Keynote Address: 2014 TTF Leadership Summit

Speech

WTS027/2014

29 October 2014

Main Committee Room
Parliament House
Canberra

Thank you for the warm welcome Margy (Osmond, CEO, TTF).

Good afternoon Bruce (Baird AM Chairman), ladies and gentlemen.

Before I move on, I would also like to extend my congratulations to Margy on her appointment as CEO earlier this month.  Margy has an impressive background and a wealth of experience which I am sure will stand TTF in good stead.

TTF industries have been, and always will be, central to Australia's ongoing prosperity so it is always good to have an opportunity to meet with members, particularly as part of this important summit.

Your expert views and insights into the priority transport infrastructure this country needs, to address both immediate and future challenges, are welcomed by the Coalition Government.

Safe and efficient transport—be that by road, rail, air, or by sea—domestic or international—together with a flourishing tourism industry are critical cogs in the machinery of our nation's economy.

And to keep that machinery turning over at optimum efficiency the Government is committed to fostering an economic environment in which Australian industry can flourish.

Reducing Regulatory Burdens

An important part of that environment involves governments removing unnecessary regulatory burdens, taxes and charges that currently tie up businesses and hinder productivity.

Our government is committed to reducing the burdens of excessive regulation by $1 billion each year—and we are devoting two Parliamentary sitting days each year to this effort.

Coincidentally, when I spoke to you in March, Parliament was engaged in our very first Deregulation Day.

Today we are debating the second tranche of reforms

I said at the time that we were building a bonfire of regulation and indeed we removed more than 9,500 unnecessary or counter-productive regulations, and 1,000 redundant acts of Parliament—producing savings of more than $700 million annually from these efforts alone.

Today we are continuing to stoke the fire with a second sitting aimed at cutting red tape and easing the regulatory burden.

Our focus is not just on reducing the volume and duplication of regulation, but on a broader approach which creates a better and more efficient arrangement between regulators and the regulated.

This includes improving how we consult and engage with stakeholders before regulations are actually introduced.

It also means making greater use of sunset clauses to ensure that a regulation does not remain on the books when its purpose is exhausted.

We are intent on lifting the regulatory game in relation to requirements like the need for regulators to take proportionate actions, being accountable for those actions, and committing to genuine continuous improvement.

If much of this sounds like plain common-sense and fair play, that's because it is, and the benefits of this approach will be felt across the entire economy.

Coastal Shipping

Getting the regulatory settings right for our coastal shipping trade—and that includes the booming number of cruise ships visiting our ports—is high on the Government's agenda.

We are all familiar with the old adage ‘loose lips sink ships’. Well consider this, since 2012, Labor's loosely thought through and excessive regulation—masquerading as reforms—have created a wake which threatens to sink an entire shipping industry.

As you would be aware, in April I released an Options Paper on potential approaches to regulating coastal shipping including a review of the 2012 Coastal Trading Act.

Submissions were received from 85 interested parties, most of which strongly argued the case for reform.

Overall, the consensus was that the Coastal Trading Act has set up an unreasonable barrier to competition and market entry by foreign vessels.

The result is increasing prices for coastal shipping services which in turn are undermining the viability of Australian business.

Submissions from peak tourism bodies, including TTF and Cruise Lines International Association Australasia, noted that the exemption for cruise vessels over 5000 tonnes resulted in smaller foreign expedition cruise operators not coming to Australia due to the licensing requirements, while the big end of town have benefited by not being subject to the excessive red tape of the Coastal Trading Act.

Over the last 11 years the cruise industry has grown by an average of 20 per cent per year, with growth being particularly pronounced between Australian ports.

This includes many regional centres, like Burnie, Eden, Geraldton, Gladstone, Kangaroo Island, the Mornington Peninsula and Port Lincoln.

The Tasmanian and Northern Territory governments also highlighted that the licensing system was operating as a disincentive for foreign expedition cruise operators.

As I said in a recent address to Shipping Australia, the Government is considering the best way to implement a significantly more flexible permit system to stimulate the use of coastal shipping in Australia. We also recognise that there are special circumstances related to the cruise industry which need to be taken into account.

Cruising is a global industry, ships are essentially transferable around the world to ports and countries that will offer a favourable environment for companies to do business in.

To ensure the continued expansion of the cruise industry in Australia, we need to get the regulatory settings right. There is still huge potential for expansion into new regional ports, opening up new tourism opportunities, creating jobs and supporting local economies.

So… we acknowledge that Australia's coastal trading sector is at a crucial way-point.

There are problems, but, as a government, we also see great opportunities for growth and expansion once we get the regulatory monkey off the industry's back.

Aviation & Airports

And it is not just the maritime sector where we are seeking to implement regulatory reform.

The Coalition Government's vision for aviation in Australia is to foster aviation industry growth in an environment that is safe, competitive and productive.

The Government's goal for aviation also acknowledges the importance of international aviation to our tourism industry, international trade and our broader economy.

Statistics from my Department's research arm, the Bureau of Infrastructure, Transport and Regional Economics, show that more than 146.5 million passenger movements were recorded at Australian airports during the year ended June 2014.

Ten years ago, there were around 88 million passenger movements. The growth recorded at end June this year represents an average annual growth rate of 5.2 per cent and marks 12 years of continuous growth.

