ABC AM

Interview

PFI004/2016

17 February 2016

Topics: Release of Infrastructure Australia's 15 Year Infrastructure Plan, Road Pricing

Presenter: Infrastructure Australia is releasing its first 15 year plan today, outlining several bold initiatives to improve living standards and productivity. The landmark report prioritises 93 projects, including the widening of the Tullamarine Freeway and the Perth Freight Link project. It also calls for a user pays system to cover the cost of new and upgraded road and rail with all vehicles to be directly charged within 10 years and trucks within five years.

Infrastructure Australia estimates the reforms would boost economic activity by $39 billion by 2040. The reports release comes in the same week as Australia's population surpassed 24 million for the first time, with a growing population making our major cities even more congested. For more on this, I'm joined live in our Brisbane studio by Major Projects Minister Paul Fletcher.

Mr Fletcher, good morning. This report, if one thing it does show is that there are a lot of infrastructure problems in Australia, aren't there?

Minister Fletcher: Michael, I think it shows how important infrastructure is and also how much is already going on. The Turnbull Government has a $50 billion programme of infrastructure spending over 2014/15 to 2019/20 projects all around the country upgrading the Pacific Highway, the Bruce Highway, Western Sydney airport—we've made a commitment to that which had been not progressed for many years.

But what this report reminds us of is the efficiency and productivity benefits of improving infrastructure. Just on the Pacific Highway for example, the upgrades already reduced the time Sydney to Brisbane by about an hour and a half. When the $5.6 billion project is completed another hour will be saved. So just think about those productivity benefits when a truck takes two and a half hours less than it previously did to complete a trip.

Presenter: Ok, but in all I think there are 93 projects that are listed as priorities here. Many of these have been around as priorities for a very long time—decades in some cases. There's been a lot of talk in the last few years about how to address this. How confident are you that this will actually get done now?

Minister Fletcher: Michael, there are two important parts to the Infrastructure Australia 15 year Australian Infrastructure Plan. The first is, as you say, a list of 93 projects or initiatives which Infrastructure Australia has assembled based upon extensive consultation with state and territory governments and other stakeholders.

Projects which are under examination over the next—in some cases—the next five years, in some cases five to 10 and in other cases 10 to 15 years and that includes, as you said in your introduction for example, some that are already underway, like the City Link to Tullamarine Freeway widening, not just widening of that freeway but also the use of so-called intelligent transport systems, which is another recommendation in this plan to use such systems to get best use out of our physical infrastructure by upgrading the information technology.

That's things like ramp metering so that as vehicles—before vehicles come onto the freeway there's a traffic light that's linked to an algorithm that's monitoring the flow to make sure we get the greatest possible capacity out of the road that is there. But so there is a range of projects around the country and this will now be an important tool for both the Commonwealth in guiding us in what it is that we may fund over time, but also state governments. So there's recommendations to state and territory governments here as well as federal.

Presenter: Sure—many of these projects, as we know, stretch beyond government timelines. I mean, we saw—that is a political and infrastructure problem in Australia isn't it? Because we've seen many governments come and go promising things and then in the end things get shelved.

Minister Fletcher: The reality is that major infrastructure projects involve very substantial capital sums, they take a long time to plan and a long time to implement. So the important thing is that we have a rational, considered planning process. First of all to identify the projects that are under consideration, next to work out a priority.

So another role of Infrastructure Australia is to do an assessment of projects to say what is the benefit cost ratio—to use the jargon—that's to say for the dollars of public money that goes in, what's the benefit that comes back to the community in reduced travel time and so on.

Presenter: That's understood, but I mean when you talk about priorities we saw Tony Abbott come into government basically prioritising roads over rail—very much so—and to the point where state leaders complained loudly about it. And then we have Malcolm Turnbull coming in and saying— certainly with a different rhetorical approach at least—can we expect to see a difference and can we expect to see more federal funding flowing to these projects?

Minister Fletcher: Certainly what Prime Minister Turnbull has said is that we'll look at projects on their merits, be they road, be they heavy rail, be they light rail. So part of this exercise is about gathering together a list of the projects, there's a document of over 100 pages with a briefing on each one of them.

Each of those is at various stages of development, most of them still need to have a business case prepared and assessed and obviously it's a 15 year plan so these are not projects that can all be funded overnight, but it is an exercise in overall, longer term planning so that can then guide the funding decisions made by the Commonwealth Government, but also by state and territory governments.

And, of course, one of the other aspects of this report, or this plan, the second aspect of it if you like, is a whole series recommendations about the approach we ought to take to infrastructure policy. For example, it recommends a nation fright strategy so that we've got a better idea of exactly where freight is moving and then what changes we might need to make to road and rail networks to accommodate freight traffic.

Presenter: And one of the things it does recommend also is a change to the way we—the users—pay for it, a sort of users pay model. Presumably that'll mean you pay for—you pay more for driving on freeways and whatever but you don't, well there won't be freeways obviously anymore and you pay less in insurance or registration and that sort of thing. Is that likely to work?

Minister Fletcher: What Infrastructure Australia is recommending to government here is that we look at a model under which there is a price charged to people driving on a road and the recommendation is that other funding sources such as fuel excise, which today people pay which contributes to the cost of roads around the country, would be replaced with a pricing system.

Now, it's important to add that similar recommendations have been made by the Henry Review in 2010, the Harper Review into competition, which reported last year and which the Government and which the Government responded to last year and we did say then that this is a direction that we would look at. It's going to take a while though, this is a 10 to 15 year process and the first step is looking at heavy vehicle charging. So there's work under way right now through the Transport and Infrastructure Council which is essentially the state, territory and federal transport ministers to look at our system of heavy vehicle charging.

Presenter: Ok, so it is something you are actually considering then?

Minister Fletcher: Well, it's a recommendation to Government. There's a long way to go on this. We are certainly looking at heavy vehicle charging and consistent with our response to the Harper Review late last year, we said what we planned to do was investigate the benefits and costs and potential next steps of options to introduce cost reflective road pricing. And so specifically the recommendation of Infrastructure Australia in this report today is that there should be a major study into this conducted by, for example, the Productivity Commission or Infrastructure Australia to look at all the details.

There'd be a huge amount to work through. We'd need to be satisfied that the community understood the benefits. There are equity issues to work through, but there could well be benefits as well. So, that's a recommendation along with all of the other recommendations in this plan that the Government will consider and we'll respond to those in due course.

Presenter: Ok. Paul Fletcher, thank you very much for joining us. Major Projects Minister Paul Fletcher there.