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Barry the Builder – can he fix it?
LeFT: Sydney’s ferries look set to receive an overhaul under Barry O’Farrell’s reign. Infrastructure looks set to enjoy something of a renaissance in New South wales under the new state government. But with great expectations and tight budgets the task is daunting – success may come down as much to managing expectations as it does to managing budgets.
Following a landslide victory in March’s state election, Premier Barry O’Farrell has already said that he’s looking to build a legacy as the ‘Infrastructure Premier’ – and he’s made early commitments that show a very positive momentum in that regard.
The government has already made a series of significant project commitments from Opposition. In the first term, they include a new North West Rail Link, a new motorway in Sydney (to be determined by Infrastructure NSW), and a $700 million convention centre public private partnership (PPP) at Darling Harbour.
Early indications point to a government that’s not shy about a commitment to delivery, with infrastructure taking centre stage in the first 100 days. The North West Rail Link in particular is moving quickly. Rodd Staples, the respected former head of the Sydney Metro Authority, has already formed a project delivery team and market soundings are underway. Meanwhile, the Premier’s own department has taken the reins on the Convention Centre project, which should reach the market in October. Continued on page 36
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[1] Abignano era helmet [2] M2 Motorway tunnel NSW, 1994 [3] Terrey Hills Golf Course NSW, 1991 [4] National Survey Manager Brett Lehmann at Bogantungan QLD, 1984 [5] M7 Light Horse Interchange NSW, 2005 [6] Abigroup founder Gennaro (Jim) Abignano laying 99” pipes on the Comenara Parkway, 1964 [7] Abigroup built the largest number of facilities for the Sydney Olympics including the Sydney SuperDome: the venue for the basketball and gymnastics (it is now known as Acer Arena) [8] Chichester Dam NSW, 1983 [9] Gateway Bridge duplication QLD, 2009 [10] Coffs Infrastructure Alliance NSW, 2009 [11] Abigroup staff and paving machine at Pearce’s Corner on the F3, NSW, 1989.
ABIGROUP CELEBRATES 50TH ANNIVERSARy
Abigroup celebrated a major milestone recently as the company turned 50.
Events were held at Abigroup sites and offices around Australia to mark 13 April 1961 when Italian emigrant Gennaro ‘Jim’ Abignano first registered his small Sydney earthmoving business as G.Abignano Ltd.
Fifty years on and several name changes later, the company that Jim created now has a turnover of $2.5 billion and is one of Australia’s leading and most diverse contractors with expert teams delivering works in areas including roads, buildings, rail, mining services, water, tunnels, bridges, telecommunications and energy.
Managing Director David Jurd, who has been with the company since 1991 starting as a Site Engineer, puts the success of the company down to its hands-on, no nonsense culture. ‘The fundamentals of what we do have never changed,’ said David.
‘That’s probably the thing I’m proudest about – we bat at the big end of town now and people recognise that we’re straight shooters. We’re the same as decades before, but now we’re a $2.5 billion business.’
Abigroup’s founder Gennaro ‘Jim’ Abignano, Abigroup’s Managing Director David Jurd and NSW Transport Minister Gladys Berejiklian cut the ribbon to officially open Abigroup’s new Head Office
Major projects that the company has completed over the years include Bayswater Power Station, the M2 motorway, a number of the Sydney Olympic venues including the SuperDome, the M7 motorway, the Monash Freeway Upgrade and the duplication of the Gateway Bridge.
Major projects that the company is currently working on include: y the $1.4 billion Queensland Children’s Hospital; y the $1.14 billion Adelaide Desalination Plant; y the $759 million Peninsula Link motorway in Victoria; y the $460 million Hunter Expressway (Western Section) in NSW; and y the $50 million Reid Alexander Interchange project in WA.
These projects, together with other recent wins, provide Abigroup with an order book of $5 billion – its largest ever – as the company enters its 50th year.
A high-quality book about the company’s history has been produced and every current Abigroup employee received one as an anniversary present.
The book contains interviews with employees both past and present who have played their part in the development of the company. Visit www.abigroup.com.au to view chapters from the book.
As part of the 50th anniversary celebrations Abigroup formally opened its new Head Office on Sydney’s North Shore on 7 April.
