Transcript of Press Conference: Infrastructure Australia's 15-year plan

Interview

PFI005/2016

17 February 2016

Paul Fletcher: This an important tool for both the Commonwealth Government and state and territory governments in deciding which projects to proceed with and ultimately which projects are to receive funding. The other important part of the Infrastructure Australia 15 Year Australian Infrastructure Plan is the set of policy recommendations in a whole range of areas; for example, there's a recommendation that land use planning should be better integrated with transport. There's a recommendation that we need a national freight and supply chain strategy. So there's a whole series of recommendations across many areas. Those are recommendations that the Turnbull Government will carefully consider. We'll have regard to the public debate that we hope this report will spark. Some of these recommendations of course also are directed at state and territory governments and we'll encourage them to consider and respond as well; certainly the Turnbull Government in due course having studied the recommendations in this 15 Year Plan will also be responding to the recommendations. I'm now happy to take some questions.

Question: Minister, the Queensland Government has welcomed this plan. But they say they won't consider privatisation.

Paul Fletcher: Well the first thing to say is that of the 93 projects at various stages of preparedness that are contained in the Infrastructure Priority List, certainly one of them is Cross River Rail here in Brisbane. The purpose of the Infrastructure Priority List is to draw together in one place a list of the projects around the country that state and territory governments are considering but other stakeholders are recommending so that they can be assessed, their priority can be determined, and that over time they can move to a full business case stage which is certainly a requirement for them to be considered by Infrastructure Australia, which in turn gives advice to the Commonwealth Government about whether it should fund particular projects. Now very importantly, state and territory governments also have a role in funding projects, and some of the recommendations in the 15 Year Plan deal with strategies for state and territory governments to realise sources of funds that they can use to contribute to the next generation of infrastructure.

Question: Is it a bit rash on day one of the report lodged to say we won't [indistinct] which is privatisation?

Paul Fletcher: The theme, or a key theme of this report is what are the policy settings to encourage the provision of infrastructure that Australia needs. One of the themes… one of the recommendations is that state governments and territory governments need to be prepared to take the kind of policy action to generate the funds to contribute towards the cost of major infrastructure projects. In New South Wales, for example, we have seen the Baird Government withdraw public capital from existing publicly-owned assets so that capital can be reallocated to building new infrastructure assets: things like the Sydney Metro and a whole range of other projects presently underway in Sydney, also for example, WestConnex, NorthConnex, and so on. Of course, those projects also have some federal funding going into them, but one of the themes of the report is state and territory governments need to have a plan and need to take the right policy actions as well as doing the long term planning in relation to the major projects that they think are important.

Question: So it seems like there's going to be a fight with the states though, isn't there. Some states are not going to go for this kind of thing.

Paul Fletcher: I think the key thing is that when we have some long term strategic directions established, then the basis on which particular projects get considered can be carried out in a more rational and consistent way. So the first thing that the Infrastructure Australia 15 Year Australian Infrastructure Plan seeks to do is to gather together a list of potential projects and initiatives all around the country so that they can be assessed and they can be developed up to the point where they have the business case that can go to Infrastructure Australia to determine- so that it can make a recommendation to the Federal Government as to whether to provide funding. But one of the other things that this exercise may also spark is private sector investors saying well, we think there's an opportunity here.

And what we think it will also do, and certainly what Infrastructure Australia is encouraging the states and territories to do, is to consider how in turn they can identify sources of funding for major projects. So there's always back and forth when it comes to the question of which projects are going to proceed, which are going to get funded. What the Infrastructure Australia 15-year plan seeks to do is to set out some clear criteria and allow a more rational planning process. That's terribly important. The Turnbull Government is investing $50 billion in a whole series of projects all around Australia over the 2013–14 to 2018–19 period; projects here in Queensland such as the Gateway North motorway, the Toowoomba Second Range Crossing, projects in Sydney such as WestConnex and NorthConnex, projects all around the country, the Pacific Highway upgrade and so on. But what this report goes to is how do all governments, as well as the private sector, work together to develop the pipeline of future projects, to plan them in the most rational way, to identify the costs and benefits, and to proceed with the projects that make the most sense.

Question: And so what's your message then to those state governments who are today sort of basically being very cautious in their response to this report?

