Transcript: ABARES Outlook 2015, Doorstop Interview, National Convention Centre, Canberra
04 March 2015
Topics: Infrastructure and the farm sector, Maldon-Dombarton railway line, Infrastructure spending, Asset Recycling, Twiggy Forrest's plan to drought-proof Australia, underground water and dams, Chinese/foreign investment, Inland Rail, FIRB and FIRB expertise, Co-ops, farm optimism.
Warren Truss: Obviously the main theme of my address was how important infrastructure is to the farm sector and the investment that we are currently engaged in, the biggest in our nation's history, will make a real difference to roads in rural and regional Australia, not just the capital city.
Connecting our producers in mines and farms and regional Australia to their ports and their international market is obviously critical for the future of those industries and guarantees that our nation's economy will grow on the strength of the productivity of the region. So, we regard this as a critical investment and it will deliver rich rewards also for future generations.
Question: Mr Truss, the Maldon-Dombarton railway line which links the Main South line to Port Kembla. How important do you believe that project is and when are we likely to see that come to fruition?
Warren Truss: Well, it's one of the projects that the New South Wales Government has been placing a degree of emphasis on and, obviously the Commonwealth has been involved in the past. It's been a bit of a stop and go affair as you would be aware and we discussed priorities with the various states as to what projects should be given priority.
There are some investments in rail and in other places and, of course, the major project that we're involved with at the present time is the new Melbourne to Brisbane line. That's a transformational project and one that we're giving a priority and where the Commonwealth has taken a lead role.
Question: Do you think you're spending enough on roads and rail? The theme emerging here is you need to spend way more than what you're doing.
Warren Truss: Well, we're spending more than any government has ever spent and we are also seeking to leverage the private sector investment. One of the key things associated with our Asset Recycling code is that it provides leverage and encourages other people to bring forward projects that, with a little bit of government help, can get across the line and that's how we've got WestConnex and NorthConnex and we had East West until the Victorian Government pulled the plug.
So, in reality, there's—this $5 billion commitment that we're doing through Asset Recycling has the potential to leverage, really, hundreds of billions of dollars worth of infrastructure projects which will have a private sector commitment.
Question: What's your take on Twiggy Forrest's plan to drought-proof Australia?
Warren Truss: Well, sounds good to me, sounds good to me, we've just got to find a practical way of doing that. Clearly, our work on Northern Australia is focusing on infrastructure and the kinds of investments that will make a difference to the North. But everyone also likes to quote the statistic that 60 per cent of our nation's rainfall falls on the North and very little of it is actually used for agriculture of other industrial purposes. So, clearly, there's enormous potential to harvest the northern rivers and to ensure that water then can be used more productively, there's also extensive underground reserves and opportunities to build industry around the abundance of water that there is in the North.
Question: You're talking very much about underground water. Do you think there is a way of avoiding dams, which avoids Green opposition, is that the way to go?
Warren Truss: Well, there are underground water resources but most of them are very slow to recharge and so we've got to be careful that the water is not being mined but just merely used at a replacement rate. Now, I appreciate that there are many, many, many year's generations of water in those reserves but if it takes 1000 or 2000 years to recharge them, then we've got to manage it very carefully.
However, some of those underground aquifers could also be used as water storages and the advantage of that in the inland—if it becomes engineeringly practical, is that you don't have evaporation then from those underground reservoirs and evaporation's a real issue in surface storages in the North because most potential storages have a large surface area but not great depth and, of course, the sun is hot and evaporation becomes a big issue.
Now, all of that has to be taken into account in doing the economics of some of these projects. There are a number of private sector projects which potentially could open up significant new areas of agriculture in the North, in Western Australia, Northern Territory and Queensland. Some of them will need a little help to get across the line and that's the kind of thing that we're talking about in our Northern Australian strategy.
Question: And would you support Chinese investment as Mr Forrest outlined yesterday? He described it as passive, but would you support Chinese investment in water infrastructure in Australia?
