Transcript of press conference, Canberra
CATHERINE KING: Today is a very important day in reforming the Australian Government’s investment in the nation’s infrastructure to ensure that we’ve got a more integrated, strategic and sustainable and affordable approach. The Government’s committed to delivering infrastructure Australia needs, creating jobs and growing the economy while not increasing pressure on inflation.
On Tuesday I released the Infrastructure Policy Statement, the first of its kind, which outlines clearly the Commonwealth’s role, its objectives and expectations for our significant investment in land transport projects. As you know, in May this year I announced that the federal government had commissioned an independent review of the Infrastructure Investment Program. That review undertaken by Clare Gardiner-Barnes, Mike Mrdak AO and Reece Waldock painted a sad and frankly sorry picture about the health of the infrastructure investment pipeline.
The inescapable truth is that the previous government under the Liberals and Nationals failed to manage this incredibly important program during their decade. At best, the last decade is a case study of what governments should not do. Under the Liberals and Nationals, the number of projects increased from nearly 150 to over 800, not in and of itself a problem, but when you start to look at the what, it does become an issue.
Many projects lacked proper planning, didn’t have informed costings and weren’t ready for Commonwealth investment. The review has found an estimated $33 billion in nine cost pressures across all projects in the program with a high risk that that figure would increase, and for those not currently under construction that figure the report says is around $14.2 billion.
Worse, it is clear that the previous government deliberately set about announcing projects that did not have enough funding and they knew could not be delivered. It can only be described, frankly, as economic vandalism.
The review has made 15 recommendations, all of which the Government has agreed to or agreed in principle to. Three of the recommendations relate to local government sub-programs, and I will be providing more detail about the Government’s response on those sub-programs shortly, but not today.
After considered consultation with the states and territories – not always agreement, but considered consultation – we now have a forward plan of projects that the Commonwealth wishes to partner with the states to deliver. Over the next 10 years more than 400 nation-building projects are expected to be completed or substantially developed, including: the North-South Corridor, Torrens to Darlington in Adelaide, where we have proposed an additional $2.7 billion to build this road; Logan and Gold Coast Fast Rail in southern Queensland, where we have proposed an additional $1.8 billion; the M1 Pacific Motorway extension to Raymond Terrace through the Hunter where works on the next section will start imminently; Metronet on the west coast, where we’ve proposed an additional $1 billion; the Tanami – frankly, one of my favourite infrastructure projects in the whole country – in central Australia is receiving an additional $200 million; the new Bridgewater Bridge, an incredible engineering feat that is currently under construction and long awaited by many Tasmanians.
Other projects are undergoing a proper planning process that was not previously carried out. We are keeping money for the construction of those projects that is in the Budget currently, but we need to plan these projects properly. They include: the Hobart Northern Suburbs Transit Corridor, which is part of the broader Mac Point development and redevelopment of Hobart; the Inland Freight Route to Charters Towers; the Direct Sunshine Coast Rail, which we know will be an important piece of infrastructure going forward for South East Queensland but also for the Olympics but, frankly, which there has not been confidence or assurance in the costs of this project; the Muswellbrook Bypass, again, a very important project in the Hunter Valley but that is going to need to be sequenced against the Singleton Bypass, which is commencing shortly. Important projects but ones where there is much more work to be done to make sure that they can be delivered and where we have a clear assurance about what the actual costs are going to be.
And some are projects, as you can see from the sheets we’ve provided to you, have been subject to the hard decision of not investing Commonwealth funding at this time. These decisions do ensure that the investment pipeline from the Commonwealth remains affordable, delivers better outcomes for the Australian people in the long term and are aligned with government priorities.
At the start of the review I said we would not cut funding from the $120 billion pipeline. It was not a savings exercise, and we have honoured that. All states and territories have maintained their funding in the pipeline that they previously had – not a single dollar less for any state or territory over the next 10 years.
