47 minute read
Delivery of major projects in Australia – panel discussion
The need for a coordinated approach to project sequencing and an up-front analysis of project objectives were key themes of the Project Delivery Panel at Partnerships 2014.
Chair: Panellists:
Michael Zorbas, Head of External Affairs, Lend Lease • Jim Betts, Chief Executive Officer, Infrastructure NSW • Ken Mathers, Chief Executive Officer, Linking Melbourne Authority • Peter Regan, Chief Financial Officer, WestConnex Delivery Authority • John McEvoy, Bus & Train (BaT) Project Director, Projects Queensland
Key points:
• The increasing trend toward longterm state infrastructure plans has provided a better opportunity to sequence projects across the national infrastructure market. • A shortage of experienced, high-quality project directors remains a challenge for all parties, but particularly the public sector. • A reinvigorated Infrastructure Australia offers the opportunity to better coordinate procurement policies and timing across jurisdictions. • Unsolicited bid processes have a role to play, but they should only be applied in selected circumstances.
Michael Zorbas (MZ): Can each panellist give a brief overview of the projects or initatives they are involved in?
Jim Betts (JB): Infrastructure NSW (INSW) is an advisory body to the New South Wales Government that was established around three years ago, when the O’Farrell Government came to office. Our primary focus is to provide advice to the Premier and to the rest of the Government on the priority investments in infrastructure and that front-end selection and assurance function. At the moment, we are preparing advice for the Government in the context of the announcement that if re-elected in March 2014, it will enter into a long-term lease of 49 per cent of electricity transmission and distribution assets, which is expected to yield proceeds of around $20 billion. The Government has given some pointers around priorities that it wants us to have regard to in preparing that advice – things like the extension of rapid transit; single-deck, driverless trains through the
heart of Sydney, the CBD and out to Bankstown and the west; the WestConnex project, and a whole series of other allocations around regional water security, schools, hospitals, and sport growth. That’s our main focus at the moment.
MZ: Where is the INSW State Infrastructure Strategy at currently?
JB: Our intention is to provide the advice to Government before the end of the year, and the Government will respond to that. Our advice will be published in accordance with our legislation, and that will enable the Government to formulate its position going into the Christmas break and up to the state election on 28 March 2015.
MZ: Peter, can you tell us about your organisation?
Peter Regan (PR): The WestConnex Delivery Authority (WDA) is tasked with doing exactly what it says: ensuring the delivery of the WestConnex scheme. As we currently sit, that is around $15 billion of capital expenditure over the next eight to 10 years, and we’re progressing that in three stages. The first along the M4 corridor, the second on the M5 corridor, and then the third joining those two together (see Figure 1). As Jim mentioned, we are also doing work and coming back to Government in the next month or so with a further business case on potential extension of that scope to the north and south. That work is progressing at the moment.
In terms of where the project is up to, we’re in the procurement phase for both Stage One (the M4) and Stage Two (the M5). We are on target to have our first construction contract awarded by the end of this year, with construction to start next year. We are looking to award the M4 East and the M5 East, which are the two main tunnel projects, next year, and both are on schedule to be delivered by 2019.
MZ: Ken, could you please give a bit of an overview?
Ken Mathers (KM): The Linking Melbourne Authority and its predecessors have been responsible for all of Melbourne’s large Public Private Partnership (PPP) road projects, stretching back around 20-odd years. Some of the team members that work with me now have been there all the way through CityLink, EastLink, Peninsula Link and now the East West Link. There’s a lot of experience in the team.
Recently, the East West Connect consortium was appointed as the preferred bidder for the first stage of the East West Link, which is an incredible project with 4.5-kilometre-long, twin three-lane tunnels, and very significant viaducts. It’s a high-risk project, technically. We had three outstanding bids from the private sector, and we were absolutely delighted with that. At the end of the day, there was a pretty tough call with our recommendation to the Government about who should succeed; such was the quality of the bids.
We’re hoping to achieve contractual close by the end of this month and then allow East West Connect to move to financial close [Editor’s note: Contractual close was achieved in late September].
We’ve got final planning approval pending from the Minister for Planning, and we’re very hopeful of achieving that soon. It’s been a very challenging
Above, L to R:
Michael Zorbas, Lend Lease; John McEvoy, BaT project; Ken Mathers, Linking Melbourne Authority; Peter Regan, WestConnex Delivery Authority; Jim Betts, INSW.
