Australian Logistics Council Annual Dinner

Speech

WTS002/2015

11 March 2015

Members Dining Room,
Melbourne Cricket Ground

Thank you for the words of welcome Don [Telford, Chair of ALC] and thank you for the invitation to join you for your Annual Dinner. It is a pleasure to be here.

I also want to acknowledge John Anderson, Chair of the Centre for Rail Innovation, and Bruce Baird, Chair of the National Heavy Vehicle Regulator.

I thank the ALC for the close co-operation and working relationship between your organisation and the processes of government. We have mutual interests—we need your advice to develop good policy and you need us to deliver good policy.

I would like to take this opportunity to thank ALC delegates for your active participation in last month's fifth annual Dialogue with my Department. This forum provides a valuable opportunity for industry and government officers to exchange views and ideas in a frank and open manner.

The Australian Logistics Council is the nationally recognised voice of Australia's logistics and freight transport industries and it is crucial that we keep the lines of communication open.

This year's Dialogue discussion focussed on deregulatory opportunities, the current priorities of Infrastructure Australia, and better integration of the freight system across the different transport modes.

And on that note, I commend you for your considered analysis of the key issues impacting on your sector. Your strategic, national, whole-of-supply-chain approach is logical, it is pragmatic—and as your conference theme notes—it is aimed squarely at Delivering for Australia.

Your report into the Economic Significance of the Australian Logistics Industry is a valuable and thought provoking document that sets out the true size, scope and breadth of the logistics industry and the impact that efficient freight movement plays in improving Australia's productivity.

I'm not going to quote too many of your own figures back to you but when we are thinking of the big picture, it is important to consider that your industry directly employs around 1.2 million people and contributes $131.6 billion to our economy each year.

When you break that down we see that achieving just a one per cent improvement in efficiency in your sector would translate into a $2 billion gain to the national economy each year.

I was particularly interested to see that the sectors which were identified as having the most benefit from increased logistics productivity are forestry, manufacturing, processed food, construction and our wholesale and retail trade. These industries represent a mix of regional and urban interests and are fundamental to our wider economy.

Your research also compliments the work of my Department's Bureau of Infrastructure, Transport and Regional Economics.

The Bureau points to an 80 per cent rise in Australia's freight task in the next 15 years, and a 300 per cent rise by 2050.

You add an informed, industry-perspective depth that assists in formulating and implementing policies to tackle the real challenges in improving supply chain efficiency and cost effectiveness to meet the needs of a growing population.

The Government also recognises that there is an urgent need to comprehensively overhaul processes for assessing and developing public infrastructure projects and I would like to thank you for your submission to the Senate (Economics and Public Administration Committee) Inquiry on the privatisation of state and territory assets and new infrastructure.

Your submission states that you support the concept of asset recycling—but you also believe that any proposal to either sell, or offer a long-term lease for any piece of infrastructure must possess a net positive benefit.

Our $5 billion asset recycling initiative will show how mature assets can continue to serve the public while providing an impetus for the next generation of infrastructure projects.

It is interesting to observe that while asset recycling was seen as a reason for the defeat of the Newman Government in Queensland, the elected Labor Government in the ACT has already lined up for the scheme, and the ALP Governments in South Australia and Victoria are showing keen interest in how the scheme could benefit their states' infrastructure needs.

The ALC also argues that proposed benefits need to be in a published cost benefit analysis that is freely available to the public.

This is in line with the Coalition Government's commitment to evidence-based infrastructure planning.

Rebooting Infrastructure Australia's structure is an important example of this commitment.

Last week, IA's independent Board appointed Philip Davies as its new chief executive officer, and I welcome him to his new role.

Philip is an ideal fit for the position, with his strong record of achievement and wealth of experience both in Australia and overseas.

On top of his experience as the Director, Infrastructure Advisory, Asia Pacific for AECOM Australia, he has also held the role of Director of Traffic Operations for Transport for London.

I'd also like to pay tribute to outgoing Infrastructure Australia head John Fitzgerald, who led the organisation… first as Interim Infrastructure Coordinator and then as Acting CEO from April 2014.

John guided Infrastructure Australia through its transition to make it a more accountable and transparent body, refocussing its key priorities after amendments to the Infrastructure Australia Act 2008 in July 2014.

