Transcript - CEDA Infrastructure Conference - Interview, Diane Smith-Gander

DIANE SMITH-GANDER: Could tell us, given of all of the change that you have made – you know, in the last few years, you know, and now through three budgets and a fourth one soon to come, you have gone and looked at the priorities. You’ve had to go through the list again and check it twice and work out what is going to be on that list. And you’ve changed the – refocused the role of Infrastructure Australia – I think it’s probably a good way to put it. But for your mind, where’s the biggest opportunity if we get infrastructure right? Where’s the thing that you’re really focused on? 

CATHERINE KING: Well, the first thing I’d do was – is point you to the Prime Minister’s announcement yesterday about a Future Made in Australia. We are very, very serious about seizing the opportunity that we have in this country from, you know, the unique assets we have, both to ensure that we make that transition to – the energy transition but that we also bear in mind the national security of this country, what is it that we need to do. 

At the heart of that for me in infrastructure is productivity – how are we actually ensuring that we are investing in productivity-building infrastructure, how are we making sure that our infrastructure investment actually also meets our needs in relation to decarbonisation, how are we ensuring the way in which freight moves around the country and people move around that – the country is being done in the way that is adding to productivity, is ensuring that we keep those – also those principles around road safety, making sure we decarbonise at the same time. 

So I think infrastructure is absolutely central to the productivity agenda of the nation. It’s why, you know, Inland Rail is an incredibly important project. Once we get that project to Parkes, that does then see – you start to see the vision of it being able to connect over to the west, being able to see Parkes as a central hub of rail freight, being able to actually engage the way in which we use our intermodal terminals – Beveridge, Ebenezer, Parkes as well Moorebank – really as part of that freight task. So I think there is a huge opportunity for infrastructure but also many challenges along the way with that. 

DIANE SMITH-GANDER: Inland Rail, it always gets a lot of attention, and rightly so. 

CATHERINE KING: A big project. 

DIANE SMITH-GANDER: Last year we talked about the fact that it wasn’t planned on linking up to ports. You said in your address, didn’t know where it was going to start and where it was going to finish when you inherited it. So can you talk a little bit about where it will start, do you I think, where it will finish, will it go to ports? And we have a question from our audience that the changes that have been made meant that people who thought they had a contract no longer had a contract, and so there are lots of people in the infrastructure ecosystem who’ve ended up with pretty big holes in their revenue budgets. How do you think about how you ameliorate that as well? 

CATHERINE KING: Sure. Well, in terms of Inland Rail, so obviously we’ve purchased – National Intermodal Corporation has purchased the land at Beveridge, and we’re about to build basically a bigger Moorebank at Beveridge. It’s a huge project for the state of Victoria. It will mean 7,000 jobs. Moorebank in itself when we opened it is already generating – it’s got 100 megawatts of solar and it’s an incredible project. Moorebank – sorry, Beveridge will have 200. So it’s a really significant investment. 

The Schott report also says we’ll need the two, so the west which also be needed, and we’re doing the work now with the Victorian State Government about what that looks like and how we preserve that into the future. We’re also looking obviously at acquiring land at Ebenezer and making sure that that terminal is fit for purpose. And we’ve just started the work of that as well. 

We’re determined to build Inland Rail. The issue really that we inherited is that I don’t think there is any board in the country that would make an investment decision when you don’t know the route, when you don’t know the cost, when you don’t know whether you’re going to get environmental planning approvals and you haven’t got the right governance structures or the structures to deliver a project. And that’s really what we’ve inherited. 

It’s why we’ve now separated the Australian Rail Track Corporation going back to its core business of running and maintaining the rail freight network. In new Inland Rail Pty Ltd, new company that is the delivery company for Inland Rail, new CEOs, new boards, new governance structures put in place, new financing structures being put in place, and concentrating on getting a return for investment as soon as we can by getting it to Parkes and doing the planning work to make sure we’ve also got as the Inland Rail review asked us to do the cost assurance work to really get a very good handle of just how much this project is going to cost going forward. 