Figure 1: Map of the WestConnex programme
Figure 2: Artist’s impression of the BaT Project
Department of Transport and Main Roads
Source: Queensland Department of Transport and Main Roads
BaT project
environment that we’ve been working in, but we’ve gone extremely well. I think that the private sector participants have been magnificent in all of our dealings. We ran a highly interactive process, with over 100 meetings in total with the three bidders.
We’ve also been finishing off work on Peninsula Link, which was built by Southern Way and Abigroup, and opened about 20 months or so ago. It’s a very successful road, and it’s going very well as a PPP availability model. There are just a couple of minor issues to resolve before we hand it over to VicRoads for their ongoing management.
MZ: John, can you tell us about Projects Queensland?
John McEvoy (JM): Projects Queensland was set up by the Queensland Government when it came to power at the last election. Basically, the view was that Projects Queensland would head up the development of all business cases that may involve private sector funding; prosecute those projects through government; address the funding needs, funding opportunities and financing solutions; and then work with line agencies in order to take projects into the market and get them delivered.
I’m one of the project directors in Projects Queensland, and I’m heading up the Brisbane Bus and Train (BaT) project. The project itself is actually quite innovative. The genesis of it commenced a number of years ago with the Cross River Rail proposal, which was a rail project running north-south under the Brisbane River in order to duplicate cross-river capacity for the rail network. Coincidentally, at the same time, Brisbane City Council, which runs the majority of the bus network, was weighted down with the success of Brisbane’s bus network expansion. The Northern Busway, the Inner Northern Busway, the Eastern Busway and the South East Busway – a lot of busways built in Brisbane – all lead into Queen Street. Brisbane City Council recognised that it was running out of footpaths, platforms and offloading facilities in the centre of the city, so it came up with a project called Suburbs2City, which was about duplicating cross-river access into the city, and also then dealing with the supply of further bus platforms in the CBD.
Quite cleverly, what’s come about is almost a combination of both of those projects. If we are trying to get both buses and trains into the CBD, the concept of doing it together and providing integrated bus and train solutions is quite innovative. When we look at the public transport modelling, some of the benefits flowing from that assessment are quite incredible – including the major benefit of a new railway station Reference Design Overview Report – September 2014
in the southern end of the city, which has always Great state. Great opportunity.
been very hard to service from a public transport perspective. With Central and Roma Street stations sitting at the northern end of the city, modelling is showing us that with the new project in place, we are actually going to get a significant number of people wanting to jump off rail at Roma Street, get onto a bus and then get off at George Street. So, opportunities for enlivening and basically redistributing the footpath use and the accessibility in the city itself is going to be quite a major accomplishment of the project.
In terms of status, the business case is in its final stages – we’re looking to get that to Cabinet for consideration in a short period of time.
MZ: I’d like to look at the issue of project sequencing and the capacity of the sector to concurrently deliver major projects down the east coast. Do the panellists have a view?
JB: I think that it’s fair to acknowledge that states in general don’t do as much information sharing as they ought to – we could do a hell of a lot more and we always say that. We go to meetings with each other, generally under the auspices of the Commonwealth, and state government representatives look at each and say, ‘We really should be comparing notes,’ and it really doesn’t happen as much as it should.
That having been said, I’m not sure that there is a huge problem at the moment in terms of a lack of coordination leading to adverse outcomes. There’s a heap of activity planned in Sydney over the next four years with projects like the North West Rail Link and CBD South East Light Rail. The main challenge as far as the Commonwealth is concerned is to deal with the consequences from the fall-off in the mining investment boom. The more infrastructure that can
be brought to market during that time, the better. If the purpose of coordination and sequencing is to ensure that the market doesn’t get overheated, that’s not looming large as one of our top 10 problems right now.
Rather, a whole bunch of projects that were committed to in New South Wales when the O’Farrell Government was elected in 2011 are all, with the possible exception of WestConnex – although, we are looking to accelerate that – looking at coming to a conclusion around the same time in 2018–19. So, one of the focuses of the State Infrastructure Strategy that we’re working on is to articulate the pipeline that will follow on from that.
One good thing is that governments are much better now in terms of articulating long-term plans. I think the Queenslanders started it with the South East Queensland Plan, Victoria followed in late 2008 and New South Wales has done the same thing with the State Infrastructure Strategy.
I think the presence of Infrastructure Australia on the national scene gave almost a pretext, or permission, for jurisdictions to plan outside of the normal forward estimates cycle, so that’s been a positive thing.
MZ: Peter, your perspective?
PR: We all have to recognise that state governments are separate jurisdictions and they’ve always got their own political objectives. They’re not going to defer or line projects up so that they’re in conjunction with other states if that’s cutting across those objectives. But there is a reasonable amount of communication, certainly Ken [Mathers] and I, and the various state treasuries, do discuss projects and where we are up to. We welcome the recent announcement on East West Link because we can now start the M5 East procurement with the market having more knowledge of who is committed where.