Infrastructure Australia is close to finalising its audit of nationally significant infrastructure. I understand IA is now busily reviewing the intergenerational report released by the Treasurer last week to ensure the audit takes into account the impact projected population statistics will have on our infrastructure assets. And I am hopeful that IA will release the audit for public consultation soon, so that you and others in the transport and infrastructure sector can inform the development of Infrastructure Australia's 15-year plan of infrastructure priorities. This Plan will guide our investment decisions into the future. 

It was one of our key stated goals for the reform of Infrastructure Australia that it gets ahead of the game; For the first time, IA will actually be identifying the priorities before governments have made their decisions and that's clearly the way planning is meant to work.

However as Infrastructure Secretary, Mike Mrdak, told the Dialogue there is also a need not just to focus on the dollars to be spent but also to accurately convey the impact of the problems we are trying to fix, and the benefits of fixing those problems and pinch points.

ALC has also noted that recent experiences across jurisdictions show that when communities are properly informed it is possible to gain broad public support.

I think we are starting to get there on long vexed projects like the Western Sydney Airport—making sure the public know what is planned and giving them their say.

And as we all know, public support is critical to getting the job done—especially in a very tight fiscal environment.

As the longest and largest mining boom in Australian history tapers off, we can no longer rely on increasing terms of trade to sustain our economic growth.

The boom helped to fund an unprecedented level of government and private spending on new infrastructure.

This record sustained level of investment has meant thousands of kilometres of new and upgraded roads and railways, new and expanded airports, seaports, hospitals, and schools, better water infrastructure and vast new communication networks.

By 2011–12, the total stock of public infrastructure assets was valued at more than $877 billion.

These are investments in Australia's future that will continue to pay dividends for decades to come.

From 2001 to 2011, public infrastructure spending more than doubled as a percentage of Australia's GDP.

However, over the decade to 2013, total factor productivity essentially flat-lined, and it actually fell in 2013—the worst performance of 15 countries compared by the Productivity Commission.

We have relied on rising export prices for too long. Now, more than ever, we need to be firmly focused on growing our national productivity.

Without reforms to our economic settings, Australia risks falling behind in the world market.

You have heard this message before and it remains unchanged—we will have to do more with less—as we refocus our attention on maintaining and upgrading existing transport infrastructure.  

We will need to look more closely at the micro economic reforms and deregulation that are needed to underpin productivity growth. 

One of our government's many delivered election commitments was our promise to reduce red tape costs to business by $1 billion per annum.

We achieved that target in our first year and look set to do even better in the year ahead.

That is not to say that we will be slowing down on game changing long-term projects like the Melbourne to Brisbane Inland Rail, the Western Sydney Airport or our unprecedented $50 billion investment in highway and rail upgrades, port access routes and intermodal hubs—WestConnex and NorthConnex in Sydney, the Gateway North project in Brisbane, North South Road in Adelaide, the Freight Link, Gateway project and the Swan Valley Bypass in Perth, Tiger Brennan Drive in Darwin and we have not given up yet on East-West Link in Melbourne.

In regional Australia we will complete the Pacific Highway duplication this decade, $8.5 billion is committed to the Bruce Highway upgrade in Queensland and another $1.6 billion for the Toowoomba Second Range Crossing.

And there are large projects in store for the Warrego, Princes, Western, Midland, North West and Great Northern Highways.

As I said at the outset, ALC understands the inter-connected, whole-of-supply chain approach better than most.

Your membership spans all the modes—road, rail, maritime and aviation and you understand that what may seem like a simple task of moving goods and services from farms to markets, from pits to ports, from warehouses to supermarkets and stores, from home businesses to customers, is in fact a complex operation.

It is in your clients' best interests—indeed the economy's best interest—that goods are moved by the most efficient mode for the job across inter-connected supply chains. 

We share and endorse ALC's recognition that transport network planning for freight has to cross traditional modal barriers and fully capture issues associated with our major ports and with broader land use planning.

To this end, the Key Freight Routes suite of maps produced for COAG's Transport and Infrastructure Council will play a strong role in informing future land use projects and commercial, regulatory and policy initiatives to ensure that critical freight linkages are recognised and strengthened.

The maps are a first for Australia and they are the result of a collaborative effort involving all levels of government, industry, researchers and major stakeholders around the country. I thank ALC for your valuable input.

