Radio interview, 4BC


BILL MCDONALD: And do you remember I mentioned this at the start of the show? The nation-building project, the Inland Rail. Roughly 1,700-kilometre freight link from Melbourne to Brisbane, designed to take thousands of trucks off the highways, improve freight movements. Talk of 24-hour movements between the states, cut carbon emissions by 750,000 tonnes and reduce truck movements by 200 thousand. So a really big project.

Well, guess what? It looks like it's a big stuff up at the moment. Under the control of a Federal Government-owned and run Australian Rail Track Corporation. Blunders that have led to a cost blowout to about $30 billion, triple its forecast cost. Now, placing it, or some doubt over it, we'll find out whether that's the case. Former Commonwealth Energy Advisor Kerry Schott released a scathing 68-page report overnight, blaming the astonishing estimated cost increase on basic failures in planning and project delivery by the Australian Rail Track Corporation. She said a new board of directors and a permanent chief executive need to urgently be appointed to run the corporation. There's also huge concerns about the South East Queensland part of the project.

If you're wondering whether this is relevant to you, that has now been taken off the table until a better solution is found that won't impact Brisbane and Logan as much. So the entire project started with Coalition Government, but it now falls, I guess, into the lap of the Infrastructure and Transport and Regional Development Minister Catherine King. And I'm pleased to say the Minister joins us now, welcome to Brisbane Live.

CATHERINE KING: Hi, Bill, it's good to be with you.

BILL MCDONALD: Sorry it's taken a while to get to you there, but firstly, what's your response to this report from Kerry Schott?

CATHERINE KING: Well, I think this is a damning indictment on the management of this project by the Liberal and National Party. This was the National Party's pet project. They've had a decade of this project and they have completely meant that it is beyond budget and it is definitely not going to be finished on time. I've got a mess to clean up here and it's been a mess from the start. It started really with poor governance, them giving it to ARTC in the first place, that did not have the skills to actually deliver the project and then just perpetuated the problems all the way along. They've basically treated the equity funding for this project as though it's free money, not asked the right questions and not had this project under management.

Now, Katy Gallagher and I are both the shareholder ministers now of this project and we've got a big job to do to clean it up. It was pretty shocking. We got the report in January. It's taken us a bit of a bit of time to work out just what we do with this. It's a really important project. When, I heard you at the start, they talk about all the benefits of it. We want to realise those benefits, but right at the moment, with this incredible blowout of cost and the way in which it's been managed, we've got work to do. So we released the report yesterday overnight, and we this morning have accepted all of the 19 recommendations that Dr Kerry Schott has given to us that we'll see a major shake-up of this project.

We've got work to do to try and get the planning work underway and right throughout Queensland. It's now pretty clear that it will go from Beveridge in Victoria. Two intermodals there at Beveridge in the Western Intermodal, and the hope is to get it to an intermodal at Ebenezer. It's clear that this project is not going to have rail through Acacia Ridge. I think that's very clear from the report. I think that was always going to be very difficult, but we've ruled a line under that but we'll get it to Ebenezer. But really the first part of our job is to try and get it to Parkes and actually get it to start making money for a return on investment, for taxpayers’ money. Because then you'll link it into the sort of east to Perth route and into Botany and into Newcastle. And then we've got to get the work to make sure we've got the costs of this under control and we understand them. So Kerry Schott told us that it's potentially going to cost $31 billion, but she had no confidence at all, even in that figure. So we've got a bit of work to do to get this back on track.

BILL MCDONALD: Yeah. Wow. It sounds like it. Part of some of her assessment as well, she said immature preliminary designs, approval requirements, delays, prolonged approval processes and of course, we've got the recent escalation in costs for doing a lot of stuff. But who's dropped the ball here? Where's the fault lie and do heads roll over this anywhere?

CATHERINE KING: Well, look, I put it pretty squarely, with Barnaby Joyce, to be quite honest. I think that he had carriage of this project and this is a major government project. He and the Finance, previous Finance Minister were the shareholders. What we had even, for example, and Dr Schott says this in a report, even the board itself of ARTC said, we don't have the skills on our board to deliver this project. You had Warren Truss as the former chair, saying to then Minister Joyce, we need different board members. And he basically just appointed some people who did not necessarily have the skills to the ARTC, didn't listen to the board and made decisions that seem to be in a political interest and not in the long term, taxpayer interest. And that's the problem when you've got a project like this. This is 1,700 kilometres, a really complex- not complex engineering wise, although there's some tricky bits to build,- but it crosses three states, it crosses multiple local government boundaries, crosses some difficult, sensitive First Nations areas as well. And if you don't have a board that has the skills to deliver it in the first place and you are not paying attention to it, this is what happens. And really, I absolutely lay the blame at their door and we've got a big mess to clean –

BILL MCDONALD: Sounds like the Nationals are all over this. If you mentioned Warren Truss as well.