Today I am also releasing the independent Review of the National Partnership Agreement on Land Transport Projects. And that was undertaken by Jane Halton. Which, like the Infrastructure Investment Program Review, recommends a more equal partnership. Our preference to create more even partnerships by default funding on all future projects – those that are not currently in the pipeline, new projects going forward to 50-50, is an opportunity for the states to join us in investing more in the regions and being co-investors, not lesser investors.
The government is committed to delivering infrastructure that builds Australia and builds lives. The review of the Infrastructure Investment Program and the Government’s response allows us to get on with the job of delivering infrastructure that creates jobs, helps wages to grow and to make our communities better to live in and more connected for all of us.
And I’m happy to take questions, and Ron has his hand up first.
JOURNALIST: I’m wondering if you could provide more specific figures for us: firstly, what is the quantum of overall projects that have been removed from the pipeline? What is the overall size of the pipeline now? Has it actually increased above 120? What is your now annual peak in spending? So we had 18 billion in the peak. Has is what been smoothed to take into account inflation? And how much will you have to pay out for projects that have been cancelled but have contractual obligations with them.
CATHERINE KING: Yeah, sure. Thank you, and that’s only a Ron question – you’ve been paying a lot of attention to this. The first that there are 50 projects that have been cancelled as part of this process. In terms of the flow of cash, that will come out in the Mid-Year Economic Financial Outlook, so we are not releasing that today, and I’m sure that will be of great interest to you, having had you write about that.
But you are right – on average, if you look across the $120 billion 10-year pipeline, the most the Commonwealth manages to get out the door in projects is between 10 to $12 billion, and that has meant significant problems when you see underspends and the way in which the pipeline currently exists. So part of this exercise has been ensuring that we do smooth that pipeline because we know we have got considerable constraints when it comes to labour costs and supply constraints as well. And as the IMF has said, we don’t want to add to inflation, so smoothing that pipeline is really critical, and that will be all revealed in terms of the cash flows, the way in which that works, in MYEFO. We’re not doing that today. But thank you.
JOURNALIST: You mentioned the pipeline had grown to about 800 projects. 50 are being cancelled. You’re saying more than 400 will be built or substantially built. What’s happening with the other 350?
CATHERINE KING: Yeah, good question.
JOURNALIST: And what kind of things are they?
CATHERINE KING: Yeah, great question. So what – the approach the review has recommended is that if you look again at the sheets we’ve provided, there are a multitude of single projects that actually are all along one corridor. And what the review has recommended that we do is to actually take a corridor approach, to look at and put all of those projects and all of the funding for that project, all of that funding has been retained. So, for example, there is not a single cut – not a single cut – to the Bruce Highway at all. All of that money is retained for those projects.
What it allows states to do is to basically sequence the projects within that corridor, come to us – you know, at the moment they come to us on an ad hoc basis saying, “We’ve got a cost escalation here. We’ve got a delay with this project.” But they have to get our permission every time they want to move money around. We’re saying we don’t want that to happen anymore. We want states to be able to manage those projects better, streamline the administration, sequence those projects and then see it as a rolling series so that when that money starts to expire, the states will come to us as part of the budget process and seek further money for those corridors.
They are very important arteries of our nation. They are particularly – freight routes that connect our great cities and our great regions together. But that is the approach the review has recommended. So the reduction – a large part of the reduction has been rolling those into those corridors. But we’ve still listed all of those projects so you could see that they were still there.
JOURNALIST: You seem to have accepted or in principle or fully accepted all the recommendations reviewed. Does that mean that the 82 projects that the review recommended be either cancelled or rolled with other projects? Are the ones that you have cancelled or rolled with other projects?
CATHERINE KING: In the main, but we have gone back once we’ve received the review, we have gone back, and I know you were all saying, why is this taking so long? The reason it took a little longer is we’ve then had to go back, test the propositions in the review, test the information that was given to us in the review with that held again by states and territories, work with them to negotiate where they still felt there was a priority project. We have then either accepted that recommendation from the states or accepted the recommendation of the review. So, that’s how it’s worked. But if you look at it, 50 are cancelled. There were 31 recommended either for cancellation or descoping in the review that we have actually rolled into the corridors. And that gets you pretty close, I think, to the 82. Yes, of course.
