18 minute read
The Hon Warren Truss MP | Deputy Prime Minister of Australia, Minister for Infrastructure and Regional Development
The Hon Warren Truss MP
The new Federal Government’s renewed focus on infrastructure investment shows its importance as a driver for economic and productivity growth, says Deputy Prime Minister and Minister for Infrastructure and Regional Development, The Hon Warren Truss MP.
It is a pleasure for me to give you some indication of what the Coalition actually plans to do, as distinct from what we were promising to do in the lead-up to the Federal Election. In doing so, I want to assure you there’s no difference between the two, but we are getting on with it now.
As the new Coalition Minister for Infrastructure and Regional Development, I have been tasked with the particular responsibility to help Tony Abbott become the ‘infrastructure Prime Minister’ of Australia.
Our task, jointly as Prime Minister and Deputy Prime Minister, is to get the country moving again, to get it building again; developing a plan and platform to ensure that we continue to roll out infrastructure into the future in an affordable and effective way.
Together with [Assistant Minister for Infrastructure and Regional Development] Jamie Briggs, we look forward to implementing the Coalition’s ambitious plan to build the infrastructure of the 21st century.
There isn’t likely to be a single solution that’s appropriate to fund infrastructure in every instance. Some projects will lend themselves to a particular funding model that may not work in another instance. What may be very successful in achieving one piece of infrastructure development may not be successfully replicated elsewhere.
We will always have to be innovative, and be prepared to be adventurous. But on the other hand, particularly when it comes to Government money, we will be conscious of the need to always ensure that the investments we make are sound, that we
are protecting the taxpayers’ money, and that we are delivering value for what is funded.
Of course, shareholders expect the same, as do superannuation members. They expect their money to be looked after and to return a good investment.
To marry those priorities and to be innovative, but also to be conscious of the need to make sound investments and achieve the community’s objective of having better infrastructure to service our nation, is really the challenge confronting incoming governments and, indeed, the public sector. Furthermore, there is a need to ensure that we can meet those hopes and aspirations in a way that is not going to pass future generations a cost burden, an economic burden or a debt that becomes unfundable.
This Government is committed to ensuring that Australia has the productive infrastructure we need to meet the challenges ahead, and to reap the rewards of sound investment.
However, our debt and our fiscal constraints hamper the Government’s ability to fund and maintain nationally significant infrastructure, so we are going to have to be creative and prepared to think outside the box.
During the recent election campaign, we announced our support for a number of major highway projects in the city and country, and our plan for getting the inland freight rail project back on track.
Efficiency gains through improved infrastructure are all-important to unlocking our nation’s potential.
Better infrastructure will provide access to new and emerging industries, and will allow us to transport our cost-sensitive goods to markets here, and to ports in far-off markets, as well as to link Australians to jobs, services and opportunities we haven’t dreamt of yet.
As I have said publicly many times before, any failure to deliver key infrastructure improvements
The Hon Warren Truss MP
The Hon Warren Truss MP
will curb and restrain growth and see national productivity stagnate. Our economy will simply grind to a halt.
Spending on infrastructure has a higher return on investment than spending in most sectors, and demonstrates clear value for money. Construction is the fourth-largest contributor to Gross Domestic Product, and employs one million Australians.
In fact, the Australian Infrastructure Statistics Yearbook for 2013, prepared by the Bureau of Infrastructure, Transport and Regional Economics (BITRE), makes interesting reading on the subject.
For instance, in 2011–12, infrastructure spending by the private sector was 11 times higher than what it was 20 years ago.
Current expenditure has declined slightly from that peak, but investment remains at historically high levels.
The growth of expenditure in infrastructure has been particularly strong in the transport sector, with its share of investment growing from 45 per cent one decade ago to 55 per cent today.
Once again, private expenditure has led the way, having grown by over 400 per cent in the 10 years since 2001–02.
What the Yearbook demonstrates is that our spending on infrastructure is as critical today as it ever has been to support the Australian economy, and to help support growth in productivity.
As economic power shifts towards Asia, Australian goods and services face increased competition from rapidly developing low-wage economies – a factor that also creates new opportunities and new markets.
In addition, our tax base is declining as our population ages.