The NSW Government’s Transport Minister Gladys Berejiklian was the guest of honour and together with Abigroup’s Managing Director David Jurd and the company’s founder Gennaro ‘Jim’ Abignano she cut the ribbon to mark the opening at a function held in the new offices which are located on four floors of the iconic Zenith buildings in Chatswood.
The office fit-out was carried out by Abigroup’s NSW Building team and was completed to the highest standards with quality finishes and a showcase main reception area. The Zenith deal includes naming rights to Tower B.
The office boasts a variety of environmental features including energy efficient lighting and services and a 4 star Green Star office interiors V1.1 as-built rating has been applied for from the Green Building Council of Australia.
Barry the Builder – Can he fix it?
Continued from page 33
The announcements haven’t stopped with flagship projects; O’Farrell has taken early and important steps in the sphere of infrastructure policy. The formation of Infrastructure NSW, chaired by former Premier Nick Greiner, with former Sydney Water and AAPT Managing Director Paul Broad as the Chief Executive, is one example. The radical overhaul of the transport agencies under Director General Les Wielinga is another.
If Infrastructure NSW does its job well, by the end of this year New South Wales will have a detailed, 20year infrastructure strategy. This strategy will get down into the detail of where future transport, water, energy and health projects will be delivered, and how they relate to the state’s land use and economic strategies.
The 20-year infrastructure strategy will also be used to inform a five-year committed project pipeline. It will include all capital projects worth more than $100 million – from hospitals to rail lines and everything in between.
And Infrastructure NSW is equipped to perform. The legislation introduced into the Parliament in May provides the agency with wide-ranging powers to step in and take control of projects if they falter.
The focus on creating certainty about the state’s infrastructure priorities is welcome news for a private sector bruised by the rapidly changing project landscape seen in recent years.
The appointment of Nick Greiner is in itself an important signal. He has strong reform credentials, and oversaw a period of rapid reform and change during his tenure as Premier. One of his biggest legacies is the widespread use and development of the PPP model, which saw billions invested in road projects such as the M4, M5 and M2 motorways, and a suite of build-own-operate-transfer (BOOT) projects in the water sector. More recently, Greiner’s role on the boards of major infrastructure companies also gives him a good understanding of the challenges facing the private sector.
And Greiner’s reform credentials will likely be important. The huge and growing backlog of projects and lack of flexibility on the state’s balance sheet mean the O’Farrell Government will need some direct and fearless advice – not least about how it can create the financial capacity to deliver the level of new infrastructure that the community expects.
In lieu of reforms, with a $7 billion rail project and a to-be-confirmed multi-billion dollar motorway already committed, other new projects look difficult to fund, at least in the short term.
Twenty years of strong global economic prosperity made it easy for some governments to hide from the need for meaningful micro-economic reform, but New South Wales is no longer in that position. Expectations from the public and business sector about better infrastructure outcomes are high, and creating the capacity to meet these expectations will require politically difficult reforms.
Of course, the scale of O’Farrell’s win leaves him well equipped with a massive electoral mandate to effect change.
The good news is that the government has shown an early appetite to undertake some of these reforms. It has announced that it will enter a long-term lease for the desalination plant at Kurnell, and the market is already being engaged on franchising Sydney’s ferry services. The government has asked outgoing Sydney Water Managing Director, Dr Kerry Schott, to oversee the desalination plant leasing before she leaves her post later in the year.
But to really get New South Wales buzzing again, the O’Farrell Government will be asked to go much further.
The long list of transport projects that need to be considered by Infrastructure NSW will need to include the missing links in Sydney’s motorway network, the F3M2 connection, the M4 East, the M5 East duplication and the F6 Motorway in southern Sydney. It will also need to consider long-term projects like an M9 far western orbital. Continued on page 38
Barry the Builder – Can he fix it?
rIgHT: Newcastle Port could be a candidate for asset sales. Continued from page 36
On the rail network, the plan will need to consider ultra-high value projects, like a new Harbour crossing and a CBD relief line, on top of a radical upgrade in signalling and rolling stock over the coming decades. Other transport investments will have to be factored in, like a decision on replacing the other half of the urban train fleet not touched by Waratah Trains, the replacement of the aged XPT and XPlorer country trains, and the replacement of the Sydney Ferries fleet.