JOURNALIST: For the project put into the corridors, like Bruce Highway, when states have to go to the federal government, seek further funding, whether it’s for cost blowouts or other activities, will that be at the current 80-20 split or will that further funding have to be sought at the new idea of the 50-50?
CATHERINE KING: Yeah. So, in terms of new projects, not projects that are currently within the pipeline, so, for new projects, so things that are not in the pipeline currently, we have stated very clearly in the Infrastructure Policy Statement that we – our preference, our default position will be 50-50, but that is for new projects, not projects that are currently in the pipeline.
JOURNALIST: So, it doesn’t include new funding for existing projects?
CATHERINE KING: In terms of cost overruns, basically, what we have been doing, we’ve been doing it for the last 18 months. We’ve been negotiating with each state and territory when they come to us with cost overruns, remembering we don’t have a lot of control over those cost overruns, we’re not the contractor, we’re not the manager of the project and we’re seeking – the review has asked for better gateway assurance pieces within, so we actually get a better handle. We don’t just suddenly get a surprise by those cost overruns. So, we’ve been negotiating that on a case-by-case basis. But what this will allow the states to do is sequence the projects in the corridor, use the money that is currently there. So, the Commonwealth is currently committed and that’s not a single cut over $10 billion to the Bruce Highway. That will allow that Minister Mark Bailey, who I’ve spoken to in the last couple of days, to really sequence those projects. And then if there are projects that, because of cost overruns that are in the pipeline, that they still need to deal with, to come back to us and we’ll talk to them about that. But they’re seen as in the pipeline currently. Yes, Jade? Jade, thank you.
JOURNALIST: Minister, Victorian government sources today accused the federal government as being weak on airport rails. They say it’s a federal government issue because it’s on Commonwealth land and if it’s not resolved, essentially you guys will be responsible for any delays to the project. Will you fix the issues with the airport or is it a state government responsibility?
CATHERINE KING: No. And I think that this blame of one over the other is just really unhelpful. I think particularly on a project like this and trying to set – I get we have stoushes, we sometimes have them in public, we sometimes have them in the front pages of your newspapers. I’d prefer that not to happen, but that’s the reality of the job that I do. With airport rail, basically, what’s happened is that the Victorian Government been perfectly aware that they’ve been unable to land where the airport has been in dispute about where the station box should be, should it be above ground, underground, the costs of those things. And so that’s been in dispute. There’s been a dispute over should there be compensation paid. All of that’s happened. So quite rightly, in, I think, their last budget, they recognised there was a delay with this project, an important project for the state of Victoria. So, they delayed, I think, by four years. I’m looking at Joseph to see if he can nod. I think it’s by about four years. So, they put the project back. And so then when it’s looked at the reviews, looked at it, they’ve said really clearly to us, look, this project’s important, but we can’t deal with this project until we know that airport bit. And so that’s a planning issue. I am the planning minister for Airports. So, the Victorians are quite right, I’m going to have to approve a planning application at some point, but I also want to work with Victoria and the airport to actually work this out. And so, we will engage in a process, cooperatively with the Victorian Government, with Melbourne Airport, to try and resolve this issue. And until we can resolve this issue, we really can’t, like, I’m not going to start – we can’t build it. We can do bits and pieces. You’re starting seeing some of that work happening under Suburban Rail. We can’t build it until we know exactly where it’s going to go and also whether there’s an escalation in costs of that. But –
CATHERINE KING: Yeah, of course, it always has been. It always has been. And it’s a cooperative, joint responsibility and that’s, I think, particularly on this project, it’s really difficult because it does require the airport to come forward with a planning application as to where the station is going to go. It’s quite complex. Sorry, OK. Yes, of course.
JOURNALIST: You’ve been quoted as saying that this outcome was achieved with the cooperation of the States and territories. The Queensland Treasurer, Cameron Dick, this morning has said, quote, “This is not true. Our government has not and will not cooperate to support Catherine King’s cut.” Both of you decided that the states and territories have all cooperated in this process. And can you clarify which ones actually are on board?