There is a certain degree of knowledge sharing and consciousness of where each other is on projects. And certainly, with the amount of things going on at the moment in the bidding phase, it’s very important for each government to be well aware that there are capacity constraints in the market. It’s not necessarily just constraints around building projects, it’s bidding projects and ensuring that we’re not getting too many things with deadlines right on top of each other, so that contractors and financiers can actually try to put their best bidding teams forward each time. We’re probably getting better at it, and it’s a good space for the industry to be in, generally, if there are a lot of things happening and they’re not just happening in one city, because there are different ideas and different approaches being trialled.
MZ: Ashurst’s most recent Scope for Improvement report provided some interesting perspective on the skills shortage, particularly at the project director level. What’s your view?
PR: It’s a very fair observation. There are not a lot of really skilled project directors on the government side, and as government procurement progresses, we’re in a phase where there is a lot more interaction with industry through those processes. There is potential for more innovation, so you have to have people on the government side with greater skills to be able to manage that process to ensure that we don’t get completely bogged down in probity-driven processes.
That is an area where there is probably scope for improvement in terms of the general skill level on the side of the government and, again, in the bid phase as well as during the delivery phase. Having people who have the experience and the capability to make pragmatic decisions in the interests of the project, but with consciousness of the broader picture, is actually important. Governments at the moment are probably taking a bit more risk on some of these procurements – certainly in the WestConnex context.
Building as the WDA inherently that means that we are internalising more of the front-end development risk than using some of the previous models for toll roads – so we do need the right people with the right skills on the government side.
KM: I agree with Peter and Jim. The state and federal governments and oppositions all have their own agendas, and major infrastructure projects sometimes play a key role in those policies and what they’re trying to promote to the public at large. It’s virtually impossible for bureaucrats to really control that process. As Jim indicated, the Victorian Government has previously developed a transport infrastructure plan, and quite a number of those projects have been delivered, so a pipeline was created and certain projects have proceeded.
It’s very difficult to look over the border into New South Wales or Queensland to try and judge when we should bring a project to the market. When federal funding is involved, Infrastructure Australia naturally has a key role, and it’s got to probably lead the reform agenda at the present time. To that end, Infrastructure Australia has really got to develop the relationships
Figure 3: Map of the East West Link
Source: Linking Melbourne Authority
with each state further. Previously, John Fitzgerald [Interim Infrastructure Coordinator, Infrastructure Australia] served in Victorian Treasury and he knew all the projects that were on the drawing board, and ensured that Treasury had a great relationship with those of us who were trying to deliver the projects. There was always a lot of dialogue going on, and that continues today, which is really good.
The other thing is that there’s an incredible effort to get these big infrastructure projects to the marketplace, but it’s not always plain sailing. The East West Link came out of the study led by Sir Rod Eddington in 2008, and some of the rail projects in that plan have been delivered or are very close to being finished. But there’s a heck of a lot of planning that has to go on, and there’s a lot of business case work. We worked on a business case for Jim [Betts] when he was heading up the Department of Transport here in Victoria – it took us about 15 months and it was a very intensive exercise. As a result of that business case, the Victorian Government decided to proceed with Stage One of the East West Link, so I’m very pleased with that outcome.
But the planning processes for these large projects are very detailed, indeed. Planning for the first stage of the East West Link has taken about 20 months by a dedicated team within the Linking Melbourne Authority, supported by a lot of consultants and specialists presenting all of that planning work and reports, as our current legislation requires us to do, and we’ve done all of that. For some of our projects, we also have to satisfy the requirements of the Federal Government’s Environmental Protection Biodiversity Conservation Act, so that adds another level of complexity.
Bringing these big projects to the market requires a lot of background work, so while you are doing that, you can’t be particularly worried about what’s going on in the other states – you’ve just got to get on with it and present the opportunity to the government for them to make a decision.
MZ: John, what are your thoughts on the industry’s capacity to handle these concurrent projects?
JM: I’m not too concerned about the capacity of industry to deal with the infrastructure challenge. A decade ago, we didn’t have Spanish, Italian or French participants in the market, and they’re here now. Internationally, we are seen as a viable infrastructure market.
Secondly, if you’re able to sequence your procurement, you won’t fatigue bidding teams and you do get the ‘A’ bidding teams onto the key projects. That’s probably the most critical issue for governments. You can move around a project’s bid
phase by two or three months, as we have a very good idea of what we think is happening in New South Wales and Victoria, and we’re trying to plot our way now as to where to position projects in order to get access to the good bid teams.