These and other structural changes, such as increasing demands on the health and welfare sectors and demographic shifts, are placing additional pressure on the economy – including the infrastructure and transport sectors.
Given these shifts, getting the infrastructure and transport planning, prioritisation and funding right is critical.
The Government is working with state and territory governments to accelerate the delivery of
The Hon Warren Truss MP
major road and highway projects. The first step in achieving this is to provide certainty of funding for our critical infrastructure projects, which include: • $6.7 billion upgrade of the Bruce Highway in Queensland • $5.6 billion to finish the duplication of the Pacific
Highway up to the Queensland border • $1.5 billion for 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 • $700 million for the Toowoomba Second Range
Crossing • $686 million to finish the Gateway WA Project in Perth • $615 million to build the Swan Valley Bypass on the Perth to Darwin Highway • $500 million for the upgrade of South Road in
Adelaide • $405 million for the M1–M2 Link project in Sydney • $400 million to continue the Midland Highway upgrade in Tasmania.
Importantly, we have also committed $300 million to finalise plans, engineering design and environmental assessments for the iconic Melbourne to Brisbane Inland Rail project.
When completed, this new freight corridor will link Brisbane to Melbourne through central-west New South Wales.
This important initiative will support the national freight task so that industry can readily move freight across and between port, rail and road networks, and onwards to customers both here and abroad.
It will also open up opportunities in regional communities along the route.
It is true that freight movements in Australia will double over the next 20 years, and treble along the eastern seaboard.
Knowing that this challenge awaits us requires meticulous planning and investment now, including new ways of attracting investment to make it happen. It requires planning across all modes to make the most of the efficiencies and advantages each mode offers, and that includes freeing up capacity on Australia’s metropolitan rail networks.
To do this requires the separation of freight and passenger traffic and establishing dedicated metropolitan rail freight networks. In May 2013, NSW Ports signed a 99 year lease for Port Botany, Port Kembla, the Intermodal Logistics Centre (ILC) at Enfield and the Cooks River Intermodal Terminal. These are all essential infrastructure assets which serve as import and export gateways to New South Wales.
The $1Billion Port expansion will enable Port Botany to handle the estimated growth in Australia’s largest economy for the next twenty plus years.
Port Botany
Enfi eld
With over 100,000m2 of warehouse space and rail connections to both Port Botany and interstate, the Enfield ILC will assist the ever growing import and export intermodal needs of Sydney.
Port Kembla Planning approval is in place to reclaim approximately 42ha of land in the Outer Harbour which will proceed dependent on customer needs and demand for port development. Cement Australia is the fi rst tennant to take up 8ha of this site and have commenced construction of a grinding facility.
www.nswports.com.au
The Hon Warren Truss MP
With that in mind, the Government has made a commitment with Queensland to investigate a new 24/7 dedicated freight connection, mainly by tunnel – from the Acacia Ridge Intermodal Terminal to the Port of Brisbane – as part of the Melbourne to Brisbane Inland Rail project.
We do so recognising that developing a network of intermodal terminals in the right places is crucial, so that industry can readily move freight by rail and road networks to customers.
The delivery of a major intermodal facility at Moorebank will improve efficiency and productivity for Sydney and for the freight task nationally.
The Moorebank Intermodal Terminal will provide a rail shuttle between Port Botany and the south- west of Sydney, and will include warehousing and a separate terminal for interstate freight.
In the long run, it will help free up congestion on Sydney’s roads, ultimately creating a more efficient supply chain and breathing new life into other elements of Sydney’s transport system.
Another key link in Sydney will be WestConnex – one of Australia’s biggest transport projects.
The day after being sworn in to office, Prime Minister Tony Abbott and I joined New South Wales Premier Barry O’Farrell, and New South Wales Roads and Ports Minister Duncan Gay, to release the business case executive summary supporting the construction of WestConnex.
The 33-kilometre WestConnex motorway linking the CBD, west, south-west, airport and port is expected to deliver $20 billion worth of economic benefits to the New South Wales economy.
It will improve commute times, create new jobs, boost economic activity in Western Sydney and help breathe new life into the Parramatta Road business and residential areas.
As these commitments show, there is, and inevitably always will be, a need for ongoing public investment in infrastructure; however, private sector investment remains fundamental in securing a sustainable future.