Paul Fletcher: Well the Turnbull Government's message is, first of all, as the Prime Minister today said, the Turnbull Government is committed to infrastructure as part of a productive, competitive nation. Secondly, there's a very important role for states and territories, and we expect the state and territory governments to be planning, and developing, and bringing forward projects. We have in fact announced some principles today that we will be bringing to bear in determining which projects we fund, and you will see the Turnbull Government saying these are some principles we expect state governments to respond to and to adopt as they put forward projects. So yes, we want to be in partnership with states and territories, and we have good partnerships all around the country; but at the same time, state and territory governments have an important responsibility to do their own planning, to bring forward projects, and to bring forward ways that those can be funded.

Question: Infrastructure Australia says that there should be a federal inquiry into road user funding and they've also said that perhaps themselves or the PC could do a trial to make people aware of what the changes will mean for them.

Paul Fletcher: As you rightly say, the Infrastructure Australia 15-year Plan includes the recommendation that we ought to have the Productivity Commission or Infrastructure Australia themselves do a major study into a system of road pricing. If we were to have a system, how would it work, what would the benefits be? And of course we also need to look at what are considerations that would need to be addressed, such as equity, who wins, who loses? So any decision to go down the road pricing path is not going to be an overnight decision. The next step that Infrastructure Australia is recommending is a major study to be conducted into it, and we'll look at that recommendation as we look at all the other recommendations and we'll then give a response in due course.

Can I just add to that. The Harper review into competition policy similarly recommended that the Government should look at road pricing. In response to the Harper review just before Christmas we said that the first step was in relation to heavy vehicles, so trucks, and we said that there would be a recommendation taken to the Council of Australian Governments by 2017–18 in relation to an independent regulator to set pricing for heavy vehicles. So that's a direction we've said that we will be pursuing in relation to heavy vehicles. In relation to vehicles more generally and whether we went down the path of having a system of road pricing, the specific recommendation is that there should be a study into that by the Productivity Commission or Infrastructure Australia as the next step. We'll look at that recommendation and respond in due course.

Question: Just in terms of the Queensland project, there seems to be quite a lot of quite expensive projects; is this an indication that there has just been a backlog of work that needs to be done there?

Paul Fletcher: The Infrastructure Australia 15-year Plan identifies a number of factors which are driving our continuing need for infrastructure in our big cities, and all around the country. And of course Brisbane as the third-biggest city, and Queensland as a fast-growing state have significant infrastructure needs as we have around Australia. That reflects population growth, it reflects economic changes, and it reflects therefore the need to respond with a continued improvement in infrastructure. So the plan makes the point that you need a forward path, you need a list of projects, you need to assess the projects on their merits, and so no I don't think there's anything out of the ordinary in that. What is I think significant about the plan is that the Infrastructure Priority List draws together a national list which gives us the basis to go forward, and it will be an important tool for both the Commonwealth Government and state and territory governments in determining which projects, over time, are proceeded with, and get funding.

Question: There aren't a lot of new projects in there, a lot of these have been seen by people before. What is the most important element of this plan? Is the funding reform, or is it the priority list of these projects?

Paul Fletcher: I think it's both of them, so I think bringing together a national priority list which can then inform the decisions the Commonwealth makes and the decisions states and territories make, amongst other things, so that they can have regard to other proposals that are going forward as they think about which proposals they want to prioritise in coming to the Commonwealth Government with or which projects they decide to fund themselves. But I think the set of policy reforms across a whole range of areas that have been recommended is very important, and we will consider them carefully, because what the plan is seeking to do is suggest some formal directions, which could improve the basis on which infrastructure is provided, fundamentally so as to improve the liveability of our cities and our nation, so as to improve prosperity, so as to generate growth and jobs. That is what infrastructure is about; that's why this plan is very good.

Question: I was just going to say when do you hope to respond to these recommendations, for example Cross River Rail?

Paul Fletcher: Look, I certainly encourage the Queensland Government to come forward with a business case for Cross River Rail. That's the encouragement that I give and the Turnbull Government gives to every state government that has a significant infrastructure project, and we will be interested to understand what funding sources the Queensland Government have identified, whether for example it has a value capture strategy. If you're going to build new railway stations and a new railway line, then for example how do you make sure that the zoning around the stations permits apartment blocks? Those sorts of factors which go to how do you capture the economic value here, and can you draw on that to contribute to at least some of the capital cost. In terms of timing, certainly we will be responding in due course.

Question: On East West Link is the Federal Government still committed to that project, given that the current Labor Government is not?

Paul Fletcher: The Andrews Government very irresponsibly tore up a set of existing contracts to construct the East West Link. The Victorian Auditor-General has found that cost more than $1.1 billion, that's money that's been wasted. The Turnbull Government continues to believe in the case for the East West Link.