Transcript: SkyNews Business at the Australian Financial Review National Infrastructure Summit

Interview

WTC015/2015

11 June 2015

Topics: RBA Governor’s call for more infrastructure spending, Asset Recycling, Canberra Light Rail, Sydney housing market, Marriage equality

Question: Deputy Prime Minister, you're also the Infrastructure Minister, yesterday we had Glen Stevens, the Governor of the Reserve Bank, suggest that he wants to see the Government spending more on infrastructure. He said that he needs to see fiscal spending take some of the heavy lifting away from monetary stimulus. Is that what you're interested in doing? Does the Government need to be spending more on Infrastructure?

Warren Truss: Well certainly this is a good time to be spending money on infrastructure. Our $50 billion infrastructure plan is the biggest in our nation's history. It's at least $17 billion more than what Labor had proposed at the last election. It will lever over $100 billion worth of investment from the states and the private sector. So it's a very, very significant commitment to infrastructure. It's a good time to be building infrastructure; a large number of significant mining projects are now coming to completion, the development of LNG gas plants et cetera, many of those have now sent their first shipment off to the markets. And so there are a lot of skilled workers and keen contractors ready to do the work. So we're getting very good tenders, projects are coming in under estimate, and so this is a great time to be building the things that Australia's going to need in the century ahead.

Question: Governor Stevens though seemed to suggest that it wasn't enough, that what the Government currently has in the pipeline just isn't enough to get the economy moving, that monetary stimulus has reached the end of what it can reasonably do, and that what we need to see is more fiscal stimulus. Should the Government be more focused on fiscal stimulus than getting back to surplus?

Warren Truss: Well it's important that the global market has confidence that Australia is a country that's got its Budget problems under control. But on the other hand, we know that expenditure on infrastructure can help to boost the economy, make it grow faster, and as a result therefore deliver benefits to the Budget bottom line. Now we've boosted in this Budget what we'd originally committed and we'll be talking about Northern Australia development in the weeks ahead and there's significant investment proposed in that package as well. So we're not finished in this square, but we have made an extraordinary start with the $50 billion commitment that we have made.

The asset recycling program I think gives the states an opportunity to build some of the things that they have wanted over the years. In New South Wales we're going to see, in particular, real benefits from the Baird Government's commitment to using their assets to actually build the sort of things that are going to be necessary in the future. That makes good sense too and enables a lot more infrastructure projects to be undertaken than might otherwise have been the case.

Question: Your Assistant Minister, Jamie Briggs, spoke earlier today and actually attacked the Liberals in Canberra's plan to potentially roll back one of the infrastructure projects in Canberra, the Canberra light rail. Is that a fear that you also hold, that you think that would be a bad move from the potential Liberal Government in Canberra?

Warren Truss: Well we have agreed to support that project under the infrastructure plan. It's of interest that Labor in Queensland has rejected any kind of asset sales, but the ACT Labor Government has been the first to get on board with that initiative. The New South Wales Government is now there strongly, the Labor Government in South Australia and Victoria have also indicated that they want to be a part of the asset recycling program. So it's a tragedy for Queensland, where they had the option for a $30 billion investment in infrastructure coming out of the asset recycling program, that its not going to proceed. I think that's going to have real implications for the State of Queensland, there's a real risk that it will get left behind by the other states, and vital infrastructure won't be built. So I think it is important that governments are taking up this option to build important infrastructure projects.

Now turning specifically to the ACT project, it is true that it is fairly marginal from the perspective of its capacity to return on its investment. The cost-benefit analysis was very creative, and took into account the capital gains in property and other issues to get it across the line. But once a project is started, once contracts have been signed, clearly they need to be honoured by successive governments. When we came to office we inherited projects from the previous government; some of them may not have been our first choice, but we're continuing to complete them. And indeed, big infrastructure projects almost always cross the terms of various governments. In fact I opened a project yesterday that in fact had crossed the terms of three federal governments and two state governments, and that's quite common for these big infrastructure projects. So the market has to be confident that once a project has been started, once contracts have been signed, that they should be honoured.

Now in the case of the ACT I guess that a decision would have to be made at the time as to whether the project is so far advanced that it can't be reversed, and once construction has started I think it's reached that stage.

Question: Turning to another part of Glen Stevens' commentary. Now he's come out and said that parts of the Sydney housing market he thinks are crazy, and that is an acute concern for him. We've also obviously had Treasury Secretary John Fraser come out with similar commentary, saying there's unequivocal bubble in Sydney and parts of Melbourne. Joe Hockey though this week came out and said that he thought Sydney prices were affordable. Where do you sit on this side? Do you sit on the side of the highest- our highest-profile bureaucrats, or with your colleague?

Warren Truss: Well I think the facts are that the Sydney house price market has been driven above what it would normally be by significant foreign investment. The fact that there's such an enormous interest in buying home units and the like in Sydney coming out of China and other countries—but particularly China—that has boosted the market to a level which otherwise would not have been achieved. Indeed, a lot of this flurry of building activity that's happening in Sydney is not actually addressing a shortage of housing, it's encouraging investors and others to come in and purchase those particular properties. So clearly, the cost of housing in Sydney is very high; compared with other global cities like London, and Paris, and Tokyo it's probably not so high. But it is beyond the capacity of many Australians to be able to afford a house in Sydney.

I think Joe Hockey's advice that people should get as good a job as they possibly can is always good advice. But for some people, it's going to be necessary for them to start more modestly. I think it's a disappointment really that Australians have gone away from the era when they were prepared to buy what they could afford, and then advance as time went by. I grew up in a house where we didn't have kitchen cupboards because we couldn't afford them in the early years, and gradually things were added. Today, everybody wants everything on the first day, and I think perhaps we've got to build a bit more slowly as our budgets can't afford it.

Question: Deputy Prime Minister, just before we go, on the issue of marriage equality, we've had now the third National Party member come out and say that they would support a change to legislation to bring in marriage equality. Will the National's now allow a conscience vote within your party for people to be able to vote as their conscience sees fit?

Warren Truss: Well the issue's not going to come up for quite some time. Our job now is to talk about the Budget, the initiatives that are included in the Budget, particularly their impact on regional Australia. We want to talk about the infrastructure we're building across the nation, we want to talk about the new agriculture white paper, the Northern Australia white paper, we want to talk about dams and other vital infrastructure for regional communities. That's our objective at the present time. If this issue of same-sex marriage comes up at some stage in the future, that will be the time to address it.

Question: Deputy Prime Minister, thank you for joining Sky News Business.

Warren Truss: You're very welcome.