Australian Davos Connection
18th August, 2015
Thank you very much Anton [Roux, CEO, Australian Davos Connection].Firstly, I greatly appreciate the invitation to be with you today.
The Australian Davos Connection has built a well-deserved reputation as a premier forum for nationally significant issues.
Good ideas are invaluable. And I look forward to your insights on Australia's infrastructure efforts, and the broader national issues they address.
At the same time, there are always some questionable ideas circulating in national policy debates - some for a very long time.
For instance, the notion of 'the Lucky Country' wrongly suggests Australia's successes owe more to good luck than good management.
Australia is fortunate to have a long list of outstanding natural and human assets, but much of this good fortune has been hard-earned.
We have a massive potential to further enrich our national wealth through making the most of both established strengths and new opportunities.
But as you understand very well, reaching our potential is not automatic, and the nation faces several challenges over the 21st century.
They include an ageing population which could impose multiple pressures on our productivity, standard of living, and balance-sheets.
We have the perennial threats of international instability and terrorism. These create a host of challenges, not least the resources they divert from other efforts.
And Australia needs to operate profitably in an international market-place that is highly competitive, subject to volatile demands, and intrinsically vulnerable to economic shocks.
Australia must avoid such challenges morphing into impossible dilemmas, and this requires comprehensive - and integrated - national responses.
This national effort extends beyond governments. But, for our part, the Australian Government is delivering a five-pillar plan to build on the Nation's economic strengths, and focused on agriculture, manufacturing, smart technology, education and mining.
This encompasses many efforts.
It includes, firstly, our drive to increase workforce participation among all demographic groups, including women, older Australians, and our young. This is clearly imperative for sustaining productivity, and commercial and public revenues.
Secondly, our efforts incorporate prudent financial management as fundamental to effective government.
Now, most people who enter politics are genuinely committed to national progress.
But an important part of practical government is to ensure that we can economically sustain this progress - and, without exaggeration, this is a historic strength of Coalition governments.
It is of course very welcome that a spirit of consensus on the need to align public expenditure and revenue has re-emerged.
This consensus now transcends political divisions - at least among some State governments.
Thirdly, our efforts encompass continuing reforms to improve the competitiveness of Australia's economy, and encourage entrepreneurship and innovation in both private and public sectors.
This incorporates our efforts to realise the potential of Australia's regions, including our super-region: Australia's North.
And a common thread joining all these efforts is our work to invigorate Australia's infrastructure base.
It allows us to make the most of the opportunities presented by new technologies, and new demands from national and international markets.
And it is essential for Australia's full engagement in the Asia-Pacific region - where much of our future lies in the economic and every other sense.
INFRASTRUCTURE INVESTMENT
The Australian Government's investments include an historic commitment of $50 billion to infrastructure investments, with a focus on transport infrastructure. After the 2015 Federal Budget, that number is now $57 billion.
They also include major investments in infrastructure in Australian regions - these are 'must haves' for better connecting our regions and cities with each other and the world. These include:
* $6.7 billion to upgrade the Bruce Highway;
* $5.6 billion to complete the Pacific Highway upgrade by the end of this decade; and
* Up to $1.285 billion for the Toowoomba Second Range Crossing.
The scale and breadth of our infrastructure investments is all the more significant for being made in difficult fiscal circumstances.
In addition, we have sharpened and strengthened the Roads to Recovery and Black Spot programmes.
These two locally-focused measures have a combined annual funding of $3.7 billion over the five years to 2019. ¬
They were joined this year by another measure with important local impacts, the Bridges Renewal Programme. This initiative will invest $300 million over four years from 2015-16 to renew dilapidated bridges.
Bridges were a seriously over-looked part of our national infrastructure base - their renewal is an important part of boosting both regional and national economic performance.
The former Russian premier Nikita Khruschev had quite a few faults - but he once offered good advice to voters everywhere.
He said that "Politicians are the same all over. They promise to build bridges even where there are no rivers".
But this is certainly not the case with the Bridges Renewal Programme and our other locally-based measures.
They demonstrate the benefits of thinking nationally, and acting locally, in infrastructure development.
