Parliament House Doorstop Interview



14 April 2016

Topics: Funding commitments for Victorian infrastructure

Paul Fletcher: I'm pleased to have the chance to offer some comments in relation to the Victorian Government's announcement this afternoon in relation to the Western Distributor project in Melbourne. The Victorian Government today has announced that it is funding this project itself, and that really is a confirmation of the position that the Commonwealth Government has taken. It's been our position that this project is funded by toll revenues; that's new revenues from the new Western Distributor and revenues from the extension of the CityLink toll concession. And because the project can be funded from toll revenues, then it's really not a project that's appropriate or requiring a Commonwealth grant. So the decision that the Victorian Government has announced today, that it will proceed with funding of this project itself is a confirmation of the decision the Commonwealth has taken that this was not an appropriate project for the Commonwealth to support with a grant.

Now of course the Commonwealth is very strongly committed to Victorian infrastructure, and just last Friday we announced a $1.5 billion infrastructure plan. That was confirmed in a letter to the Victorian Premier and Treasurer, including a commitment to a $1 billion upgrade of the Monash Freeway, $500 million from the Commonwealth to be matched dollar for dollar by the Victorian Government. We've also offered a commitment to the M80 Ring Road—that's a $700 million upgrade of that road, $350 million from the Commonwealth, again on the basis that it's matched dollar for dollar by the Victorian Government. And of course the Murray Basin freight rail project—$440 million, involving $220 million from the Commonwealth and $220 million matching funding from Victoria.

So that's the offer that's been made by the Commonwealth Government to the Victorian Government just last Friday. A very strong commitment to Victorian infrastructure from the Turnbull Government. The further point I'd make about the Western Distributor is that the Commonwealth has offered, and stands ready to have discussions with the Victorian Government about innovative financing proposals, whether that be a concessional loan or even taking equity. That's an offer that's there from the Commonwealth to discuss with the Victorian Government in relation to the Western Distributor, and so the Commonwealth Government, the Turnbull Government very strongly committed to infrastructure in Victoria.

Question: Has the Victorian Government shown you up by announcing this today?

Paul Fletcher: Not at all. What the Victorian Government's announcement has confirmed is that the Commonwealth's position was the right one, that this is a project, the Western Distributor is a project which is underpinned by tolling revenues, tolls on the new parts of the Western Distributor that will be built, and an extension of the existing CityLink toll concession for some ten to fifteen years. Now, because of those toll revenues, that's the basis for the financing of the project, and it really wouldn't make sense for the Commonwealth to be putting grant money into a project which has those underlying economics. Instead what the Commonwealth is doing, as we announced last Friday, is making available $1.5 billion of Commonwealth funding to vitally needed Victorian infrastructure like a $1 billion upgrade of the Monash Freeway with $500 million of Commonwealth money there, should it be matched dollar for dollar by the Victorian Government, and other vitally needed projects like the M80 Ring Road, where we've offered $350 million, and the Murray Basin Freight Rail project, where we've offered $220 million, again on the basis of being matched dollar for dollar by the Victorian Government.

Question: Shouldn't the state governments be congratulated for taking initiatives like this and not asking for future money from the Commonwealth Government? Shouldn't that be a good thing?

Paul Fletcher: Certainly state governments have responsibilities in relation to infrastructure in their states, and of course state governments work with the Commonwealth Government, the Commonwealth works with state and territory governments. And the Commonwealth demonstrated just last Friday our appetite to work with the Victorian Government in relation to a billion dollar upgrade of the Monash Freeway, we've made available $500 million to be matched by the Victorian Government dollar for dollar. Similarly we've committed $350 million to the M80 orbital road, the Ring Road, and similarly we've committed $220 million for the Murray Basin Freight Rail project. So there are many projects which involve state and Commonwealth Governments working together, but there are also certainly plenty of projects where a state government takes the lead on a project and funds it itself without Commonwealth help.

Question: In terms of this decision today, where does that leave your demand for the Andrews Government to separate the Monash Freeway upgrade from the project?

Paul Fletcher: Well, the key issue is that we stand ready to work with the Andrews Government. We've provided $500 million that will be available to fund upgrades of the Monash Freeway, matching money put in by the Victorian Government. So that offer still stands and I am very confident that we will be able to work cooperatively and constructively with the Victorian Government to deliver this vitally needed infrastructure to upgrade the Monash Freeway, which is so congested, and is such a critical transport artery for the south-east of Melbourne. We need to get that moving. Now what the Victorian Government had put on the table was a smaller project. We've said we support that and we're happy to see that getting underway as soon as possible, as soon as we complete the approval process. In addition, we're now providing significant additional funding and we want to work with the Victorian Government towards that proceeding as quickly as possibly. I've had discussions with Victorian Roads Minister Luke Donnellan about our desire to work closely together on the Monash Freeway, and I'm confident that we'll be able to take that forward.

Question: And in terms of the $1.5 billion that you were talking about earlier, obviously the Andrews Government's decision today isn't a deal breaker in terms of that money still being on the table?

Paul Fletcher: The two issues are separate. So the Commonwealth has a commitment to provide $1.5 billion to the Victorian Government to fund infrastructure projects in Victoria, provided that our funding is matched dollar for dollar by the Victorian Government—$500 million available for the Monash, $350 million available for the M80 Ring Road, $220 million available for Murray Basin Freight Rail, and a range of other projects as well. That money is there, that's quite separate from the Victorian Government's announcement today.

Question: And just lastly you mentioned that the toll revenues for this project mean that Federal Government funding wasn't needed. Is that the policy going forward across all road projects, that if tolls can fund it the Federal Government won't?

Paul Fletcher: As a general principle, the Commonwealth looks at the need for Commonwealth funding on projects around the country based upon a whole range of criteria. One of them of course is whether the project is capable of being funded out of other sources, including potentially toll revenue. So there's nothing new in that principle, it's a sensible way to allocate Commonwealth infrastructure funding so we use it where it has the greatest impact. Thank you.