Speech to the Airservices Australia Waypoint 2013 Conference

Speech

JBS002/2013

06 November 2013

National Convention Centre
Canberra

I would like to thank the Airservices Australia Board, its Chair, Angus Houston and Chief Executive Officer, Margaret Staib, for the opportunity to open this annual event.

Firstly, I should apologise for my senior colleague, the Deputy Prime Minister, the Honourable Warren Truss, who regrettably is unavailable to attend today.

As I am sure you all know, the Deputy Prime Minister has a vibrant and strong interest in this policy area and I am sure you will have much to talk about with the Deputy Prime Minister over the coming years in this policy space.

Today I want to share with you the new Australian Government's plan to improve Australia's productive performance by investing in an ambitious infrastructure programme, and describe how the Government sees the aviation sector as being an important element of this agenda.

The Prime Minister has said on a number of occasions that he wants to be known as an infrastructure Prime Minister, and recently, in a speech in Adelaide, he said my KPI was to ensure that this title was delivered, so there is no pressure at all!

This desire is not driven by a headline—it is driven by the understanding that Australia will not meet its economic potential and make the most of future opportunities without modern and efficient infrastructure.

The fact is that our infrastructure has not kept pace with population growth.

The existing infrastructure in our modern cities is cracking under the pressures of an expanding population.

And sadly, while there has been an increase in public expenditure on infrastructure in recent years, too much of the previous government's focus was on overpriced school halls and pink batts, rather than economically productive infrastructure.

In fact, when you look at GFC infrastructure spending by the then Labor Government, only 14% was focussed on improving the economic infrastructure.

We must turn this record around to ensure a stronger economy and a better future.
The truth is, Australia is facing a challenging macroeconomic circumstance, with a fall in mining investment, while the civil construction sector remains sluggish—exposing us to lower growth.

Highlighting this point was the recent September edition of the Deloitte Access Economics “Investment Monitor”, a quarterly snapshot of major business and government investment projects in Australia.

It stated that the total value of investment projects fell by $3.4 billion to $873.7 billion in the September quarter—a 0.4% fall from the June quarter, but a 5.7% fall from a year ago.

These conditions are being reflected in deteriorating unemployment rates and sluggish GDP numbers, which are now back to around GFC levels.

While the Government is optimistic about our future, the current economic conditions mean we have to move quickly to improve our productivity performance, and to take advantage of the much discussed growth in our region.

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

And to get to the world or for the world to get to us, we need an aviation industry at the top of its game.

Together, we are very confident this can be achieved.

In every state and capital city, the new Australian Government has plans to fund significant, productivity building infrastructure that will help ensure that our cities work for future generations.

One of my key roles in this portfolio is to help ensure the Government's multi-billion dollar investment in building and improving our transport infrastructure for the 21st century gets underway and completed.

And many of these projects have direct benefits for better connectivity with the aviation industry.

In Sydney, for example, we are committing $1.5 billion to ensure the Westconnex project gets underway.

This project, one of the largest motorway projects in Australian history, will provide vastly superior road access to the nation's major international gateway, Sydney's Kingsford-Smith Airport.

In Perth, we are committing $686 million to build the Gateway WA Perth Airport and Freight Access Project, which involves a major upgrade to the road network surrounding Perth Airport.

This project will massively improve access to Perth Airport.

It complements Perth Airport's redevelopment programme and provides the land transport capacity to meet the continued forecast growth in Western Australia, which is heavily driven by the resource sector.

We have also committed $1 billion to support the Gateway Motorway upgrade in Brisbane.

The Gateway Motorway provides an efficient and safe connection between the Gold and Sunshine coasts, including the airport precinct.

In Adelaide, the Prime Minister has an ambitious commitment to complete the north south road corridor within a decade; again, improving access to Adelaide's modern airport terminal.

And the East West Link in Melbourne will provide greater connectivity for residents in the eastern suburbs to Tullamarine airport.

