ABC Radio Adelaide Drive with Jules Schiller
10 May 2018
Subjects: Infrastructure funding in the Federal Budget
Jules Schiller: Well, it's a Bermuda Triangle of budgetary proportions—what's happened to the $1.8 billion promised to South Australia for major infrastructure projects? Earlier in the week there was optimism, on Tuesday there was confusion, and yesterday four major industry groups condemned the Budget as not delivering on its promises. In fact, on this show yesterday Evan Knapp from the SA Freight Council was on the program speaking on behalf of a number of these bodies, saying that there isn't enough money there for the next four years. Here's what's happened.
Evan Knapp: It turns out that the Budget is all smoke and mirrors. We were promised $1.8 billion, and we've received about eight cents in the dollar of that, or $162 million over the four years of the Budget. We've dug through the documents very, very carefully, including the 54 page press release from the Commonwealth Transport Minister Michael McCormack, and the detail is there, it's just buried very, very deep. There is zero dollars for future priorities for the North-South corridor over the next four years. It was all smoke and mirrors. What they promised on Monday they have not delivered on Tuesday night.
[End of excerpt]
Jules Schiller: Alright; let's try and get to the bottom of this. And we're joined by the Federal Urban Infrastructure Minister. Paul Fletcher is on the line. Hi, Minister.
Paul Fletcher: Jules, good to be with you.
Jules Schiller: Okay, so smoke and mirrors was the phrase thrown out there by the SA Freight Council. Does he have a point?
Paul Fletcher: No, absolutely not. Look, the Turnbull Government has committed $1.8 billion for priority regional and urban infrastructure in South Australia—it's on page 141 of Budget Paper No. 2.
Jules Schiller: [Laughs] I haven't got that far yet.
Paul Fletcher: That includes $1.4 billion for future priorities along the Adelaide North-South Corridor. Included within that is $177 million for the next stage of the North-South Corridor, which is Regency Road to Pym Street—that's approximately 2 kilometre stage. I was with the new SA Transport and Infrastructure Minister Stephan Knoll just a couple of weeks announcing that the two governments, Commonwealth and South Australia, have reached a funding agreement on that, and so that that will be the next project that can commence.
But what we've also set aside is over $1.2 billion in addition to that for the next stages of the North-South Corridor.
Jules Schiller: Okay, so was that in the Budget? That $1.2 billion?
Paul Fletcher: Well, again, it's all on page 141 of Budget Paper No. 2.
Jules Schiller: Well, why the confusion, then, Minister?
Paul Fletcher: Well, I guess you'd have to ask the groups who were making those statements yesterday. But I think they perhaps failed to understand how infrastructure funding works and the relationships between the Commonwealth and states, not just South Australia but every state. So, what happens is the Commonwealth has a 10 year infrastructure program—we're committed to spend $75 billion over the next 10 years. We then allocate that to specific projects. It's important to understand there are significant lead times with infrastructure—it takes time to do the planning and to get environmental approvals, then to go out to market and contract to get the work underway.
So, there's an additional difficulty which is that, regrettably, the previous state Labor government had pretty much left the cupboard bare in terms of planning for future stages of the North-South Corridor. So, there was a plan that they finally submitted for Regency Road to Pym Street, so we've been able to work quickly to get that underway. But the incoming Marshall Liberal Government now has the task of getting the planning underway for the further stages of the North-South Corridor, and they are a very businesslike, very focused, well organised government, and I know they're working hard on that. I've had discussions with Minister Stephan Knoll about that. But the reality is because of the lack of planning by the previous state Labor government, that will take some time.
Jules Schiller: How much time, I guess, is the question, Minister. When?
Paul Fletcher: Well, that's the planning work that needs to be done, so I can't answer that right now. But what I can say is: what the Commonwealth has done is set aside $1.4 billion for the Adelaide North-South Corridor. As I say, of that $177 million earmarked for the next stage—Regency Road to Pym Street—and then over $1.2 billion for successive stages, and that is what the South Australian Government is now doing its planning against, and I look forward to further discussions with Minister Stephan Knoll as that planning work is done. Obviously, he wants it to be done as quickly as possible—as do I—but he has been put in the position- the Marshall Government's been put in position by the former South Australian state Labor government that they had not done the planning for the next stages, they really left the cupboard bare.
Jules Schiller: So, the North-South Corridor was due to be completed by 2023. With, sort of, question marks over when that money will be available, is that now in doubt?
Paul Fletcher: Well look, the Turnbull Government certainly hasn't changed its position on that. What needs to happen is that the incoming government now needs to do its planning, and they're getting that work underway. The funding of $1.2 billion- a bit over $1.2 billion beyond that $177 million, as I say, has been allocated; it's in the Budget. So, we look forward to constructively working with the Marshall Liberal Government, but we need to see that planning work go forward.