Warren Truss: Well, the second stage of the Ord is being funded pretty well entirely—apart from the initial government commitments, by a Chinese investor and he's doing good work in opening up stage two of the Ord. If we move to stage three of the Ord, which is across the Northern Territory border, I would expect that there would be similar barriers to domestic investment in that project as there was for all of stage two.
You know, all of the fine—the shortlisted tenderers that developed Ord stage two were from overseas. And once that development is there, of course, it's there for all Australians for all of time and therefore that investment has enabled something to happen in Northern Australia that probably otherwise would not have happened.
So I suspect that, unfortunately, Australians are impatient about their investments, they expect returns quickly, and those of us who have been in farming for a while know that you've got to wait and be patient about your farm investments, and many of the investors from Asia, and for that matter other parts of the world, are prepared to be more tolerant and patient than Australians. So overseas capital will unquestionably be critical to develop Northern Australia.
Question: Are you worried about the Inland Rail project picking winners and losers in terms of the survival of smaller country towns, which you referred to in your speech as a real danger that could happen once you open up certain areas, and [indistinct] that sort of towns?
Warren Truss: Well clearly the Inland Rail can only take one route, and what the work that's been done over the last decade on identifying that route has been about is establishing what is the most economic way to build this railway line, and how can we tap the maximum amount of inland resources.
Now the trains are not going to stop at every town; they need to get to their destinations, and most of the freight will obviously be going from capital city to capital city. So there will need to be key intermodals along the route, and the line will also link up to the east-west railway lines, and also the local lines in the states that are serviced by this new system.
So there will be connections into it, there'll be towns that will be passed through and maybe not even stopped, and there'll be other places where there'll be intermodal [indistinct]. So I acknowledge that that will feed investment in those communities, but it is an investment that otherwise would not happen, and the overall benefits to regional Australia from a project of this nature will be very substantial indeed.
But let me also add, the benefits of taking a lot of this traffic out of the capital cities, taking—reducing the number of trucks that would otherwise be on the road by tens of thousands, makes a real difference to the efficiency of our transport network, and the efficiency of our investment in infrastructure.
Question: if there is a need for Australia to have foreign investment, is your government sending the wrong message with the changes to the FIRB?
Warren Truss: We will need foreign investment as we have in the agricultural sector, and in fact other parts of our economy, since 1788. We will need that continuing investment. But what we are saying is that we have a right to make decisions about what investment is in the national interest.
So, we will look at each project on its merits, we welcome particularly innovative investment that's opening up new projects that otherwise would not happen. The purchase of existing assets that are being well run by Australians, we may well ask more questions about.
So each proposal will be assessed on its merits; our door will be open to quality investment. But if it's contrary to the national interest well then we'll say no.
Question: You've expressed concerns about the expertise on the FIRB to assess the national interest in terms of agricultural assets; how far have they travelled since you've come into government to resolve your concerns about that area?
Warren Truss: Well a significant part of the announcements that we've been making over the last couple of weeks about assessing applications for foreign investment and the foreign investment guidelines, is that there will be a fee structure for those applications which will provide the resources to enable us to make—undertake better scrutiny of the applications.
So this will provide the resources for the FIRB to do its job. Clearly, we've been unhappy with the sort of fleeting examination of some applications in the past, where key issues do not seem to have been adequately considered.
Now they will have resources, independent resources, to be able to look at these issues and make wise judgements about what should be recommended to the Treasurer as to what foreign investment should proceed. So, no we're not satisfied with the role of the FIRB in the past, but we will be providing it with substantial resources in the future to do its job properly.
Question: Mr Truss, we've seen some farmers come together to form co-ops to try to take on the bigger supermarkets, just wondering if the Federal Government supports the establishment of more co-ops, and how the Government would ensure more dairy farmers aren't priced-out by the corporate supermarkets?
Warren Truss: Well, we certainly support the cooperatives, and they have favourable taxation and other arrangements which enable them to undertake their task in a cooperative way.
We do know that the history of cooperatives is a bit patchy. There have been thousands of them in this country, there are less of them these days because it is a model that has disadvantages as well as advantages.