I don’t think, as I said, any boardroom around the table would make an investment with the level of unknowns we’ve got with Inland Rail, but we are absolutely doing the work to ensure that happens. I understand for those that had – you know, had planned for projections obviously where we’ve entered into contracts we’ve honoured the break clauses of those and will continue to do that through any projects that we’ve done. But, really, this is, as I said – you know, it would have been completely irresponsible of me just to continue with business as usual on that project. It was very clear there were some significant problems and that there weren’t, you know, any brakes being put on. And I think that would have been irresponsible of me as an infrastructure minister to come in and ignore those. 

DIANE SMITH-GANDER: I think part of the issue with the state of the project as you just noted was clearly coordination between different levels of government and, you know, getting agreement as to how that project should press forward. And so we’ve got a question from the audience around this coordination with the state, politely saying it has many opportunities, but it’s very challenging. I think that’s an incredibly polite way of putting it. And you’ve talked about Infrastructure Australia and the role that it needs to take. So the audience is interested to know what’s the role of Infrastructure Australia going to be in ensuring that joined-up approach? And I know you’ve only really just got these changes through, but how do you think that is going and what’s your task in giving Gabrielle Trainor and her organisation? 

CATHERINE KING: Well, the first I’d say is just remembering why was Infrastructure Australia set up in the first place. It’s not the state’s adviser; they’ve all got IA bodies that are doing that advice in the states. It’s not local councils’ adviser. It’s not to some industry’s adviser either. The main client of Infrastructure Australia is myself as land transport infrastructure Minister, Chris Bowen as infrastructure minister for transmission and energy projects, Michelle Rowland on communications infrastructure and Tanya Plibersek on water infrastructure. That is the job and role; we are their main clients. 

And getting Infrastructure Australia to recognise that that’s who they’re providing advice to, and I think what happened, as I’ve said previously, after a decade of basically people not really wanting their advice, just wanting to be able to invest wherever they could and, you know, the way in which they could, Infrastructure Australia went looking for clients elsewhere basically. That’s what it felt like to me. And so what we’re trying to do is saying  we’re their main clients and providing that advice. 

Now, it might surprise people in this room, but this is the first budget process where I have got on a project-by-project basis, particularly for those large projects over 250 million, where I’ve now got proper advice from my department and Infrastructure Australia on projects that are requiring Commonwealth investment. Prior to that, we had very little advice coming to government about what – , how do you weigh up the investments being asked for from state and territory governments. 

What it’s also meant is that I’m really relying on the assessment that Infrastructure Australia does do of the business cases and putting some discipline back into states having those, being able to then say, “Well, look, we’ll release or put planning money aside to actually start planning this project and then we’ll follow with construction money later.” So that’s really the way in which it’s working now. It’s not going to be turned around in a term; it’s going to take quite a bit of time to get to that process, but that has well and truly started, certainly in this budget process.

DIANE SMITH-GANDER: I have to say, this Inland Rail and rail in general is the gift that keeps on giving in the slide over here. So I’m really going to try to bottom out the questions about rail. So this, I think, is a really interesting one – you talked in your address about equity, you know, and the importance of making sure that it’s not just five (inaudible) city thanks are doing well out of infrastructure projects and so forth. That’s about social licence also to a degree. What have you learned about the importance of social licence from Inland Rail? I think you are really, at the end of the day, as a government owner of that piece of it. And so how is that going to impact the future of this project and what you’re thinking about for other infrastructure projects? 

CATHERINE KING: Well, I think it’s about – you know, look, the nature and scale of large-scale infrastructure projects is that not everyone is going to be happy. And I think sort of if you start from a point that you want every single person who – where this project is, going to be happy, then we’re never going to build anything. That’s the reality of it. But what you do is make sure that – when you are scoping projects you actually embed yourself in local communities, you listen to what is important, what is important to them from landscape values, from land usage points of view, how do we actually make sure that we’re not just sort of flying in and out and saying, “This is what’s going to happen in your community and, you know, we’re just going to plough through with our planning permit. How we’re actually going to make sure that we’ve listened to you as best we possibly can.” And I think sometimes that does mean we have to take a bit of time. 

