Transcript: Fireside Chat at the Australian Financial Review National Infrastructure Summit with Ben Potter

Interview

WTC016/2015

11 June 2015

Swissotel, Sydney

Question: The Prime Minister wants to be known as the Infrastructure Prime Minister… [inaudible] in infrastructure, the implementation of infrastructure plans, to a large extent because of the problems- changes of government in Queensland and Victoria. How do you think he's going on that? And I think we've seen national capital expenditure falling obviously, and public infrastructure spending falling as well. How do you think he's going with that objective, which is a very noble objective?

Warren Truss: Well federal infrastructure expenditure is not falling; it's in fact increasing, and increasing substantially. Our $50 billion program is by far the biggest that there's ever been in this country. It's at least $17 billion more than what the previous government had promised at the last election. So there's significant funding and real effort going into it. Tony Abbott is certainly personally committed to an infrastructure agenda, and it's a delight, frankly, to be Infrastructure Minister when you've got such a positive attitude coming from your Prime Minister, and for that matter the Treasurer as well, who's personally committed to infrastructure and sees it as particularly important at this time.

In an era when the mining developments are starting to slow, when many projects are coming to completion, there is clearly a space now that needs to be filled, and building public infrastructure is a logical component of filling that space. It is a very good time to be building infrastructure, tendering is keen, most projects are coming in under budget, and governments are not normally able to say that. And so clearly we're doing the right thing by having a commitment to infrastructure.

Now you mentioned some disappointments, and there are some disappointments. Clearly the fact that the East West project is not proceeding in Melbourne leaves a big gap in the infrastructure work and the jobs that can be created in Melbourne, because there are simply no other projects that are within a couple of years of being ready to proceed. So we are worried about that, and the potential impact that will have on the Victorian economy. Perhaps the situation in Queensland is even worse, because the government that was defeated had a $30 billion infrastructure plan funded by asset recycling, which we were naturally prepared to support. They were voted out, and the new government has really no plan to replace it. So Queensland is one of those states with Western Australia where the decline in mining investment is most apparent, most evident, and therefore is a state where the government did need to step in and take the opportunity to provide infrastructure in Queensland for the next century. So that's a worry, those two are a real concerns.

Question: And the remark was made earlier that New South Wales is winning the State of Origin of infrastructure at the moment.

Warren Truss: Yes, that's absolutely true. I think New South Wales is going to be the big winner from what's happening in Melbourne and Queensland, and that there will be real opportunities in New South Wales to get the keenest of tenderers, the best people doing what is really a pretty exciting agenda in this state. It's not all that many years ago that New South Wales was considered to be a basket case. I can remember my predecessor Anthony Albanese one year gave no federal funding to New South Wales at all because there were no projects ready to go. In that era, Victoria was the go-ahead state and was where you would go if you needed to spend some money in a hurry. Well unfortunately Victoria's fallen off the pace, but New South Wales has learnt, and I think it's beyond question that they are the leaders in delivering infrastructure in Australia at the present time.

Question: And what has the Federal Government got against rail infrastructure, public transport? I mean, shouldn't the Federal Government be funding infrastructure that works, transport that works, not transport that fits in a particular category?

Warren Truss: Well we are. We are. We're funding significant rail projects around the country, some of them naturally cross governments. I opened one yesterday here in Sydney which was started under the Howard Government, work went all the way through the Labor Government, and now is being completed by this Government. And there are a lot of projects like that. But we've also made significant commitments to urban public transport, especially through the asset recycling program, but there are a number of other urban transport projects that we've invested in and we'll continue to do that in the future.

The Melbourne to Brisbane railway line is perhaps the most innovative and important of the national railway infrastructure, and we're getting on with that job—there's actually $300 million in the Budget this year to hopefully get the first parts of that project underway. Again, there's significant issues in that project in Queensland because that's where the hard work has to be done, getting through the Toowoomba Range, but particularly bringing a new freight railway line through the suburbs of Brisbane is clearly not going to be easy. So there's going to need to be a strong commitment from the Queensland Government. Discussions I've had with Queensland so far have been positive in that regard, and I think this is the kind of innovative project that will make a huge difference for the transport network in Australia.