That is easier said than done. Investor confidence is shaky, with overblown patronage forecasts contributing to some well-reported commercial failures, including the Sydney Cross City Tunnel, Lane Cove Tunnel and Brisbane’s CLEM7.
A study of five Australian toll roads found that actual traffic volumes were, on average, 45 per cent less than forecast in the first year of operation.
The Government recognises that getting patronage forecasting right, including improved modelling, is one of the keys to boosting investor confidence. BITRE is investigating the causes of these overoptimistic forecasts.
Initiatives to reduce the risk of investors being misled by overzealous forecasts are an important step towards restoring investor confidence.
These initiatives include: • improving data collection using new technologies • the development of guidelines for toll road modelling • the provision of reference models from state governments • improved commercial vehicle data • further research into the public’s willingness to pay for using toll roads.
Looking across the board, levels of private sector ownership and investment in transport infrastructure vary across modes and jurisdictions.
Private operators – such as airport owners and some port owners – will need to make significant infrastructure investments to meet the growing freight and transport tasks of the 21st century.
And that is part of the reason that we have announced an overhaul of Infrastructure Australia’s structure and priorities.
The reforms are designed to better coordinate long-term projects, support better planning and give greater certainty to investors and the construction sector.
In line with other government boards, Infrastructure Australia will be led by a Chief
The Hon Warren Truss MP
Left: The proposed alignment for WestConnex
Executive Offi cer who will be responsible to the Infrastructure Australia Board.
The new CEO will be responsible for delivering the strategic objectives of Infrastructure Australia and its policy reform program.
The Government 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 which now have an infrastructure advisory body of their own.
Infrastructure Australia will be asked to develop a 15-year pipeline of major infrastructure projects to be revised every fi ve years based on national, state and local infrastructure priorities.
The Government believes that Infrastructure Australia should not just rely on submissions from states, territories and others, but should also be working proactively alongside them to identify critical projects across the country.
Moving forward, we need to build more modern infrastructure, and to identify the right projects that will best contribute to Australia’s productivity growth over the next decade and beyond.
A key plank in the Government’s approach is to maximise private sector investment in infrastructure.
The M1–M2 Link is a good example. This project includes an up-front contribution from both the New South Wales and the Commonwealth governments, and signifi cant capital investment from the private sector, which is supported by user charges.
We will also look at how we invest in other projects going forward. There is much to do, and we need to work in partnership with the private sector to deliver the infrastructure that our society expects, our industries need and our people deserve.
The fi scal constraints that beset the Federal Government, and those of the states and territories, make private investment a necessity – not an optional extra.
Modern projects to launch this country into the next phase of economic prosperity will not be built without private capital.
We must be focused on delivering critical infrastructure, ensuring we are getting value for money for our investments, and be dedicated to embracing and increasing innovation in project delivery.
The Government will play its part. But to move forward, we must be in partnership with the construction and investment communities. This coinvestment of not only capital, but also of shared will and vision, will be the basis for building our nation and improving the living standards of our people.
I look forward to working with you to deliver the road and rail projects to take Australia forward, and to driving the growth and productivity reforms necessary for Australia to meet the challenges and opportunities of the 21st century.
The Hon Warren Truss MP
The Hon Warren Truss MP, Deputy Prime Minister of Australia and the Minister for Infrastructure and Regional Development
Warren is the longest serving federal leader of any political party in Australia today, becoming Leader of The Nationals in 2007.
A third-generation farmer from the Kumbia district near Kingaroy in Queensland, Warren first won his seat of Wide Bay in 1990. He was a minister in the Howard Government for 10 years, serving as Minister for Customs and Consumer Affairs in October 1997, and, a year later, Minister for Community Services. In July 1999, Warren became the 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, was appointed Minister for Trade.
Before entering Parliament, Warren was a Kingaroy Shire Councillor (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 CoastSouth 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.
Warren is also former State and National President of the Rural Youth Organisation and President of the Lutheran Youth of Queensland.
At the 2013 federal election, Warren led The Nationals to the party’s best electoral result in 30 years.
ROAD PRICING: CONSIDERATIONS FOR AUSTRALIA
As one of the last non-priced utilities, Australian roads are overused and underfunded, which negatively affects the country’s social, environmental and economic outcomes.
