The Hon Warren Truss MP

The infrastructure backlog in Australia is beyond the capacity of governments to fund on their own. The solution will lie in regulatory reform and a greater role for the private sector, according to the Leader of the National Party, The Hon Warren Truss MP.

As we all know, there are various reports around that have put Australia’s infrastructure gap at somewhere between $700 billion and $800 billion. This gap will never be filled entirely.

There will always be new projects that come forward, and expenditure needs will always rise beyond our capabilities.

We know that we have to invest more and we need to do it now. If we don’t, it’s going to cost Australia dearly.

Productivity will continue to decline as congestion rises, impacting on economic growth, not to mention its social toll, adding to the stress and the anxiety of daily life.

The Liberal and National parties have already made significant commitments for infrastructure expenditure should we be elected to government.

Recent announcements have included commitments towards the East West Link in Melbourne, the M4 East extension in Sydney, and the Gateway Motorway North project in Brisbane.

We’ve renewed earlier commitments to the upgrading of the Pacific Highway, the Bruce Highway and the Toowoomba Range Crossing. We’re committed to supporting the Gateway WA project in Perth, the Melbourne to Brisbane railway line, and the Midland Highway in Tasmania.

And, of course, there will be much more.

But government budgets at the moment are awash with debt and deficit, and unfilled and unfunded commitments. Clearly, given the sheer size of the task ahead of us and the current budgetary position of the Commonwealth and state governments, government investment alone is not going to be enough. It’s going to take a combination of government and private funds, together with regulatory reform, to enable this investment.

As you would all be aware, the government has just begun negotiations with the states and territories about the next federal–state road and rail funding agreement, which is due to commence in 2014.

The year 2014 seems to be something of a magical year with this government. Like lots of things lately, the money will not have to be found until after the next election. Nonetheless, there will need to be significant contributions towards funding infrastructure on top of the commitments that are being made, like disability reform, mental health care, dental programs and, of course, education, amongst others.

The agreement on the size and priorities of the next federal–state agreement is some way off, but the program needs to be focused on taking productivityenhancing projects from concept to construction, and then completion.

The Hon Warren Truss MP

When Labor spent not one but two stimulus packages, the rhetoric proclaimed a Nation Building agenda.

Yet, the Business Council of Australia estimates that only 14 per cent of the total spending announced under that Nation Building agenda actually went to productivity-enhancing infrastructure – and, of course, many of the projects have not yet been completed.

Studies have shown that investment in infrastructure has a positive effect on economic growth and has a higher return on investment than spending in other sectors.

As a government, and as a nation, we need to place a higher value on ensuring that we have a modern and integrated multimodal national transport network.

The Coalition has a track record of investing in worthwhile projects to grow our economy, and to build our communities and connect our regions.

In May 2002, the Coalition announced its plan to create what was then a revolutionary new national land transport policy. When AusLink was introduced in 2004, it represented the most significant change since Federation to the way in which national transport infrastructure is funded.

For the first time, investment in road and rail was based on a longer-term agenda, and of course it was built around corridor studies that addressed the longer-term freight task. The Coalition remains committed to the AusLink program; the current government has renamed it but has essentially kept it in existence, and we’re also committed to its subelements, like Roads to Recovery, the Black Spot program and the strategic regional roads program.

We’re also committed to a new bridges renewal program to fund the upgrade of some of the 20,000 local bridges across the country that are nearing the end of their lives.

Substantial upgrades are often beyond the financial resources of local governments and, as a result, many bridges now have strict weight limits imposed upon them, impacting productivity.

Infrastructure Australia was established in 2008, with great expectations that it would help to focus investment on delivering ‘nation-building’ projects. Minister Anthony Albanese said in 2007:

‘By operating at arm’s length from Ministers, Infrastructure Australia will ensure decisions are no longer based purely on political interests or the margin of a particular seat.’

Then the government went on to choose multibillion dollar projects for its Nation Building Program without prior Infrastructure Australia approval. In fact, the most prominent South Australian project, the O-Bahn, was reportedly chosen by Prime Minister Kevin Rudd and the South Australian Premier of the day during a late-night walk around Hobart’s cold streets.

We all know that the $2.1 billion election commitment for the Parramatta to Epping rail link in Sydney wasn’t considered by Infrastructure Australia before its announcement, and there was no costbenefit analysis that has been publicly released.

