Transcript - Interview with Jacqui Felgate, 3AW Drive

JACQUI FELGATE: But as you know, major infrastructure projects have been under the microscope this week. We’ve been talking about the state budget all afternoon. Melbourne Airport Rail has been delayed for at least four years, and a huge reaction from our audience as to whether we need an airport link. And today, the Prime Minister, the Premier and the Federal Infrastructure and Transport Minister, they were all in Melbourne to announce that an extra 3.25 billion will be given to the North East Link. So, this comes from the Federal Government. It’ll take the total investment from the Commonwealth to 5 billion. The North East Link stretches from Bulleen to Greensborough and it is expected to open in 2028. But, as with all things in Victoria, it’s blown out in terms of cost. Initially budgeted at 10 billion, reassessed in 2019 to 15 billion. The government revealed last year that the cost estimate was $26 billion. I’d love to hear from our audience. Would you use the North East Link? I think it’s going to be the biggest infrastructure project in the state’s history in terms of cost, actually. 133693 - is it needed, and is it worth the money? 133693. Catherine King is the Federal Minister for Infrastructure and Transport. Appreciate your time today, Minister.

CATHERINE KING: You are most welcome, Jacqui, good to be with you.

JACQUI FELGATE: So, we’re looking at these cost blowouts that I just, you would have heard me reading out. Can you guarantee that this project won’t blow out further?

CATHERINE KING: Well, we’re seeing cost blowouts on infrastructure projects right the way around the country, and Victoria’s not alone. But of course, they rescoped the North East Link to lengthen the tunnels, and of course, that is part of what the cost pressures on this project is about. What we’ve done today is announce an additional $3.25 billion, taking our contribution from the Commonwealth to $5 billion. This project has been talked about for a long time. It’s under construction currently. We will contribute to the non-tolled components of this road. So, that connection from M80 connecting the east, and in also making sure we’re embedding what you call smart infrastructure. So, checking, embedding that in as you build, so that you can extend the life of the asset as long as possible, in the way in which traffic flows and so making those connections. So, that’s what we’ve done. And, you know, I think in terms of the cost of this project, these are big builds, like, they are very, very significant projects. And it came as a surprise to me, to be honest, when I came as Infrastructure Minister, just how little the Commonwealth was, in fact, putting into these really big builds in Victoria. We’ve put lots of money into big building projects in other states, but we have not done so in Victoria. And that was part of the legacy of the way in which the Morrison government treated Victoria.

JACQUI FELGATE: But are you bailing us out here, though? Is it the Federal Government’s job to bail out a Victorian Government that continues to see cost blowouts like this?

CATHERINE KING: What a job of the Commonwealth is, is to invest in nationally significant infrastructure, and you don’t get much more nationally significant than taking 15,000 trucks off suburban roads and making sure you actually link your major freeway networks to move freight and around in a state. And the fact that the Commonwealth’s contribution now has increased to $5 billion is in recognition that the Commonwealth’s role, the unique role that we have, is to invest in those really big, nationally significant projects.

JACQUI FELGATE: Can I ask you, can you tell our listeners, why has this project blown out so much? Is it just construction pressures and the cost? Obviously, construction has risen over that period of time.

CATHERINE KING: Yeah, there’s a few things happening across. I mean, the first thing is this project was rescoped for longer tunnels. If you remember, there was quite a community outcry about the length of the tunnels and about where they came out. So, the scope of the project changed. So, of course that’s going to increase. So, that’s natural. We’re also seeing the cost of supplies. So, COVID obviously saw incredible pressure on supply chains and that has not necessarily eased. So, cost of concrete, cost of steel, cost of labour, all of those things have been challenging to every project across the country. So, we’ve got blowouts on, you know, there are big, big cost pressures on large infrastructure projects and what you’ll see in the upcoming budget, through really hard decisions I had to take in the infrastructure investment that Commonwealth makes, what you’ll see is new projects. For the first time we’ve been able to do that, and then also funding cost pressures, but they are in every state and territory. Victoria is not alone. The other thing that has happened is that on projects that the previous government announced, they were really good at putting out a press release, not so good at having the planning work done to understand how much something was going to cost. And so we’ve also just had projects that were just nowhere near funded from the Commonwealth in the way in which they needed to be because there just wasn’t the work done. So, the other thing we’ve done is really put Infrastructure Australia back in the heart of some of the decision making that we’ve got to make, obviously, the politicians will still make decisions. That’s what my job as a Minister. But having that really good data, good evidence, and actually just at times putting money into the planning first, getting that done, getting a good sense of the costs and the good estimates of the cost before we even make announcements about putting money into construction. So, we’ve started to do that a lot more.

JACQUI FELGATE: When it comes to the other big infrastructure projects in Victoria – I’ll give you two, the Suburban Rail Loop and the airport rail – will this latest investment in this north east link affect your funding and ability to fund those two projects?