These linkages matter and we are investing heavily to make them happen and make them work.

Specifically in relation to aviation, the Australian Government, after years of delay, will finally make a decision on whether to proceed with a second Sydney airport at Badgerys Creek.

An early decision, which I expect to be before Christmas, will provide certainty to the aviation sector and potentially build the economic capacity of western Sydney with the creation of thousands of new jobs for many years to come.

Your industry is also investing, and I acknowledge Airservices' commitment to investing over $1 billion in new and upgraded critical aviation safety infrastructure over the next five years.

This investment, funded by the aviation industry, includes new and improved air traffic control and aviation rescue and fire fighting facilities, as well as advanced communications, navigation and surveillance equipment.

It supports the increasing application of advanced satellite-based technology which will be critical to ensure our air traffic systems can meet continuing growth in Australian skies and on the ground.

It is also pleasing to see plans for the future implementation of a nationally harmonised air traffic management system by Airservices and the Department of Defence.

All these measures are designed to improve the performance of the aviation sector and increase our prosperity.

Our infrastructure plan is ambitious and is a clear indication that Australia is once again open for business

But to ensure this is lasting reform and not just a one-off clash splash, one of our first steps will be to reform Infrastructure Australia.

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

Under the Coalition Government, Infrastructure Australia will have a Chief Executive Officer responsible to a Board—operating like other Government Boards.

In coming weeks, we will present legislation to Parliament as a priority to give effect to these reforms.

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.

And it must be said that government has been a key part of the problem in this respect for many years.

Infrastructure investment is easily targeted in budgets which are seeking to achieve reductions, compared to politically sensitive social welfare spending.

I believe we need to address this issue in the future with targeted amounts that each budget should have as an indication of a long term commitment to infrastructure investment.

That is why 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.

In addition to better planning, we also need to look at different ways to engage the private sector and attract foreign investors with their capital to commit to infrastructure projects.

To this end, I have been tasked by the Prime Minister with actively looking at ways to work with State Governments and importantly, the private sector, on alternative sources of funding to ensure and encourage foreign investment to get these big infrastructure programmes underway.

Of course, both federal and state budgets are under pressure. They are carrying massive debts and we are limited in our capacity to build these important infrastructure projects. So we do want the private sector to increasingly invest and we will look at ways in the future for them to make that investment, and we will have more to say about that later this year.

Just like the Prime Minister said—Australia is again open for business and this is no more apparent than in the infrastructure investment portfolio.

However, new infrastructure projects are at risk if we allow the current regulatory systems to continue stifling investment and allow our cost structures to continue affecting our competitiveness.

The cost of doing business in Australia is too high.

It is holding back investment.

It is holding back our economy.

It is holding back our people.

In comparison to our competitors, we are now a much more expensive place to invest.

Together, we must begin to address this if we are to continue to enjoy the prosperity that our people expect.

This is why we are tasking the Productivity Commission with examining ways of reducing costs and timeliness and attracting private investment.

The terms of reference for the inquiry are currently with the Treasurer and they will soon be released.

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 more 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.

As I said at the beginning—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.

I don't need to tell this audience that Australian aviation is essential to connect people across our vast country and with the rest of the world.

A modern and efficient aviation industry is vital for our tourism and export-oriented industries, and it is vital to ensuring continued economic growth.

It is therefore important that aviation agencies and the industry continue to pursue measures to improve the capacity and efficiency of our aviation system.

Where investment does not keep up with growth, we see the results in system congestion and delays—just like on our roads, our rail and at our ports.

These delays—at taxiways and gates or with take-off or landing across the network—cost time, money and patience.

We recognise that at some airports the rate of growth, driven by the resources sector, has been much higher than forecast.

Over the last twenty years we have seen an average annual growth rate of over 5 per cent for passenger movements through Australian domestic airports.

Back in 1986, there were around 35 million passenger movements through Australian airports. Compare this to the nearly 142 million passenger movements last financial year and you see real and sustained growth.