The Infrastructure Australia pipeline is choked with much-needed projects that have failed to move from concept to planning, or from design to construction, and that have no timetable for completion. On the other hand, the role and process of Infrastructure Australia is not well understood or explained.

I still come across people who think that all they have to do is get a tick-off from Infrastructure Australia and suddenly the money will appear for their project to proceed. Sadly, it’s not that simple.

I also think Infrastructure Australia can do more to help explain its processes and why particular projects have been chosen for approval. As an example, I was surprised that the 2012 priority list gave the next stage of the Bruce Highway upgrade – which

The Hon Warren Truss MP

happens to be in my electorate – a rating of ‘early stage’, even though the route was chosen years ago, and the planning and design was well advanced.

Yet, the Cross River Rail project in Brisbane was listed as ‘ready to proceed’, when we all know that the state government hasn’t yet decided how it’s going to address the congestion issues in an affordable and responsible way, and whether this is going to end up being a $1 billion project, a $4 billion project or a $40 billion project.

From the Coalition’s perspective, we’re keen to support Infrastructure Australia and give it a meaningful role in project assessment. We will task Infrastructure Australia with creating a pipeline of projects. This pipeline will need to look at least 15 years ahead, with a review every five years to provide a timetable for future priorities and investment. This will be created collaboratively with the states and territories, and will provide a comprehensive and evidence-based framework to encourage investment. We want Infrastructure Australia to be well ahead of the game so that there are no delays in bringing projects to fruition because assessments haven’t been undertaken.

We’ll also require all major Commonwealthfunded infrastructure projects to undergo a full costbenefit analysis by Infrastructure Australia before they proceed.

We’re committed to Infrastructure Australia; we want it to work. There needs to be a strong understanding within the community that its role is permanent and that it is going to play a key role in developing our priorities for the future. And it needs to be visionary and forward-thinking so that there aren’t delays in bringing projects to the construction stage because assessment work has not yet been undertaken.

The Coalition is also committed to reducing red tape for business, improving our international competitiveness and maximising value for money in projects. It is bewildering that around 40 per cent of funding for infrastructure projects is spent before a bulldozer arrives on site.

Community consultation and protecting our environment are important, but the fact that projects take years to get through the planning and approval process is something that clearly needs to be addressed.

A recent report by the Business Council of Australia found that resources projects are 40 per cent more costly in Australia than in the United States, hospitals cost 62 per cent more, schools 26 per cent more and airports a staggering 90 per cent more.

Now, this is a comparison with the United States; not exactly a low-cost country, not a country that takes shortcuts in relation to approval processes, but for some reason the costs of these projects are much higher in Australia.

These costs are holding back our capacity to deliver the infrastructure that we need. Now, a lot of this is about regulation and the willingness of governments of all political persuasions to respond to community complaints about a particular issue with another tranche of regulations.

Since Labor was elected in 2007, the RuddGillard governments have introduced 16,000 new regulations, while repealing less than 100. And that was in spite of Labor’s election commitment to abolish one regulation for each new one that was introduced.

Now, I know this isn’t easy, but we have to seriously tackle the burden of regulation if we are going to deliver projects in this country efficiently and on time.

While total investment in infrastructure has increased dramatically in recent years, private sector investment has only marginally increased over the same period.

In Australia, infrastructure investment by super funds has been of interest to policymakers for a number of years.

The introduction of compulsory superannuation 20 years ago has seen investment in superannuation funds in Australia soar. Today, 12 million Australians have around $1.3 trillion invested in superannuation funds. It is estimated that over the next 15 years, this could rise to up to $5 trillion.

Traditionally, superannuation funds have had a limited role in infrastructure financing in Australia. Research on Australian Prudential Regulation Authority (APRA) regulated super funds has indicated that only around five per cent of their total asset allocation is in infrastructure.

Previously, IPA has estimated that if we get the regulatory settings right, super funds could provide an extra $18 billion in additional infrastructure investment each year. This could go a long way towards helping fund the vital infrastructure we need to improve productivity across Australia.

The Hon Warren Truss MP

Significant investment in Sydney’s transport network is long overdue, and much of that investment will only be achievable through partnerships between the private sector and governments

Super funds will not take risks with members’ funds, and they expect solid returns on their investments. Government and industry need to work together to get the regulatory settings right so that we can begin to fill this infrastructure deficit.

At the last election, the Coalition committed to infrastructure bonds. There is no ‘silver bullet’ and no one policy measure that will stimulate the unprecedented levels of investment required to provide the sort of infrastructure Australia needs to continue to grow and be innovative about the way in which we source the funding for important projects. That approach must harness business and governments to work more constructively to provide Australians with a quality transport network that represents value for money.

