Transcript - ABC Radio National

DAVID LIPSON: Economists are tipping another interest rate rise when the Reserve Bank Board meets tomorrow with inflation still stubbornly high. One of the drivers of that inflation according to the IMF is infrastructure spending, a view now backed in by the Federal Government.

A major review of the nation’s $120 billion infrastructure pipeline is due within weeks, and as Tom Lowry reports, it’s expected to recommend cuts to range of projects committed to under the former government.


TOM LOWRY: Few things go together like politicians and big infrastructure announcements.

SPEAKER: Suburban Rail Loop will deliver faster and more convenient travel for all Victorians, connecting the ‑‑

[End of Excerpt]

DAVID LIPSON: That’s a now two‑year‑old promo clip, making the case for Victoria’s massive Suburban Rail Loop project with a price tag for the first two stages estimated at $125 billion. The size and scale of the many projects in the country’s infrastructure pipeline is causing concern. Here’s independent economist Nicki Hutley.


NICKI HUTLEY: If you put too much into the economy at once, too much demand, if you think about all the labour, the materials that you need and you’re stretching all of that across too many projects at once, that means that wages costs are going to go up, input costs are going to go up, and that feeds through not only in the costs of that infrastructure, but also into the costs of construction everywhere.

[End of Excerpt]

DAVID LIPSON: The International Monetary Fund is worried too. It last week urged Federal and State Governments to pursue projects at a more measured pace in an effort to push down inflation. The Federal Government agrees, flagging the need for what it calls difficult decisions about the infrastructure pipeline. Treasurer, Jim Chalmers.


JIM CHALMERS: The comments from the International Monetary Fund are important, they are welcome, and they are consistent with the way that we are coming at this challenge.

[End of Excerpt]

DAVID LIPSON: A review has been under way for months looking at hundreds of projects in a 10‑year $120 billion pipeline and whether they are viable. The review hasn’t yet been made public. But the Government has indicated it has found cost blow‑outs worth around $33 billion.

Some argue there are better ways to tackle inflation. Here’s John Davis from the Australian Constructors Association.


JOHN DAVIS: It’s difficult to see where there can be cut‑backs. We’ve got 500,000 to 600,000 migrants expected to enter Australia this year, so we can’t stop building schools, hospitals and transport infrastructure.

[End of Excerpt]

DAVID LIPSON: Some big projects like the Suburban Rail Loop have already been carved out of the review, along with any commitments made by Labor prior to the Federal Election, and projects already under construction, including Inland Rail also won’t be halted. It’s expected the review will question smaller, more local projects, much more closely. John Davis says there still isn’t much there to be saved.


JOHN DAVIS: I think everyone is expecting that there will be some of those commuter car parks, some of those essentially pork‑barrelling projects from the previous government, and I think everyone’s sort of factored in that they are going to get cut. But beyond that it’s very difficult to see what can be cut.

[End of Excerpt]

DAVID LIPSON: The Coalition is questioning why some of the government’s bigger projects aren’t on the table. Here’s shadow Infrastructure Minister, Bridget McKenzie.


BRIDGET MCKENZIE: They are multi‑billion‑dollar programs and projects, and apparently they’re not going to impact inflation at all, because they have been explicitly ruled out of the government’s review.

[End of Excerpt]

DAVID LIPSON: That’s Nationals’ Senator Bridget McKenzie ending Tom Lowry’s report, the Infrastructure Minister is Catherine King, and she joined me earlier.

Catherine King, thank you for your time. Just before we get to infrastructure, Daylesford is in your electorate. Do you have any information about this terrible crash at the Royal Hotel?

CATHERINE KING: Look, this is just devastating news overnight, you know, just a little bit past 6 o’clock, and a car’s obviously crashed into an area that has been set up really post‑COVID with lots of tables and chairs for the ‑ not just the Royal Hotel, there’s an ice‑cream shop just there as well, so lots of families, it was a really warm night last night, we’ve got a long weekend in Melbourne with the Melbourne Cup, so Daylesford as a major tourism destination was pretty busy last night. I know that the police, the SEC, CFA, Hepburn Shire staff were on the scene very, very quickly, Ambulance Victoria obviously as well, but obviously with the news overnight, we’ve lost ‑ five people have lost their lives, and you know, five families have had their lives changed forever.