Our perspective is that if you do get bid teams that have been together and have done their job, and then can immediately move straight on to the next project, then it’s normally the next government that benefits from that because their capacity to innovate, and their capacity to put together good deals and good offers is enhanced. So, I’d always try to get a bid process in the sweet spot if we possibly can.
In terms of a shortage of project directors on the government side, unfortunately, governments have been very good at promoting people who are good at what they do, and that’s tended to mean that good project directors get promoted out of the infrastructure sector and into something else. Les Wielinga (former Director General of Transport for NSW) was a very good project director before becoming a Director General. Dave Stewart was a very good project director in Queensland, and is now working in New South Wales as a Departmental Secretary.
Governments, in a sense, struggle a little bit with the concept of project directors in terms of how you define their permanent roles in government. I think that is part of why that issue exists. It is a challenge.
JB: Having a pipeline of projects enables you to start doing the succession planning. So, I think of Ken [Mathers] working on CityLink in the 1990s; you look at Rodd Staples (Project Director) on North West Rail Link, Corey Hannett on Regional Rail Link in Victoria – you can see that generation of really high-calibre project managers coming through. It all helps to have a pipeline.
MZ: I want to explore the Federal Government’s role in infrastructure, and particularly Infrastructure Australia. What’s the ideal role for Canberra to play?
JB: The main thing that we’d like from Canberra at the moment is role clarity between the Department of Infrastructure and Regional Development, and Infrastructure Australia, and I think that both organisations would want that themselves.
Infrastructure Australia has been an unambiguously positive thing in terms of lifting the debate about infrastructure beyond the narrow confines of the forward estimates period, and encouraging really good planning. I think that’s been the best of Infrastructure Australia. The worst of Infrastructure Australia has been the paralysis by analysis, so that after six or seven years of Infrastructure Australia’s existence, if you looked at the ‘Ready to Proceed’ list, nationally there were only half a dozen projects in there – a couple of managed motorway projects, and a few others.
And certainly I felt some frustration in Victoria working on the Melbourne Metro project. There seemed to be constant requests for analysis, which would clarify whether the benefit cost ratio was 1.19 or 1.18. I thought that there were opportunities to cut to the chase there.
I think that the re-establishment and refresh of the Board is a really positive thing. There are really quality people on there like Peter Watson, Michael Carapiet and Dr Kerry Schott, and that will continue to stand Infrastructure Australia in really good stead.
But I think that maybe when it drifts over into unsolicited policy generation, that’s where a bit of frustration comes in, in terms of who our interlocutor is at the Commonwealth level. Should we be talking to Infrastructure Australia, or should we be talking to the Department? Recognising that Infrastructure Australia is an advisory body, and that the Department is the one that is associated with the ultimate funding decisions, is important.
What Infrastructure Australia shouldn’t do is generate a huge standing army of analysts in its own right. By far, the best way of proceeding is to try to inculcate good practice into the jurisdictions and enable them to produce the business cases, and do the assurance around those business cases.
These guys know how to do business cases, they know how to assure them, and they have their investor roles properly thought through, and their high-value, high-risk type process – as opposed to Infrastructure Australia replicating what should be the responsibility of jurisdictions both at the development stage and the delivery stage.
Where we interact with the Commonwealth once projects have been funded, it’s a pretty good interaction. The Commonwealth has been pretty good at striking the right balance between making sure it has its eye on the ball in terms of following the money, ensuring that good governance is in place, but not getting intrusively over-involved in projects. The Department is getting that balance right.
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Pictured Left to right: Peter Gemell, Doug Cowan, John McLuckie and David Longmuir
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continued from page 43
PR: I agree with Jim. The changes in Infrastructure Australia and the relationship with the Department have been really positive. We’ve been able to work really well at developing financing structures with them by being fairly open and direct as to what they are trying to achieve and what we are trying to achieve.
In the long term, there is potential for more objective criteria surrounding when states can expect that there might be Commonwealth funding available in some form. Historically, the allocations inherently have a degree of political overlay to them, and that’s to be expected, but clarity on a more objective basis is helpful. Certainly, some of the more alternative approaches – such as the concessional loan structure that we are looking at on WestConnex M5 – are really positive steps and something that is well placed with the Department rather than with Infrastructure Australia. At the same time, it’s important that Infrastructure Australia supports the underlying project from the start so that you don’t have the risk of going down a path and then finding that a particular project was not a priority. It’s about clarity and objectivity, and also maintaining dialogue that at the moment works very well.
