Transcript - media conference - Inland Rail Review
CATHERINE KING, MINISTER: Thanks, everyone. Can I start by acknowledging the traditional custodians of the land on which we gather and pay my respects to elders past, present and emerging.
Can I thank Kerry Schott very much for her work on the Inland Rail report. I couldn’t think of anybody better we could have got to do this work. It is, of course, only the first step in getting this major project back on track and delivering the jobs and investment the communities across the route of Inland Rail deserve.
Frankly, this report is an absolute damning indictment on the Liberal and National Party. It is a lesson in how not to do nation building. It’s an example of everything that can go wrong in the management of a major infrastructure project. And, frankly, as I said, it’s an indictment on the Liberal and National Party.
Inland Rail is 1,700 kilometres of Liberal National Party incompetence. When the Coalition committed to delivering Inland Rail in 2017 and ’18, they estimated that it would cost 9.3 billion dollars. It has now blown out to 31 billion dollars with the potential for costs to blowout even further. As recently as 2021 we know that the-then Deputy Prime Minister said that it would be operational in mid-2020s. Now Dr Schott's report finds that it is so far behind schedule that she can’t even put a date on when it can be completed.
Frankly, this is what happens when you let the National Party be in charge of a major infrastructure project. The previous government began this project with no idea where the rail line would start in Melbourne and where it would finish in Brisbane, or how it would interact with towns, communities and the natural environment along the route. And rather than filling the board of ARTC with experienced and skilled personnel, the previous government handpicked appointees with neither the skills or the experience to actually deliver this project.
Now, Dr Schott has made nineteen recommendations to the Australian government, and we have accepted every one of them, all, or in principle. We don’t want to hide from the fact that these recommendations will lead to sweeping changes in this project.
First Dr Schott was also able to recommend appropriate start and end points for Inland Rail – in Queensland an intermodal terminal should be developed at Ebenezer west of Brisbane, and we’ll work with the Queensland government in that regard. In Victoria the project should connect to two intermodal terminals in Beveridge and one in Truganina.
In line with Dr Schott’s recommendations, the government will stage the delivery of Inland Rail, first prioritising the section from Beveridge to Parkes to increase resilience and improve the supply chain productivity between Melbourne, Perth, Adelaide, Sydney and Newcastle and also start to get a return for commonwealth investment.
To answer outstanding questions about cost and time frames of the entire project, an independent cost estimator and value engineer will be appointed to undertake details assurance work on this project.
We’ve already commenced the process of ensuring that ARTC has the necessary skills and experience, having appointed Peter Duncan as the new chair of ARTC and Dr Collette Burke as director in January this year. And additionally, a new substantive CEO of Inland Rail will also be appointed as soon as possible. We’re beginning that recruitment process now, and while the government also supports the recommendation to establish a subsidiary company under ARTC to actually deliver this project and separate it out from the day-to-day operations of ARTC.
That being said, Inland Rail does remain an important project to meet Australia’s growing freight task, improve road safety and to help decarbonise our economy. We have been left with one almighty mess with this project to clean up from the previous Liberal National Party government. We’re up for the job, but that job starts today.
I’m going to hand over briefly to Katy to say a few words and then Kerry to say a few words as well, and then we’ll be happy to answer any of your questions.
KATY GALLAGHER, FINANCE MINISTER: Thanks very much, Catherine. And thanks for coming, and great to be up here with Kerry and Catherine essentially starting cleaning up the mess of the project that was left – or we inherited from the former government – in relation to Inland Rail.
I’m here as one of the shareholder ministers, and I think in government you read a lot of reports, you get a lot of reports; you don’t get a lot of reports like the one that Dr Schott did for Inland Rail. It’s shocking. When you open it, when you read it, when you work through it every page that you turn is another kind of sad story of poor governance, failure of the former government to lead this project, to ensure proper governance, proper process, to ensure that ministers, shareholder ministers, ensured that the project was being run properly. And that is a real failure in terms of ministerial responsibility on this project.
Catherine’s gone through obviously a number of the other issues, but there’s a fair bit of work to do to get this project back on track, and we will do that work in accepting the recommendations and the very thorough work that’s been done by the review, for which we’re very, very grateful.
