Transcript - interview - ABC Newsradio - Breakfast with Glen Bartholomew

GLEN BARTHOLOMEW, HOST: That’s right, a damning review of the Inland Rail freight project has found mismanagement has resulted in an astonishing cost increase, meaning it will now cost three times more than the original estimate. The project’s build is a way to enhance our national freight and supply chain capabilities, connect existing freight routes through rail, roads and ports and support Australia’s broader economic growth. The review, though, led by former Energy Security Board Chair, Dr Kerry Schott, says the cost of the project has now blown out to $31 billion, and it warns the price tag may climb even higher because it’s still unclear where the line “will start or finish”. So, what do we know?

Catherine King is the federal Infrastructure Minister and joins us now. Minister, good morning.


GLEN BARTHOLOMEW: What’s gone on here? How surprised are you by this cost blowout?

CATHERINE KING: Well, we’re pretty shocked, to be honest. It’s, I think, a damning indictment on, frankly, the National Party, who this was their pet project for the last decade. It’s had problems right from the start, and I think Kerry Schott’s report that we commissioned shows that, you know, there wasn’t these – basically the skills base within the organisation the Liberal National Party chose to build this project. They then ignored advice about actually getting people with skills on the board and, in fact, again appointed at the latest appointments people that had links to them and ignored advice to appoint, you know, engineers, people who actually understood what this was.

You know, this is a 1,700-kilometre big infrastructure build, and, frankly, it is a damning indictment to see. We still do not know on the basis of Kerry’s report just how much this will cost. So, we’ve got a big job to do as a government to clean up this mess and to get this project – pardon the pun – back on track and actually deliver it and get it starting to make returns for the Australian taxpayer.

But we were pretty shocked when we got the report. We’ve taken some time to work through it, accepted all of the recommendations but, really, are concentrating as much as we can to now fix what is a really big, frankly, National Party mess.

GLEN BARTHOLOMEW: Where do you start? What are you going to do?

CATHERINE KING: Well, the first thing we do is we’ve already – we already have started; we’ve appointed a new chair in Peter Duncan to the Australian Rail Track Corporation as well as another skills-based director, and that’s been an important start. We have – we will clearly indicate today that we will concentrate on getting Inland Rail to Parkes and putting all of our energy and effort in getting that done and that part done. We’ll continue the planning work in through the rest of New South Wales and Queensland but are not in a position to start entering into contracts or tendering until we’ve got a really clear scope.

We’ll appoint an independent cost evaluator to really go back and check over every single part of this project, and we’re not going to put more money into it until we know exactly how much it’s going to cost. I think we’ve now got final clarity from Dr Schott about where it will start and end, so two intermodal terminals in Victoria at Beveridge and the western intermodal freight terminal will start the work on getting those done.

GLEN BARTHOLOMEW: Is it a bit surprising? Listeners might be wondering how did we get so far down the track, so to speak, without knowing exactly where it began and where it was going to finish?

CATHERINE KING: Well, absolutely. Like, absolutely. It was, like, farcical. You know, how do you not actually go and say, “This is what we’re going to do.” It was always going to be very difficult to get rail through suburbs in Brisbane, for example, to get it to the port. They just sort of ignored all of that and, you know, basically just decided they just wanted to commence building it. And I think it’s again – and frankly, you look at how this happened and it has been plagued with problems from the start from, you know, governance to lack of skills to, really, it being this National Party pet project that they just sort of somehow thought that because it was funded on equity that this was free money and you could just keep going and throwing money at it and building and not having any accountability at all. You know, it is a reason that you would never, ever, ever put the National Party in charge of an infrastructure project anywhere in the country ever again.

GLEN BARTHOLOMEW: You’re in charge now. Are you committed to seeing it through?

CATHERINE KING: Yep, absolutely. So, I’m committed to making sure we get it back on track. We’ve made the decision that we will concentrate all our energies and efforts on getting it to Parkes and making sure that is built and done. We can then start to get a return for taxpayers, because that will help get it through to the east-west. It helps us to get links into Newcastle and into the Port of Botany so we can start actually getting some return. It’s going to take a long time before you get the actual return on all of the investment –

GLEN BARTHOLOMEW: Well, that’s the next question: is the return going to be worth it if it’s going to cost billions and billions and perhaps even higher than the figure we have now - $31 billion?

CATHERINE KING: If you did a cost benefit today and started today you would really question it, but we’ve now got a substantial sunk cost into this project plus also, as Kerry Schott points out, we’ve got a really increasing freight task. This will play an important role into the future of freight, and rail freight is really important to try and make sure that we get, you know, trucks off our roads and we actually get freight into our ports. But this has got a long way to go. It’s a complex project, but we are committed to seeing it through. But we’ve got a lot of work to do.

I think one of the other recommendations – we’ve accepted as I said all of them – is to set up a subsidiary board, a separate, you know, sort of company under the Australian Rail Track Corporation to separate this out from the day-to-day business of the Rail Track Corporation, which really its business has always been to maintain our existing rail track and to make access to existing freight companies for that rail; it’s never been a builder of big infrastructure. So, we’ve agreed to do all of that as well.

So, there’s a lot of work for both Katy Gallagher and I – we’re both the shareholder ministers of this project – to get it back on track. But we’re determined to do it but, frankly, it’s – you know, you just look at it and you just shake your head, and you say, “What on earth were they doing for the last decade,” really.

GLEN BARTHOLOMEW: You said you wouldn’t go ahead until you know how much it costs. Are you going to be to know how much it costs? Kerry Schott suggests that there’s potential for this project to blowout even further.

CATHERINE KING: Yeah, absolutely. Or potentially to shave some of the costs out of it as well. The issue really is that – you know, you wouldn’t go ahead and start building your house until you had a really clear idea – you know, you know there’s going to be blowouts here and there but not, you know, literally doubling. You know, you wouldn’t go and do that without actually have the plans done, the designs done, knowing the costs of, you know, all of your materials, having your contracts. So basically, that’s what’s happened here. So, there isn’t any planning approvals for any of the project through Queensland yet. And until we have all of that work done on the planning approvals, we really don’t know just how much this is going to cost or how long it’s going to take to finish.

And we’ll undertake the work to do that, but let’s get it to Parkes. There’s a view of trying to build a new intermodal terminal open access at Parkes as well, which will be great for that community. We’re going to do that, and we’ll get the work done to try and get, you know, all of the information we need to get the building on beyond there. But first bit – get it to Parkes and get some return on the taxpayers’ money first.

GLEN BARTHOLOMEW: Where will it end is the question literally and figuratively. Catherine King, we’ll keep a watch on the progress. Thanks for joining us this morning. The federal Infrastructure Minister reporting on the big cost blowout – three times more than expected – for that Inland Rail freight project.