Transcript of Speech: Australian Logistics Council Forum 2015
11 March 2015
Melbourne Cricket Ground, Brunton Avenue, Richmond, Victoria
Thank you, Michael. Thank you everyone for being here. It's a great turnout and a terrific venue—Australia's second-best sporting venue. Just behind Adelaide Oval. It is great to be here.
I don't need to tell you about the significance of your industry; Michael does that well enough for all of you. It is a very important industry for the Australian economy, and it's very much at the heart of the Abbott Government agenda. We are very focused on infrastructure because we are very focused on growing Australia, and we want to have the prosperity and the living standards that we've come to enjoy, our generation have come to enjoy, for our children's generation.
And we do that by putting in place not just the regulatory settings, but the infrastructure settings to ensure that we can take advantage of what is a unique time in human history, where the growth in our region has never been seen before. And companies, such as yourselves in the room, can take advantage like never before of such opportunities, if we can get the settings right from a government perspective. That's why we've been focused so much on our $50 billion infrastructure investment programme in last year's budget.
Your industry represents nearly nine per cent of the GDP in 2013, according to a report we released last year at Parliament House. It directly contributes $130 billion worth to the Australian economy; it employs 1.2 million people; a one per cent improve in efficiency in the sector generates $2 billion worth of gains for the economy each year. And we want to work with you to get that one per cent improvement. That's why we've asked Mark Birrell and Infrastructure Australia to work in a coordinated fashion with the states to plan out the next 15 years of infrastructure investment across Australia. So, we are making decisions based on need, with finite government resources, leveraging as much private sector investment as we possibly can.
And we did that, I think, last year in the Budget quite effectively, with projects such as the WestConnex project in Sydney, which is Australia's biggest ever road building project. A project which keeps getting bigger and bigger with Mike Baird's imagination. It is a project which will transform Sydney utterly, and I think if Mike Baird's elected, which I hope in two and a half weeks' time, that alongside his asset recycling initiatives, will see Sydney power ahead of the country through that infrastructure investment.
Last year we announced that we would build a second airport in Sydney, a major contribution to the economy into the future. We're getting on, after 50 years of discussion and debate, with an airport at Badgerys Creek, focused on building the capacity of Sydney and the national economy. It will be a once in a generation greenfield airport, it will happen, and work will start next year. We're in the process of investing $3.5 billion of federal and New South Wales Government money on the road networks to support the establishment of that airport as well. So, we're not just building an airport and trying to catch up with infrastructure later, we're trying to plan for the growth. So that your companies can make the most of this new piece of infrastructure to help with the growth in that part of Australia.
Across the country we invested in major urban projects to help with congestion and with the movement of freight: the Gateway North project in Brisbane; the record investment in the Pacific Highway and the Bruce Highway; the investment in the South Road in Adelaide; both the Darlington and Torrens to Torrens project; and the Perth Freight Link in Western Australia, and introducing for the first time a pricing mechanism so the freight industry has a consistent and certain route to port to get the product from Western Australia out much quicker and much more effectively. It is a significant economic reform, it's a major new piece of infrastructure, and we are very confident it will help make more of that great state and its economy.
But there are challenges, and I want to reflect this morning a little bit on some of the challenges that we see in the infrastructure space that have developed in recent months. One of them, of course, and the major hurdle to our infrastructure investment programme, and I think to the growth of our economy, is right here in Melbourne.
Today, you would have seen in the Herald Sun a report about a major International Investors magazine which said in its headline: can Australia be taken at its word? And it goes through in stark detail the situation in and around the East West Link here in Melbourne, and the proposal or the consideration being given by the Andrews Government to legislate away contractual rights of the private sector consortium.
As you know, the history of this project is that well back now, nearly a decade ago, Sir Rod Eddington put together a report about Melbourne's transport needs for the years ahead. In that report, he recommended a new east-west crossing of Melbourne, with two projects being identified. The former Napthine Government invested and decided that they would invest in the first stage, just to the north of the city in Melbourne, and with the Federal Government investing $1.5 billion, that project was signed, the contract was signed just prior to the November election. Work was expected to be underway in December, in fact some early works were indeed underway prior to the election.
In addition to that, the Federal Government last year in the Budget committed $1.5 billion to the Western Link section of the East West Link, a project which the Leader of the Opposition at the federal level, Bill Shorten, supported not just once but twice in public submissions. He supported in a public submission as the union boss he used to be, the AWU, where he put a submission in in late 2007. And then he put another submission in with three other western Melbourne MPs, Julia Gillard, Brendan O'Connor, and Nicola Roxon, who all submitted that that road needed to be built, back in 2008.