Obviously, there’s work to be done on cost, on schedule, on really working through some of the more tricky parts of the project. And that work will be done, and it will take some time. I think in discussions we’ve had with Kerry some of that work could take 18 months to work through some of those detailed costings of the project. But obviously when you’ve had a project go from where it started to cost estimates now – and Kerry can speak to these – in the order of 30 billion dollars, obviously we’ve got a lot of work to do to understand some of those cost increases.
I’ll hand over to Kerry, and thanks again very much for the review, Kerry.
KERRY SCHOTT, AUTHOR, INLAND RAIL REVIEW: Thanks, ministers. Good morning, everyone. Just a few points to make: this is a good project in the sense of being important. We forget how big Australia is geographically, and this project runs from just outside Melbourne CBD-ish to Brisbane, and that’s equivalent to going from London to the Ukraine border. And we forget how big things are here and how difficult it is to actually do an infrastructure project across that distance.
So this was never going to be a very easy project, but I think the difficulty in it is not really in the engineering of it. There’s a few parts that are tricky, but the difficulty is in being organised about managing a project like that.
And about just over a thousand kilometres of it are upgrades of existing track, and any of you who know about fixing up roads or rail know how difficult it is to do that when you’ve got to keep a railway running and at the same time upgrade the track that the trains for both passenger and freight are running on.
And most of you are probably not very familiar with ARTC, but its business is basically looking after all the freight track all around Australia and lines from Sydney to Perth and up to Darwin and so on. Their business is basically selling freight paths to freight operators. So that’s the way they make money, and they make a lot of money – about a billion dollars a year. So this is not a small company.
What they’ve never done before is a project of this size, and they really didn’t have the in-house capabilities to do it, or any of the capabilities at a board level to supervise it in any way or strategise and help people think about how they were going to manage it.
So the first problem that I came across when I looked at this was first of all realising it was running late, and ARTC, to their credit, had done a fair bit work on trying to get information for me. But I was astonished to find that the budget in the course of two years had gone up from about $16 billion to over 31. And we all know infrastructure costs are going up at the moment, but they’re not going up like that. So this was really amazing.
And I got to the point when I looked at it more closely that I don’t actually accept either of those figures because the reality is that there’s so much uncertainty about it that I just felt I couldn’t really believe those numbers. So for a government that puts you in a pretty tricky position because you’ve started a very big project, you don’t know when it’s going to finish and you don’t know how much it’s going to cost.
So the recommendations that I made are basically aimed at the work that needs to be done to get to the bottom of both those big questions. They did break the project up in stages, which is what you do with a big project like this. So it’s got basically 13 bits to it. And the obviously thing to do is to try and get Melbourne through to Parkes done, which would connect you to the East West line as well as starting the North South line. And ARTC could pick up some revenue on that because there’s trains that they could run Melbourne through to Sydney actually through Parkes, but also from Sydney through Parkes through to Perth, who may want to divert down to Melbourne and so on. So there’s a bit of revenue in there for them. It’s not – it won’t give you the benefit of getting through to Brisbane.
When you look at the freight task on this, it’s not about moving goods from one port to another port; it’s basically about getting all the great produce from Queensland – and this is largely domestic movement of freight – from Queensland, North Queensland and Queensland generally down to the south of the country. And it’s a really large freight task and at the moment all that freight is coming down – mainly coming down the road. And those of you who ever travel on the highway will know how busy and full of trucks it is every day of the week and in the evenings. And by 2030 it’s going to be impossible. So that’s the reason why the project was started in the first place.
So the first point really is that it’s not a bad project, but it’s just been managed really badly. The second point that I’d like to make I think is in terms of cost overrun, there are basically three reasons for it. The first was about when you do something like this you’ve got to get approvals, you’ve got to meet environmental approvals, you’ve got to talk to the community you’re going through, you’ve got to ask the farmer when you can go on to his land to get access and so forth. It takes a lot of time.
ARTC did not manage that process very well, and in the process they managed to upset everybody. And when you do that, you then instead of making any progress you go three steps back. So they’ve had to recover from starting off quite badly with their approval processes. That’s meant that they’ve been very delayed, and they’ve also had to do things – not surprisingly – to get approvals. So it has meant that the scope that they thought they were doing is actually a bit bigger than what they thought.
