Address to Centre for Economic Development Australia, Adelaide
30th July, 2013
Good afternoon ladies and gentlemen.Thank you for the opportunity to address you today on the importance of providing the transport infrastructure necessary to connect communities and drive our economy.
It really goes without saying that infrastructure delivery will be a vital part of improving productivity in Australia.
The Coalition has previously talked about its five-pillar plan to diversify and grow Australia's economy. The Coalition wants to focus on our strengths in agriculture, manufacturing, services, education and of course, mining to create new jobs and open up new and exciting opportunities for Australian businesses and families.
With an infrastructure deficit tipped at anywhere between $700 and $800 billion, it cannot be overstated how important efficient infrastructure is to unlocking our nation's potential.
Infrastructure will make transporting our products to markets both near and far easier. It will provide access to link Australians to jobs, services and opportunities.
Balancing a federal budget after years of Labor deficits will require expenditure restraint, but as we know, infrastructure expenditure can have a positive impact on the growth and by making a more productive economy, will also help in making a stronger budget.
Investment in infrastructure is a vital ingredient if we are to balance the books and improve the efficiency and productivity of our economy.
To this end, the Coalition has already made a number of significant infrastructure commitments to provide the modern infrastructure needed to match the demands of our modern economy.
For instance, we have committed:
* $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,
* $5.6 billion to finish the duplication of the Pacific Highway, and,
* Here in Adelaide we have committed $500 million to continuing the South Road upgrade.
The Coalition will also support the Gateway WA project in Perth and just a fortnight ago, 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 has been announcing our infrastructure priorities, the May Federal Budget confirmed that Labor intends to slash future infrastructure spending.
The next State-Commonwealth road and rail funding program under Labor has been cut by $1.2 billion per year, down from $36 billion over 6 years to $24 billion over 5 years.
This is when the recklessness of the last six years of spending by the Rudd-Gillard-Rudd Government will hit hard.
It was this government that squandered billions of dollars installing and removing combustible roof batts, building over-priced school halls and sending out stimulus cheques to deceased estates.
It is hardly surprising that the Business Council of Australia estimated that only 14% of the stimulus package actually went to productivity enhancing infrastructure.
Last week in Sydney I outlined the Coalition's policy to enhance Infrastructure Australia and I would like to share some of these ideas with you today.
As we all know, Infrastructure Australia was established to better target Commonwealth infrastructure investment. Unfortunately it has been largely ignored by the current government and has been unable to cut through the political spin cycle to develop a longer term pipeline for investment and consideration by decision-makers.
Last week I announced that the Coalition will reform Infrastructure Australia to enhance its capability as an independent, transparent and expert advisory body.
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 Tony Abbott and I have already announced some time ago, 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 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. Various tailor made options need to be assessed and implemented. Just look at some of the major projects under consideration -
* WestConnex in Sydney will be constructed using a Special Purpose Vehicle created by the NSW Government and then on-sold as a Brownfield opportunity.
* The Toowoomba Second Range Crossing lends itself to a PPP arrangement with truck tolling revenue used for ongoing maintenance. We will be exploring this with the Queensland Government
* The F3 to M2 project in Sydney will be constructed and operated by the private sector with a matching financial contribution by the NSW and Commonwealth Governments and supported by the Coalition.
Additionally, the approach adopted to fund projects in our biggest cities may be markedly different to that used in Adelaide and Perth where patronage, revenue and risk forecasts will be different.
To try and stimulate additional private sector investment, the Coalition in 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.
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. This may be of particular interest to states like South Australia that will have a smaller number of large-scale projects of likely interest to the private sector.
We also intend to improve infrastructure delivery in Australia by harnessing best practice and focusing on continual improvement to ensure that projects are delivered cost-effectively.
This approach will be complemented by the Coalition's commitment to reduce red tape by $1 billion per year.
Red tape and compliance costs are affecting our international competitiveness and holding us back from delivering many of the worthwhile projects.
It is a bewildering fact that some construction companies suggest that around 40% of funding for infrastructure projects is spent before any bitumen is laid.
In conclusion, infrastructure clearly has a role to play in driving productivity in Australia.
We need 21st century solutions if we are to have a 21st century infrastructure system.
The importance of better road and rail networks that actually link into ports to get products to markets - here of overseas - in the most efficient way possible cannot, and must not, be under-estimated.
Infrastructure is intrinsically linked to the growth and recovery of the Australian economy and rest assured that the Coalition will continue its strong track record of infrastructure investment and will seek to facilitative further investment from the private sector where possible.
We will enhance Infrastructure Australia to give it a more hands-on role in setting the long-term vision for priority infrastructure projects and to ensure that it is delivered in the most cost-effective and efficient way.
Thank you.
[ENDS]