Yet we now see this situation where an elected government in Victoria, elected at the election in November last year, is proposing to tear up contracts with the consortium, not build the road, and put at risk billions of dollars of taxpayers money in compensation; but worse, is even considering, it seems, legislating away the rights of the consortium. I refer to the article I mentioned just before, in the Infrastructure Investor magazine, it says: retrospective legislation, two words designed to send shivers down the spines of infrastructure investors following the post-crisis solar PB debacle in Spain. What investors thought they were contractually agreeing to, and indeed were contractually agreeing to, turned out to have something different entirely, if any of that makes sense, which it doesn't.
It goes on and says: unlike in certain European countries, this particular case involves just one project and one state; but the recent Queensland election resulted in some 37 billion of potential infrastructure deals being taken off the table, and there are fears that something similar may happen in New South Wales, where elections are due on May 28. For the time being, Australia continues to expect the weight of infrastructure privatisation and convey in the status of the world's most attractive infrastructure destination. But a triple-whammy in these three leading states would raise serious prospect of turning this tide.
The reality is that the move by the Andrews Government, which the Federal Government utterly opposes, utterly opposes, will cost Australians jobs. It will cost us investment, it will raise Australia's sovereign risk, and it will mean that we are at risk of becoming a backwater economically.
Australia relies absolutely on international investment. We always have and we always will. We pride ourselves on being a place to do business. The actions of the Andrews Government, if they go ahead with this, will put at risk the reputation of Australia abroad, the businesses that operate here so proudly. It will cost us investment, it will cost us jobs and it will cost us wealth. It is a very serious situation that we are confronting. We are urging the Andrews Government, and the Prime Minister will have much more to say about this in the next very short while, to stop this consideration of legislation.
It would be a retrograde step, it will damage not just Victoria but it will damage Australia. It will ensure that we are, yet again, back to the Kirner era of government in Victoria where we didn't have certainty for investment, we didn't have certainty for our sovereign risk and we weren't a place that people looked to invest. Arnold Dix is the chairman of the legal committee of the International Tunnelling and Underground Space Association wrote an open letter just a couple of weeks ago to Daniel Andrews. In it he said the impact upon the perception of Victoria's and Australia's sovereign risk is significant. It would certainly result in decreased access of Australia to foreign capital, increase interest charges, a decayed sovereign risk profile; a degraded credit rating and a lack of local and international confidence in the sovereigns to honour such agreements in the future.
This is not just the Federal Government trying to make politics out of a decision of a state and Labor Government, this is international, well-renowned investors sending very clear messages. I say to you all at this conference, people who are involved utterly in this industry and rely on this industry and its success into the future, that this is a turning point for Australia. We cannot allow a state government to act in such a reckless fashion with our economy, and I think it's incumbent on all of us to make clear to the Andrews Government not to proceed down this path. It isn't too late to stop what would be a very damaging act by this state Labor Government. They can go ahead with the road; they can create the 7000 jobs it will deliver. We will deliver the money that we promised, the $1.5 billion for the first stage and the $1.5 billion for the second stage. We will talk to the Andrews Government about future priorities that they want to engage in whether it be Melbourne Metro or other road projects for the future but we are not going to contribute federal government taxpayer's money to compensation without a road.
It's just not going to happen. We're investing infrastructure to create jobs and to create a stronger framework for our economy into the future. We are not going to just hand over taxpayers' money for free, for no road.
So, this is an important time and it's an important time for this conference to be underway. I think Michael's been, on your behalf, very clear about the position of the Australian Logistics Council. I think it's very important that that clarity of message is made clear to the Victorian Government in the coming days and weeks before they take what would be extraordinary action and legislated away a contractual right in a retrospective manner.
We are very committed to getting and delivering this infrastructure that we announced last year in the Budget with state governments across Australia. It is part of a broader economic plan to grow our economy. Andrew Robb has done so much good work in creating these trade agreements with China, Japan and Korea over the last 12 months. Our side of it and the infrastructure side of it is to deliver the economy that we can service to these trade agreements and our businesses can make the most of what we have done in developing these new markets. So, our producers, whether they're the agriculture or the resources or manufacturing, can get to their markets more effectively, more efficiently and that is exactly where our infrastructure agenda is targeted.
We want these projects delivered quickly, effectively, with the private sector involved, with a plan for the future and that's what the Abbott Government has been focused on over the first 18 months of our term. We're working away, we're getting results. We've got projects operating now in Sydney in support of the Western Sydney Airport, already announced the projects are underway. The WestConnex project in Sydney's started last Sunday. The Prime Minister and Premier Baird turned the first sod last Sunday. We are getting action on the ground, but we cannot allow the actions of one government to destroy and damage the credibility of our country, of our economy at this time. It will hurt jobs, it will hurt our incomes and it will hurt our future.
Thank you, Michael, for inviting me. Thank you all of you for participating in this conference. I'm delighted to answer a few questions if that's what the floor wants. Thank you so much.