So increases in scope have put the price up, but the time that they’ve taken is really what’s blown their budget out. So when a project is running late you get escalation and you’ve got people sitting around doing nothing and it gets very expensive.
So the other point I think I want to make – and then I’ll sort of stop – is that the way that it was set up within ARTC meant that the operational part of the company really got – was at huge risk of getting overtaken by a very big project. They usually do maintenance and stuff like that. They don’t have this big project running off in a sort of little division that can just eat the rest of the company up. So it led to a tremendous lack of focus. And you really need to separate out your two activities really carefully or you’ll get overlap and all sorts of internal messes. And I think while I didn’t really get into that, I suspect there was a lot of that going on as well.
So that’s pretty much it. I tried to make the report so it was readable, so I encourage all of you to have a read of it; it’s not that technical.
JOURNALIST: Minister, back in 2015 when the original business case was done, the Inland Rail barely passed its cost-benefit assessment then – 1.1 at a cost of 9 billion. The price has since tripled. Presumably the benefits haven’t tripled. Should we just dump the project instead of burning billions of dollars more of taxpayers’ money on what’s an uneconomic investment?
CATHERINE KING: Well, the answer is no. I mean, I think you’re right in the sense of where the cost benefit would be today, but you also heard Dr Schott talk about the – you know, the real aim of this is about getting as many refrigerated trucks off the road as we can into a more carbon-friendly transport freight mode. And that’s really what this – the benefits of this project are.
We’ve got a lot of sunk costs in the project already and I think those are both two factors that we had to consider as shareholder ministers in making decisions about what to do. We’re determined to get this to Parkes, and there’s no further money that we need to appropriate through – it’s an equity-funded project – to do that. We’re determined to do that, but we’re also determined to make sure we understand how much it will cost beyond there.
KERRY SCHOTT: Can I just say that you can’t do a benefit-cost ratio analysis until you know what the cost is.
CATHERINE KING: Yeah, and we don’t know.
KERRY SCHOTT: And one of the things that I found very positive about the project was some of the special activation work that had been done in New South Wales around regional development. And Wagga has got quite a lot out of the freight going through there and they’ve been developing sort of regional activities there and it’s very successful, and Parkes is about to do the same thing.
JOURNALIST: Minister, when you talked about sweeping changes to the project, putting the government’s management aside, are you looking at changes to perhaps like the scope and the route? And if – I wouldn’t mind asking Dr Schott a question: for someone reading this who’s not across Inland Rail, they might think it's almost laughable that a project began before the start and end points were actually sorted. Why in your opinion, having looked at the project's origins, was construction allowed to begin before these key questions were answered?
CATHERINE KING: Why don't we let Kerry answer first and then I'll answer.
KERRY SCHOTT: Yeah, I don't know the answer to the first question, to your terminal question. This is a matter that you've got to sort out with the states, and you might end up not completely sorted out, but I was rather surprised at how unsorted out it was, particularly in Queensland, I think. I think the state governments and the commonwealth and ARTC are now pretty much sorted about that.
CATHERINE KING: Thanks, Kerry.
JOURNALIST: And, sorry, just the changes?
CATHERINE KING: Yeah, so, I don’t think you can see – like, the governance is actually really critical. I think one of the really big lessons for this is you’ve got – you know, this project was - hit problems from the start because that governance wasn’t there. And I think we’ve got to now try and retrofit that to make sure we’ve got that going forward, so I don’t think – you know, that is actually really critical.
In terms of the scope, I mean, Kerry hasn’t recommended sweeping changes, but obviously as we go through the independent valuation, there may be some of that that we need to do. And it is why we’re really determined we’ll get it to Parkes and we will continue – we’ll do the independent valuation, but we’ll continue the sort of planning corridor preservation acquisition, but we won’t be entering into contracts or tendering beyond there until we’ve got a really good handle on all of that. And there may be minor scope or changes that are recommended. But we’re just not in a position to say what that would be at this stage.
JOURNALIST: Minister, you say you’re determined to get it to Parkes, but are you leaving open the possibility of shortening the route?
