Tim Pallas MP, Treasurer of Victoria

Key points:

• Infrastructure investment had underpinned Victoria’s success leading into the pandemic and will be central to its recovery. • The Victorian Government wants to reassure industry of its commitment to delivering projects using public-private partnerships. • The Victorian Government is pursuing opportunities to improve all parts of the procurement process, from project inception to delivery.

Tim Pallas MP (TP): Thanks very much, Adrian, for the opportunity to speak today. I would like to acknowledge the traditional owners of the land on which we are individually meeting and pay my respect to their elders past and present. I would like to thank Infrastructure Partnerships Australia for the invitation, and for your ongoing and continuing support of the pursuit of excellence in infrastructure. I would also, of course, like to thank Sir Rod for his kind introduction. He has been a solid supporter of all things infrastructure in this country, and probably does not get enough recognition for all the hard work he does. 2020 has not been the year that any of us wanted. We find ourselves in one of the most challenging times in the last century, from both a health and an economic perspective. As a government, we are doing everything we can to navigate our way out of the current circumstances towards COVID normal. As we head into that new normal, there are opportunities for economic reform and redesign that lie within this massive disruption. We know that the upswing will come at the end of this, and we are working hard to position ourselves well for that.

Let’s talk about Victoria’s economy and what is ahead. Victoria ended 2020 in a suitably strong economic position, the envy of the nation on key fiscal metrics and the leading economy in the nation for eight consecutive quarters. Like all jurisdictions around the world, coronavirus has hit our economy hard. This once-in-a-century pandemic has ravaged countries right around the globe. Governments everywhere have been forced to make difficult decisions, as they weigh up choices that are literally life and death.

Since the Andrews Labor Government was elected, we have spent every day fighting for workers and fighting for jobs. Our infrastructure pipeline leads a nation and has supported the creation of more than 115,000 jobs for Victorians. More than half a million jobs have been created since we took office in 2014, so to find ourselves asking people not to go to work goes right against the grain. But to do otherwise would see this deadly virus run rampant and is simply one of those things that we must act to avoid.

The worldwide recession, closure of national borders and vital restrictions to save lives have impacted employment, trade and economic activity. Both the IMF and the OECD are predicting a damaging recession right across the globe this calendar year, with world output declining by up to 7.6 per cent. Australia recently entered a recession, ending over two decades of continuous economic growth. The Victorian unemployment rate climbed to 7.5 per cent in June, and our most recent modelling, of course, indicates that it might peak at an estimated 11 per cent in the September quarter, coinciding with stage four restrictions in Melbourne and stage three across the rest of Victoria. These estimates do not factor in the latest road map settings, and we will have more to say in due course about the economic implications of the road map. It is yet another reminder of the steep economic cost of not getting on top of this wicked virus.

The Victorian Government has now invested more than $12.5 billion into the fight against coronavirus. This includes more than $6 billion of direct economic support for businesses, industries and workers doing it tough. The economic settings make for grim reading, but we know that our billions of dollars in support are making a difference.

Independent modelling from Deloitte Access Economics has found that Victorian Government investment decisions are helping the economy, having protected more than 81,000 full-time equivalent jobs. Our most recent announcement came last weekend: a $3-billion package of support, including cash grants, tax relief and cashflow support designed to help businesses survive. Our $6 billion in business support is the equivalent of around 25 per cent of Victoria’s annual tax revenue, or 17 per cent of our own source revenue. Reduced revenues and the Government’s record investment in measures to support Victorians through the crisis means that the Victorian budget is now likely to return an operating deficit of $7.5 billion in 2019–20.

I announced in July that up to $2.6 billion was spent out of an additional $10 billion treasury advance that had been approved for the 2019–20 financial year. Despite these numbers, we have been very clear as a government that we need to engage closely with business and the community to provide the support they need. Getting the virus under control is not just key to protecting lives, it is also key to getting the economy on a sustained recovery. Chris Richardson, from Deloitte Access Economics, said recently that success against the virus means success with the economy. And he is right.

He has noted that countries with lower coronavirus deaths have generally fared better economically than those with higher deaths. On the best available public health advice, we have adopted a staged approach to easing economic and social restrictions, as we exit the current stage four lockdown. Reverting to and from lockdowns would only inflict further damage to our economy. We have come too far, and we have worked too hard. Through this staged approach, we are working towards a COVID-normal Christmas, based on an ongoing reduction in case transmissions. With clear and articulated case targets, we have trigger points for review that give Victorians more insight into how we are tracking.

The staged approach represents a balance between opening up the economy and ensuring that we do not escalate community transmission. Stage three and four restrictions have significantly impacted the construction sector and its ability to continue working on the state’s infrastructure programme. During stage four, the delivery of state-critical construction projects continued with comprehensive COVID-19 safe plans. For other projects, activities have reduced or been suspended, but for the most part, have stayed somewhat active under a pilot-light setting.