On top of multi-billion dollar futureproofing projects, the state will need to liberate enough money to deliver its part of the duplication of the Pacific Highway, which will cost the Federal and State Governments another $7 billion to finish. And then there is the Princes Highway duplication – a massive task all on its own.
None of those projects come cheap. And that’s before you start to consider the desirability of replacing a range of hospitals from the 1960s and 1970s that are coming to the end of their economic lives, or the new health, education, justice, water and freight network investments that will be required to deal with economic and population growth.
In short, the list of projects likely to be identified by Infrastructure NSW is going to be important, it’s going to be long and it’s going to be expensive.
In September, O’Farrell will receive an economic audit of the state’s financial position. The audit, being overseen by Treasurer Mike Baird and acting Treasury Secretary Michael Lambert, will deliver a picture of the state’s assets and liabilities and outline the opportunities for reform.
The economic audit can be judged a success if it spells out a strategy to rein in the state’s expenses and drive up service quality. It will need to identify how the state’s budget can be transformed to provide a sustainable way to fund recurrent service costs, and fund the short and longer-term capital investments identified by Infrastructure NSW.
An appropriate program of asset sales is an obvious avenue to support infrastructure investment. Candidates for an asset sales programme could include the state-owned ports in Newcastle, Kembla or Sydney, the state’s forestry businesses, and some public sector maintenance and construction functions.
The energy sector too will hold opportunities for windfall revenues, although the current half-pregnant structure makes it a much less straightforward proposition.
A fractious public debate and internal divisions in the former state government saw a headlong pursuit of a compromised reform model that has left the energy sector in a mess. All generators remain publicly owned, but the output of many has been sold to the private sector – along with the retail businesses.
This effectively leaves the state halfway to a poor reform – with no easy way back. Proper reform would have delivered the state a clearcut, competitive and efficient energy sector, and potentially delivered billions for renewed investment in vital infrastructure.
But there are still opportunities to salvage value from the state energy sector. Part of the generation sector remains in full public ownership, and so do the transmission and distribution businesses.
O’Farrell has commissioned an independent inquiry, headed by Justice Brian Tamberlin, to identify a way to fix the energy mess. Hopes are high that the inquiry, due to report later this year, will unambiguously call for a reform plan that will see the straightforward sale of the remaining generators, and a process to sell the part-reformed generators to the private sector.
Of course, major reforms, like privatisations, service outsourcing and meaningful public sector reform, need to be tackled sensitively in a way that engages the public and debunks the myths.
Beyond its own budget measures, there is no doubt that New South Wales will also be looking for Canberra to play its part.
O’Farrell was quick to point out after the election campaign that New South Wales largely missed out in the first round of Infrastructure Australia funding. The day after the state election, O’Farrell said of Sydney: ‘Now this is a city that has 20 per cent of the nation’s population, and yet in the first round of Infrastructure Australia funding, we got less than two per cent of the funds.’
High expectations that New South Wales would be the beneficiary of billions in federal infrastructure funding for new transport links amounted to nothing beyond planning study support and the funding for the Hunter Expressway. The state was even forced to return the money it received for planning studies, because it axed the Sydney Metro while it was in the procurement phase.
In spite of much of the media commentary at the time, it wasn’t the merit of the projects like the M4 East or Metro network that stopped them winning support. Nor was it a lack of quality in individual submissions. Rather, it was the lack of an integrated strategy for the state’s infrastructure networks that meant New South Wales fell at the funding hurdle.
O’Farrell has already tasked Infrastructure NSW as the primary interface with Canberra for federal funding; and there have already been several rounds of meetings between O’Farrell and Prime Minister Gillard, as well as Federal Infrastructure Minister Anthony Albanese.
There are still funding issues to be resolved, not least the competing priority commitments of the Parramatta to Epping Rail Link (PERL) and the North West Rail Link – but there are positive signs that a resolution may yet be reached.