The Government is also committed to lifting the economic performance of our rail network.
For instance, our premier freight rail infrastructure project, the 1,700 km Melbourne to Brisbane Inland Rail is an important part of servicing Australia's future freight task, which we expect to significantly increase by 2030. By building Inland Rail we will establish the backbone of a new interstate rail connection not only between Melbourne and Brisbane, but also between Queensland and Western Australia.
However, the capital intensive nature of rail means that the market is unlikely to be able to fund the capital costs - so the project will need significant Government support.
Inland Rail will better connect regional communities with capital cities, and producers with export markets, producing lower transport costs and thus lower prices for consumers.
It will catalyse private sector investment in complimentary infrastructure such as terminals and provide long-term certainty to the logistics industry.
I will shortly be considering the business case and a delivery plan for Inland Rail and will also ask Infrastructure Australia to also provide their independent assessment. This will provide the Government with the opportunity to make further decisions on delivery and the funding of construction.
AN AIRPORT FOR WESTERN SYDNEY
Our infrastructure ventures go beyond road and rail.
In particular, while there was a great deal of political discussion about a Second Sydney Airport - for more than 50 years - there was no decision.
This Government has now made a decision that Badgerys Creek would be the site for Western Sydney's airport and is getting on with the job. We anticipate that a full service airport, with international and domestic flights, could be operational by the mid-2020s.
The proposed airport could generate $24.6 billion in direct expenditure by 2060, and contribute $23.9 billion in GDP to the national economy.
These benefits underline the general need to make the right infrastructure choices across the board.
Infrastructure projects are expensive, and their long life means they must be as 'future-proof' as possible - so how we deliver major infrastructure is almost as important as the projects themselves.
And in this respect the emergence of the public-private development model reflects a well-recognised finding - that governments alone cannot meet all infrastructure needs.
The Government has vigorously pursued alternative sources of funding for major infrastructure projects that encourage private sector investment, including foreign investment.
Our efforts include providing incentives to the States and Territories to recycle mature assets into new green-fields infrastructure through the Asset Recycling Initiative - incentives which have already been taken up by NSW and the ACT.
We have also pursued other alternative financing approaches, including a concessional loan of up to $2 billion to finance Stage 2 of Sydney's Westconnex, and a distance-based Heavy Vehicle Charge to recover part of the cost of the Perth Freight Link.
Australia's regions also continue to receive vital funding through our infrastructure investments.
Our premier regional investment initiative is the $1 billion National Stronger Regions Fund. The Fund is designed to help deliver the priority projects which support the economic growth of Australia's regions. It has a major focus on improving productivity, employment and workforce skills.
The Fund is off to a strong start. We approved funding for 51 projects valued at $212 million in Round One of the Fund, and Round Two applications are now being considered.
Our infrastructure investments and regional initiatives will strengthen Australia's ability to compete and excel in this century - and will thus address several critical national challenges.
They are integrated with our other efforts, which I will focus on over the next few minutes, starting with our work to enhance Australian agriculture.
AGRICULTURAL COMPETITIVENESS WHITE PAPER
The Agricultural Competitiveness White Paper released last month sets out our policy platform and initiatives that promote a more competitive agricultural sector.
These reflect the sector's economic importance, and the need to address its specific challenges.
The White Paper is focused on developing better returns at the farm gate and taking practical actions under five priorities:
* A fairer go for farm businesses - focused on creating a fairer and more competitive business environment;
* Building the infrastructure of the 21st century - especially to secure water-supply;
* Strengthening drought and risk management;
* Farming smarter; and
* Accessing premium markets.
The White Paper encompasses a comprehensive range of measures, representing an investment of over $4 billion, and I could do less than full justice to all of them today.
However, several measures warrant particular emphasis.
The 'fairer go for farm businesses' priority encompasses a greater involvement by the ACCC in the agricultural sector, including the appointment of a Commissioner dedicated to agricultural issues.
We have also allocated over $20 million under this priority to further streamline agricultural and veterinary chemicals approvals, thus reducing farm costs.