CATHERINE KING: No, not at this stage. You know, we’re – so the effort and concentration we need to do now – and that’s what the, you know, cabinet has agreed – is to get it to Parkes. We think that is where we can get a return on investment. We do want to see it get to Ebenezer, that’s the final point. We’ve got to do a business case on Ebenezer, but we’re not in a position today to start building that to do that. We’ve got a lot of work to do to actually get that, but we’re determined that the construction to Parkes will happen.
JOURNALIST: Minister, just a question for Dr Schott.
CATHERINE KING: Yes, of course.
JOURNALIST: Given what you’ve seen in this project, do you think there needs to be more independent oversight of major infrastructure projects to ensure that these sort of clearly decisions taken out of the hands of day-to-day politics?
KERRY SCHOTT: I don’t – I’m not sure how to answer that because I think it really is the job of the ministers to appoint a board to be able to, you know, do the strategy and get the thing started. And then the actual doing of it is in the hands of the CEO and the people on the ground who are managing the project. And one of the problems that happened here was that it hasn’t had a CEO for 18 months. And, you know, that’s really difficult. It’s been kept on the road, as it were, by a sort of temporary CEO, who’s done a good job in just keeping it alive. But the fact that there was difficulties filling that position, you know, is just a real sign of the governance issues that the ministers were speaking about.
CATHERINE KING: And not only that, we had, you know, recent board appointments that were made contrary to even the Chair of ARTC, Warren Truss at the time, who’s now been replaced by Peter Duncan, they were recommending that they needed skills based, and Barnaby Joyce chose not to put people on, contrary to the board. Jade?
JOURNALIST: What will the government now do with the 1.6 billion dollars that the Morrison government committed to the Beveridge freight terminal? And will the government consider providing any additional funding for either the Beveridge or Truganina sites?
CATHERINE KING: So we’ve accepted the recommendations of the report that there needs to be two intermodal – Beveridge and WIFT, as it’s known colloquially in our home state – and we’ll do that. That money still sits within the budget. We recently – again, both Katy and I are shareholder ministers for the National Intermodal Corporation and we’ve recently exercised the option on the land at Beveridge. That happened a week or so ago. I think that would have gone into the media as well. So we’ll progress both of those projects with the Victorian government.
JOURNALIST: Minister, so I’ve just got two questions, if I may: what would you say to communities that are north of Parkes that might be facing uncertainty now as it sounds that there’s nothing set in stone from here? And also you and Dr Schott mentioned that a lot of the traffic that will be going through this freight line will be coming from Queensland and there’s a lot of existing truck freight. What does that mean now that it’s going to Parkes? Will the ARTC be able to turn enough solid revenue to make the project worth it just going to Parkes at the moment?
CATHERINE KING: Well, at the moment they’re not getting any revenue from this project at all. So getting it to Parkes at least opens up the opportunity to start getting a return on investment for taxpayer dollars, and so that’s why getting it to Parkes is important. Dr Schott’s also recommended the exploration of an intermodal terminal at Parkes, which I think will certainly if that went ahead provide significant jobs and benefit for that community as well.
Beyond that, as I said, we’ll continue the planning works, continue the work that needs to be done to get planning and environmental approvals through, corridor preservation, land acquisition where that’s needed as well. We’ll continue with that, but we’re just not in a position today on the basis of what we know in terms of this project to say, you know, we will start building on this date. Because if I did that, I would be doing exactly what the previous government was doing – just making it up. And I don’t want to do that; I want to deliver this project. I want to provide certainty.
I think the other recommendation Dr Schott has made around really looking at a close opportunity in those regions for activation, what else you can do and what else you can put around them, the New South Wales government did a good job with that and will continue to do that. We want to look at that as well and what the benefits are for beyond Inland Rail for those regional communities as well.
JOURNALIST: Minister, the report highlighted significant problems in Queensland – it’s four years behind any other state and is responsible for large amounts of the cost blowout. What needs to be done now to address those issues? And is construction feasibly going to take place within the Queensland border this decade?