The Victorian Government has created a framework to respond to coronavirus impacts across its infrastructure programme. Employers, workers, contractors and unions have worked together to keep workplaces safe and projects moving on critical construction projects. It has been a great collaborative achievement, especially given the cost and timeline risks of demobilisation of large projects. This maintains direct economic activity while supporting demand throughout infrastructure supply chains. Departments and agencies are able to respond flexibly, providing tailored help according to individual projects and contractual arrangements. Extensions of time can be agreed upon for delays caused by coronavirus, helping constructors adapt work practices while staying on track. Departments and delivery agencies can also fasttrack payment arrangements to reduce the impact on project cash flows. This response will benefit constructors, but also subcontractors, suppliers and project consultants as project payments flow.

The Government continues to collaborate with industry partners to help individual projects maintain jobs and boost the economy. The Government’s overriding priority for the next six to 12 months is targeted timely economic stimulus that creates jobs. Infrastructure has been the cornerstone of our success to date and will be central to our recovery. Our immense

$107-billion Big Build – the biggest project pipeline in the nation – has anchored this state’s success with mega projects like the North East Link, the West Gate Tunnel Project, the Metro Tunnel and Airport Rail Link.

Our Building Works package is investing $2.7 billion in local infrastructure projects, upgrades and maintenance programmes. By the end of September 2020, a total of 98 initiatives from this package will have started procurement. This represents $2.48 billion, or 97 per cent of the total package. During the pandemic, the Victorian Government has remained fully committed to our infrastructure pipeline. We know this investment drives economic activity and jobs. We have also adapted to changing circumstances and our strategy has been to maintain construction sector activity and the pipeline, mobilise immediate quick-start projects through stimulus, and reform with new approaches to investment.

These projects include road upgrades, new schools, community housing and repairs of bushfire-damaged areas. Our infrastructure investment after COVID-19 will focus on productivity and job creation, addressing social disadvantage and expected changes in behaviour. Meanwhile, our Building Victoria’s Recovery Taskforce is making sure that permits continue at a steady pace. Since March, new and amended planning permits have been issued with a development value of more than $7 billion. When it comes to our recovery, we will not let good ideas or projects sit languishing in red tape. We will get them going.

The Victorian Department of Treasury and Finance (DTF) and the New South Wales Treasury are undertaking a joint review of their major infrastructure procurement processes. These two reviews span all sectors and will consider opportunities to improve all parts of the process, from project inception to delivery. It is an important opportunity to share experiences, leverage best practice, and enhance policy alignment across the two jurisdictions. The DTF is also undertaking a joint review with the Major Transport Infrastructure Authority. These reviews will help us deliver our infrastructure programme, increase capability and ensure value for money. They will be overseen by an expert panel of Australian infrastructure experts, giving recommendations for reform. My department will engage extensively with key stakeholders throughout both reviews.

With the onset of coronavirus, we were faced with a tough challenge in how we could get more construction companies to be involved quickly in the delivery of shovel-ready projects. We know the construction sector will play a major role in driving Victoria’s immediate economic stimulus. That is why we have made the difficult decision to restructure and pilot a new procurement approach for the Suburban Roads Upgrade project. The $2.2-billion Suburban Roads Upgrade will deliver 12

“Victoria has dug deep, and each and every

Victorian has made a considerable investment in assuring our success.

We pulled together to get through it

arterial road upgrades through a programme-based approach. Companies will be pre-qualified, with work awarded based on a range of factors, including experience, performance and capacity. This will support large, medium and small companies to participate in these projects, creating more jobs and capacity in the construction sector.

Over the past 20 years, Victoria has invested more than $30 billion in 32 contracted public-private partnership (PPP) projects right across the economy. I want to reassure our market and industry partners that we will continue to use PPPs in our mission to stimulate the Victorian economy, with specific project characteristics, meaning that our value-for-money outcome can be achieved.

We have also delivered the Victorian Major Projects Pipeline, a new online portal developed by the Office of Projects Victoria, to help the construction sector find more opportunities to be part of major project delivery across Victoria. Until now, there was no one-stop shop for industry to view a snapshot of major projects on the horizon. The pipeline is primarily targeted at the construction industry and highlights around 70 major projects, each with an estimated value of $100 million and above. Projects can be viewed by estimated value, region, project type and relevant delivery agency in an open invitation to the construction sector to get involved.

Complex infrastructure delivery requires elite talent. To help build and nurture the talent needed to deliver our wide range of projects, we established the Victorian Major Projects Leadership Academy in 2019. We have now expanded the programme to be the Australian Major Projects Leadership Academy. The programme is delivered by the University of Oxford’s Saïd Business School and Ernst & Young. It is arguably the most prestigious programme of its type in the country, providing high-quality training to our major project leaders. Today, I am pleased to announce that nominations for the 2021 intake will open on Monday for eligible senior public sector departments and agency staff working in major project delivery.

