Keynote Address: Infrastructure and Regional Development for the 21st Century
30 April 2014
National Press Club
Thank you, Laurie. [Wilson, President of the National Press Club]
And thank you to the National Press Club for hosting me today.
When I last spoke here we were in the final days of the federal election campaign. I said at the time that federal elections are a contest of ideas.
And that, equally, they are about finding practical solutions to real world problems… grasping the opportunities to secure our nation's future.
Well, the nation spoke. And the Coalition has wasted no time in acting.
People rejected the Labor way of debt, deficit and directionless government.
They understand that Australia could not sustain government spending that took the federal government from having money in the bank in 2007 to gross debt of $667 billion in just over 15 years.
Australia is in this because after just six years of Labor Government because they couldn't stop spending and so much was wasted.
They also promised billions of dollars of new spending earmarked for the budgets after they left office—Gonski, the National Disability Insurance Scheme, Foreign Aid, Defense, Hospitals—outside the forward estimates of Labor's last Budget but which we must account for in our first.
Labor still budgeted for the illusion that their mining tax would pay for their infrastructure expenditure even though it was collecting near to nothing.
The International Monetary Fund recently confirmed that for the six years from 2012 to 2018 Australia is forecast to have the largest percentage increase in spending of the 17 IMF Advanced Economies profiled.
Labor promised to limit real spending growth to 2 per cent a year. Instead, during their time in office they delivered real spending growth of 3.5 per cent.
Now 2017–18 is coming into the forward estimates for the first time. The medium term projections from MYEFO shows real spending growth between 2016–17 and 2017–18 will be nearly 6 per cent—or nearly three times what Labor promised to deliver.
And our ageing population locks in an expenditure profile which increases necessarily without any new measures.
We live longer but aspire to retire earlier.
We spend longer at school and university and so have less time in the workforce to save for retirement.
The cost of aged care to the federal Budget is scheduled to more than double over the next decade from $13 billion to over $26 billion.
Hospital costs will increase from $14 billion to $38 billion.
Income support for carers and Medicare benefits will both double.
The Pharmaceutical Benefits Scheme costs will increase by around 70 per cent over the decade.
There has been a lot of talk about the Age Pension.
Spending on the Age Pension already takes up 10 per cent of all Commonwealth spending—$40 billion this year, and is due to rise to $72 billion in a decade on current trends.
Demand for the Age Pension will continue to increase as the population ages—each week around 1,100 more Australians become eligible for the Age Pension.
In Australia, between 2010 and 2050 the number of people aged 65 to 84 is expected to double, and the number of people 85 and older is expected to quadruple.
People, quite rightly, work their entire lives with the expectation that the Age Pension is there at the end of their working lives as a safety net.
We have to make sure that safety net is secure, taut and capable of catching the people who need it.
We were elected to fix Labor's mess, to deliver better management and to start to turnaround the Budget. We did not hide the fact that it would be tough.
Our country is still a nation of great opportunity.
The Australian people have worked hard to build our country and now we must all make another effort to make it strong again.
Headlines about horrors in a Budget never refer to the costs of inaction.
Most people expect the coming Budget to be tough but there will be no forgiveness for us as a government if we avoid the hard calls now.
Nor will there be forgiveness for Labor and The Greens if they continue to block our attempts to deliver our mandate for reform.
Many still hope that it will be someone else who will carry the burden but everyone will need to do their bit. Not because we want to, or because we enjoy it, but because it is what must be done in the national interest.
Labor's policy legacy will never return the Budget to surplus.
Debt will continue to rise.
Australia's debt is already costing us $12 billion a year in interest. That means interest payments of over $230 million every single week. The first $1 billion of tax the government collects every month is needed to pay the interest bill on Labor's debt.
But balancing a Budget is not just about cutting expenditure. It is just as importantly about building the capacity of our economy to grow and expand.
As our nation prospers our Budget also improves.
Investing in better infrastructure creates the impetus for growth and improves the efficiency of our industry and commerce.
Since coming to government just seven short months ago, we have instigated the biggest road and rail construction programme in our nation's history.
As the leader of The Nationals I am especially proud of regional Australia's share of that investment.
The program of works we are rolling out across the nation will cement Tony Abbott's standing as the Infrastructure Prime Minister and, I might add, our administration's reputation as a transport infrastructure government.
This infrastructure is pivotal to getting our nation moving efficiently and competitively.
Our agricultural production, worth around $33 billion a year in exports alone, could more than double by 2050.
Resources development will continue to deliver well into the 22nd Century, and beyond.
Energy self-sufficiency and the potential for major export contracts with the development of gas reserves, renewables, uranium, oil and coal, are all real probabilities that capitalise on our natural advantages.
All of these opportunities for growth are in our regions.
Harnessing the talent of people in the regions, linking regional enterprises to markets and putting in place skills development programs in the regions to meet demand, is something we must do.
