Transcript—774 ABC Melbourne



02 May 2016

Topics: Federal funding for Melbourne road and rail projects; East West Link

Rafael Epstein: Paul Fletcher joins us. He is a Coalition MP; he is also Malcolm Turnbull's Minister for Major Projects. Minister, good afternoon.

Paul Fletcher: Good afternoon, Rafael.

Rafael Epstein: The $847 million for the Metro Rail Project, the Treasurer here in Victoria, Tim Pallas, says that money was always coming, it's not new money. Is it new money?

Paul Fletcher: It is new money, let me explain. The Commonwealth established what's called the Asset Recycling Initiative a couple of years ago. We set aside $5 billion, and that was money that state governments around the country could apply for. What they needed to do was to withdraw capital from existing state-owned infrastructure, such as for example the process that the Victorian Government is going through now with the Port of Melbourne, and if they did that and put the money into other productive infrastructure then the Commonwealth would provide an additional 15 per cent of the amount raised by the state government. So the scheme's been in place for a couple of years; Victoria is now in a position where it has met the conditions because of the Port of Melbourne privatisation process, with the legislation now having gone through the state parliament, and therefore it is eligible to receive this amount of $857.2 million form the Commonwealth Government to go towards Melbourne Metro.

Rafael Epstein: Where has that number come from? That's not 15 per cent of 11 billion. Where does the number come from?

Paul Fletcher: Well it's- the percentages are struck- the 15 per cent is on the proceeds of the amount that is raised from …

Rafael Epstein: [Talks over] Oh, from the Port of Melbourne lease.

Paul Fletcher: From the Port of Melbourne, yeah.

Rafael Epstein: Okay, yes, sorry, forgot that.

Paul Fletcher: And in fact, I think—I stand to be corrected on this—but I think there's one other small project in there as well. And then another key point is that the total amount coming to Victoria is $877.5 million, of which $857.2 goes to Melbourne Metro, and then $20.2 to Murray Basin Rail—the freight rail initiative there.

Rafael Epstein: Okay. I want to have a listen to the former Treasurer Joe Hockey speaking in September last year with Jon Faine on 774, where he's talking about precisely this style of money.


Joe Hockey: No, well we are prepared to put it into public transport, because the sale of the Port of Melbourne—which I support the Victorian Government on this—I want them to get on with the sale of the Port of Melbourne. If they take those proceeds and put them into public transport in the middle of Melbourne we will be supportive of that and we will give them a 15 per cent bonus—a 15 per cent bonus. So yes, our money will go into public transport in the middle of Melbourne.

[End of excerpt]

Rafael Epstein: So that's Joe Hockey in September last year, Minister. That sounds like he's talking about the money then. The money has been in the- you've been budgeting for this package of money for a while; it's in your forward estimates, so how is it new money?

Paul Fletcher: Let's be clear, this is new money to Victoria. In other words, at the time that Joe Hockey was speaking to Jon Faine last year, Victoria had not satisfied the eligibility conditions to get the money. It now has, and therefore the expenditure of that money, the provision of that money to Victoria, is contained in …

Rafael Epstein: [Interrupts] Sure, but it was always going to come, wasn't it? If they leased the port and put the money towards a decent project the money was always going to come.

Paul Fletcher: They needed to meet the condition of leasing the port. Let's go back a step as to why the …

Rafael Epstein: [Interrupts] So they've done the right paperwork, basically.

Paul Fletcher: Well it was more than paperwork. I mean, it's a serious policy process that the Victorian Government has undertaken here. And look, credit to them, let's be clear what the purpose of this has been, this Commonwealth Government Asset Recycling Initiative. It's a way of the Commonwealth encouraging state governments in Victoria, in New South Wales, Northern Territory, ACT, state and territory governments to withdraw taxpayers' capital from existing assets which no longer need to be in public hands, and reallocating that capital to vitally needed new infrastructure. And so in Victoria, as we've just heard, money will now be going towards Melbourne Metro to support this transformative project. In New South Wales there's money going to the Sydney Metro; in the ACT there's money going towards light rail.

So this is the Commonwealth saying to state governments if you take a decision to withdraw taxpayer's capital and put it into new productive infrastructure, infrastructure that will deliver jobs and growth, that will allow- make life in Melbourne, make this wonderful city even more liveable, more productive, more efficient, let people get to and from work more quickly, all of these good things that we all want to see happen, this is a way that the Commonwealth is working with state and territory governments all around the country to support them in doing that, and to provide tangible financial support linked to and reinforcing an action that the state government has taken. But the key point is this: until quite recently Victoria had not met the requirements. They were working to do it, but the Victorian Government hadn't done it. It now has. The Commonwealth is now in a position to write this cheque to the Victorian Government, and most importantly to the people of Victoria, and we're very pleased to do it.