MZ: How can industry become a better advocate for these projects?
JM: Governments seem to have to take the frontrunning on these projects. It’s been interesting watching the engagement of industry through organisations like Infrastructure Partnerships Australia (IPA) on the concept of asset recycling and contributing to the debate. It’s been quite useful to see IPA actively contribute to that debate and provide supportive comments to government.
With road projects, you often have some vested or community group that can push a project in a certain direction. In those instances, industry has to stand back and let that debate occur. The focus for industry is to work with government and keep the fundamental message moving forward, that we do need to recycle our asset base, and that government does play a role in increasing investment to boost the economy.
MZ: Looking at the unsolicited bid frameworks, what’s worked well and what hasn’t? Is there a danger that unsolicited bids might be seen as a replacement for a broader, deeper public sector planning process?
PR: That is an issue, and industry needs to understand that unsolicited proposals certainly do have a role, and potentially a very positive role, but that role is not in circumventing or replacing the standard of procurement from government, which is always going to be a competitive process. The demonstrable value for money that comes from market-based competition is clear.
That said, we’ve had an excellent illustration of the benefits of unsolicited proposals in Sydney with the NorthConnex project, which we have been working on with Transurban and their partners. That is a very unique opportunity where a piece of longneeded and well-understood infrastructure is being delivered a lot earlier than it would otherwise have been delivered, and probably with more innovation than would have come out of a conventional process.
That has worked because of the approaches taken by the Government and Transurban in working collaboratively after an initial assessment found that something could be done, that otherwise could not have been done without that direct negotiation.
It is to do with joining existing toll roads and with the ability to apply network financing across a group of roads that Transurban already has concessions over, so you do have a genuine uniqueness.
That process is using the unsolicited proposal framework to effectively trial an alternative approach to procurement, separating design and construction from financing, still with a very competitive design and construction process, and a financing structure that also works and shares upside with the state. This is a really good outcome that has given a lot of confidence when it comes to projects like WestConnex to go down a similar path, and to run a design and construction process that isn’t linked to the provision of finance.
There are real positives. Clearly, it is a ‘horses for courses’ approach. There are examples in Melbourne where the unsolicited proposal framework is being used, particularly where you have incumbent owners of infrastructure, and it makes a lot of sense. But it has to occur where there is a unique opportunity, and industry
needs to clearly understand that they have to inject as much competition as possible and demonstrate as much of a competitive process as possible.
Simply trying to lock in equity returns at the start of the process and then work out the risks and how they are allocated doesn’t really work. It has to be a genuine two-way negotiation.
MZ: Is there a culture of fear in the public sector that good ideas can’t be properly vented because they might make their way into the press or create tension in the minister’s office? How can we incentivise public servants to be more entrepreneurial?
JB: I don’t sense a huge fear that is crushing the capacity to have good ideas. In fact, one of the really refreshing things about working in New South Wales at the moment is that you have a government that has a real interest in reform and a Premier who is very personally committed.
Generally, there is a culture in the public sector where you get absolutely penalised and lambasted for your mistakes, and sometimes much less rewarded for innovative thinking, so there is a whole apparatus of machinery around auditors general, ombudsmen and other scrutiny bodies – and I make no complaint about that because it’s entirely appropriate – which militates in favour of people being potentially more cautious about having open discussion internally regarding innovative and potentially controversial things.
Equally, it’s incumbent upon bureaucracies to come up with good long-term strategic advice. In the absence of properly structured, evidencebased, sound advice, you have the preconditions for opportunistic, politically driven programmes based on primary school whiteboards, with space programs and bridges to Tasmania.
PR: The key for government is to ensure that the thinking is refreshed as well. When I came into New South Wales Treasury three and a half years ago, I hadn’t been around that scene before. I’d been working in Sydney and overseas, for both the public and private sectors, so I probably did have a different viewpoint on how things are done.
That did allow me to take things forward in a way that wouldn’t have been possible had the bureaucracy been set up the way it was before that point. But the Government at the moment in New South Wales is pretty forward thinking and open to new ideas.
It is always going to be a balance between getting public sector people who are risk-averse and conservative, and those who are more entrepreneurial, but as long as there are fresh thoughts coming in and new approaches that aren’t immediately starved of oxygen, then it can work very well. But it’s all about a sensible balance.
KM: The last two big road PPP projects in Victoria have been driven from within government, so I don’t believe that there is a lack of that entrepreneurial spirit.
It depends on how determined you are; you’ve got to keep plugging away. When you are working on the basis of a report that was very well considered by Sir Rod Eddington, and trying to bring forward some of the projects in that report, you know it is well based and you know that you are going to get there at the end of the day.
