Keynote Address: Transport and Tourism Forum: Australian Transport Summit



05 September 2014

Westin Hotel, Sydney

Well, thank you for having me here today. To Bruce Baird, TTF Chairman, it's great to see Bruce always. Trent, the acting CEO, to all of you, thank you so much for having me speak at this very important forum, the pre-eminent body for tourism and transport in Australia. It is terrific to take part in what is an extensive agenda today.

It is, obviously, this Sunday, 12 months since we were elected to government last year. So, it is an appropriate time, I think, to reflect upon what we've done in the first 12 months. The direction we're taking and what we seek to achieve with our infrastructure policies in the years ahead.

The context of what we've been trying to do in infrastructure really relates to our plans for growth and jobs. We have got a challenge in Australia with the mining construction phase and the mining boom coming to an end quite rapidly. We are faced with some genuine economic challenges. We saw this week with national accounts have some encouraging figures, but certainly not with growth and the level that we'd like to see in Australia.

We've got challenges on the employment front with higher unemployment than what we would like so we very much are targeting infrastructure to be a key element of our growth agenda, and that's why in the Budget it was front and centre of our growth strategy.

We're, of course, looking to reduce red tape with our red tape repeal days and there is another one coming up in October. We are trying to make the workplace relation system simpler and fairer for employers and employees so people can be employed. And we're looking to do a Productivity Commission inquiry into the workplace relation system, during this first term, in addition to the bills that we've already got before the parliament.

Really importantly, when it comes to lifting our productivity and our competitiveness, we are looking to invest very heavily when it comes to infrastructure.

We are looking to improve the infrastructure system, and I think if you look upon the first 12 months of what we've done, I would categorise it in three distinct areas: The first would be the development of a substantial pipeline of work, $50 billion announced in the Budget of projects right across Australia—leveraging, we expect, according to treasury over the next decade, over $125 billion worth of work on building infrastructure right across Australia with potentially more to come through the Asset Recycling Initiative.

Here in Sydney, of course, we've invested heavily in the WestConnex project. We used for the first time ever a Federal Government concessional loan to bring forward the second stage of that vital project and it is moving along rapidly as we speak and we hope to make, alongside our very capable partner, the New South Wales Government, some more announcements about the WestConnex stage two in the coming weeks about how quickly that project is moving along.

But, importantly in Sydney, and I think something close to the heart of this forum, is after at least 40 years—certainly as long as than Bruce Baird's been involved in politics—we made a decision to build the Western Sydney airport. I think that is a very important decision, not just for the fact that we made the decision in respect of the airport to start its process, and I'll make some more comments about that in a moment, but we put in place a plan to build the infrastructure which will support growth in that region.

We're not just establishing an airport with the existing infrastructure, but we're spending $3.5 billion to ensure that the roads are supporting that, in particular, and the New South Wales Government is planning a Rail Corridor so there are rail connections as well that will support the growth that the airport will drive in Western Sydney.

There will be another couple of million people in Western Sydney in the coming decades, and I think what we've done is not only got on with the process of delivering what is absolutely a nationally significant piece of infrastructure and much needed to improve our productivity. But we are supporting it with the planning to think ahead, to get ahead of the game and come from that respect.

I think when it comes to the airport, the Deputy Prime Minister made an announcement about two or three weeks ago now, that our business advisors had been appointed, that we had started the process into negotiation with the Sydney Airport Corporation.

People should make no mistake, we want to build this airport and this should be a very clear message to those taking part in that negotiation. If we are not getting there through this process, the Government will look to build this airport with someone else. We'll get on and build this airport. There are legislative requirements for us to negotiate with the Sydney Airport Corporation and we will do that in good faith and we are confident they will come to an arrangement with the Government to get this project started in 2016.

People shouldn't make a mistake, we want to deliver the airport and we will get this airport built. It is vital infrastructure for Australia, it is vital to ensure that we are growing. It is vital to ensure that we've got as strong an economy as we can possibly have.

In that respect, we are equally very committed to the Asset Recycling Initiative which has had some attention in the Senate in recent times and we are again confident that people will see the wisdom in pushing ahead with that initiative. In fact, it's been led here, already, by the New South Wales Government under the leadership of Mike Baird. New South Wales has shown that you can use your balance sheet more effectively by the use of—particularly when you focus on the results out of Port Botany—the money that's now been invested in WestConnex out of that sale, the result of the sale of Newcastle Port and the infrastructure investments that'll come from that.

What the Asset Recycling Initiative seeks to do, and there's been some, I think, mis-reporting of this, if I can put it that way, some with not positive intent, is to not incentivise the sale of an asset, is to incentivise the use of the money from that sale which is a very important point.

There are some who are seeking to attack that this is because they claim that it is some attempt by the Federal Government to bribe states to privatise because realistically there are some who write on this issue and who commentate on this issue who are just fundamentally against privatisation and they're entitled to have that view.

But the reality of what we are seeking to do with this initiative is to say to the state governments, who are already attempting, let's be honest, to embark on privatisations of certain state assets with the support of their population, mind you, with the support of their population. For instance, here in New South Wales where Premier Baird will take a proposition to an election, when he gets this support, he will press ahead in respect of the electricity assets the New South Wales Government owns.