Rafael Epstein: Paul Fletcher is with me, he is Minister for Major Projects in the Turnbull Government. Tell me what you think about what you are hearing—1300222774. Some of the texts: so it's not new money. Joe Hockey already promised it. And someone else saying because we need roads. Paul Fletcher, if I can ask you about on what basis money is given: there's a project with a completed business case, the East West. There's less than a billion for that. There has consistently been $3 billion on offer for a project—the East West Tunnel—for which there has never been a business case completed through the process with Infrastructure Australia. Why is there less money for the project with the business case that's been ticked off by Infrastructure Australia?

Paul Fletcher: Well, largely because the Asset Recycling Initiative is designed to encourage and support a particular kind of behaviour by …

Rafael Epstein: [Interrupts] No, but I didn't ask you about- you've spoken a lot about the asset recycling. If you're a Victorian …

Paul Fletcher: [Interrupts] Yes, but you're asking me why is the treatment of one project different to another. It's because they come under essentially different Commonwealth Government programs.

Rafael Epstein: So you're willing to throw money at a project without a proven business case when it's [indistinct].

Paul Fletcher: [Talks over] Well you see, it's not right to say the East West Link did not have a business case. It has a well-established business case.

Rafael Epstein: [Talks over] It hasn't been through Infrastructure Australia. It's not well-established at all. It hasn't been through Infrastructure Australia.

Paul Fletcher: [Talks over] It has been through Infrastructure Australia, but can I just make this point, Raf. The Turnbull Government has said there is $3 billion available for East West Link should a future Victorian Government decide to proceed with it.

Rafael Epstein: [Talks over] Which you approve without even seeing a business case.

Paul Fletcher: But at the same time, what we also announced three weeks ago on April 8 was $1.5 billion for a range of other …

Rafael Epstein: [Interrupts] Okay Paul Fletcher, forgive me for interrupting, and you're welcome to take the credit for spending some money on roads, but I'm trying to …

Paul Fletcher: [Talks over] Well that $1.5 billion was roads and rail.

Rafael Epstein: [Talks over] I'm trying to establish on what basis money is committed. Now I think both sides of politics like the Asset Recycling Scheme, but if you look at the Federal Government's contribution to Victoria, there is less than a billion for a train tunnel that's been through all of the paperwork with Infrastructure Australia …

Paul Fletcher: [Interrupts] Well can I just correct you on that Raf, because there is a business case …

Rafael Epstein: [Talks over] … and there's $3 billion for a project that has not- it's never finished, it's never been through all the [indistinct] Infrastructure Australia.

Paul Fletcher: [Talks over] Raf, let's just get some of the facts straight here. The Melbourne Metro Project, there is a business case which has been lodged by the Victorian Government. It was lodged in February with Infrastructure Australia. It is still being considered.

Rafael Epstein: Still further down the pipeline than the East West.

Paul Fletcher: Well again, that premise is not right.

Rafael Epstein: That is 100 per cent right, Paul Fletcher. Go to the Infrastructure Australia website. East West is an initiative. Metro Rail is a business. That means one thing, and one thing only: that the Rail Tunnel's gone further down the process. You know that.

Paul Fletcher: [Talks over] Can I just make this point? The money that's going to Melbourne Metro is money under the Asset Recycling Initiative, and separately we have an Infrastructure Australia process which is the process where the Commonwealth provides funding to state governments for a whole range of other projects. The Turnbull Government has a $50 billion infrastructure investment program.

Rafael Epstein: Why are they separate, Paul Fletcher? It just seems very much like somebody locked you into the East West Project and you're not willing to budge on that. The independent umpire is who we can trust. You've got less than a billion going to the project that's way, way further down the line, being ticked off by an independent arbiter, and I still don't understand why.

Paul Fletcher: Well I think Raf, the factual premise of that is simply not right, but in any event …

Rafael Epstein: [Interrupts] Which part of that's not right?

Paul Fletcher: Can I just make the point …

Rafael Epstein: No, no. Paul Fletcher, which part of that's not right? Because you keep on telling me my facts are not right.

Paul Fletcher: [Talks over] When you say that the East West Link did not go to Infrastructure Australia. It has been to Infrastructure Australia.

Rafael Epstein: [Interrupts] It has not been to Infrastructure Australia. I got a statement from them today. It did not go through the process nearly as far down the path as the Metro Rail Project. You know that.

Paul Fletcher: Can I just also make the point that there's $857.2 million of new money for Victoria for the Melbourne Metro today, plus $1.5 million of new money for a whole range of infrastructure projects announced on April 8, including $500 million for the Monash—if that's matched for dollar for dollar by the Victorian Government—$220 million for Murray Basin Rail, a rail project, $300 million for the M80 Western Ring Road, a $1.5 billion infrastructure commitment on April 8 for Victoria. So the Turnbull Government is getting on with providing funding to the Victorian Government for- and to the people of Victoria to support a range of projects, because that is what the Victorian people expect the Turnbull Government, the Commonwealth Government to do, working with the State Government, which is to get on with delivering the infrastructure that's needed.