CATHERINE KING: Yeah. So, what I can say is that we have gone back and forth over the last few weeks with states and territories. There are no surprises for them and should be no surprises for them in any of the information we’re releasing today. They’ve in fact had that – some of it for months, some of it was released to them again on Friday. So, no surprises in that. I also want to say, really know, I respect and get on very well with my Queensland colleagues. I’ve spoken again to Steven Miles this morning; I spoke to Mark Bailey last night and will continue to work with them. There are no cuts, absolutely no cuts to funding in Queensland and in fact, we are providing $3 billion in cost pressures for all of those programmes. There are some – so, what I would say, clearly, there appears to be some confusion on behalf of the Queensland government about this. We will work with them over the coming days and weeks for them to understand what we have done. But there are no cuts to Queensland at all. Like, there are no cuts.
JOURNALIST: How can you say there are no cuts?
CATHERINE KING: Because there aren’t any. Because there aren’t any. There are no cuts to funding. There are no cuts to funding in Queensland.
JOURNALIST: But that’s not the question. You’re answering a different question.
CATHERINE KING: I’m telling you there are no cuts to funding in Queensland at all. There are no cuts to –
JOURNALIST: But there are cuts to projects.
CATHERINE KING: There are projects that are being cut, but we are providing $3 billion in cost pressures, including $1.8 billion to Logan, to Gold Coast Faster Rail. We are giving money to cost pressures. There are some projects in all states and territories that are cancelled, but the amount of money that Queensland receives has not been cut at all. At all. And there is some confusion, I would have to say, on behalf of the Queensland Government, I think they have been given some, I don’t know, some unusual information, it would appear. That does not accord with what we have told them very clearly. Yes, Andrew?
JOURNALIST: Just for absolute clarity, when, for example, with Queensland, you talk about following projects will proceed through planning while with remaining funding reserve construction, you’ve got things like the direct Sunshine Coast Rail Line. Are you effectively delaying the delivery of the project?
CATHERINE KING: I think, Andrew, you would be very right to criticise me if I started a project without knowing how much it was going to cost or what the route was going to be or how much we could deliver. So, the first thing on Sunshine Coast Rail, I’ll say. The Queensland government has currently not, I think it’s committed a small amount to planning, but there is no construction money from the Queensland Government on the table for that project. There is $1.6 billion that is in the Commonwealth Budget, which we have retained for that project. But the estimates that we have got so far is, in order to take that project to Maroochydore is three times higher, billions of dollars higher than has been previously stated. So, what I am saying is, if we are to deliver this project and not repeat the mistakes of the past, what we need to do is plan this properly, get a handle on the cost and then move forward to deliver it. We’ve kept that money in the budget.
Andrew, of course, you may have a supplementary question.
JOURNALIST: Just to clarify, then, that you’re saying that where some costings are a bit dubious, you want to go through the planning?
CATHERINE KING: Not just dubious, we just don’t know. We just simply don’t know.
JOURNALIST: Okay, if you don’t know what they’re dubious, you’re still going to go through the planning? Are you guaranteeing those budgets would continue because you’re setting aside money for construction where you don’t know how much the cost is so there are savings here that you’re not –
CATHERINE KING: Taking currently? Because we think because we know the projects are important.
JOURNALIST: So, everything in yellow is a potential saving.
CATHERINE KING: No, everything in yellow is that we are doing the planning work. We’re going to get a handle on what the costs are. We will work with the states and territories about what their commitment is, what our commitment is, so that we can deliver the project. And that’s part of what we normally do as part of. And those projects stay in the pipeline. So, they are in the pipeline –
JOURNALIST: In the pipeline but might not be actually spent on those particular projects.
CATHERINE KING: They are allocated to those particular projects. So, they are there.
JOURNALIST: How much money has been spent on the Great Western Highway upgrade? And is the $2 billion been ripped out entirely?