Inland Rail I think particularly the biggest lesson – well, the two big lessons from the Schott review is that, you know, was ARTC the right body to deliver basically what was the biggest infrastructure project crossing three states, multiple local government areas, really difficult topography, was it the best body to actually do that work? It hadn’t done it before. Had been really good at maintaining our rail freight network and, you know, the use of the rail freight network, but was it the best body? So making sure we’ve got those government structures right and the right people in place, and that’s why I’m going to get, you know, criticised that how slow high speed rail is, but there’s a reason that I’m taking the time to get the people in place, get those structures right, get the business case right and actually work through those issues because of the lessons of Inland Rail. 

DIANE SMITH-GANDER: Thank you. And one last question about railways – and this is going to be the last one. And I think it’s the horse of self-interest, because I’m sure there are quite a few people in this room, not the least of which is Melinda Cilento, have come from Melbourne, and had to get to the airport this morning to get here. How many in the room came through Melbourne Airport at some point to get here? Yes, quite a few. Yes, there we go. Quite a few. Not me; I come from Perth at the end of a rail line that occasionally floods and then gives us all a great deal of concern. But Melbourne Airport rail, so you’ve got an umpire now – Neil Scales – between the state and the airport owner, APAM. Anything that you’ve got as a particular objective there? Anything you want to say about Melbourne Airport rail? 

CATHERINE KING: Well, I think it’s an important project for the state of Victoria, and I think the Victorian Government does as well. That’s why we’ve both kept our investments on the table, but we want to be able to deliver it. And I think the challenge we’ve obviously got is making the decision about where the station box goes and that dispute we have with the airport, trying to get that settled. I don’t think it’s helpful for us to play that out in the public domain. I know there’s a lot of interest in it, but I’ve asked Neil to do the work and provide advice to the three of us really as partners in this project as to how best we can proceed with it. And we’ll take that advice on board as we go through this project. At the moment we’re – it’s important. We think it’s something that we’ve got to do. But we’re just not there yet. And that’s the reality of the project right at the moment. 

DIANE SMITH-GANDER: Yeah, and I’ll give you some lived experience from Western Australia, and I’m sure you know exactly what I’m going to say about the rail link there because all of us who have ever gone through that airport – and there’s Richie, giving us a bit of a laugh – I think it’s 900 metres from the terminal. And the walk from that, 900 metres, would require you to go through two humongous roundabouts. There’s really no way that’s going to happen. And so it’s a real tragedy that the opportunity to connect appropriately from one side of the terminal – it’s much better on the other side of the terminal, but the way the runway operates. So I just give that as a real prompt to say even if it’s someone else’s job, someone else’s problem to solve, please make sure they solve it properly and don’t solve it in the way they’ve done it in WA. 

CATHERINE KING: Well, thanks for that. Interesting obviously with my other hat on as the regulator of airports, as, one, both the planning minister and the regulator of airports – it’s a very interesting sort of dichotomy there – but is the disability access or mobility access of airports has actually been a really significant focus of the aviation white paper and trying to get – it’s been really interesting to see airports start to think about these issues much more proactively than they have before. 

So obviously transport links to the airport and the responsibilities airports and airlines have are also part of the thinking that I bring to the table on both that project but also on my capacity as planning minister for our airports. 

DIANE SMITH-GANDER: Yeah, look, I’m very pleased to hear that. As an older Australian who is only going to get older – there is no pathway in the opposite direction unfortunately – you know, as we make things more accessible, it also will help older Australians. And we’re seeing, you know, our demographic changing a great deal towards that. 