I don’t think that there is any negativity, either, towards ideas that come from the private sector. Governments are generally pretty open to those sorts of things. I encourage the private sector to keep pushing their agenda as well, and bodies like IPA and other industry groups all have a role to play in pushing governments along with the delivery of infrastructure.
JM: If there is a fear in public service and politicians in Queensland, it is a fear of mediocrity. I don’t think that there is a fear of entrepreneurship and getting on with the job. I think that all states are in fairly similar situations, faced with high debts and stretched balance sheets, and we are all dealing with the fact that there’s an ongoing public expectation that we get on and do this to improve the economy. That’s not going to happen if people are fearful of putting forward good ideas and testing them.
Above: Lend Lease’s Michael Zorbas
Peter Regan, Chief Financial Officer, WestConnex Delivery Authority
Peter Regan has more than 18 years of public and private sector experience in project and infrastructure financing in Australia and the United Kingdom.
He is currently the Chief Financial Officer of the WestConnex Delivery Authority, and is responsible for implementing the Government’s financing strategy for the WestConnex project.
Mr Regan joined WestConnex in April 2014 on secondment from the New South Wales Treasury, where he had been the Head of Infrastructure Finance with responsibility for the development and financing of major new infrastructure projects including the North West Rail Link, NorthConnex, Darling Harbour Live, Sydney Light Rail and the Northern Beaches Hospital. Mr Regan also led the successful restructuring of the $2.4 billion Waratah Train PPP and was previously a member of the WestConnex Delivery Authority Board.
Prior to joining the New South Wales Treasury in April 2011, Mr Regan spent 10 years in the United Kingdom. As Director of Corporate Finance at Transport for London, he led the unwinding of the £5-billion London Underground PPP, financed the development and expansion of the London Overground and Docklands Light Railway, and played a key role in delivering the financing and governance structures for the £15-billion Crossrail scheme.
Prior to joining Transport for London, Mr Regan worked in project finance lending and advisory roles at Deutsche Bank and in corporate advisory at PricewaterhouseCoopers.
Jim Betts was appointed Chief Executive Officer of Infrastructure NSW following five years as the Secretary of the Victorian Department of Transport and four years as the Director of Public Transport at the Victorian Department of Infrastructure. Key personal achievements during this time include the delivery of the $38-billion Victorian Transport Plan, the overhaul of Victoria’s legislative framework to integrate the planning of transport and land use, and overseeing construction of the $4.3-billion Regional Rail Link project.
Mr Betts’s 25 years of experience span strategic transport planning, infrastructure delivery, and transformational structural reform, including privatisation, private finance and regulatory reform, and also include senior roles in the British Government.
Ken Mathers is the Chief Executive Officer of Linking Melbourne Authority (LMA), and has held this role since incorporating in 2003.
A civil engineer, Mr Mathers has had a long career in Victorian road infrastructure, commencing with the Country Roads Board in the 1960s. Project management roles included Melton Bypass, Hume Freeway duplication, the Western Ring Road, Monash Freeway upgrades and planning for CityLink.
He joined the Melbourne CityLink Authority in 1995 as Director, Engineering and Operations. CityLink was then the largest road infrastructure development in Australia undertaken as a Public Private Partnership (PPP) that introduced electronic tolling.
After three years as a private consultant, Mr Mathers returned to State Government in 2003 to lead the Southern and Eastern Integrated Transport Authority (SEITA), which was responsible for EastLink – another PPP roll road.
Renamed as Linking Melbourne Authority, it was responsible for the 27-kilometre Peninsula Link, the first PPP Availability project in Australia, which was opened to traffic in January 2013.
In 2012, LMA developed the business case for East West Link. It completed the statutory planning process for the eastern section from the Eastern Freeway to CityLink, and the extension to the Port of Melbourne. LMA is now undertaking the bidding process leading to contract award in 2014.
Mr Mathers is well known in industry for his support of infrastructure procurement through PPP delivery, and the promotion of quality urban design and public amenity in road development. He has been a Board member of City North Infrastructure Pty Ltd – the Queensland Government entity responsible for facilitation of Brisbane’s $4.3-billion Airport Link project – and is
currently Vice-President of Roads Australia and has had an extensive past involvement with Engineers Australia. Mr Mathers has also been a member of the Regional Rail Link Authority Advisory Board.
In 2012, Mr Mathers was awarded Roads Australia’s John Shaw Medal for his contribution to road planning and development in Australia.