Can I also refer in this context to the Moorebank Intermodal terminal that agreement was reached in the last week for that to proceed, a public-private sector partnership, which will move a lot of the freight off the roads of Sydney onto rail. Moorebank will be connected to the Port of Botany by rail, and to the interstate rail network. And so that will be I think a real boost to rail infrastructure. So, we recognise that rail will play a particularly important part of the transport task in the future.

Rail is particularly good at large volume, long distance haulage, not so good on the short distance stuff but rail is absolutely essential to us having an efficient transport network into the future.

And can I add one other thing, I'm a strong supporter of us having a decent shipping industry in this country. It is a tragedy that at a time when our freight task is growing, the share carried by ship continues to decline and a number of Australian ships is halved over the last few of years and so we've really got to be serious about making some tough decisions about whether we want a shipping industry in this country or whether we don't. I do. And that is going to mean that we're going to have to tackle some pretty tough issues, some industrial issues obviously, but we have clearly reached a stage where the shipping industry is so small now, so fragile, that this is really a desperate last attempt to have an industry capable of moving freight around Australia from port to port.

Question: And does this mean revisiting cabotage because you'll have to deal with that inthe Senate?

Warren Truss: Well, certainly it does involve cabotage but we have cabotage now. It's limited but some cabotage in relation to shipping around this country, there are arrangements where licenses can be granted for international vessels to undertake voyages but the conditions associated with those licences are so restrictive as to make it difficult for them to work in practice. You've got to get four licences at a time, you've got to apply a year in advance, you can't change the dates and if you turn up a day early at the port, you've got to wait outside the port until you can bring the ship in. So, it was a system, largely written by the MUA, that was designed to fail and it has failed. Since then the number of Australian flagships has halved and unless we act promptly and are prepared to take some tough decisions, we'll have no industry at all.

Question: Much of what we've heard today has been about the huge population growth we're seeing in four capital cities in particular, not in Adelaide or Canberra or some other cities. So, two questions arise out of that. One is the Coalition has a tradition of nominating the- usually the Leader of the National Party, as the infrastructure minister and city interests see that as a way- the role of that National Party infrastructure minister is to prise money away from the cities into the regions and so I wonder if you could comment on that in the context of the Northern Australian infrastructure fund that appeared to come out of nowhere in the Budget and the lack of detail around it makes some people suspicious that it was a bit of- maybe a vice captain's call.

[Laughter]

Warren Truss: Well, I'll be happy to take the credit for it when the white paper is announced but the reality is it's very much a team effort involving senior federal ministers but also the premiers of Queensland, Northern Territory and Western Australia and that work has been going on really since the federal election. We take that very seriously, there's been no money taken off Sydney or Melbourne, I can assure you, to fund the Northern Australia strategy but it is a very substantial commitment. People have been talking about the North for ages and not doing too much. This, I think, will be seen as a genuine attempt to enable and to help facilitate the North achieving its true potential. And you'll all be aware of the fact that two thirds of the global population lives in the Tropical zone. Now, Northern Australia is probably the only part of that Tropical zone that's in a developed country so we are in a unique position to provide leadership in science and education and medicine, technology for the largest proportion of the global population.

So, we want to tap those benefits. Yes, we are going to need some better infrastructure up there and the Budget and the white paper announcement is about that as well. But I think that the Northern Australia paper gives us a chance to open, I guess, the last frontier in Australia and enable it to achieve its potential. I think if you look fairly though at the Budget, and the commitments we have with each of the states, the agreements over the next five years for infrastructure, the cities have done pretty well. In fact, if this event was being held in a country town I would be being told that you're not delivering enough to regional communities but we have boosted the Budget so that everyone, city and country, are getting more from infrastructure as a result of the commitments we've made in the Budget. And that includes big, big capital city road and rail projects but it also includes significant investments on the Pacific Highway and the Bruce Highway.

We'll have a four-lane road by about the end of this decade, a four lane road all the way from about Gympie in Queensland through Brisbane, Sydney to Melbourne and then out to Sale and out to Ballarat and Bendigo etcetera. We will have that four-lane for the first time, for the first time. It unimaginable a country like Australia with big cities like Sydney, Melbourne, Brisbane and they're not connected by a four lane highway. Well, that's a significant infrastructure breakthrough that we're making and that benefits country and city.

But we've also invested substantially in local roads and streets. We've doubled the money this year going to councils for road and street works. We've got a new bridges program in country areas. We've boosted the black spots program to get rid of accident spots and the like. So there's substantial strategic investment in major infrastructure projects, but we're not ignoring that last mile, which is so important in delivering produce to market or getting people to school or to their hospital or whatever other community services they will need.