Now, we’re going to pivot because the top question has now got to the point of green. I knew we were going to have to get there very quickly. So you’ve spoken a lot about making sure that infrastructure investment supports sustainability. You said it again this morning. And so what’s the real opportunity that government can have to incentivise contractors to actually get into green construction? 

CATHERINE KING: So there’s a few pieces of things – work happening. So infrastructure and transport ministers have charged Infrastructure Australia with actually looking at the issue of net zero and infrastructure, and there’s a really significant piece of work that IA has done for us as well. I am in the process – which I’m sure all of you will enjoy – of negotiating the next national partnership agreement, they’re now called federation financing agreements – so FFAs – with every state and territory, which is the agreement by which the Commonwealth then enacts investment in infrastructure. 

And part of that has been increasing the sorts of things that we are asking for in return for our investment, and so they do include things like how do we build in the circular economy into infrastructure investments. As you’d know, other than for Inland Rail, high speed rail, Western Sydney Airport, Moorebank and a couple of other projects, we don’t do the direct procurement; states do all of that direct procurement and direct tendering. And so the FFA is actually a really important mechanism that we will be requiring the states to begin to look at these issues. 

There’s great examples of that around the country, but we want to see more of those. And, again, that links back into the Future Made in Australia speech that the Prime Minister made yesterday, and you’ll hear a lot more about that in the upcoming budget. 

So projects like Victor Harbour, I think, for example, are using, you know, recycled glass from McLaren. Now, we’re not always able to have those sorts of – that sort of materials available locally or close, but you’re starting to see a bit of that. That also does, of course, bring challenges to costs, but that requirement being within the FFA means that tenders shouldn’t just be considering, you know, what is the cheapest price; they’ve actually got to also consider how is this project contributing to the procurement standards of the Commonwealth, how is it contributing to the circular economy, how is it looking at embedded – embodied carbon and how is it actually ensuring that we are employing apprentices and traineeships as part of the Commonwealth’s programs. So you’ll start to see a lot more of that. 

States at the moment are only required to report back to me when I sign off on whether we’re releasing money on First Nations targets of employment. There’ll be a lot more requirements on them under the current – under the new FFA going forward, if they sign it, of course. 

DIANE SMITH-GANDER: Yeah, thank you, Minister. The glass example is an interesting one. And I must say, recently I was delighted to see that tyre recycling is starting to be a thing, you know, in Australia. Because when you think of the tyres, you know, particularly like up in the Pilbara and in Queensland in the resource areas on the huge bit of kit that runs around there it’s crazy to imagine that we’re not thinking about how to recycle those tyres. In the United States a lot of roofs are made out of asphalt shingle. I’m not sure there’s much of that in this nation. We probably don’t even know how to make an asphalt shingle. But it’s a very interesting roofing material. 

But Liz Ritchie has asked me particularly if you’ll comment on how your infrastructure policy statement is intersecting with the regional investment framework, particularly how do we get regions to the frontline of energy transition? 

CATHERINE KING: Well – and the first thing I would say is many of the infrastructure projects that we invest in, particularly now that we’ve actually moved to – so this corridor funding, so actually thinking about how do we fund a corridor of projects rather than just one project in a corridor. And so providing the states opportunities to actually schedule those projects along the corridor and trying to encourage them to also think about what else do you do while you’re building that corridor, is it an opportunity while you’re looking at that corridor to also look at investing in mobile telecommunications infrastructure, is this corridor going through a major tourism area, is it actually also, you know, requiring further upgrades in terms of rest stops. So trying to look at the whole of the corridor rather than just it is just a piece of infrastructure and a particular project. So that’s – we’re really only at the start of that, but that corridor investment allows states to move money between infrastructure projects, and I think that will be important. 

In terms of the energy transition, again, there are huge opportunities in the region. With my transport hat on, obviously we are going to need significant investment in sustainable aviation fuels and in biodiesel in this country, and being able to produce that and getting into market and into refineries to be able to use and land transport is going to be a significant part of that story. 

