ABC Radio National Breakfast interview with Fran Kelly

Fran Kelly: Another interest rate cut is on the cards before Christmas. The Reserve Bank expressing renewed concern about the state of the employment market and flat wages growth. With the economy still in the doldrums, the Morrison Government has deflected calls by the Reserve Bank Governor Philip Lowe to bring forward large-scale infrastructure projects to make them quote shovel ready as quickly as possible.

Instead, the Federal Government's turning the heat up on the states to fast track developments to try and spur employment growth and kick start the economy. Alan Tudge is the Minister for Urban Infrastructure. Minister, welcome back to Breakfast.

Alan Tudge: G'day Fran.

Fran Kelly: You've publicly put it on the states to accelerate their infrastructure projects. It's up to them to make the economy stronger. Is that a concession that too much of the Federal Government's $100 billion infrastructure pipeline is going to arrive too late to make a difference which the economy needs right now?

Alan Tudge: Not at all. In fact, we've got a record amount of expenditure this financial year on infrastructure, almost double the amount that what we had before we came to government. And that means there's major projects going on, Fran, right across the country, particularly in our big capital cities. I mean, projects like a Western Sydney Airport in Sydney, or the M80 here in Melbourne, or North-South road in Adelaide. It's underway right now, but if we want to do more, of course we are ready to do more, but it's ultimately up to the states to bring forward their schedule.

Fran Kelly: Okay, just in terms of record Commonwealth spending, correct me if I'm wrong, but I think there's around $30 billion of $100 billion over the forward estimates over the next three years. That's 0.37 per cent of GDP, that's comparable to previous years, isn't it?

Alan Tudge: So we've got about $45 billion over the forward estimates over the next four years, which is the forward estimates period. And that means that we've got right now about 160 major projects occurring as we speak, and about another 120 major projects in planning.

Fran Kelly: Okay, but in terms of previous spending, you're saying that's well above?

Alan Tudge: Well it's almost double the amount of what it was when we first came to office. I mean, five years ago people were lauding the fact that we had a $50 billion national infrastructure plan. Today we have a $100 billion national infrastructure plan, which not only is building right now but outlining a pipeline over the next decade.

So absolutely, we are heeding the call of the Reserve Bank Governor, getting on with it, and we're having good discussions with the states and territories to see what else we can do, particularly, Fran, with some of these smaller Urban Congestion Fund projects, because they're the ones that can be done quickly.

Fran Kelly: Okay, let's look at the states. The large-scale construction work underway in New South Wales and Victoria is already pretty intense. If you look around Sydney, you'd have to ask where's the capacity for them to do anymore right this second. Then there's the $5.4-billion-dollar Cross River project in Brisbane entirely funded by the Queensland Government. I think not a single cent from the Commonwealth, the same in WA with Metronet. Where's the evidence that the states should be doing more right now?

Alan Tudge: Well many of the states are doing an enormous amount of work as well, and particularly New South Wales, as you point out. I mean, they have fantastic projects across Sydney, as well as across regional New South Wales, many of which have been supported by the Federal Government as well. Where there is capacity to do more, and where I've been having discussions with my state counterparts, as well as the Prime Minister with the Premiers, is particularly on some of these smaller projects as I've been saying.

Now, these are often $5 million, $10 million, $50 million dollar projects in the suburbs across the major cities, and they inject real money into local communities, employ local people, and fix those really congested hot spots which cause grief to people on a daily basis. They're the types of things that we can get going really quickly, and I'd like to see nearly all of those up and running over the next 12 months or at least in the detailed planning phase.

Fran Kelly: And is that the sort of project that the Reserve Bank Governor was talking about? Isn't he talking about large infrastructure structure programs by and large?

Alan Tudge: They're the other opportunities as well, and that's what I was signalling yesterday, that we do have a pipeline of other projects as well, Fran. And they're in the planning, and you do need to go through a rigorous planning exercise with the very big projects. You can't switch them on overnight. But if the states are able to bring forward and accelerate that planning, then we're willing to negotiate with them to bring forward our funding.

Fran Kelly: Because it sounded like in the comments yesterday, it sounded like you were basically criticising the states for not doing enough. I mean, and there is evidence, as I said before and given some examples, the states are doing a lot of the heavy lifting. $56 billion on roads and rail in New South Wales over the next four years. If the Commonwealth is so concerned that these projects need a kick along, why does the Commonwealth help from the Metro West link, which needs Commonwealth funding to proceed, for instance?

Alan Tudge: Well we've got our priorities, we've outlined our priorities in each state and territory. And some of those state governments haven't picked up on yet either, including for example the East West Link here in Melbourne. That is a project which the states wouldn't have to pay a cent in order to actually get built because we've committed the entire government share of it.

Fran Kelly: Just on that one, because I think I've asked you this before, the State Government of Daniel Andrews has rejected that. It's been re-elected overwhelmingly, it rejected it again. It doesn't think that's a priority. Why doesn't the Commonwealth, if you're so keen to get the state spending money on large infrastructure, just swap those funds to something that Victoria does want to build?