CATHERINE KING: Yeah, that project is a project for cancellation. And I will explain partly why. You would have seen in the lead up particularly, I don’t know if you’ve heard it, but it’s worth a listen to – the John Barilaro piece. I don’t know if we’ll feel like circulating it again. Which is also a lesson in why some of the 80-20 stuff is always a little tricky. The Liberals in the lead-up to the election announced that with no money attached to it, that they were going to build a tunnel, basically. So, build that whole corridor. Build a tunnel. $11 billion. Gleefully, John Barilaro was out there laughing, saying, I think that potentially is 80 per cent of a Commonwealth contribution of which we knew nothing about. So, what we’ve said is that there are really significant safety issues along that corridor. We want to work with the NSW Government to try and resolve those. In future, if there’s a project, we need to plan it properly and look again at the whole corridor, not just – there was money allocated to the both ends and that that’s what we’ll do cooperatively with the NSW Government. But there was never any commitment from the NSW Government or the Commonwealth Government for an $11 billion tunnel in the middle that somehow seems to have, I don’t know where that came from. Well it came from John Barilaro, I suspect. Yes, of course.
JOURNALIST: Minister, I was just wondering, earlier in the week you said you couldn’t add any new projects –
CATHERINE KING: If we did nothing. Yeah, if we did nothing.
JOURNALIST: Now that you’ve made these decisions, is there scope or is the $120 billion pipeline effectively in aspect for the next decade? And you can’t build anything new that might [Indistinct]
CATHERINE KING: So, just remind you it is a rolling pipeline. So, each year, as projects finish and conclude, then more money comes into the pipeline. So, what we’ve been able to do by this exercise is actually free that up because at the moment, every time we added extra money in, in the next year, it was just going to cost pressures. So, really that’s been part of what we’re trying to do, sustain the pipeline, make sure we’ve got the money for cost escalation, build a better process for how things get onto the pipeline in the first place, gateway processes to ensure we’ve got some assurance about cost escalation, some control over that. We’ve had very little control. It just comes to us and suddenly we’ve got to find billions of dollars. So, we’re trying to get a handle on that. And so, we can actually deliver these projects.
There are some projects which we’ve cancelled that, frankly, and I don’t like having to do that. I know communities, many communities have fought hard for them, but when you’ve got a project where there is no commitment from a state government to put any money in at all, no interest from the state government to build it and not enough money really to even build a tiny part of it, you’ve got to take a hard decision about that. And unfortunately, I’ve had to do that. That’s not to say if states come to us and work with us later on, those projects don’t become important and come back into the pipeline at some point. But right at the moment, I can’t in good faith leave that money just sitting in the budget, not productively being used, never moving out, and basically other communities, in essence, missing out because we can’t deliver their projects. Yes.
JOURNALIST: [Indistinct] airport rail, I know you were pointing out some of the challenges. That’s long-awaited. Can you give us an idea of when that will be? And just while I’ve got you as well, Geelong, you cancelled the fast rail there. Are you effectively gutting the people in Victoria’s second-biggest city?
CATHERINE KING: So, thank you for the question. Can I start with the airport rail? And so again, a really important project, but I think one of the mistakes that has been made is to put a timeline, I don’t know how long it will take to negotiate with Melbourne Airport and how to get that through. And again, I don’t want to make the mistake of saying it’s going to start on this date and we’re delivering it on this date when we don’t know that yet. That’s part of the problem we’ve had with this pipeline. We create a perverse incentive, frankly, often for costs to escalate because we go out and say, we want to do this by this. So, Melbourne Airport Rail is a really complex project. It’s one as I said, as a Victorian, I know how important it is. We’ve talked about it for over, I think, over 20 years at least. I think it’s the only airport in the country that doesn’t have heavy rail to it. But we’ve got a bit of work to do with the Victorian Government to actually get that and with Melbourne Airport to get that done.
In terms of Victoria, every state, to be honest, is getting a fair and good share of the infrastructure pipeline. Every single state and territory is getting a fair share of the infrastructure pipeline. We will, of course, always work with Victoria. I get on with Jacinta Allan. I’ve known her for over 20 years. The new Minister, Ben, I’ve met already and talked to him frequently. We will work with them to deliver the infrastructure that Victorians need, as we will with every other state and territory. I’ve got Charles at the back there.