It's hard, often, for cooperatives to make substantial investments, hard for them to put aside and to save up for investments, and those are factors that have to be taken into account in making a decision as to whether the cooperative is the best structure, or whether there's some other way in which farmers can work together to achieve their best possible results.
Question: Just on infrastructure as well, so what are the projects you believe that someone will be able to look back on this time and say these are the projects that made a different—what are the actual concrete things that are happening?
Warren Truss: Well, what we're doing on the National Highway will be really critical to regional Australia. By about the end of this decade, there'll be a four-lane highway stretching from places like Gympie and Toowoomba in the north down through Sydney and Melbourne, and then out along the Princes Highway towards Gippsland and up towards on the Western Highway and then also in Princes out to the east.
So we will have a four lane highway linking our three East Coast capitals for the first time, and extending significantly into the regions. We will have a new range crossing in Toowoomba that essentially will open up access to the grain-growing areas and productive areas of western and inland Queensland. In New South Wales, there'll be significant investments on the Pacific Highway but also other regional roads that'll make a difference in bringing freight into the city.
We'll have a new intermodal terminal at Moorebank will make Port Botany more functional and have rail networks connecting it to other capitals but particularly to inland Australia. In Victoria where we thought we were going to have an East-West project—we're not going to have that, but there will still be new port developments in Victoria and a significant road network.
The money we're investing in Western Australia will make it easier for people to get in and out of Perth airport. But a substantial investment which I referred to earlier, best part of a billion dollars on the roads north of Perth, connecting Perth to Darwin.
That will also make a difference in terms of moving equipment in and out of Perth and also servicing the agricultural sector. And that is only a small part of the list, and we are clearly investing also in local roads, local bridges; local black spots.
Providing rest areas for heavy vehicles, etcetera. So this is a commitment to genuinely connect regional communities to their ports and their capital cities, but also to ensure that we have the network which enables our freight and our exports to move smoothly from farm and mine to market.
Question: Minister, is the biggest threat to Twiggy Forests plan lack of money or The Greens?
Warren Truss: Well, it is disappointing that the Greens seem to want to oppose everything. They start from the position that all development is bad; they say they want clean green Australian food but they make it very hard for Australian farmers to produce it by sort of opposing modern farming methods and by opposing new developments in almost every instance.
Well, as I said in my remarks earlier today, we have taken significant steps to try and sweep away unnecessary environmental red tape at the federal level. And something like $800 billion worth of projects were approved in our first 12 months. Some of which have been sitting in a log jam for years, for many years, for no valid reason.
We will still assess things about their environmental impact and assess that very seriously. And not all projects are good projects. Some will be reviewed.
Where there is satisfaction that the environmental issues are resolvable and appropriate conditions are in place to make it work then Governments should not hold those projects up and that will make a real difference in giving people the confidence that if they spend, sometimes, tens of millions of dollars, maybe hundreds of millions of dollars to get a project ready to proceed, that Governments will not destroy it or refuse to grant approval on spurious issues.
Question: We are getting reports and releases from ABARES saying it's a record year forecast for beef and lamb exports. Do you believe that that optimism is well placed?
Warren Truss: Well, certainly the lower Australian dollar is making all exports much more attractive. We have this huge market in Asia, which is just opening up in every possible direction. There are so many markets that we will just never be able to supply them all. But it's worth therefore working on those that are going to be most profitable in the long term.
The China free trade agreement is just breathtaking in its scope. And what we've been able to achieve for agriculture in Japan and Korea is also way beyond any free trade agreements that we've ever had. Way beyond even the more recent free trade agreements. And therefore the opportunities are just huge. And if we succeed in getting India and the Gulf Co-Operation Council and others into similar agreements, it is a totally new era for Australian agricultural exports.
It'll be a matter of picking and choosing between the available opportunities and that's just exciting for agricultural development in this country. Now, overseas investors know that, and that's why they've been keen to come to Australia and be a part of this potential progress and development. What we need to be sure of is that Australia benefits from this investment and the value of our free trade agreement is harvested fully also for Australia and its people.
Thank you very much.