In June 2012, the Infrastructure Finance Working Group’s report was released. The Working Group brought together Australia’s major private investors and their representatives to look at avenues for regulatory reform to encourage investment.

This report addressed many of the hindrances to private sector investment: high bid costs, the lack of a clear project pipeline and risk allocation, to name a few.

Given the task ahead of us, we need to look at all the options and find innovative ways of structuring financing and risk allocation to get the maximum value for investment, and a larger number of projects underway.

Earlier this year (2012), I held a meeting with a number of private sector investors, super funds and others, and while all were actively considering potential infrastructure investments, none of this investment was in Australia.

It seems strange to me that we have Canadian pension funds looking at infrastructure projects in Australia, but our own funds are looking for projects in Canada and, for that matter, other parts of the world. Maybe the grass is greener on the other side of the fence, but we’ve got plenty of work that needs to be done in this country.

There needs to be a political will to get projects under construction. But the private sector should not wait for governments to get projects underway.

Some time ago, I suggested that companies with ideas and infrastructure projects in mind should come forward and tell governments of their interest. If they are prepared to make it happen, so are we.

New South Wales has taken some steps in that regard. The New South Wales Government is considering an unsolicited private sector offer by Transurban to design and construct the F3 to M2 link: a much-needed project that has been languishing for some time.

A proposal to put tilt trains on New South Wales’s intercity and regional passenger routes has the potential to put fast trains on existing tracks much more affordably than a Very Fast Train.

As we all know, significant investment in Sydney’s transport network is long overdue, and much of that investment will only be achievable through partnerships between the private sector and governments. From our perspective, our door will always be open to talk to people who have innovative projects that they’re interested in being a part of, to try to find a way to make them happen. And in cooperation with state governments, I think we can move these projects along much quicker, and deliver real results for Australia.

We are also looking at a number of innovative ideas, including leveraging the government’s AAA credit rating to provide cheaper loans for projects on Infrastructure Australia’s priority list.

The Hon Warren Truss MP

We believe these sorts of initiatives may assist the private sector and local governments to make priority projects a reality.

I want to assure you that we are committed to speeding up the pace of major infrastructure delivery.

We will have more to say about our final commitments on policy measures to leverage greater private sector investment in infrastructure closer to the next election.

We need 21st-century solutions if we are to have a 21st-century infrastructure system.

Too often, when we talk about infrastructure, we do so in the context of costs. Of course, the costs are real and have to be addressed, but we forget about the opportunities that projects may offer. The importance of better road and rail networks that actually link into ports to get products to markets – here or overseas – in the most efficient way possible cannot, and must not, be underestimated.

Those productivity gains are the difference between winning and losing in the ever-changing domestic and global marketplace.

So, when I look at infrastructure across Australia, I see the costs, but I also see the costs of not getting on with genuine nation-building to take us into the next 20 years.

Our miners will continue to mine and process resources for the world. Our farmers will continue to produce food and fibre for an ever-hungrier world. But they will only be competitive if our infrastructure system is world-class.

We have to ensure that our infrastructure is geared to meet those growing demands, and that our communities can share in that growth. THE HON WARREN TRUSS MP Leader of the Nationals, Shadow Minister for Infrastructure and Transport

Warren Truss is a third-generation farmer from the Kumbia District near Kingaroy. He entered Federal Parliament in March 1990 as a National

Party Member representing the electorate of Wide Bay.

In 2007, Warren was chosen as the Federal Parliamentary Leader of The Nationals. He is also Shadow Minister for Infrastructure and Transport.

Warren was a Minister in the Howard

Coalition Government for 10 years. He was appointed Minister for Customs and Consumer Affairs in October 1997, and a year later, Minister for Community Services. In July 1999, Warren assumed the position of Minister for Agriculture, Fisheries and Forestry, where he served for six years. He became Minister for Transport and Regional Services in July 2005, and in September 2006, Warren became Minister for Trade.

Before entering Parliament, Warren was a Kingaroy Shire Councillor from 1976 to 1990, including seven years as Chairman. He served as President of the Burnett District Local Government

Association and as Chairman of the Fraser

Coast–South Burnett Regional Tourism Board. He was Deputy Chairman of the Queensland Grain Handling Authority, and a member of the State Council of the Queensland Graingrowers Association.