Press Conference—Brisbane

Interview

PFI028/2016

21 October 2016

Topics: Turnbull Government's commitment to M1 motorway

Mark Bailey: It's great to welcome Minister Paul Fletcher here to Queensland. As we all know the M1 is an issue that is of considerable concern to Queensland motorists and I welcome Minister Fletcher here for discussions here in Queensland. We have agreed to progress the contract process to get a final market price as soon as we can. While we have differing respective views about the funding issue we have agreed to work together to get this project as close as we can to going. So what we're announcing today is a double early contract process for the Gateway Merge project. And that will see us with a final market price by February as we work with industry and we'll also go out to market before Christmas in terms of the Mudgeeraba to Varsity Lakes part of the M1. So it's an important issue, I welcome Minister Fletcher, it's been a very productive discussion today and I'll hand over to him to say a few words.

Paul Fletcher: Well thank you very much Mark, I'm very pleased to be here in Queensland, and look we have had a constructive discussion today. I guess the purpose of the discussion has been to look at these two projects—Mudgeeraba to Varsity Lakes, and the Gateway Merge, and see if we can focus on the areas of agreement. There are differing positions the two governments have on funding commitments. But what we have sought to do today, I think in a very constructive meeting, is focus on how we can take the procurement process forward and of course one of the reasons for that is that we are finding all around the country, and certainly here in Queensland, that at the moment conditions in the construction sector are very competitive, and when you go to that procurement process, not infrequently we're finding prices that are lower than the amount that's been budgeted. So that is a sensible next step to take to go out to the market to get firm prices, and if those prices do prove to be a little lower than has been assumed that may make our collective task a little easier. So today is really about focusing on the areas of agreement because it is so important that we do everything we can to move this forward. Obviously the M1 is an absolutely critical facility, that's why my colleagues Bert Van Manen and Karen Andrews worked hard to secure Commonwealth funding and I've certainly found today's meeting with Minister Mark Bailey to be constructive. And so I certainly look forward to moving forward on a procurement process so that we can firm up the design in relation to Mudgeeraba to Varsity Lakes, and also see if we can get firm pricing.

Question: But if neither level of government leads, then isn't this just kicking the can down the road? I mean the fundamental conflict is still there.

Mark Bailey: Look, what we're doing here today is advancing the detailed design, final market price as quickly as we can, that work will be done over coming months and we'll continue the dialogue. It's been a very productive discussion today with Paul, we'll continue those discussions to look at an outcome.

Paul Fletcher: Certainly what this is about is focusing on the areas of agreement. Let's understand that every large project involves significant time stages for each stage of the process. So there's clear value in moving forward in terms of procurement, so we're focusing on the areas where we can agree and getting work done on that front.

Question: Minister Fletcher what are you putting on the table in terms of that funding? What are you offering?

Paul Fletcher: Look the position in terms of the funding split hasn't changed from the Commonwealth's point of view, I'm sure Mark would say it hasn't changed from the Queensland government's point of view, but what we've sought to do here is focus on the areas of agreement. And what we can move forward on, going out to the market to get a firm design in relation to Mudgeeraba to Varsity Lakes, and I'm sure Mark can explain more the important of the design aspects, and then on both projects getting firm pricing.

Question: So what's on the table sorry? Can you make it clear for us?

Paul Fletcher: The Commonwealth's position remains that the funding commitment is $110 million for Mudgeeraba to Varsity Lakes, $105 million for the Gateway Merge, but the focus of today's discussion and the reason that Minister Bailey and I have come together today is to really focus on the areas we can reach agreement and to move forward so that we can go out to market, we'll get firm prices and Mark, you might want to explain the importance of the design issue in relation to Mudgeeraba to Varsity Lakes.

Mark Bailey: Certainly. So obviously the Mudgeeraba to Varsity Lakes is a very important project, we're going out to market before Christmas and there are some issues there that still need to be dealt with. There's utility issues that need to be finalised, there's some pre loading issues there as well, but they will be dealt with as part of our contract process.

Question: Can I ask what sort of savings you both anticipate being able to get by going out to market so early? What do you expect?

Paul Fletcher: Well I think my comment would be, we don't know until we test the market.

Question: But you must have some experience—you said it's been happening in other states, it's markedly more here in Queensland?

Paul Fletcher: Let's wait and see what we get back, that's the purpose of this process. Let's actually go out to market. There have been significant savings experienced in projects around the country but I don't want to prejudge any assumptions about what outcomes we might get here. But certainly I think it is worth going to market so that you get firm prices.

Question: But what happens next if you go to market and get a price and there's still a squabble over who pays for what?

Mark Bailey: Can I just say in terms of the marketplace at the moment, we saw the final price on the Bruce Highway at Sunshine Motorway come in with a $180 million saving. That was only six weeks ago. So the market out there is very good and that's why we're agreeing to get out there while the market is in good shape to see where we can land on the terms of the final price. In terms of the question then being we'll continue that dialogue, that's what we've agreed to do today, our positions are well known but the fact that we're talking, we're working together to see how we can resolve this I think is a positive step after we've had fairly entrenched positions over the past couple of months.