We need to encourage value adding industries and smart manufacturing. We need to look seriously at regional Australia's infrastructure and gear it for growth.
To achieve these goals it will be necessary to unlock private sector investment and expand its role in the provision of transport infrastructure.
Governments capacity to fund future infrastructure through traditional financing methods alone, will simply not be enough with falling taxation revenue and growing expenditure demands.
Meanwhile, the cost of construction spirals. We now talk of billion dollar projects where we used to speak of millions.
Delivering economically productive infrastructure means we have to be smarter in how we plan and fund infrastructure to ensure taxpayers' money is spent prudently and returns the greatest benefits to the economy and the public.
We are working at ways of partnering with the private sector to deliver key projects and help encourage greater private sector investment in the infrastructure Australia needs.
This is an important part of our infrastructure reforms—but, we acknowledge, the Government's own investments will need to remain significant.
Across this vast continent, safe and efficient transport networks are of critical importance in building a strong economy and in keeping communities connected and the supply chain moving to and from our major import/export hubs.
So, before this decade is out, this Australian Government will have invested over $40 billion in major transport infrastructure projects across the country.
Our investment will leverage similar levels of funding from other tiers of government and the private sector.
By now, I hope you know our headline city investments well:
- $3 billion for Melbourne's East-West Link—stages 1 and 2,
- $1.5 billion to get Sydney's WestConnex underway and another $405 million for the NorthConnex project,
- $3.5 billion for the roads of Western Sydney,
- $1 billion to upgrade the Gateway Motorway North in Brisbane,
- $686 million to finish the Gateway WA Project in Perth and $615 million for the Swan Valley Bypass, and
- $500 million for the upgrade of South Road in Adelaide.
But our transport package also includes record amounts for regional roads, recognising that connecting our regional towns and cities to their capitals and getting our farm and mining exports to markets in the most efficient way possible, especially in this the Asian Century, must be a priority.
This investment includes:
- $6.7 billion to upgrade the Bruce Highway to make it safer and better protect it against regular and costly flooding;
- $5.6 billion to finally finish the duplication of the Pacific Highway within this decade;
- Up to $1.3 billion to build the Toowoomba Second Range Crossing as the first major road PPP project in regional Australia;
- $400 million to continue the Midland Highway upgrade in Tasmania; and
- Almost $500 million for the Great North Highway and North West Coastal Highway in WA.
And there's more to come.
We have committed $300 million to finalise plans, engineering design and environmental assessments, as well as start construction on the iconic Melbourne-to-Brisbane Inland Rail project.
I remind you that it was the previous Coalition Government that had the vision to champion and begin work on the Inland Rail and not much as happened over the past six years.
It's part of our holistic infrastructure effort combining all transport modes. It recognises the reality that, nationally, our freight task will double over the next 20 years, but that it will treble along the eastern seaboard.
The Inland Rail will join Brisbane through Toowoomba, southern Queensland, regional NSW and Victoria, and on into Melbourne.
That means less congestion on our highways, but also the local roads that service our metropolitan and regional ports.
Speaking of local roads, we have a renewed commitment to the Roads to Recovery Programme, locking in its future for a further five years with $1.75 billion of funding.
As most of you will be aware, Labor and the Greens are now playing games with this funding. They opposed the legislation to deliver it in the House and are poised to do the same in the Senate.
If this legislation does not pass the Senate by 30 June this year, that $1.75 billion, which Australia's 565 local councils depend on for their roads and streets will be road kill.
It's something that regional Australians understand only too well. Of the 17 seats that changed to deliver the Coalition government last September, 11 were regional.
Now they look to the Coalition to help the regions build a better future.
The Government has also committed $300 million to the Black Spot Programme addressing road sites that are high risk areas for serious crashes, in addition to our new $300 million Bridges Renewal programme to restore dilapidated local bridges.
In addition to the Inland Rail project, we continue to upgrade our nation's rail system.
$50 million is being injected into the Australian Rail Track Corporation to deploy its Advanced Train Management System (or ATMS) from Port Augusta to Tarcoola in northern South Australia.
Once operational, this system can be extended to other parts of the ARTC network, bringing interstate rail into the modern era by replacing physical train control and signalling systems with an advanced digital system using global positioning, 3G broadband communications and satellite technology.
We are also investing in our rail freight links to our ports.
We are delivering a $75 million investment in the next stage of the Port Botany Rail Line Upgrade in Sydney and we are working with the private sector to deliver the much-needed Moorebank Intermodal Terminal.
In Melbourne we are committing $38 million to the Melbourne Metropolitan Intermodal Terminal system.
And, in Brisbane, we are partnering with the Queensland Government to plan a new 24/7 rail freight link to the Port of Brisbane—the country's fastest growing container port.
This line would not only feed the Port but also link to the Inland Railway connecting the mines and agricultural regions of South East Queensland and Northern NSW to international markets.