Rafael Epstein: 1300222774. I'll get to your calls soon. Paul Fletcher, you mentioned the money for the Monash. I'm still trying to establish in my mind- I genuinely don't understand the criteria by which projects are chosen. There is one proposal from Transurban that involves the Western Distributor and the expansion of the Monash and Webb Dock I believe as well. You're giving- you're willing to throw $500 million at the Monash part of that proposal, but you're not willing to give any money to the Western Distributor. It looks very much like hundreds of millions of dollars for a road in the east and zero for a road in the west. I don't understand by what criteria that decision was made.

Paul Fletcher: Well, the fundamental logic for that, Raf, is that the Western Distributor Project is premised on toll revenue …

Rafael Epstein: [Interrupts] You're giving $3 billion to a toll road called the East West!

Paul Fletcher: Both the revenues that will come from the new component and what will come from the …

Rafael Epstein: [Talks over] Well- Paul Fletcher, stop, stop, stop. So you're willing to give money to a toll road that's called the East West Tunnel, but you're not willing to give money to a toll road that's called the Western Distributor?

Paul Fletcher: Yeah, and the fundamental difference is that the Transurban proposal is premised on the toll revenues from CityLink, which is a long-established brownfields tolling revenue stream, and so therefore, the economic …

Rafael Epstein: [Interrupts] So's the Monash Extension. That's a completely false distinction.

Paul Fletcher: [Talks over] No, no …

Rafael Epstein: The money for the Monash- that Monash project's only going to go ahead with the State Government.

Paul Fletcher: [Talks over] The Monash …

Rafael Epstein: That project is only going to go ahead with State Government money if they're allowed to extend the tolls.

Paul Fletcher: [Talks over] You've asked me to explain the distinction between the approach we're taking in relation to the Monash and the approach we're taking in relation to the Western Distributor. The reason we've taken the approach we have for the Western Distributor is that—just as we've done in Sydney with a project called WestConnex—we have offered the State Government there innovative financing. So we've offered and have had accepted a concessional loan of $2 billion to support the WestConnex project in Sydney, and we have said we're happy to talk to the Victorian Government about a similar concessional financing approach, innovative financing approach in relation to Western Distributor. But fundamentally, when it comes to …

Rafael Epstein: [Interrupts] That's not an answer to my question at all. What's the difference between the Monash and the Western Distributor?

Paul Fletcher: The fundamental difference is the Western Distributor is supported by an existing brownfields tolling revenue stream and the Monash is not.

Rafael Epstein: You do understand, Paul Fletcher, that the proposal- the reason the State Government has an expansion project for the Monash is because of a- I think it's an unsolicited proposal's the term, from Transurban. It involves the Monash and the Western Distributor. The only reason the Monash is happening is because they're going to get to extend the tolls on CityLink. You're drawing a false distinction.

Paul Fletcher: The point that the Commonwealth Government has made to the Victorian Government is we believe the need to expand the Monash is even more pressing, and therefore we will provide $500 million of Commonwealth money to achieve a considerably greater expansion of the Monash than is proposed under the Transurban proposal. Let's be clear. What the Victorian Government is proposing to do in relation to the Monash is fine as far as it goes. The budget for that is around $400 million. We're saying let's go from a $400 million expansion of the Monash to a billion dollar expansion of the Monash and we will provide $500 million of Commonwealth money towards that if it's matched by the Victorian Government.

Rafael Epstein: Are you feeling like the underdog with the polls, or do you think Labor's still the underdog?

Paul Fletcher: Well, Raf, I'm not going to get into being a commentator. I will leave that to you and your colleagues in the media. What we will get on with in the Turnbull Government is delivering infrastructure and the funding for it, and working with state governments and territory governments around the country to deliver the infrastructure that the Australian people expect us to get on and deliver, and that's what they want to see us focused on.

Rafael Epstein: And do you look at campaigns with an equal mixture of great anticipation and dread?

Paul Fletcher: [Laughs] Campaigns are part of the job of being a politician, and look, it's a privilege to have the chance to make the case to the Australian people about the Turnbull Government's plans for jobs and growth and for transitioning our economy from one that has relied upon resources to being much more diverse, and we've got clear plans to do that and we look forward to the opportunity to discuss those with the Australian people over coming weeks.

Rafael Epstein: Paul Fletcher, thanks a lot for your time.

Paul Fletcher: Thanks Raf.

Rafael Epstein: Paul Fletcher is Minister for Major Projects in the Turnbull Government.