John McEvoy, Project Director, Bus and Train (BaT) Project, Projects Queensland
John McEvoy has 35 years’ experience in the mobilisation and delivery of mega projects within Australia and internationally. During the past 15 years, he has focused on the transactional and implementation phases of a range of major economic, social and environmental infrastructure projects, ranging from $300 million up to $5 billion.
Mr McEvoy has established an industry reputation as an innovative problem-solver with significant experience in capital investment optimisation, and in utilising PPP, EPC and Alliance contract models to deliver successful project outcomes within challenging and complex social and political environments. Mr McEvoy has recently been appointed by Projects Queensland as its Project Director for the $5-billion Brisbane Bus and Train (BaT) Project.
Michael Zorbas is Head of External Affairs at Lend Lease. In this role, he is responsible for engagement with governments and the media on behalf of one of Australia’s most iconic companies. Lend Lease employs 14,000 Australians who have created international icons, from our own Sydney Opera House, through to the S11 National Memorial and Museum in New York, Petronas Towers in Kuala Lumpur, the Tate Modern in London and back to Sydney’s Barangaroo and Headland Park; a financial centre and waterfront asset for the people of Sydney to rival Canary Wharf in London and Marina Bay in Singapore.
Mr Zorbas’s previous roles have included Head of Strategy and Communications for Grocon, General Manager of Government Relations for Stockland, Deputy Head of Media for the Liberal Democrats in the United Kingdom, and Chief Advocate for the Property Council of Australia. He is currently a Board member of the Sydney Institute and the Committee for Sydney.
He is a past director of the Canadian Government’s Forum of Federations, and also served two terms on the Special Broadcasting Service (SBS) Community Advisory Committee.
INFRASTRUCTURE FOR VICTORIA – GETTING AHEAD OF THE GROWTH CURVE
Will a record investment in infrastructure keep Victoria ahead of the game? Yes, says Victoria’s minister for public transport and roads, Terry Mulder MP.
A strong pipeline of key infrastructure projects will drive Victoria’s prosperity and shape Melbourne for decades to come.
Billions of dollars of investment in a new port, new roads and new rail lines will generate thousands of jobs, create new suburbs, build new transport links and expand the central business district.
A new rail tunnel and airport link, a new road spanning the breadth of the city, expanded freeways and upgraded suburban rail links herald a new era in the city’s transport infrastructure.
The Melbourne Rail Link will see a new tunnel from Southern Cross to South Yarra via the Fishermans Bend Urban Renewal Area, driving investment in Melbourne’s newest precinct and adding fast new travel alternatives to the central city.
New trains, modern and reliable signalling, and level crossing removals will boost services on Melbourne’s suburban lines, and a rail link to Melbourne Airport will bring easier access for locals and visitors.
An expanded CityLink will complement the airport rail link with new lanes, and the East West Link will extend from the end of the Eastern Freeway to the Western Ring Road, providing a vital alternative to the M1 and relieving the inner north of chronic traffic congestion.
This massive investment will comprise a mix of public and private funding. Innovative new PPPs will supplement state and Commonwealth contributions.
As well as the creation of thousands of jobs during construction, the $24-billion investment will deliver long-term dividends to the city’s liveability and prosperity.
Melbourne’s CBD and the inner city have generated jobs and growth for two decades, fuelled by new residential and business addresses in Docklands and Southbank. Employment growth has been particularly strong in education, and financial and property services.
Terry Mulder presides over a budget allocation of $24 billion for transport infrastructure
Artist’s Impression Artist’s Impression
Melbourne Rail Link will service the new residential and business location of Fishermans Bend
For this prosperity to continue, more residential and commercial land is needed. Melbourne Rail Link will ensure not only better commuter access to the CBD, but also the development of Fishermans Bend as a new residential and business location.
Fishermans Bend adds 250 hectares to the edge of the CBD and is projected to house up to 80,000 residents and 40,000 workers by the middle of the century. Its development will ensure a ready supply of homes and office space for coming generations of workers.
Melbourne’s prosperity is becoming less dependent on traditional industries and more dependent on knowledge industries like education, research and finance. These industries already employ a majority of Melburnians – a trend that will increase in coming decades.
Growth in prosperity, in population and in commodity exports will drive a doubling in the state’s freight volumes between now and 2035.
To cater for this, Hastings will become the state’s second container port, heightening the need for new freight transport infrastructure. New road links like the East West Link and new and upgraded road and rail links between Dandenong and Hastings will be built.
As Asia demands more of what Victoria grows, containerised grain, meat, vegetables and dairy products will need to move quickly and efficiently from the state’s agricultural regions to our ports.