And on the domestic side, there were more than 114 million passenger movements this year with domestic passenger movements through Capital city airports accounting for 77 per cent of all domestic passenger movements in 2013–14.

This is a growth of 1.8 per cent compared to 2012–13.

Internationally, there were more than 32 million passenger movements this year.

International air traffic grew by 6.8 per cent compared to the previous year, with the top five countries of origin for short-term visitors to Australia being New Zealand, China, the United Kingdom, the USA and Singapore.

Since 1992, when we began to liberalise the Australian aviation industry, international passenger movements into and out of Australia have more than trebled.

In 1992, 41 international airlines flew to Australia. Today there are 54.

The mix of those airlines has changed—the rise of Asian hubs in the 1990s and Middle Eastern hubs since 2000 have caused a fundamental shift in the orientation of our industry, and an increase in global connectivity.

Services from Middle Eastern airlines have trebled in just a decade.

The number of Asian-based airlines serving Australia has increased from 14 in 1992 to 23 today.

The growth in the Chinese market particularly has been a constant theme of industry discussions in recent years.

The growth has been enormous.

In the last five years alone, the number of short-term visitor arrivals from China have more than doubled, reaching nearly 760,000 in 2013–14.

But we cannot expect record levels of growth forever and, behind the headline figures, we have just begun to observe a shift away from the simple story of continued and unbroken growth.

In recent months, a number of airlines, particularly from Asia, have slowed or stepped back from their previous ambitious growth plans.

In some cases, we've seen airlines reduce capacity, either by operating smaller aircraft, or reducing the number of flights they operate. This is not a cause for panic and hand-wringing. This is the market at work, and evidence that our market-driven aviation market policies are working.

A liberal aviation market policy means both an ability to compete and to withdraw services also. The key objective is to facilitate sustainable growth.

The Coalition Government recognises that this sustainable growth objective presents a slight change to the current mindset of growth at all costs.

It requires all players—airlines, airports and the tourism industry—to recognise the importance of each party having the opportunity to make a profit.

And the changes that are taking place are not simply in the number of airlines or the number of flights or the number of passengers.

In the past, airports were seen solely as transport hubs for moving goods and people from one region or country to another.

Not so today.

Airports are now business destinations in their own right and provide a powerful economic engine for their home region and local communities.

Modern airports are developing into airport cities—or aerotropolises  —as the professional planners say.

In the 18th century the drivers of business and urban development were the world's seaports; in the 19th century it was railroads; in the 20th century it was highway networks.

Today, it is airports which are becoming multimodal transport and commercial hubs and centres for time-sensitive, distribution networks.

Increasingly airport arteries are home to business and industrial parks, information, communications and technology complexes, and retail and hotel centres.

This is the way of the future, and this new way of looking at airport precincts is echoed in the way we are considering long-term airport master plans to ensure that planning and infrastructure development integrates with, and supports, local communities.

Western Sydney Airport

This is certainly the case with the development of the proposed Western Sydney airport.

As you would be aware, in April this year, the Government confirmed that the site for a new airport will be Badgerys Creek. This comes after more than 50 years of discussion about potential sites.

This decision will provide an avenue for economic growth for Western Sydney—the third largest economy in Australia—and add much needed long-term aviation capacity for the Sydney region.

 As the TTF has rightly noted, transport infrastructure to serve an airport in Western Sydney will be vital to its success.

That is why, in partnership with the New South Wales Government, $3.6 billion will be invested over ten years on important road upgrades to ensure that we have safe and efficient transport links that can accommodate forecast growth.

The New South Wales Government has also commenced a consultation process to preserve a corridor for a future extension of the South West Rail Link to the airport site.

Demand for passenger journeys in the Sydney region is forecast to grow from 40 to 87 million over the next 20 years. 1

An airport for Western Sydney has the potential to service the increase in demand and support the continued growth of Australia's $107 billion tourism industry into the future.

At the same time, a new airport will create jobs in Western Sydney not only during the construction phase, but over the long-term as the airport and surrounding population grows.  

Detailed planning is underway and it is anticipated that an airport could be operational by the mid-2020s.

Planning includes a robust and rigorous environmental assessment.

To get things rolling, the Government has contracted a team of experienced consultants from SMEC Australia to conduct an initial survey of the site and its environmental assets.

The survey will update our specific knowledge of the site to inform the Referral under the Commonwealth's Environment Protection and Biodiversity Conservation Act, 1999.

The Referral is expected to be submitted for consideration by the Minister for the Environment, Greg Hunt, next month.

The environmental assessment will of course include opportunities for public consultation.

As you are well aware, an important first step in delivering the airport involves consultation with the owners of Sydney Airport who have the right of first refusal to develop and operate a second major airport for Sydney—this was a condition of the sale of Sydney Airport in 2002.2

Formal consultations commenced on the first of October and are expected to take nine months.

Conclusion

In closing today I want to emphasise that the Coalition Government is looking to the future.

We know how important it is that we have the right policy approach to regulation and infrastructure to ensure we can revive and revitalise coastal shipping, meet the challenges of the burgeoning freight task and accommodate and capitalise on the predicted growth not only in the aviation industry, but also in tourism, airport and trade industries.

It has been a long and productive day and I am sure that you are looking forward to afternoon tea so I will leave it there.

Thank you for your time.

1 Joint Study on Aviation Capacity in the Sydney Region

2 Sydney (Kingsford Smith) Airport Share Sale Agreement