Charging for all road use (road usage pricing) could help to reduce congestion, provide funds for much-needed transport infrastructure and ensure people use roads more efficiently. However, for broad-scale road usage charging to work successfully, community acceptance is essential.
The case for road pricing
Current transport taxation doesn’t provide sufficient funds to support the maintenance and development of Australia’s transport infrastructure. According to Infrastructure Partnerships Australia (IPA), ‘reform of transport taxation could … assist Australia to fund its next generation of public transport and road projects. Furthermore, congestion already costs Australia $9.4 billion every year. Without action, these costs will more than double to $20.4 billion by 2020.’
A new pricing model is needed to help reduce growing congestion, increase infrastructure funding, encourage efficient road use, and potentially improve long-term equity outcomes by providing more funds for alternative transport modes.
Road pricing models
Any serious road pricing model will likely involve changes to existing taxation systems, an appropriate measurement of the value of roads to the economy, and an approach to dealing with different circumstances, such as rural versus inner-city environments. It will also need to raise sufficient revenues for transport infrastructure investment and maintenance, be technically simple to implement, reduce congestion and address equity concerns.
Although many potential models have been put forward, the majority focus on the average cost to the taxpayer, which inevitably results in ‘winners’ and ‘losers’, and is less likely to gain public support.
Community acceptance
Communities appear to show more support for road pricing, such as congestion charging, if the government uses 100 per cent of the revenue raised to improve public transport.
The true cost of road transport for commuters is rarely spelled out, and the level of cross-subsidies required to finance transport infrastructure is far from transparent. Road tolls do not always collect enough revenue to fund new roads and are often seen by drivers as a penalty to be avoided, rather than a service fee.
The first step to community acceptance should be informing road users of the exact cost of their choice of transport and offering alternatives to help them better manage their transport costs.
An unpriced utility
Individual transport is in many ways a utility. Energy, water and telecommunications companies have already reformed the way they manage pricing and demand. They also reinvest revenue generated from access to monopoly infrastructure, to improve performance and efficiency.
To maximise the usefulness of individual transport and minimise its limitations, we should analyse it in the same way as other utilities. If road users were explicitly paying ‘per use’ on every road, then an appropriate fee/service relationship would emerge. If transport providers, freight operators and commuters could easily compare the costs and value of different modes of transport, they may also make different transport decisions.
An aggregated transport account
To ensure community support and help commuters make better transport decisions, Australians need to understand what they spend on every mode of transport.
According to Australian Bureau of Statistics data, transport costs in Australia represent 16 per cent of total household expenditure. This is high compared to energy costs, for instance, which represent 2.5 per cent1. It is proposed that demonstrating financial savings is likely to be more effective in reducing road use than highlighting travel time savings.
We would suggest that governments could initially introduce a new aggregated transport account as part of an optional road pricing scheme. Transport users could choose to enrol in the scheme to receive financial benefits, such as reduced registration fees, in exchange for explicit charges for every kilometre they drive.
As part of this scheme, a transport account aggregator system would provide a combined transport account statement. The statement would offer commuters a clear, comparable analysis of the costs associated with their transport mode choices.
Andrew McKindlay Evans & Peck Principal, Sydney
Items such as fuel and maintenance costs, parking, and public transport usage could be included. This would enable them to make informed transport decisions based on convenience and cost. It could also offer reduced prices for certain services, recommendations for alternative, cheaper transport modes and the ability to pre-pay for trips at a discounted price.
The account statement would be updated and available in real time online and via a smart phone app. The app would also potentially enable commuters to use their GPS-enabled smart phone to automatically provide information about the roads and other means of transport they are using, as well as pay for public transport.
About Evans & Peck: Evans & Peck is a global advisory firm that provides project and business solutions to clients who develop, operate and maintain physical assets in the infrastructure and resources industries. www.evanspeck.com
1. Australian Bureau of Statistics Year Book Australia, 2012 www.abs.gov.au/ausstats/abs@.nsf/Lookup/ by per cent20Subject/1301.0~2012~Main per cent20Features~Household per cent20income, per cent20expenditure per cent20and per cent20wealth~193