Alan Tudge: Well we've already got $27 billion worth of funding going into Victoria with massive projects going on. But on top of that we did say leading up to the last election, and one of our big commitments in the last week of the election, let us fund the entire amount and get on with the job because it is one of the only major freeways in the country which comes to full a stop in the city rather than connecting through the city onto another one.

It has to be done, Fran. Infrastructure Australia says it has to be done. Infrastructure Victoria says it has to be done and we're willing to pay the entire government share to get the job done. So, I'm still hopeful that we can negotiate something with the Andrews Government in Victoria to get the job done because there's 50,000 motorists every single day that rely upon that work being completed.

Fran Kelly: You're listening to RN Breakfast. Its 17 minutes to eight. Our guest is Alan Tudge. He's the Minister for Population, Cities and Urban Infrastructure.

Philip Lowe, the Reserve Bank Governor, wants infrastructure projects run more like monetary policy, at arm's length from the government. He said, and I'm quoting here, some more independence with project selection would be a good idea.

Why should the public trust the Government to get it right when it's clear that, not just your government, but governments use infrastructure budgets to favour marginal seats. I mean we saw that in the last federal election, Corangamite in Victoria, a very marginal seat that the Morrison Government was desperate to hang on to, in the end you weren't successful, given more than $26,000 per person in commitments at the last election.

Alan Tudge: Well I don't accept that figure but we do have Infrastructure Australia who provides advice to us on every single major project.

Fran Kelly: But you don't take its advice on every, I mean there are many projects funded by the Commonwealth that aren't signed off on Infrastructure Australia.

Alan Tudge: So every single major project has to have a detailed business case done and it has to go to Infrastructure Australia for their assessment. But at the end of the day, come each budget period, the government of the day has to make the determination as to which piece of infrastructure goes next.

Fran Kelly: So in other words it is not this arm's length, independent project selection the Reserve Bank Governor is talking about.

Alan Tudge: That takes into account what Infrastructure Australia says, that obviously takes into account what the State Governments want to do as well and frequently they'll have their own pipeline of work which they come to the Federal Government to help fund as well. So that's generally how the process works.

Increasingly the Federal Government is taking the lead and putting projects on the table and encouraging the states to join up with us and the Melbourne Airport Rail Link is a classic example of that, where we put money on the table and then a year later on the Andrews Government also came to the table and said let's get on with it.

Fran Kelly: Sure. But what about this notion of more independence in project selection. That's what the Reserve Bank Governor suggested. Why isn't that a better idea?

Alan Tudge: Well, because at the end of the day the government of the day is accountable for the big financial decisions which have to be made and we have to submit ourselves to elections and to the accountability through that process. And they're big decisions, they're taking taxes from people to pay for those, and at the end of the day we take the advice from the experts and then make the decisions though and accept responsibility for them.

Fran Kelly: I know you're not the Industry Minister, but you are the Urban Infrastructure Minister and we've got these problems with cladding, combustible cladding and other building defects, they're going to come to a head tomorrow at this meeting with Commonwealth and state ministers.

Victoria has taken the lead, it's announced a $600 million remediation program to rid buildings of flammable cladding but it wants the Federal Government to kick in half of that. You've said no, and yet isn't nation-wide cladding removal exactly the sort of job creation project that you're spruiking here. It needs to be done. It will create jobs immediately in local communities. Doesn't it exactly fit the description of what you said earlier?

Alan Tudge: Well, Fran, I mean there's all sorts of projects which could be done.

Fran Kelly: This needs to be done though.

Alan Tudge: This absolutely needs to be done but at the end of the day these are state responsibilities. The Federal Government has nothing to do with building regulation, it's entirely constitutionally the responsibility of the state governments. And frankly, it's been their compliance failures over the last years which has caused these problems.

So we're saying to the states it's terrific that you're taking responsibility for it. Get on with it. We would like to support you in terms of providing some national consistency in terms of the regulation, that's what Minister Andrews is doing. But in terms of fixing up the cladding problem, that's ultimately the states' responsibility.

Fran Kelly: So there'll not be a dollar coming from the Federal Government?

Alan Tudge: Well it's the state's responsibility.

Fran Kelly: So, no?

Alan Tudge: At the end of the day we have our responsibilities, the states have their responsibilities and sometimes there's some shared responsibilities. In relation to building regulations, we have nothing to do with that. It's entirely the domain of the states. This was a failure of compliance, and, ultimately therefore the states have to take responsibility and fix it. That's what Daniel Andrews is doing and we're encouraging other states to likewise.

Fran Kelly: Minister, thank you very much for joining us.

Alan Tudge: Thanks very much Fran.

Fran Kelly: Alan Tudge is the Minister for Population, Cities and Urban Infrastructure.