Question: So what was that Sunshine Coast Motorway project?

Mark Bailey: It was about $1.15 billion and it came in at $929 million—actually, it was $1.1 billion and came in at $929 million. So that was very good value we were very happy with that. That's a joint federal state project, much larger than this one, but it gives you a sense of the (inaudible)

Question: (inaudible) that you are anticipating?

Paul Fletcher: Well again, from a federal government perspective what I'd say is let's go out to market and see what sort of prices we get and that's why it does make sense to go to this next step.

Question: Drivers would probably say this is taking too long, we saw a bad accident last night that caused absolute bedlam for people getting home. Can we not make this process faster?

Mark Bailey: We are doing everything we can do to this as fast as we can. Of course we've inherited this process after the Newman-Nicholls Government, there was no new funding for the M1 in three years. So it's a situation that Paul and I both inherited but we're working together to resolve it.

Question: It sounds like you two are holding hands but you didn't answer my colleague's question before. I mean what happens, we're heading down the path, you get to a point, are you going to stay and arm wrestle or are you actually going to build it? Who's going to cough up the money?

Paul Fletcher: Well again, what we're focused on here today is the areas of agreement so that we can move forward to a procurement process so that we can get pricing from the construction sector. And we felt that the rationale for meeting today, and the work we've done and the discussion we've had today, is let's see if we can focus on the areas of agreement, and that's been the purpose of today's meeting and I think it's been a useful and constructive meeting.

Question: So for the procurement process and once you get a full market price is there a chance that either the Queensland or federal government could change their position on the funding deal?

Paul Fletcher: Well again I think let's focus on the areas of agreement and what we have agreed is to move forward in terms of the process. That's what today's discussion has been about and I'm pleased I've been able to do that and I think this will be important in terms of being able to get some firm prices from the market and also getting a full design in relation to the Mudgeeraba to Varsity Lakes project. So that project is somewhat less advanced in terms of the design specificity and so that will be an additional element of what will be achieved out of the process.

Question: So you can't guarantee that money won't delay the project potentially again?

Mark Bailey: We've got, the Palaszczuk government has got $86 million on the table, the Commonwealth's got a substantial amount on the table, that's far in advance of where we were 12 months ago so we are on the way to resolving this, we are talking and working together, but we still have a ways to go on that and we'll continue that dialogue over the coming months but we will accelerate this contract process so we can get a final market price so that if and when we come to an agreement we get going straight away.

Question: Minister Fletcher you've put the federal government money into the first two years of the project?

Paul Fletcher: Certainly one of the things I have indicated publicly both in today's media release and previously, including speaking in the Commonwealth Parliament is a willingness on the part of the Commonwealth Government to front-load our contribution. And so again I think—

Question: What does that mean? (inaudible)

Paul Fletcher: It means we stand ready to reach an agreement under which our money goes in earlier, the Commonwealth money—when I say our, it's all taxpayer money, but the Commonwealth money goes in earlier and Queensland government money comes in at a later stage. Those are all details to be sorted out, we've been clear here that there are some areas where our current positions stand but what we've sought to do today both in our private meeting which has been constructive and in what we're announcing today is to focus on the areas of agreement, to focus on the way forward, and particularly to move through the procurement process so we can get specific prices form the construction sector.

Question: The specific area of agreement from (inaudible) funding model— like the days of the 80/20 50/50, is that finished? Or what are you looking at?

Paul Fletcher: Look I think our focus today is very much on these two specific projects and taking them forward to the next stage of procurement and we've had a useful discussion about that today, a constructive discussion, and I'm pleased that we were able to move forward.

Question: (inaudible) new funding model?

Paul Fletcher: What we've focused on today is these two specific projects, focusing on our areas of agreement, how we can move forward towards getting firm prices from market, firming up the design in relation to Mudgeeraba to Varsity Lakes, and so our objective today in this discussion in the constructive meeting we've had today, and in the joint media release we've put out, is to focus on the areas of agreement.

Question: Minister Fletcher, correct me if I'm wrong, have you or have you not funded an 80/20 agreement with the NSW Government and Mike Baird for a similar (inaudible) in a non-metropolitan area? Is that correct and if so, if it is correct, what would you say to Queenslanders that think right now the federal Government is taking them for a ride?

Paul Fletcher: What I would say to Queenslanders is it's important that we focus on the areas of agreement on these two projects so that we can move forward a procurement process, get firm prices, firm up the design to Mudgeeraba to Varsity Lakes. So what I've been focused on doing, and what my counterpart Mark Bailey has been focused on doing in today's very constructive discussion, is focusing on the areas of agreement.

Question: Well have you done it for NSW though? It's a fair question, you didn't touch on it.

Paul Fletcher: Well again today our focus today has been on the areas of agreement and I'm pleased we are able to move forward towards a procurement process.