Interview with Tom Connell on Sky News Australia

TOM CONNELL [HOST]: Well, the Government is embarking on a 90-day review of Commonwealth infrastructure projects that has the potential to deliver billions of dollars in savings, but it says it will be re-invested in infrastructure. It’s promising to axe so-called press release projects to prioritise only truly nation-building infrastructure. But Labor election promises won’t be touched.

I spoke to the Infrastructure Minister Catherine King a short time ago and started by asking her about what the review is trying to ensure.

CATHERINE KING [MINISTER]: Well, I think the first thing is we’re absolutely committed to keeping the Commonwealth infrastructure investment pipeline at $120 billion over the 10 years and, of course, it’s a rolling pipeline. But what we want to also be able to do is make sure we’ve got capacity for paying for cost overruns and we’ve got room to be able to promise and commit to new projects that states and territories are asking us for.

The problem I’ve got at the moment is that the pipeline is actually full of projects that we simply can’t deliver – they’ve either got no funding partner at all from a state government point of view, they’re massively underfunded. And so what I wanted to be able to do is, we started that work in October, we had a look at 50 projects we either had to change the time frame for or we cancelled. And now we’re having a look at the entire projects across the 800 projects of the infrastructure investment pipeline.

TOM CONNELL: Runover can be about 30 per cent. Does that mean you need a 30 per cent cut, deferral, whatever it might be, if you’re going to say – what you’re essentially saying is we can’t go over 120. So is that what you’re going to need? That sort of scope of savings?

CATHERINE KING: Well, the previous government made no provisions for cost escalations, so we actually need to build that into the pipeline because we know that that’s happening. So that’s one of the things we’ve got to look at and the reviewers will look at as they go through projects. You know, really this is about what can we deliver and then is there the possibilities of creating headroom within that $120 billion to ensure that we can deal with cost overruns.

At the moment they’re pretty substantial, but generally they’re around about 10 per cent you should factor in, and that needs to be factored in. And generally we factor that in when we’re getting into contracts and part of that sort of contracting arrangement. But that’s really – some of these projects, though, that I’ve got on the pipeline were announced back in 2016. No funding partner at all, they’re billions of dollars underdone. Now, I’ve got a decision to take, and I want the reviewers to look at these are a pretty hard eye – do we leave that money sitting there forever, basically never to be delivered, never to be actually – never building anything but it’s still a promise that’s there that a previous government made, or do we say, actually, we think that money can be better used for another project.

TOM CONNELL: Right. But if you’re talking that 10 per cent, so you need a scope of about $12 billion –

CATHERINE KING: We haven’t set any –

TOM CONNELL: But to get that headroom –

CATHERINE KING: Yeah, well, we haven’t set any particular target. We are looking at this systematically. We’re looking at this project by project. Let’s see what comes out at the end of it. I haven’t set a target.

TOM CONNELL: Okay.

CATHERINE KING: And I’m deliberately not doing that because projects need to be able to stand up on their own merit and I want to know – so it may well be that we’re not able to get that headroom, but, you know, I’d certainly like to be able to.

TOM CONNELL: Or more. I mean, if you find that all these projects are not stacking up and you get a greater amount of savings, does the 120 need to stay? It’s an amount that’s sitting there just because of previous promises. Why not spend less if that’s what the review finds?

CATHERINE KING: Well, we think if you look around the demand and the need for infrastructure investment overall, 120 is a good number. It’s the number that if you look at the investments, so, for example, it pales in significance; the New South Wales State Government spends that itself. Itself it spends $120 billion, so the Commonwealth spending 120 –

TOM CONNELL: Right. So if it came in under that you could find other projects?

CATHERINE KING: Absolutely. There is well and truly demand.

TOM CONNELL: So if there’s scope for it to find even more savings, then you go, “Right, we’ve got headroom plus money”?