The Daylesford community is incredibly close‑knit, it will really have shocked a lot of people, and I think will really only just be coming to terms to what happened today, and you know, my heart goes out to the people who’ve lost family members.

There’s obviously a number of people who are also in hospital as well with injuries, but these sorts of terrible accidents, the sort of level of trauma goes on for a long period of time, and people will need a lot of support and care, and the police obviously will need to undertake a significant investigation into what’s happened.

DAVID LIPSON: Indeed they will. On to infrastructure. If there’s an interest rate rise tomorrow, how much of that can be blamed on infrastructure spending.

CATHERINE KING: Well, look, I’ll leave it to the Treasurer to sort of make the comments around, you know, his part of the portfolio ‑ his portfolio, but really from my point of view, since we took the portfolio, there’s been evidence that this infrastructure pipeline has not been managed and not been managed well, and obviously that is also causing inflation pressures as we see other costs of building some of these particularly large‑scale projects, but even some of the smaller‑scale projects go up.

But what I have inherited is an Infrastructure Investment Pipeline that went from 150 projects to 800 projects under the previous government, that the independent review has found that there are $33 billion worth of known cost pressures with more expected, and it is simply just not sustainable for the pipeline to not - you know - to continue in the way that it is after a decade, frankly, of being used for political purposes.

We saw that the largest amount of projects were added into the pipeline in the lead‑up to the 2016 and 2019 election campaigns. We’ve seen lots of announcements with projects with really not enough funding to really even deliver a small amount of it, let alone a large amount. So I’ve got to ‑ you know, I started the work of trying to clean this pipeline up in our first budget, and we’ve got a bit more work to do.

DAVID LIPSON: We are expecting half a million new migrants this year. Our cities are already experiencing serious growing pains, and a lot of people listening to this would be sitting in traffic jams right now asking, is cutting back on infrastructure projects really the best way to curb inflation?

CATHERINE KING: Well, there’s two things, two parts to the that question. The first is you are right, it is really important that we continue to build infrastructure that enhances productivity, makes our cities and our suburbs more liveable, and we’re currently ‑ there are 300 projects currently under construction as we speak that have Federal investment and co‑investment with either Local Government or State Government there.

What I don’t want to do is promise people that we’re going to build something when it clearly is not going to be built. We’ve got to make sure that the investment that we make actually is deliverable, is able to be done so in a way that doesn’t add to inflation, that doesn’t add to the cost‑of‑living pressures people are currently experiencing, but also does add to productivity across the nation.

DAVID LIPSON: Is it correct to assume that projects on the chopping block are the smaller, more local projects rather than the bigger, more expensive ones?

CATHERINE KING: The review’s recommended a range of projects, and they are from large to big ‑ large projects to small projects, and we’re going through each of those with our State and Territory counterparts trying to look at, you know, making sure we’ve got the right data, making sure that we’ve actually factored in to account the importance of various projects across the country, and so that process is underway and nearing a conclusion now.

But what I would also say is, if you’d remember, that part of what National Cabinet did when we announced the extra money to build more homes was that there is also a $500 million bucket of money that is about trying to build that enabling infrastructure to bring more housing stock on to the market. That will be available next year, both for State and Local Government to competitively apply for, and again, that is to try and ease the, not just congestion, but really to look at how we can bring more housing on to the market more quickly.

We know that there are a lot of development applications out there at the moment that have had planning approval, but that are sitting back because the costs of infrastructure are just, you know, meaning that it doesn’t stack up for them from a business point of view, so some of that $500 million will go towards trying to actually bring those houses to market more quickly by building some of that infrastructure into those suburbs.

DAVID LIPSON: Catherine King, we’ll have to leave it there, thanks for your time.

CATHERINE KING: Really good to be with you, David.

DAVID LIPSON: And Catherine King is the Infrastructure Minister.