ensuring we can meet this massive investment programme is to reform Infrastructure Australia, and in coming weeks, we will present legislation to Parliament as a priority to give effect to these reforms.

Under the Coalition Government, Infrastructure Australia will operate like other Government Boards. The current IA Coordinator and IA Council will be replaced in favour of an IA Board and a Chief Executive Officer responsible to that Board.

These reforms are designed to improve planning, ensure long-term projects are better coordinated, and give greater certainty to investors and the construction sector.

We will ask Infrastructure Australia to undertake a full audit of our infrastructure asset base in collaboration with states and territories, and develop a 15 year pipeline of major infrastructure investment projects which will be revised every five years.

We must, as a government, lead the way in ending the boom and bust approach to infrastructure investment, to give greater certainty to investors and builders. I acknowledge that this boom and bust approach has been the fault of many governments at both federal and state level, who have too often seen infrastructure investment as an easy target in tight budget environments, up against politically sensitive social welfare programmes. I will have more to say about that in coming weeks.

In addition to better planning, we also need to look at different ways to engage the private sector to get investment in infrastructure projects.

To this end, I have been tasked by the Prime Minister with actively looking at ways to work with State Governments and the private sector on alternative sources of funding for big infrastructure commitments.

This is particularly necessary and challenging to state and federal balance sheets because of the legacy of the former Federal and State Labor governments with records of massive debt and massive deficits, severely restricting the ability of future Australian and State Governments to move on these investment opportunities.

There is an increasing appetite in the private sector to invest, under the right settings, and we will get every option on the table, and in coming weeks, and hopefully before Christmas, we will look to have a paper released which will outline some of our thinking in this respect.

Part of this work includes tasking the Productivity Commission with examining ways of reducing costs and timelines and attracting private investment.

The terms of reference for the inquiry are currently with the Treasurer and they will soon be released. It will also provide scope to the Commission to look into infrastructure costs in Australia.

As I travel around the country and meet with industry leaders, a consistent concern raised with me is the cost of doing business in our country. It is holding back investment. It is holding back our economy. It is holding back our people.

Australia has become a high costs country. In comparison to our competitors we are now a much higher cost place to do business and we must begin to address this if we are to achieve the prosperity our people expect.

It is affecting our competitiveness and killing projects—just like the Olympic Dam mine expansion here in South Australia. With all the disappointment about that decision the BHP Board made, we didn't help by making ourselves more costly than we need to be.

This inquiry will form the basis for an Australian Government agenda, in collaboration with our state colleagues, and the private sector, to reduce costs and help deliver infrastructure projects on time and on budget.

This investment by governments and the private sector of not only capital, but of shared will and vision, will be the basis for building our nation and improving the living standards of our people.

Too often, much of the former Labor Government's spending—like $16 billion on school halls or $2.5 billion on pink batts—was wasted. We have received little to no gain from their investment decisions.

Unlike our predecessors, our investment is targeted at increasing our productive capacity for the future.

Here in South Australia we have committed to moving forward on the most vital transport link for Adelaide—and the one most talked about for a generation—the upgrade of the North South Corridor.

The Prime Minister, two weekends ago, here in Adelaide, set a very ambitious target of getting that project well underway in ten years.

It is an ambitious commitment that will require a strong focus and significant additional funding investment from the Australian Government.

Consistent with our election commitment, the Coalition will allocate $500m to begin the upgrade at the Darlington section as a priority.

We expect to allocate significantly more in the coming years to get the ‘Torrens to Torrens’ project and additional upgrades on that corridor underway and completed.

In fact, we have asked the South Australia Government to continue with the planning for the Torrens to Torrens project, using the $20 million in Australian Government funding allocated in this year's budget to do that work.

As an indication of how serious we are and how eager the Australia Government is to get on with the job, today I can announce that we will provide funding to the State Government to urgently work with the private sector to complete the business case on the upgrade at Darlington.

We expect this work to be well underway by Christmas and to be completed shortly thereafter.

This is not only an indication of our seriousness, but also as an act of faith with the State Government to ensure that this vital project finally gets underway and the people of the southern suburbs get the benefit of it.

There is no question about it—we have a focussed and deliberate agenda to improve Australia's infrastructure needs. And we are willing to provide significant amounts of funding towards it.

We have to ensure that we are getting value-for-money on these projects and we are funding the right projects. We will work through the Productivity Commission to have an agenda to reduce costs and reduce the timelines.

We will build the infrastructure for the 21st century.

The new Australian Government will spend more on economically productive infrastructure, reduce the costs and the time for building it and ensure that we put in place building blocks for a stronger and more prosperous Australia in the future.

Unlike our predecessors, we don't pretend to know everything about your industry. That is why we will engage regularly with you to talk to you about what are the priority needs in your sector, and more broadly, across our infrastructure needs for a stronger Australia.

It has been a great opportunity to talk to you this morning. I hope you enjoy very much the wine at the Wine Centre today and the food that goes along with it. I hope you have enjoyed your time in Adelaide and for those of you who don't visit regularly, you should. It is within the top ten places in the world to visit, and hopefully it will soon be within the top ten places to do business as well.

Thank you very much.