We have never had a challenge like this pandemic in our lifetimes. It is a relief to see some light at the end of the tunnel as the numbers fall. Victoria has dug deep, and each and every Victorian has made a considerable investment in assuring our success. We pulled together to get through it. And that resilience will help us on the economic front. All Victorians should be encouraged by the safe, steady and sustainable steps that regional Victoria has been able to take this week, that will see us all the way to a COVID normal. The big job of rebuilding our economy begins. And with it, the enormous opportunity to create dynamic and energising change. My thanks to Infrastructure Partnerships Australia for your ongoing support and collaboration. In our upcoming budget, we will say more about our blueprint for a renewed Victoria. Thank you very much.

Adrian Dwyer (AD): Well, thank you very much, Treasurer. We have a couple of minutes to ask you some questions from our audience. I just want to focus for a moment on the forward opportunities that always come through disruption and crises. One thing that strikes me, that we have heard about a few times over this conference, is the shortening of supply chains. Given that Victoria is Australia’s manufacturing centre, and there are opportunities with industry in Victoria to maybe look at capitalising on shortened supply chains, do you think there is a potential push to place Victoria at the centre of the construction and infrastructure supply chain for the country?

TP: I would say that Victoria and Melbourne have been the headquarters of our logistics industry and the centre of our supply chain activity. That has become increasingly apparent as restrictions have hit and therefore impacted upon the rest of the nation. I think it is true that what this pandemic event has taught us is those supply chains need to be critically and carefully managed in the interest of not just Victorians, but of all Australians. There is an enormous responsibility that attaches to us. We are looking at supply chain security in terms of the product that is being held. What are the key things that we need to manufacture in this country? But we are also looking at more efficient means by which supply can occur. We also note there has been an enormous move towards digitised access and digitised commerce. Increasingly, we are going to have to think about how that integrates into the supply chain provision. Victorians have robustly adopted the idea of digital commerce, and that is a clear demonstration that the world we have at the moment, or the world that we entered into in this pandemic event, will be considerably different on the other side. Supply chains will have to be more assured – they will have to be secure and they will have to, from a manufacturing point of view, be capable of assuring Australians that they can get the products they need as efficiently as they possibly can.

AD: Thank you, Treasurer. I am sure I speak on behalf of all attendees when I wish our Victorian colleagues every success on the road out of this crisis.

Delivering on major transport builds

The Federal Government, along with state governments across Australia, is currently investing in the country’s largest transport infrastructure program. From 2019–20, the Australian Government has invested $100 billion and investment in Victoria continues, with $57 billion of transport projects already in progress across the state.

Coleman Rail – a Victorian company and ACCIONA subsidiary – is playing a significant role in the infrastructure revolution. Established in 2002, Coleman Rail has grown to maintain a strong presence throughout Australia, supporting and supplying the country’s rail infrastructure with offices in Melbourne, Sydney, Brisbane, Adelaide and Perth.

The company is rapidly establishing itself as a reliable contractor that can deliver large, high-profile and complex infrastructure projects on time and within budget. Almost three years into one of Victoria’s flagship infrastructure builds (the Level Crossing Removal Project on the Frankston line), Coleman Rail – along with Southern Program Alliance (SPA) partners – delivered three new train stations, constructed a new road bridge and two rail bridges, removed seven level crossings, and completed stage one of a new train stabling facility. In addition to the transport infrastructure, SPA has provided community facilities, including new pedestrian and bike paths, new commuter parking, open space, a playground, and a basketball court.

Coleman Rail Executive General Manager Sean Bonham attributes the ability to deliver to the company’s broad range of expertise, which covers major infrastructure projects, minor work, and maintenance, including upgrades to capital city transport systems, such as Melbourne’s tram network.

‘Our expertise covers construction, upgrades and maintenance, complemented by our in-house capacity to undertake civil, mechanical, utilities, services relocation and building works. Many of our projects are delivered within live operating environments and constrained sites. Our highly skilled and experienced resources include a large permanent direct labour workforce, as well as experts in engineering, commercial, construction, safety and environmental management,’ says Bonham.

More recently Coleman Rail was awarded another state-sponsored infrastructure project: the new Bayswater Station Project in Perth and named preferred contractor for the upgrade to Victoria’s regional Shepparton rail line northeast of Melbourne.

The new $253-million Bayswater Station project includes the construction of a new station building, surrounding precinct works, and new platforms and rail infrastructure to support the Forrestfield–Airport Link and the future connection with the Morley–Ellenbrook Line.

The Shepparton Line Upgrade (SLU) is part of the Victorian Government’s $2-billion regional rail revival project. Coleman Rail is experienced in this sector, having been part of the Alliance delivering the near-completed Ballarat Line Upgrade. The SLU project included upgrades to signalling, communications, level crossings and pedestrian crossings, platform extensions at three stations, a new Shepparton stabling facility, and the extension of a crossing loop.

As governments Australiawide focus on strategies to reduce congestion, connect regions, and improve passenger and freight movements, Coleman Rail has positioned itself as a rail contractor that is ready to deliver.♦

Level Crossing Removal works at Cheltenham

COLEMAN RAIL

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