Question: Sorry to keep you in the cities but a lot of what we've heard today is around the lopsided nature of growth in major cities, with population and housing going on the outskirts, service, industry and knowledge, industry jobs being created on the interiors of the cities, and some discussion about how technology can help us deal with that. What is the Federal Government's feeling about that? I mean, going back to an earlier question, is there any role for the Federal Government driving policy to try and divert some of that population growth to the likes of Adelaide and Hobart, and even Canberra, where they're not experiencing- not expecting the same level of growth? Or is that futile?

Warren Truss: I fear it might be futile, although as a country Member of Parliament I regret that. But what has been inevitably happening now for a very, very long time—probably a hundred years—has been that the little towns lose out to the bigger town nearby. When we build a bitumen road from the little town to the big town, we're actually signing the death warrant of the little town. And the bigger town then loses out to the regional capital. And the regional capitals are losing out to the state capitals. And as you say Adelaide—and even for that matter Brisbane—are missing out now to Sydney and Melbourne. And I regret that. But I don't know how I can turn it back. I don't know how I can turn it back.

Now, the people who are crying out that they can't afford a house in Sydney could buy a whole street in my town. And have plenty of space around them as well.

[Laughter]

But they're not choosing to do it.

Question: Because they don't get the job that they want, presumably?

Warren Truss: Well, they could get a job. They could get a job that would sustain their lifestyle comfortably, particularly if they've got needed skills. In fact, they could probably not only get a job that was fulfilling for them but also enormously beneficial to the community. Because if the people leave, you know, if the bank closes or if there's a significant business closes, that's a brain drain as well. And so regional community loses a lot of its skills base. You lose your rotary president, your school P and C president, and those sort of things. And so the loss is more than just people moving out, it's actually a loss of the skills base of those communities and is very hard to rebuild them, very hard. And I think the fly in-fly out syndrome is perhaps the most graphic example of that. That people would prefer to get on an aeroplane every Monday and Friday and fly the other part of the country, or for 28 days on and 14 days off, fly to the other end of the country, at substantial expense, rather than live in the country town.

Question: And we know federal funding is limited, and we heard some very challenging ideas today from Chief Executive of Transurban and some of the- I think your Assistant Minister Jamie Briggs about the need- the fact that technology is available, technology is emerging, that can do virtually anything. You can track- Singapore's going to track vehicles by satellite and charge them according to every- whatever, you know, congestion time of use, whatever. We're not really having a debate about satellite tracking in Australia to my knowledge, but there's obviously a lot of potential for dealing with the strain on infrastructure between city outskirts and city interiors and so on from that. Do you think the country is ready for it? The nation I mean?

Warren Truss: Well, I don't think the public are anywhere near where the academics are. Now it may be academically a good policy to have pricing on what everyone does and charge them individually for the infrastructure that they use. That is no doubt sound economic and academic theory. But I don't know that you would pass the pub test. People would see this as the growth of big brother beyond belief, if their every movement in their vehicle is going to be tracked by a satellite. And yeah, I agree it can be done and in a sense we're doing a bit of it now, by virtue of the tolling and other arrangements that we have in place. But I think people probably still want to be able to visit their girlfriend without the whole world knowing about it, or their wife…

[Laughter]

…and I think that the reality is that there's still quite a bit of work to be done to win public trust and confidence in a system of that nature. But nonetheless, we do have in some senses a road user charge. It's fairly blunt in that, you know, there's a tax on the fuel and the more miles you do, the more tax you pay.

In the heavy transport industry, trucks do pay a road user charge that covers the full cost of their use of the roads, including a share of the construction costs. So it's broken through in the trucking industry, the working sector if you like, and I think Jamie Briggs's comments this morning were especially about what we might be able to do to enhance the use of charging systems in the trucking industry. In other words, charging perhaps a special toll on roads, trucks using particular roads, and with obviously a commitment that then that money would be spent on that road so that the benefits are there for the future. And I think it will be a lot easier to do it in the heavy transport sector, although not easy, but easier than it will be with private motorists going about their daily business.

Question: Mr Truss, we're out of time, I'm afraid, so can you please thank the Deputy Prime Minister for his time today.