The Coalition’s Plan for Infrastructure Australia - Infrastructure Partnerships Australia Symposium
25th July, 2013
Hon. Mark Birrell, Brendan Lyon, ladies and gentlemen, good afternoon. Thank you for the opportunity to address you today.Providing the infrastructure necessary to connect with and drive our 21st economy will be a vital part of improving productivity, enhancing efficiencies, encouraging existing industries, spurring the industries of tomorrow and making Australia a better place to live.
The Coalition has a five-pillar plan to build on Australia's diverse economy - focusing on agriculture, manufacturing, services, education and mining.
It's a plan to create new and more secure jobs and harness opportunities for Australian businesses and families.
It cannot be overstated how important efficient infrastructure is to unlocking our nation's potential.
Infrastructure will provide access to new and emerging industries, to transport our cost-sensitive goods to markets here, and to ports for far off markets, as well as link Australians to jobs, services and opportunities we haven't dreamt of yet.
The Coalition is determined to drive and provide the modern infrastructure to match the needs of our modern economy.
To this end, we have already committed to a number of substantial projects across the country...
* $1.5 billion to the WestConnex project in Sydney,
* $1.5 billion for the East-West Link in Melbourne,
* $1 billion to continue the Gateway Motorway North upgrade in Brisbane,
* $400 million to continue the Midland Highway duplication in Tasmania,
* $500 million for the upgrade of South Road in Adelaide, and
* $5.6 billion to finish the duplication of the Pacific Highway.
The Coalition will also support the Gateway WA project in Perth and just last week, Tony Abbott and I announced that a Coalition government will partner Queensland in an $8.5 billion upgrade of the Bruce Highway.
We will also deliver the National Broadband Network sooner and for tens of billions less than Labor's NBN.
While the Coalition is powering along with our priority infrastructure projects to build the Australia of the 21st century, the May Federal Budget confirmed that Labor's infrastructure investment has been slashed.
In fact, we see the next State-Commonwealth road and rail funding program under Labor has been decimated. Going from $36 billion over 6 years to $24 billion over 5 years - a cut of $1.2 billion per year (or $6 billion less over the life of the program).
This is where the chickens from the reckless and wasteful spending of the Rudd-Gillard and Rudd again governments come home to roost.
Never forget that during the global economic downturn Kevin Rudd's Labor squandered billions of dollars on installing and then removing combustible roof batts, building over-priced school halls and sending out stimulus cheques to people already dead.
It is hardly surprising that the Business Council of Australia estimated that only 14% of the stimulus package actually went to productivity enhancing infrastructure.
While Infrastructure Australia was established to better target Commonwealth investment it has been largely ignored by Labor and has been unable to cut through the political spin cycle to develop a longer term pipeline for investment and consideration by decision-makers.
Today I am here to make it clear that a Coalition government will insist on better value for taxpayer investment.
The Coalition will reform Infrastructure Australia to enhance its capability as an independent, transparent and expert advisory body.
That will require an overhaul of Infrastructure Australia's structure.
Under a future Coalition Government, Infrastructure Australia will be led by a Chief Executive Officer, responsible to the Infrastructure Australia Board.
In line with other Government Boards, the new CEO position will be responsible for delivering the strategic objectives of Infrastructure Australia and its policy reform program.
As we have already announced, Infrastructure Australia will be tasked with developing a 15-year pipeline of major infrastructure projects to be revised every 5 years based on national, state and local infrastructure priorities.
That's about better coordinating long-term projects, better planning and giving greater certainty to investors and the construction sector.
The Coalition will also task Infrastructure Australia with undertaking a new, evidence-based audit of our infrastructure asset base, to be run in collaboration with the states and territories, many of whom now have an infrastructure advisory body of their own. This audit will also be revised every 5 years and will help inform the 15-year pipeline.
The Coalition believes a reformed Infrastructure Australia should take a much more proactive role in identifying the infrastructure priorities our nation needs.
Rather than just rely on submissions from states, territories and third parties, Infrastructure Australia itself should be working with them to identify, assess and rank infrastructure priorities across the nation.
An evidence-based audit is a necessary precursor for this to occur.
That 15-year lead time is not only important for private investors and getting projects off the ground, but in keeping on top of the next tranche of investment opportunities to keep Australia's infrastructure relevant and at the cutting-edge of emerging needs.
Working hand-in-hand with state and territory governments must be the model if we are to achieve cost-effective integration between processes and priorities.