I might add that, in Perth, we will shortly complete the North Terminal Rail Quay at Freemantle, which will significantly improve the rail connections between the Port and the key freight hub of Kewdale.
Australian ports manage 10 per cent of the world's entire sea trade—some $200 billion worth of cargo each year, 32,000 container cargo ships and that is increasing by more than five per cent a year for the past five years.
That workload is expected to double by 2030.
As an export nation with no land borders, sea transport comprises 99 per cent of our international merchandise trade.
So we must ensure that our ports and our shipping industry are productive and competitive in the global marketplace.
That's why last month I announced a major review of coastal shipping to confront the growing disparity between the cost of shipping domestically and the cost of shipping to Australia from overseas.
Following consultation with industry we have released an options paper canvassing reforms to the costly and cumbersome regulations governing coastal shipping.
Western Sydney Airport
Of course, the big news of late is that after decades of dithering, the new Coalition Government has done in months what no other government since the mid-1960s has achieved… locking-in an airport for Western Sydney at Badgerys Creek.
Airports are unique job creators—creating more long-term jobs than during the construction phase. It means 4,000 new jobs in construction and tens of thousands more once the airport is operational.
Our decision ends half a century of indecision and uncertainty.
But it also now allows the aviation, transport and tourism industries to make long-term investment plans based on a commitment they can count on.
By 2060, an airport at Badgerys Creek has the potential to drive an increase in GDP of almost $24 billion.
It will complement—not replace —Kingsford-Smith Airport, which will continue to be a critical part of Australia's transport infrastructure.
This is why we are committing to a 10-year package of $3.5 billion to undertake a major roads funding programme in partnership with the NSW Government, which will transform Western Sydney.
This rolling programme of upgrades will make it easier for the people of Western Sydney to move around and work in the region, but will also be integral to connecting Badgerys Creek to the rest of Sydney.
Reforming Infrastructure Australia
As you know, the government is pursuing changes to Infrastructure Australia (IA) to make it a more independent and transparent body, giving it a broader range of responsibilities and enshrining certainty, transparency, focus and a national purpose in infrastructure planning, development and delivery.
Our changes will, for the first time, give IA an independent board with a chief executive officer answerable to the board.
IA will be separated from the department and will control its own budget and work program, making it truly independent.
IA will be charged with developing a rolling 15-year infrastructure plan for Australia. IA will be ahead of the game, not trying to catch up after decisions have already been made.
IA will be required, by legislation, to publish the justification for prioritising projects, including benefit-costs analysis.
This will give planning certainty to industry and ensure public funding is used to deliver the infrastructure projects our nation needs most, when we need them.
IA's role is pivotal in our strategy to lift Australia's productivity and I am disappointed that these reforms are being resisted by the Opposition.
This government will deliver the major infrastructure projects Australia needs, and we are reforming national approaches to how we fund, deliver and manage this infrastructure.
My goals and objectives in public life are to help deliver benefits, especially for those who live in regional communities.
I live in a region and I want regional Australia to share in our nation's growth and prosperity.
Labor and The Greens did not even attempt to understand the regions when in government.
But we know the importance of investments in the regions and the importance of funding them responsibly.
We have begun to deliver for hundreds of local projects, under our $342 million Community Development Program
And we are doing it without a mining tax.
In an increasingly demanding world, regional Australia holds the key our future prosperity—and by that I don't just mean our traditional mining exports which have been in high demand ever since the first export of ore from South Australia in the 1840s.
Consider this… by 2050, our Asia-Pacific region will account for almost half the world's economic output.
This seismic demographic shift is reflected in an increasing demand for high-end primary produce including beef and dairy and Australian producers are already taking advantage of this growing market.
Our government has negotiated FTAs with Japan and South Korea and China is on the agenda.
To ignore regional Australia's need for investment and growth is to turn our backs on the opportunities for the future.
It was in this room at my last address that I committed the Coalition to a $1 billion National Stronger Regions Fund. Next year it will be rolling out, with the first funding available, providing the hard and soft infrastructure communities need for their people, families and businesses.
Whether it involves planes, trains, automobiles or boats we have been working hard these past seven months.
Our focus on the productivity and other economic benefits of infrastructure investment reflects the need to lift Australia's productivity above the sluggish rate of 1.1 per cent achieved over the past decade—compared with 2.1 per cent in the 1990s.
The Deputy Governor of the Reserve Bank made the common-sense observation last year that infrastructure investments alone will not solve national productivity problems. But he added this investment can certainly make a major contribution to a broader solution.
Those investments must be strategic, targeting Australia's growth areas and linking together for the most efficient and competitive transport infrastructure if we are to reap the rewards ahead.
The regions of this country would still exist without the cities, but I doubt our cities cannot survive without healthy, thriving regions.
Our government is turbo-charging infrastructure construction and regional development for a stronger Australia. And there's more to come.
Thank you for your time.