CATHERINE KING: Yeah, well, that’s part of what we’re trying to do, and make that – make sure that it’s deliverable, sustainable and actually focused on those nation-building projects, - so, you know, at the moments if I was to say, you know, is our freight, rail freight, network absolutely and utterly resilient to climate change I couldn’t say yes because, you know, the Bureau of Infrastructure, Transport and Research Economics has clearly said to us there are really high-risk areas on our freight network, and being able to find the room to be able to fund those is really what this review is about.

TOM CONNELL: So you want projects to stack up. You’re running a ruler over this, but Labor election promises are exempt?

CATHERINE KING: Yeah, that’s right.

TOM CONNELL: Why?

CATHERINE KING: Because we’re delivering what we said we were going to deliver, and we’re very confident with the election promises that we made that they do stack up, and that’s what we’ve done. And anything under construction currently also we’re not obviously going to halt construction.

TOM CONNELL: And that confidence, I mean, you made those promises in opposition without even the benefit of, say, the department. So why so much confidence in those promises? Why not have the same –

CATHERINE KING: We’re also making sure we deliver what we promised what we are going to deliver on. We didn’t make a huge amount of promises in terms of the infrastructure pipeline, but also we worked pretty closely with state and territory governments on most of those promises.

TOM CONNELL: Just – I mean, you’ve accused the Coalition of partisan spending, not having the right priorities. Doesn’t it seem strange that you wouldn’t at least subject your own promises to the same process?

CATHERINE KING: No, I don’t think that is at all. I think that that’s what – we’re delivering what we said we were going to do. We’re taking the opportunity to look at what is in the pipeline currently and that is not an election commitment that is not currently under construction, looking at what can be delivered. And, as I said, there’ll be projects that are in Labor seats, there’ll be projects in National Party seats, in independent seats that we can’t deliver that will be part of that review. And we’ll be looking at that with, you know, the eye about how to deliver them, is there enough money available, is there a funding partner to do that, what’s the time frame and really getting that – into the detail of that.

TOM CONNELL: You get the point of the Coalition attack on that, though? Because they say, “Well, Labor’s got this new regime of accountability, but they’re putting themselves outside of it.”

CATHERINE KING: I’m certainly not going to take any lectures, frankly, from the National Party or the Liberal Party on this. They’ve left us with this mess and we’ve got to clean it up.

TOM CONNELL: But it leaves them an attack line, doesn’t it?

CATHERINE KING: Well, they can do whatever they like. You know, this is two political parties, frankly, who’ve been responsible for using this infrastructure investment pipeline, frankly, in a way that has left us with the mess that we’ve got.

TOM CONNELL: Okay. $2 billion for the Suburban Rail Loop, I understand that’s started. So that means that –

CATHERINE KING: Yeah, it’s under construction.

TOM CONNELL: So that money stays.

CATHERINE KING: Earlier works.

TOM CONNELL: What about the rest of the project? Because the Victorian Government is factoring in you spending I think another 12 billion. So will that go through Infrastructure Australia?

CATHERINE KING: Yes, it does have to go through Infrastructure Australia. And that’s really one of the other things we’ve done with the review of Infrastructure Australia we did last year, trying to put that back into the process of being able to ensure there are business cases, there’s a consistency across the country of how cost benefit analysis is done and that work.

TOM CONNELL: Okay. So that will have to stack up?

CATHERINE KING: Yes.

TOM CONNELL: Or you won’t give more money to that Rail Loop?

CATHERINE KING: That’s correct.

TOM CONNELL: The Victorian Government will have to find it elsewhere?

CATHERINE KING: That’s correct.

TOM CONNELL: Okay. And in terms of that stacking up, that’s a business case? That’s a positive reading, if that’s the terminology, on spending a dollar and getting more than that – more than a dollar for economic benefit?

CATHERINE KING: Correct. That’s correct.

TOM CONNELL: Okay. All right. Minister, thanks for your time.

CATHERINE KING: Good to be with you.