The Coalition will also require any and all Commonwealth infrastructure expenditure exceeding $100 million to be subject to analysis by Infrastructure Australia to test cost-effectiveness and financial viability.
This will include dams, telecommunications, hospitals, educational institutions, energy projects and water networks but won't extend to defence projects.
In line with our previous commitments, the Coalition will also require Infrastructure Australia to routinely publish public cost-benefit analyses for all projects being considered for Commonwealth support or investment.
A key plank of the Coalition's approach is to maximise private sector investment in infrastructure.
After meeting with a large number of private investors, superannuation funds, construction companies and many others with a direct interest in infrastructure, there is no 'silver bullet' to unlocking the kind of investment we need.
In the case of WestConnex, for example, the NSW Government intends to establish a Special Purpose Vehicle to oversee project construction, to which the Coalition has committed $1.5 billion, and NSW $1.8 billion in the form of equity. This reflects the limited appetite of private sector investors for greenfield projects.
WestConnex is expected to generate considerable toll revenue and it is the intention of the NSW Government to sell the completed project as a brownfield opportunity. In these circumstances, it may be appropriate for the Commonwealth contribution to be made in the form of a non-recourse loan so that any proceeds from the sale can be re-invested in other NSW infrastructure.
The Toowoomba Second Range Crossing, which will be built under a Coalition Government, will generate some trucking toll revenue, but this is unlikely to cover much more than maintenance costs. This project lends itself more to a PPP, covering construction and maintenance supported by a Commonwealth loan guarantee and availability payments. We will be exploring this option with the Queensland Government.
We have, of course, already agreed to support the F3 to M2 project in Sydney with a $405 million grant with the project to be entirely constructed and managed by the private sector. And innovative funding models could potentially be used for the East-West Link project in Melbourne.
So it is clear that a one-size-fits-all approach will not successfully bring more deals to market.
To this end, I announce that a Coalition Government will create a dedicated Funding and Finance Advisory Unit within Infrastructure Australia, tasked with evaluating finance options for nationally-significant infrastructure projects and investigate and report on funding models.
I note that Labor announced a similar initiative in the May Budget, but to the best of my knowledge it has not been implemented.
The Coalition intends this Unit to harness expertise to assist a diverse array of projects in coming to market, using models that are tailor-made for the project at hand.
Whether it be a significant road or rail upgrade, a Greenfield port development or the expansion of a major regional airport, we need to look at the suitability of each project for leveraging private sector investment.
And ask how that investment can be best facilitated to deliver the modern infrastructure Australia wants and needs.
To build on this, the Coalition will also require Infrastructure Australia to work with the private sector to investigate and negotiate innovative funding and financing options with regard projects that are in the national pipeline.
The Coalition will also harness the knowledge and expertise of private financing models in Australia by providing support to the states and territories through staff secondments to provide procurement assistance for major projects where requested.
What I have announced today is a comprehensive overhaul of Infrastructure Australia's functions to release it from burdensome shackles that inhibit sound decision-making.
Finally, can I make a few comments on project delivery in Australia.
The amount of funding that is spent on an infrastructure project before a bulldozer is on-site is ridiculous and something that we must improve upon if we are to maximise our infrastructure delivery capabilities.
Businesses and investors have been telling me and my Coalition colleagues that the cost of doing business is substantially higher than our major competitors.
This is not limited to transport infrastructure projects, with research indicating that resource projects are 40% more costly in Australia than the United States, building hospitals cost 62% more, schools 26% more and airports a staggering 90% more.
To this end, the Coalition will require Infrastructure Australia to assess the performance of major projects funded by the Commonwealth to improve processes and delivery models into the future and ensure best practice in infrastructure delivery is achieved.
We have made substantial commitments to the infrastructure our cities, regions and economy need. We have also outlined reforms to Infrastructure Australia and to the planning of future infrastructure priorities.
We have made these commitments because we know that it is today's investment that provides the productive capacity for tomorrow's more competitive economy.
Tony Abbott has said frequently that he wants to be remembered as the Infrastructure Prime Minister. I look forward to being his Infrastructure Minister - delivering better infrastructure for a stronger nation.
Ladies and gentlemen, thank you for your time today and allowing me to announce what I think are exciting and necessary changes if we are to build the infrastructure Australia needs today and tomorrow, and get this country moving again with purpose.
Thank you.
[ENDS]