We’re obviously in a really significant energy transition at the moment and, you know, I’ve got projects in my own constituency that are really challenging. We know that instead of us generating all of our energy from coal-fired power stations that have been in one part of the country and then the transmission coming into our cities and around, we are now able to generate because of the huge nature of this country energy in lots of different places, and moving that around is challenging. 

So I think making sure that regional communities are beneficiaries of that, and I mean not just from the jobs in construction but also that they get access to good, clean, cheaper energy themselves in their communities, that we’re not just seen to be producing it for somewhere else. Also making sure that there is good and reasonable remuneration and compensation for people who are hosting transmission lines or hosting particular projects is important. We learned that from wind farms and from over, you know, 20 years of wind farm development, but also making sure, again, when we’re planning and developing these projects that we understand the importance of landscapes to communities and try and do the best we possibly can to ensure that land use planning is incorporated in. And that means engaging really early, and whilst that’s hard to do, but engaging really early with local councils who actually know their communities pretty well and really, you know, to some extent, when I say with transmission projects, like, actually walking the line and understanding why is this important, why will people care about this particular area and thinking about it, using existing easements where you can. So they’re the lessons that I would suggest we need to learn. 

DIANE SMITH-GANDER: We just have a few minutes left – only 2, actually – I’m going to sneak in one last question. 

CATHERINE KING: Of course. 

DIANE SMITH-GANDER: How do you take into account housing needs in prioritising infrastructure.

CATHERINE KING: Yep. 

DIANE SMITH-GANDER: You knew it had to come, with the migration thing. And you talked last year about migration needing to do more of the heavy lifting, you know, to get the skills into Australia while we’re training our own people. But housing is the big elephant right in the corner of the room. 

CATHERINE KING: So, again, there’s a few things happening in this space – like, a lot happening in this space. The government is investing over $24 billion in 17 different housing programs. It’s a huge investment in really trying to break that cycle of getting more supply into the marketplace. One small element that I have within my portfolio of that is that housing support program. It was not surprising to me but I was surprised at the level of it when I spoke, for example, with the Lord Mayor of Melbourne, Sally Capp. She said that they – you know, she had planning approvals already for around 22,000 dwellings in the City of Melbourne that were basically not progressing because, I guess, the environment had changed for that investment about what return you were going to get. So people were waiting for better market conditions or really banking those planning approvals until the capital was available and you were going to get that return on investment. 

So the housing support program, it’s a $500 million program, it’s just opened in the last couple of weeks, where it’s doing two things: one is it’s investing in local government and states for increased planning capacity so that we can release land. But also the second part of that is actually sort of taking some of the funding risk out for developers and for local councils. So the fund will be available for things like the connecting utilities, sewerage, water, to new housing estates. It’s part of our 1.2 million homes that we absolutely have to build. And they all need to be built around – well located, so around public transport links, around active transport links, really making sure that they’re part of that. 

So that program is open and available now for local government and for state governments to apply for. It – and I’d encourage, you know, if there are developers in the room, to talk to the local councils where your developments are. If you’re able to bring those developments to market more quickly or would like to, then, really, that housing support program is try to de-risk some of those costs and particularly in terms of infrastructure investment. 

DIANE SMITH-GANDER: Well, Minister, I think what remains is for me to thank you and to point out that actually I can’t see the screen there that tells me how much time I’ve got left, so I don’t know if I’m cutting us off short. But according to run sheet we’re supposed to finish now and invite Gabrielle Trainor, the Chair of Infrastructure Australia to come up with a session on infrastructure outlook pathways and strategic decisions. 

We have got a lot of questions. Yeah, look at all these questions that we didn’t get to. And so apologies to those of you in the room and online whose questions I didn’t get to. But what this does allow CEDA to do is to understand what was on your mind, and it does help inform our agenda going forward. And I’m sure we’ve got a way of getting it to your office so you’ll be able to see what it was that you didn’t get to talk to. But thank you, again. 

CATHERINE KING: Terrific. Thank you so much for having me today.