CATHERINE KING: There, well, this was their pet project. Like, this was their pet project every day in question time we'd have Barnaby Joyce getting up, telling us how amazing Inland Rail was. Well, guess what? Guess what, Minister, you dropped the ball and that's what's happened. And frankly, I think this is an absolute classic example of how not to build infrastructure and a classic example of why the National Party should never have their hands on the till of these sort of projects ever again.

BILL MCDONALD: Goodness me. So what happens with the funding now? Is that part of everything you review off the back of this review?

CATHERINE KING: So it's always been equity funded, which means it's not money that's in the budget, but it's money that sits there and then we've got a return. So basically, we're meant to get a return on investment. It's going to take a long while for that to actually occur, so we're not going to put any more money into it. The equity funding that's there is enough well and truly at the moment, to keep building the project as it is. What it means is that we will concentrate all of the sort of tender construction contracting work to Parkes. In the meantime, we will get an independent valuer to come in and really get absolutely down into the weeds of getting as much detail as we can about the cost of this project. We'll keep going with the planning work with the Queensland Government and the New South Wales Government to get the planning and environmental approvals done.

But until we've got those approvals, really, we can't say here is a date for when construction will start in this area. I think the other thing is we obviously want to try and make sure we get maximum benefit and getting that rail to Parkes begins to give us a return on investment and gets at least some money back into the coffers that can be used to make sure we get this project back on track. So that's really what we're planning to do. There's a major shake-up of the structure. We'll set up a subsidiary board underneath ARTC that's got the right skills to deliver this project. The project hasn't had a CEO for 18 months. Again, the previous government just failed to appoint –

BILL MCDONALD: I was going to say. Can you give us a reminder there? So obviously, they put their hands up, as you said, they said, we haven't got the scope and the expertise to cover this, so they just let it go and let it run wild or ignored it?

CATHERINE KING: Well, I think – I don't know. I don't know what they were thinking, I really don't. I think at some point I ask every day; how much is this costing? Is this value for money? What do we got to do next? And you're reliant on people giving you that information, but you've got to ask for it as well. So not only did they not for what it looks like, the most recent, just before the election, board appointments, ex-National Party MP I think in some instances, and other people who might be known to the National Party were put on the board again, not necessarily with the skills to deliver the actual project. They were contrary, as we understand it, to in fact, even the Chair's recommendations about who was needed on the board. We then had a CEO not appointed for 18 months. Again, we understand the board recommended someone for that position and the previous government obviously didn't agree with that person, but just left the person. We've just had someone acting in it who's done a really good job to try and keep the thing ticking over, but just wasn't in a permanent role. So there's just been a mess with this and I think they have been more interested again and I'm finding this in infrastructure everywhere, in getting a headline and putting a media release out and the delivery has just been really terrible.

BILL MCDONALD: Well, it makes me think ahead to [indistinct] infrastructure as well, seeing we've got all the Olympic infrastructure to be built up here in Queensland. Should we be worried about that?

CATHERINE KING: No, I'm pretty confident Steven Miles and I work really closely together. My department's all over it. We've obviously got an agreement to build the smaller venues and we've got our hand up for the Brisbane Arena. We're all over it. That's the first thing. We only signed the Intergovernmental Agreement just at the start of this year, but we're getting all of that work under way, and we are absolutely very focussed. You know, we've got a 10-year time period to get, we've got to get it built before then. The Brisbane Arena is a particularly complex project, but we've got the structures in place and starting to make sure we've got the people in place to deliver that.

And I'm pretty confident Steven and I are in close contact about that and are across it. As I said, there are big lessons to learn from this project, but you've got to get that, you really got to make sure you actually understand the design, you've got the scope right, you've done the planning work, you've got the approvals. But basically what they did with this project, they didn't have any of that. And they just basically started along the road. They didn't even know where it was going to start or finish.

BILL MCDONALD: Beggars belief. Look, I appreciate you, thanks for coming on and explaining it all and I really appreciate your time. Have a great Easter.