JOURNALIST: Minister can I go back to Queensland?
CATHERINE KING: Yes, of course. There’s a surprise.
JOURNALIST: The Treasurer has tweeted in the last 20-odd minutes a message to Catherine King is, “Treat Queensland more like Qantas and less like Qatar.” [Indistinct] like confusion. That seems more like anger. If you can’t get a message to one of your Labor colleagues. What’s the chance of getting it to the voting public?
CATHERINE KING: Well, then, can I just say really clearly, I’m not going to engage in that sort of sledging. I think everyone deserves to be spoken to and dealt with respectfully across all of this. It’s how I deal with colleagues. And that tweet’s a matter for Cameron Dick, frankly, I think that’s a matter for him.
JOURNALIST: Minister, I just had a question. Just going back to that contract of no cuts. We live in an inflationary environment. People’s wages have gone up, government revenues have gone up, and it’s pretty obvious if you look at the broad situation of what you’re really saying to these states is, “look, costs have gone up. I’m sorry, we can’t fund things we said we’re going to fund.” So, there is an aspect of that. It doesn’t seem like it’s about confusion. At the core of it, it’s about you suggesting that you’re saying, sorry, we can’t do this.
CATHERINE KING: No, what it’s about is saying, I know costs have gone up, so where we’ve been able to, we’re easing those pressures. So, over $2.7 billion to South Australia. Now, that’s a project that the previous Liberal Government in South Australia and the previous Liberal Government here in Canberra have underfunded. Like, drastically underfunded. And we’ve been left holding the can on this really important project. So, we’ve found the cost pressures for South Australia. We’ve found $1.8 billion, overall, $3 billion for cost pressures in Queensland. What we’re saying to the states is we are helping you with your cost pressures on these projects. This is important. We’re trying to make sure we smooth the pipeline so that we’re not adding to inflation, we’re not adding to labour cost shortages at the same time. That’s what this exercise has been about.
JOURNALIST: Minister, how can you say that this is not adding to inflation if there’s been no cuts to the [indistinct] pipeline?
CATHERINE KING: So, that’s what the smoothing out of the pipeline, it’s the sequencing of projects that’s really important. Taking projects off. We know that if we did continue with them, we would have to find billions of dollars more money to actually deliver them. And also – so that, but also then smoothing the pipeline and the cash flows of which you’ll see in the Mid-Year Economic Financial Outlook.
JOURNALIST: So, at the moment, a lot of the projects end in or supposed to finish funding for those comes through in ‘25, ‘26, late as ‘27. What you’re saying is we should expect to see a very significant number of projects have end dates well beyond board estimates now in the back of the decade.
CATHERINE KING: Well, certainly the way in which the sequencing of those projects. That’s the way the pipeline works and we’re trying to make sure the funding follows the construction. That’s what we’re trying to do because at the moment the funding does not follow construction. I’ll just do one more. Of course.
JOURNALIST: What’s the value of the 50 projects?
CATHERINE KING: That’s a good question. I think we’ll have to get back to you off the – it was a slightly moving feast, so we’ll get back to you in terms of the dollar amount of that. I think it’s in the vicinity of $6 billion, but I don’t want to – don’t misquote me on that. I’ll take one more because you’ve been persistent. Thank you so much.
JOURNALIST: Aren’t the M7, M12 works in NSW already underway? What does it mean for that, and won’t it impact the new airport?
CATHERINE KING: So, what I’d suggest you do is look at that, talk to the NSW Government about that. That’s a project that’s important there. But we are working with the NSW Government in relation, I think there’s a cost pressure there that we’re trying to deal with at the moment. So, part of – there’s some continued discussions as we head into the sort of MYEFO, where there’s additional cost pressures, we may not have been made aware of before today. And that’s one of the projects we’ve got some continued discussions to talk about, but that’s pretty important that we deliver the connectivity to the new railway.
Thank you so much, everybody, for coming in. Thank you