Of course, the commitment we've made to the North-South Corridor is only part of what we've committed—also $220 million for the Gawler rail line electrification. Now, you might recollect that under the previous state Labor government, money was actually allocated for that by the previous federal Labor government. It was so badly mismanaged by the state Labor government that the money had to be handed back. I'm very confident that the Marshall Liberal Government will do a much more professional job on the Gawler rail line electrification. And that's really important, so that people in the northern suburbs of Adelaide are able to commute into the city and that electric train sets can be used to Salisbury and north of Salisbury, whereas at the moment, of course, it's the old diesel sets that are being used.
Jules Schiller: I'm talking to the Federal Urban Infrastructure Minister Paul Fletcher about the $1.8 billion in road funding—there's been a bit of doubt as to whether that was included in the Budget.
Let's talk to someone who was on the show yesterday—I played a little grab of him earlier—chief executive of the SA Freight Council Evan Knapp. Evan, you've heard from the Urban Infrastructure Minister Paul Fletcher. Have you read page 141 of the Budget?
Evan Knapp: I have, absolutely, and it doesn't say what he's insisting that it says. It's talking about promises in the Never Never, you know, outside the Budget funding period of four years. We know that we haven't got $1.8 billion in this four year period, we've only got $162 million, and that's the only money that's guaranteed for us going forward.
Jules Schiller: Alright, let's go back to the Federal Urban Infrastructure Minister Paul Fletcher. That's pretty strong words there from Evan Knapp, Minister. Does he have a point?
Paul Fletcher: Well, again, can I just read out to you the exact wording, printed on the page: the Commonwealth Government will provide $1.8 billion for priority regional and urban infrastructure in South Australia, including $1.4 billion for the Adelaide North-South Corridor future priorities, $220 million for the Gawler rail line electrification, $160 million for the Joy Baluch Bridge duplication—that's an important project in Port Augusta—and it goes on to say: provision for this funding has already been included in the forward estimates.
So, that money is there. I can only conclude that there's a bit of a misunderstanding of how the processes work, but can I just make it very clear to you and your listeners: there's a $1.8 billion commitment for South Australian infrastructure from the Turnbull Government. We stand by that. We are working with the Marshall Government, which is a very professional, well organised government, they're obviously working as quickly as they can.
Jules Schiller: Minister, can you explain what-
Paul Fletcher: And I'm confident we're going to see some great projects delivered for Adelaide and South Australia.
Jules Schiller: Not everyone lives, I guess, in the political bubble, so what does forward estimates mean? You know, what's the definition?
Paul Fletcher: So the forward estimates is a four year period.
Jules Schiller: Okay.
Paul Fletcher: So, the first year is 2018/19 and then, the way the Budget is set out, you've got four years and then you go beyond the forward estimates. And so, typically, infrastructure funding is split into what's in the jargon, what's in the forwards, and then what's beyond the forwards. But I make the point: this is perfectly standard for large projects because of the long lead times. But I make one other point.
Jules Schiller: Sure.
Paul Fletcher: What we state is in the forwards is the estimate and the best state of knowledge at this time, but it is routinely and regularly varied. There's hundreds of projects around the country that are funded by the Commonwealth and each six months through what's called the MYEFO—to use another piece of jargon—the Mid-Year Economic and Fiscal Outlook-
Jules Schiller: That's a doozy there, okay.
Paul Fletcher: Yes, very attractive language. And then the Budget. Projects get moved around. What it depends upon, ultimately, is then the planning work the state government does, because it's important to understand it's the state government which physically manages and delivers the projects, so it's the one that has to do the business planning. It then needs to put that to the Commonwealth. We then reach an agreement per project on when it's going to commence, what the milestones will be—and the milestones, in another piece of jargon, is the steps at which the Commonwealth makes payments; we make our payments as a milestone is met, and all of that has to happen. And one of the other things that has to happen is that the state government has to go out to market to contract with a large company—it might be a, you know, a Lendlease or another large construction company—so, Lendlease, for example, are doing work on the Northern Connector project at the moment.
So, all of these steps have to happen before, then, the Commonwealth makes its payments to the state government. So, the point I'd make is that I can only assume that in some of the commentary that's been given, there's a bit of a misunderstanding of the processes. But I just repeat the point I make: the Turnbull Government's Budget for 2018 includes a commitment of $1.8 billion for infrastructure in South Australia.
Jules Schiller: Thank you very much, Federal Infrastructure Minister Paul Fletcher. We're going to have to leave it there, appreciate your time. And also to the chief executive of the SA Freight Council Evan Knapp.