CATHERINE KING: No, because what we’ve done. So, the first thing is we’ve left the fight. There’s $5 billion already on the table from the Commonwealth and 5 billion from the state, that is in both our budgets at the moment. The issue with Melbourne Airport rail, which is an important project for Victoria, it’s the second busiest airport in the country and now the only one that doesn’t have a rail link to it. The issue we’ve got is, if you remember, John Howard leased all our Commonwealth-owned airports out. It’s leased, I think, through till 2040. And so the airport is the leaseholder and they will have to make a decision about what and where the station is and what they want. And there’s no agreement between the state, Commonwealth and the airport at the moment about what that will be and what that will look like. So, we’ve appointed Neil Scales, who’s a former Queensland infrastructure secretary. He’s gone and had a chat to the airport, had a chat to the state, had a chat to us. He’ll provide a report to me about a pathway forward. But there’s no doubt this project is delayed because we can’t start this project until we know basically where it’s going to end.

JACQUI FELGATE: How frustrating is that for you as a Federal Government, that you can’t get an answer out of either side here?

CATHERINE KING: Well, it’s frustrating to the State Government, too, and I think you saw a bit of that from Tim Pallas this week. When this is a project, we know everybody, we’ve talked about this forever, it’s really important. So, what we’ve asked Neil to do is, Neil Scales to do, is just provide us with the start of – it’s going to be a long process, but a start of a process to actually get, What do we need to do? What does the airport need to do? What do we need to do to make sure we’ve got updated figures in terms of road usage and all of those things? So, there’s a bit of work to be done. It’s frustrating it’s delayed, I know the Victorian state government is as well.

JACQUI FELGATE: Well, Tim Pallas said yesterday at a business event, Minister, that he – I mean, it may have been a bit tongue in cheek, but that he considered doing it at Avalon instead.

CATHERINE KING: I think Avalon was on the phone pretty quickly after that. They’re pretty keen, pretty keen to get us.

JACQUI FELGATE: Trying to get our faster out of Geelong, Minister, if that happens.

CATHERINE KING: All of that, I think there’s a lot, but I think, look, it’s just that Melbourne’s the second busiest airport in the country, it’s huge. It’s a really important airport, not just for the state, but for the country. So, we want to get it done. But I don’t think – it’s the same thing. We’ve got to get this planning stuff right and we’ve got to get that agreement right. We’ll work with the airport in good faith to try and get them through whatever concerns they’ve got and then have a plan forward to how to do that. In terms of Suburban Rail Loop, what I want to say. So, we’ve got, I think we’ve got $2.2 billion in the early works in Suburban Rail East, which is the sort of Cheltenham, Box Hill section of that. And we’ve said that there needs to be more work from the state done with Infrastructure Australia before we’re ready to make any further investment in that –

JACQUI FELGATE: So, what do you mean by that work that the state government needs to do?

CATHERINE KING: So, they’ve got more work to do in terms of the – I think it’s a stage three business case that they’ve got to work through with Infrastructure Australia. And I think that information’s all underway now and we’ll look at that as Infrastructure Australia provides advice to [indistinct].

JACQUI FELGATE: Have you seen that business case yet?

CATHERINE KING: No, I haven’t, but that’s, again, Infrastructure Australia is independent of me. They’ll provide me independent advice once they’ve got all of that. But what I will say about Suburban Rail, and I was just over in Perth yesterday, if you look at what they’ve done there in METRONET, it’s been a very big build. What they’re trying to do is change their whole way in which their city works, so that you actually build housing, businesses, workplaces around rail stations. And really what suburban rail is exactly about that. It’s not just about rail, it’s actually about more housing, more work out in the suburbs and really trying to connect your suburbs together and connect your rail network together. So, it’s an important project for Victoria, but there is a little bit more work that we’d need before we wanted to put some more investment in.

JACQUI FELGATE: So, are you a supporter of Suburban Rail Loop at this point, despite the massive debt that we have?

CATHERINE KING: Well, absolutely. We’ve got $2.2 billion already in Suburban Rail Loop East, and we wouldn’t have put that in if we didn’t think that it was an important project for Victoria. And obviously, in terms of the big builds that Victoria’s got, I mean, you know, it’s pretty amazing to see the work that is going on through the West Gate Tunnel. If you have the opportunity to even hop online and have a look at North East Link, like, it’s a very impressive build that’s happening. It’ll really, again, improve the way traffic flows and freight flows around Victoria. These are big, important projects for the state. There’s projects also out in the regions as well, and we’ve got more to do there as well. We are very happy to partner with the Victorian state government on projects. It’s one of the things that has been really missing as a Victorian, as I said, I felt really, I know if you looked at the Commonwealth’s investment in any of those big projects. We’re really not,  we haven’t been involved – we’re not involved in the West Gate Tunnel at all. We’re now increasing our investment in North East Link and we’re involved in the Suburban Rail Loop. And then obviously there’s more we’ve got to do on regional roads and regional rail as well.

JACQUI FELGATE: Really appreciate your time today, Minister. Hopefully I can speak to you again after you’ve seen that suburban railroad business case. I’d love to have a chat about that.

CATHERINE KING: Always happy to talk to you, Jacqui.

JACQUI FELGATE: Catherine King is the Federal Minister for Infrastructure and Transport.