And we expect to see more growth in the future.

Deloitte Access Economics predicts that over the period to 2025, international and domestic passenger movements at our international and capital city airports will grow on average by 4 per cent per year.

International and domestic air freight movements are also expected to grow.

The Asia-Pacific region is currently one of the fastest growing regions in the world, and is expected to be so into the future.

There is a challenge for the aviation sector, including organisations such as Airservices, to meet this growth and help facilitate future economic prosperity in Australia.

The challenge is to make efficiency gains as quickly as possible now, and to invest in longer-term solutions.

We need to develop innovative ways to manage our current and future volume of air traffic.

I am aware of Airservices' efforts to enhance the efficiency of operations at our major airports, working collaboratively.

In response to strong activity growth at Melbourne, Brisbane and Perth, Airservices has initiated the Airport Capacity and Enhancement Program, known as the ACE program.

Perth, Brisbane and Melbourne airports all have plans for investment in new runways to manage future demand.

I welcome these initiatives by the industry, which all increases the long term capacity of our national aviation system.

Finding ways to deliver short and long term efficiency and capacity gains will take a concerted and collaborative effort across the sector —involving airports, airlines, regulators, and the air navigation service provider.

In meeting the challenges of industry growth, nothing is more important than maintaining and enhancing Australia's high level of aviation safety.

We must ensure, though, that the industry is not regulated by rules better suited to the needs of the 1980s.

For instance, the current regulation of aircraft noise is better suited to the aircrafts of 20–30 years ago rather than today's modern, and much quieter, planes.

Regulation is a moving feast—it is never complete and we must ensure it meets the needs of today and tomorrow.

This is why the Government is committed to holding an external review of the Australian aviation regulatory system.

The review will examine the structures, processes and effectiveness of those agencies involved in aviation safety.

It will explore the relationship and interaction of these agencies, the aviation safety regulatory review process, and assess our regulatory framework against other comparable countries.

The process to set up the review is well advanced with a formal announcement to be made shortly about the terms of reference, constitution of the review panel, public consultation process and timing.

The Australian Government has also announced its intention to make changes to strengthen the Civil Aviation Safety Authority's (CASA) governance arrangements.

These changes will enhance the organisation's role as Australia's aviation safety regulator, including:

  • expanding the CASA Board by bringing in two new members with aviation skills and experience; and
  • enhancing the role of the CASA Industry Complaints Commissioner.

We also recognise that Airservices Australia, as the national provider of air traffic and aviation rescue and fire fighting services, plays a vital part in our aviation safety system.

We look forward to working with CASA, Airservices and the aviation industry to enhance the safety, efficiency and capacity of Australia's air traffic management system.

A crucial part of achieving this objective will be strong communication between Government and industry. such as Waypoint are important.

Unlike our predecessors—we do not pretend or believe to know everything.

We certainly don't believe that government knows best.

The Coalition Government believes there should be a close relationship between Government and business in tackling the future aviation challenges facing our industry.

With this in mind, the Government is establishing a formal Aviation Industry Consultative Council, to be chaired by the Deputy Prime Minister.

The Council will provide a forum to discuss matters of importance to the aviation industry. It will provide the industry with better access to the Government and an opportunity to contribute to policy development.

The Government has made a specific commitment to work closely with the general aviation sector.

We want to reach agreement on the priority issues to take forward as part of a revitalised general aviation action agenda.

I am delighted to have been able to participate in Waypoint 2013, an excellent platform for collaboration across industry and Government organisations.

A strong partnership between Government and industry will help to ensure our aviation industry continues to play its key role in Australia's economic growth.

As I started, I will finish, Australia is open for business.

The Australian Government will invest in the coming years, record amounts in economically productive infrastructure, delivered quicker and at lower cost, to ensure growth in our living standards for our people.

I wish everyone involved today a successful and rewarding forum.

It gives me great pleasure to declare Waypoint 2013 officially open.

Thank you.