What we are then saying is, well, that's terrific you've made that decision as a state government, but we really want more infrastructure built throughout Australia. So, we are incentivising the use of the money, or the proceeds of those sales, and that's why we think it is an absolutely important issue. And everywhere I go, from the B20 roundtable we had just two months ago here in Sydney, where there was genuine excitement about the fact that this initiative will help bridge that gap between the challenge we have of trying to find investment in greenfield infrastructure, which there is a great deal of reluctance for, and the desire from domestic and international investors to invest good quality brownfield assets. Using this initiative to bridge that gap, I think we'll then see another but even stronger pipeline of infrastructure than what we have already announced in the Budget.

The second area the Federal Government is moving on, or has moved across substantially in the first 12 months, is Infrastructure Australia. I know this forum is an eager supporter of Infrastructure Australia, and that's terrific, you should be. But the problem we've found with Infrastructure Australia when we got to government was that it wasn't working. It was being politicised and the states weren't cooperating with it. The reality is, unless the state governments are working away with Infrastructure Australia, it is next to useless because at the end, the state governments, rightly or wrongly—and I say hello to all my state friends in the room—deliver the infrastructure throughout Australia. The Federal Government doesn't deliver infrastructure. We contribute large amounts of money because these are now macroeconomic interests, but the states deliver infrastructure. They plan the infrastructure and they deliver the infrastructure.

They need to work away with Infrastructure Australia for it to be successful. We are very confident with the reforms that we've just put in place that began on 1 September, just this week, that Infrastructure Australia under the chairmanship of Mark Birrell—who is an outstanding Australian who has a terrific record when it comes to infrastructure—will ensure that we've got an Infrastructure Australia, which is looking into the future. An Infrastructure Australia, which is working with the states on a 15 year plan that is evidence based, that is looking to spend finite taxpayers' dollars as effectively and as efficiently as possible, at the same time as encouraging private sector involvement in the projects.

And thirdly, what we did when we came to Government was of all the criticism that many of you have of the infrastructure system in Australia that we had heard over the years, we decided that for all those criticisms, it was worth having a Productivity Commission inquiry to see what the situation was.

We asked the Productivity Commission to look at public infrastructure, at the costs and the timeliness of projects, and the opportunities for investment by the private sector. The opportunities to use alternative financing to get more projects delivered. And that's what the Productivity Commission did.

They delivered their report in July, and I've been talking to states over the last couple of months about the recommendations to seek agreement to get some of the recommendations that the Productivity Commission made put in place to improve our system. It is pleasing to say that the states have been absolutely co-operative across the country looking at ways to get a better system.

The Productivity Commission particularly focused on project selection and future planning of projects, so we've got a better use of data to make more informed decisions. One of the areas the states have been critical of in the project selection issue is the narrow focus of the assessment process that the governments have gone through, that Infrastructure Australia was looking at, in making judgments on whether state governments and the Federal Government, indeed, were making the right decision when it came to infrastructure investment or not.

So, we've worked away with state governments at building a better system of project selection judgment, if you like, and in that respect, it is pleasing today to announce and to release a new paper which will look at the overview of project appraisals. We've come to an agreement with the states to release the paper for industry comment over the next month to build a better system of judging projects so we're getting more transparency in making those judgments for taxpayers and for the planning of future projects. It's the first time the states and territories have agreed to consult on the development of a more sophisticated and consistent framework to assess and evaluate major infrastructure projects.

Following the consultations I've had over the last two months with state transport ministers, treasurers, and in some cases, premiers, they have agreed, just last week, to consult on the paper we're releasing today about a broad project appraisal framework in a new National Guidelines for Transport System Management in Australia.

In particular, the new framework will seek to improve how much information on cost-benefit analysis and why that economic modelling is disclosed to decision makers and ultimately, the public. The new framework will recommend circumstances in which wider economic benefits should be estimated in creating a rigour around productivity estimates. The Australian Bureau of Statistics is doing some modelling on the best set of parameters that could be used from the current data available. This will lead to more transparent decision making, with major projects selected based on a broader range of factors that better reflect community expectation and achieve value for taxpayers' money.

We're releasing this document today for public comment and I encourage all of you to look at the document, consider it, and make your views known. This process we expect to deliver a nationally consistent approach to build evaluation that will guide Infrastructure Australia and the states to ensure we build a stronger infrastructure base at less cost for taxpayers.

What we hope out of this, over the next month is that, following the feedback from industry, that Infrastructure Australia will consider the guide, and if its board sees fit, it will adopt it, and then we'll work with the states to finalise a selection criteria to use into the future so people are getting more transparency on decision-making. So the states are actively cooperating with it, and that we are getting better infrastructure decisions being made earlier so we achieve value for taxpayers' money. I think that is an aim that all of us in this room are interested in, and those interested in infrastructure across Australia would like to see be achieved.

Infrastructure is absolutely vital to our agenda. Getting the decisions right, getting infrastructure delivered, is absolutely important for us to ensure we've got a stronger economy. It's creating jobs. It is ensuring prosperity for the next generation that we have enjoyed ourselves. It is a great area to be involved with in the Government. In the first 12 months, I think the Abbott Government has made major steps to improve the system, deliver a strong pipeline, and get on with the job of building a stronger Australia.

Good luck with the rest of your conference. Thank you so much for having me today, and I wish you all very well. Thank you so much.