And we will introduce better tax arrangements - including through enabling farmers to double their Farm Management Deposits to $800,000 from 1 July next year.
Farmers will be able to use these deposits as a loan offset from that date, reducing their interest costs.
We are establishing a $500 million National Water Infrastructure Fund for farmers' future water security, under Priority Two.
Drought is all too obviously one of the biggest challenges farmers face. The White Paper sets out a range of responses - including up to $250 million for Drought Concessional Loans each year for up to 11 years.
This is a good case of our willingness to back agriculture over the long term.
Access to advanced farm technologies and practices is essential. Our measures under Priority Four include $100 million to extend the Rural R&D for Profit programme out to 2012-22. Again, this underlines our commitment to agriculture over the long haul.
And we place a particular emphasis under Priority Five to enabling farmers to access premium markets.
In addition to our efforts to liberalise international trade, we will provide $30.8 million for breaking down technical barriers to trade; and an additional $200 million will be spent to improve biosecurity surveillance and analysis.
These are all major investments - but they are essential steps towards ensuring the future prosperity of the agricultural sector, and the Nation it helps support in so many respects.
NORTHERN AUSTRALIA
Agriculture has of course a particular importance for Australia's North.
As you know, the Government released the White Paper on Developing Northern Australia Our North, Our Future last month.
The White Paper blueprints the development of the North up to 2035 - an essential step for the Nation, and a plan whose time has surely come.
The North has the great advantage of proximity to fast-growing Asian markets, where demand for Australian goods and services is unprecedented.
The White Paper sets out initial investment measures of $1.2 billion.
This adds to the Coalition Government's commitment of nearly $5 billion in transport infrastructure to the North - and to the $5 billion Northern Australia Infrastructure Facility announced in the May Budget to provide concessional finance for infrastructure projects.
The White Paper's measures cover six cornerstones of Northern development:
* simpler land arrangements that support investment;
* developing the North's water resources;
* growing the North as a business, trade and investment gateway;
* infrastructure investment;
* reducing employment barriers; and
* improving governance arrangements. And COAG's agreement to proceed with Northern Territory statehood by 2018 is consistent with this effort.
By focusing on the North as a whole we aim to achieve gains that are greater than the sum of individual investments - and three efforts are particularly noteworthy.
Firstly, we are making a $200 million commitment to facilitate greater investment in northern water infrastructure.
Secondly, we aim to grow investment in the North by several measures, including through:
* setting up a new $75 million Cooperative Research Centre on Developing Northern Australia; and
* investing $15.3 million to position the north as a global leader in tropical health;
And thirdly, we will focus on funding high priority infrastructure, including through:
* $600 million for priority road projects in Northern Australia;
* a new $100 million Northern Australia beef roads fund to improve the productivity of cattle supply chains; and
* a $39.6 million investment in upgrading airstrips and supporting air services in remote Australia.
Most significantly, there is a natural fit between our emphasis on developing agriculture, invigorating Northern Australia, and the priority we place on trade liberalisation.
Australia has now signed Free Trade Agreements with three countries - China, Japan, and the Republic of Korea - that account for over 80 per cent of Asia's GDP.
These Agreements are hugely significant and produce very substantial economic benefits.
They have involved some difficult adjustments for Australia, especially in manufacturing, but they are in Australia's net national interest.
Independent economic modelling shows that the North Asia Agreements are worth $24.4 billion in additional income for Australia over the next 20 years.
Our partners gain access to a stable and secure market for their products - and their investment.
Our North Asia agreements increase the prospects for even greater investment flows between Australia and North Asia.
Our efforts to liberalise trade are continuing.
The Australian and Indian Prime Ministers have agreed that the top bilateral priority for our two nations is to complete negotiations for a Free Trade Agreement this year.
And we are progressing economic partnership agreements with Burma, Indonesia and Malaysia. We have also achieved significant progress in the Trans-Pacific Partnership negotiations.
To sum up, advancing economic growth and prosperity generally always involves traversing difficult terrain - and success depends on being open to good ideas about how best to navigate it.
That is why I am glad to be with you today.
I'm happy to take your questions - and thank you very much.
[ENDS]