The Council has already put the maps to their first good use by agreeing ‘as of right’ access for B-doubles to all key freight routes as an immediate objective; with the further objective of increasing ‘as-of-right’ access over time.  The national heavy vehicle regulator now has the role of monitoring and reporting to governments on the gaps, particularly on inter-urban routes.

Connecting to the key freight routes is the role of state and local planning, and as your members appreciate, last mile roads play an important role.

That's why this Government has committed more than $3.8 billion in new money to local government and regional initiatives including:

  • $2.1 billion for the new Roads to Recovery Programme;
  • $565 million for the Black Spot Programme;
  • $1 billion for the new National Stronger Regions Fund;
  • $300 million for the new Bridges Renewal Programme; and
  • an additional $200 million through to 2019 for road upgrades under the Heavy Vehicle Safety and Productivity Programme.

Earlier this month, following a competitive, merit-based selection process, 53 projects have been identified under Round Four of the national Heavy Vehicle Safety and Productivity programme.

We will contribute up to 50 percent of total project costs to ensure our freight routes are safer and more efficient.

I have also announced Round One of the Bridges Renewal Programme with 86 bridges set to be restored or rebuilt across the nation.

The Bridges Renewal Programme is designed to bolster productivity of Australia's local bridges, to better serve communities and drive greater efficiency in road freight and traffic movement.

By upgrading these bridges from, for example, one-lane timber bridges to two-lane concrete bridges, residents will enjoy better, safer and more reliable road access. Freight from farms and local factories will be able to pass safely along quicker routes with greatly improve productivity.

It's a classic win-win situation. That's why the Coalition Government has identified local bridge upgrades and repairs as a national priority.

I was also pleased to see that Stage 1 of the North Sydney Freight Corridor Programme is within a whisker of completion.

The first seeds for a Northern Sydney Freight Corridor (NSFC) Programme were sown in 2004 by my predecessor and a man of great vision, former Deputy Prime Minister, John Anderson AO, who is currently chairing the Melbourne to Brisbane Inland Rail Implementation Group. 

John, to a large extent, authored an infrastructure programme which has subsequently remained a focus of three successive governments. 

When complete, the programme of works will significantly improve the transit of freight within the rail corridor immediately north of Sydney and reduce interaction with passenger trains. 

The NSFC programme of works remedies the lack of space previously available for holding freight trains on Sydney's outskirts, so they can be better coordinated with passenger trains to provide a more reliable service. 

Commuters will also benefit through extensive station upgrades at stations impacted by the works. 

The completed program of works will provide improved freight train access through northern Sydney to the metropolitan freight network, Port Botany and intermodal terminals by easing restrictions on freight services during the passenger peak periods as well as improving capacity for freight trains at other periods during the day. 

When complete in June 2016, Stage 1 of the NSFC Programme will boost carrying capacity by 50 per cent by increasing the number of freight trains operating in the corridor from 29 to 44 per day.

But of course it is not all about road and rail…in a country as vast as ours, and at such great distance from major global hubs, air and sea freight movements are a critical part of the national and international supply chain.

I have asked my Department to develop broad options to improve air cargo supply security requirements that are commensurate with risk, meet key international obligations, and are consistent with the Government's deregulation agenda.

The Department will consult with industry on these options including the release of an industry discussion paper and targeted industry workshops.

As part of the options development and our reduction of red tape agenda, I have agreed to regulatory changes to streamline Transport Security Programs (TSPs) for industry participants. 

Our major sea ports are also our international trade gateways and we rely on maritime transport for 99 per cent of our exports.

A substantial proportion of our domestic freight also depends on coastal shipping but, as you are all aware, Australia's coastal trading sector is at a crucial way-point.

In 2012–13, Australian ports managed more than $400 billion worth of international cargo and saw some 4,900 overseas cargo ships make almost 14,000 port calls.

At first glance, that may sound impressive but this is an industry sinking under the dead weight of red tape and uncompetitive costs.

Clearly, coastal voyages by international and domestic ships should be growing, not shrinking.

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.

To this end, work is progressing and the Government is actively considering the options.

Conclusion

In closing I would once again like to thank ALC for your valuable contributions to the ongoing work to secure a safe and efficient national supply chain.

I also thank you for the opportunity to join you this evening here at the MCG Members Dining Room.  I recall that last year we dined at Sydney's Randwick Racecourse. As a proud Queenslander I'd like to do a small plug for my home state. Maybe next year we could meet at the GABBA.

Thank you.