CATHERINE KING: Well, again, we’ve got to get that independent valuation in. And I’ve spoken to Steven Miles yesterday. We’ll get – do the work that we need to do to ensure that those – really, it’s the planning and environmental approvals that need to be put in place. I think through the report Dr Schott has mentioned that there were some problems with the way in which ARTC went about that, so not providing adequate information to actually even allow an environmental assessment to be undertaken properly. So there are some significant problems within ARTC about how they went about that. We’ve got to work those through and get those planning approvals.
But, I mean, this is a problem with, again, the lesson from a project like this, to actually even start – I know the report; I won’t go into too much detail about this – but, you know, just prior to caretaker, you know, an MOU to enter into a private-public partnership was entered into. To enter into something like that, when you don’t even have planning approval, when you don’t even have clarity about how you were going to get it down the range – single stack or double stack – how, you know, you’re going to get it into the Port of Brisbane, frankly, is incredibly questionable. You know, they were putting basically, “Let’s get this thing built,” without asking any questions about what is – you know, is that scope right, are we actually going to be able to do that, how much is it going to cost, like really basic questions. And we’ve got to be able to answer all of those, particularly in that Queensland bit, before we can start construction.
JOURNALIST: Minister, how much money has already been spent on the project?
CATHERINE KING: It’s about two billion dollars that’s already been spent. I’ll just check – my staff will nod at me if I’ve got that right. Yes.
JOURNALIST: If we’re only two billion dollars in and this is expected to blow out to 30, I mean, this is just so problematic, the fact that Brisbane, there’s no feasible way to operate the double-stacked freight trains, I think someone has already asked this, but surely we should just start again?
CATHERINE KING: Well, I mean to some extent – well, we’re not starting again. And as I said, I think the benefits of this in the longer term given how big our freight task is growing – and we can see that already, but the freight task is growing substantially and rail has to play its part not just from a road safety point of view but also we are looking to decarbonise. We want to get these trucks off our roads. We want to get more freight on to rail, and this is an important part of doing that and will be important for all of those regions along the route. So we’ve made that decision that we will progress with the project.
But we’ve got to really get this under control. I think it is abundantly clear that it was never going to be able to get through Acacia Ridge. Like, it’s abundantly clear that we’re never going to be able to bring double-stacked trains through the suburbs of Brisbane into the Port of Brisbane. But instead of actually being clear about that, making the decision early, right at the start of the project, we’ve just had this, you know, mess, frankly, that we’ve been left with.
JOURNALIST: Minister, taking on board all these recommendations, when can you realistically complete this project?
CATHERINE KING: Well, I’m not going to put a date on it because I would just literally at this stage, as Kerry’s report indicates, I would be guessing, and I would be adding exactly to the same – I’d be doing exactly what the previous government did – just making it up. And that’s what they did.
JOURNALIST: Long than the 2027 –
CATHERINE KING: It is clearly going to take longer than 2027. It is absolutely clear that that date was a fiction, a complete and utter fiction.
KERRY SCHOTT: The estimate at the moment is 2027 through to Parkes. The approvals for the rest of New South Wales will take a little time, but they’re in a much better place than Queensland approvals, which are well behind. And ARTC are estimating early 2030s for Queensland. But I think I wouldn’t really hang my hat on that estimate either. You really need to get those approvals in place.
And the approval process in Queensland, having got off to an extraordinarily dreadful start, has improved and the end is in sight for approvals, but it’s going to take some time.
CATHERINE KING: It is. We’ll just take one more.
JOURNALIST: A question for the Finance Minister on another topic, please: yesterday you were at the National Gallery announcing urgent budget relief for the collecting institutions. Will there be good news soon for single parents facing payment reductions as their children approach eight or parents compelled to attend parenting classes?
KATY GALLAGHER: So, as you know, we are right in the thick of ERC at the moment. We’re having a couple of important reports that have been provided to government that go to those issues that you raise about payments and support, particularly for single parents, mums primarily, that is have through the economic Inclusion Advisory Board and the Women’s Economic Equality Taskforce, and we’re working through those in the final stages of the budget decisions.
So, you know, I think Jim and I have made clear that we are – you know, we see the budget as an opportunity to look at the ways that we can support the most vulnerable Australians. Those decisions are currently being worked through through the ERC for the budget that we’ll hand down on 9 May.
CATHERINE KING: Thanks, everyone. Thank you.