Whatever the case, the election of the O’Farrell Government clearly holds a lot of potential for new thinking and renewed momentum to plug the infrastructure gap. And it’s clear the new government recognises the need to engage the know-how and investment of the private sector if it is to begin to tackle that challenge.
2000/01 2001/02 2002/03 2003/04 2009/102008/092007/082006/072005/062004/05990,4851,009,2961,161,3161,270,1531,376,2391,445,3181,620,1141,778,3701,784,0171,927,507SYDNEY PORTS GROWING AND WORKING TOGETHER
total container trade 2000/01 to 2009/10 (teUs)
SYDNEY’S PORTS FACILITATE OVER $50 BILLION OF TRADE EACH YEAR, WITH AN ANNUAL CONTRIBUTION TO THE NEW SOUTH WALES ECONOMY IN EXCESS OF $2.5 BILLION. To meet the future demands of international trade, Sydney Ports is increasing capacity at Port Botany with the construction of a third container terminal. The $1 billion Port Botany Expansion is due to be operational in 2012, providing more options for importers and exporters. For more information please visit www.sydneyports.com.au
www.sydneyports.com.au
Barry the Builder – Can he fix it?
O’Farrell says, ‘without Federal Government assistance, without working with the private sector, without the state doing better, we will not solve the problems across this state.’
For their part, the New South Wales public are expecting real changes. In the days after the election, a website doing the rounds – www. hasbarryofarrellfixednswyet.com – was greeting visitors with a giant ‘NO’.
While it was then (and is now) far too soon to expect the new government to have delivered real change – it is a reminder that public expectations are high.
The change of government in New South Wales has marked a paradigm shift in the state’s reform agenda – there is now a unique opportunity for reform, that is matched by a public appetite and expectation of change. The early indications are that the opportunity won’t be wasted.
40 futurebuilding Volume 2 Number 1 Key infrastructure figures in the O’Farrell Government
BARRY O’FARRELL Premier
Barry O’Farrell has served in the New South Wales Parliament since 1995. He has a strong interest in infrastructure policy and projects, having served as the Chief of Staff to the Transport Minister in the Greiner Government. O’Farrell spent a lot of time consulting with the infrastructure sector in Opposition, including on the architecture and function of Infrastructure NSW.
ANDREW STONER Deputy Premier and Leader of the Nationals
Andrew Stoner joined the Parliament in 1999, following a career in small business and the public service. He has held a range of infrastructure portfolios in opposition, including roads and ports. Prior to the election, Mr Stoner mooted options for network tolling mechanisms to fund PPP projects in Sydney.
MIKE BAIRD Treasurer
An investment banker and son of former Transport Minister Bruce Baird, Mike was elected at the 2007 election. He is a strong supporter and advocate for the need to reform public administration – including active support for the 2008 proposal to sell the state’s electricity sector.
GLADYS BEREJIKLIAN Transport
Gladys Berejiklian – a relative newcomer to the Parliament – has held the transport portfolio for five years. First elected in 2003, her career before politics included a period as a political adviser, before a successful career in banking.
GREG PEARCE Finance and Housing
Greg Pearce is a former Freehills Partner with a good understanding of financial management and reform. The reform of the allocation of acts by O’Farrell means that Pearce also holds control over most of the state’s assets – and will be important in driving reform in areas like social housing and water.
DUNCAN GAY Roads and Ports
One of the government’s most experienced MPs, Duncan Gay, supported high-speed rail in his 1988 maiden speech, which would position Canberra Airport as an alternative second airport for Sydney. He has held mainly infrastructure related portfolios, including previous stints in roads and industry portfolios.
BRAD HAZZARD Planning and Infrastructure, Minister Assisting the Premier on Infrastructure NSW
Brad Hazzard held a wide range of portfolios in Opposition, picking up responsibility for planning in 2007 and infrastructure in 2008. He will oversee the delivery of a new planning act for New South Wales, and will be responsible for the day-to-day operation of Infrastructure NSW.
JILLIAN SKINNER Health
Jillian Skinner has flagged a greater role for the private sector in healthcare provision, specifically in the treatment of chronic diseases, but is yet to go into any detail. Jillian wants to overhaul hospital emergency departments by providing patients with real-time information on waiting times.