This will increase the movement of containerised export freight to our ports, and one of the added benefits of Melbourne Rail Link is the potential it offers to free up existing tracks for this freight.
In addition, the completion of the 18-kilometre East West Link will ensure that workers in industries that rely on vehicle travel – from tradespeople to sales representatives to couriers – can move about the city.
Melbourne’s sole reliance on the M1 and West Gate Bridge means that breakdowns or incidents can bring the city to a standstill. The cost of congestion to industry is estimated at nearly $1 billion per year – much of this as a result of delays to freight movement.
The government’s multi-billion-dollar investment is a response to rapid growth in population, much of it in metropolitan Melbourne.
Between 2007 and 2012, Melbourne had the largest population growth of any capital city in Australia, with an increase of 406,600 people – equivalent to more than 1500 people per week or two per cent per annum.
This is expected to continue. ABS projections forecast a population of 8 million by 2051, making the city more populous than Sydney by 2053.
The strongest growth in employment is in knowledge-based services in inner Melbourne. Annual employment growth in the City of Melbourne over the decade to 2011 was 5.3 per cent compared with 2.2 per cent for the rest of Melbourne. Over the past decade, central Melbourne has been responsible for 43 per cent of the growth
New lanes will be added to CityLink between the West Gate Freeway and Essendon Airport
A planned underground station at Domain will ease pressure on St Kilda Road tram services
Expanded Central City
To Airport FOOTSCRAY East-West Link
This section of Airport Rail Link (as part of Melbourne Rail Link) on existing tracks
DYNON
ARDEN MACAULAY PARKVILLE
East-West Link
PORT OF MELBOURNE E-GATE
CITY NORTH North Melbourne MelbourneCentral New connection to Flagstaff city loop as part of Melbourne Rail Link CBD ALEXANDRA PDE
COLLINGWOOD
Parliament
DOCKLANDS Southern Cross
NORTHBANK Flinders Street
FISHERMANS BEND NORTH
Fishermans Bend [Montague] FISHERMANS BEND SOUTHBANK Flinders Street to Richmond Station Corridor
Richmond
PORT OF MELBOURNE Domain
Twin tunnels as part of the Melbourne Rail Link South Yarra
LEGEND Rail network Existing rail station Melbourne Rail Link–Tunnel Melbourne Rail Link–Airport Rail Link Cranbourne-Pakenham Rail Corridor upgrade New station Potential future station Freeway network East-West Link CityLink-Tulla Widening DART bus upgrades Expanded central city urban renewal area Industry and employment area Port of Melbourne Key bus route Potential Rail Projects (alignment not yet determined)
in gross state product (GSP). This reflects a strong trend among service industries to locate in areas that offer proximity to clients and like-minded professionals, links to interstate and international markets, and access to a deep, skilled labour market.
Strong employment growth in the CBD has increased the number of trips to the City of Melbourne from 240,000 per day in 2006 to 340,000 per day in 2011. Most of the new trips have originated from the outskirts of the city – as well as the City of Melbourne itself. As the majority of trips into the Melbourne CBD are made using public transport, greater demands are being placed on rail in particular.
Melbourne has accommodated its employment growth over the past decade by increasing total office space in the CBD. Docklands has accommodated almost 60 per cent of the growth in office space in the Melbourne CBD since 2003.
Once Docklands is complete, there will be little scope to cater for the large floor-plate office space being increasingly sought. Based on potential supply and a net absorption rate of 100,000 square metres per annum, capacity will be exhausted in the next seven to 10 years.
Without a supply of new, fit-for-purpose office space, Melbourne city centre’s position within the Australian market as a relatively low-cost and accessible office precinct will be under threat.
A stronger service economy is increasing the demand for air travel. Knowledgebased industries are highly dependent on accessibility and interaction. As the gateway for interstate and international travel, Melbourne Airport provides these industries with face-to-face interaction with clients based outside Victoria. The importance of the airport to the growing knowledge-based economy is reflected in the fact that the single-biggest industry user of air transport services in Victoria is the professional, scientific and technical services sector. This accounted for 17.6 per cent of expenditure on air transport by industry users in 2012/13.
International education is Victoria’s largest single export industry. In 2012, there were almost 150,000 international student enrolments in Victoria from more than 160 nations. The export value of Victoria’s international education sector from students studying onshore (on a student visa) was $4.365 billion in 2012, generating an estimated 30,000 full-time equivalent jobs in Victoria. Almost every international student studying in Victoria is likely to have entered via Melbourne Airport.
The number of international visitors to Victoria has grown by more than 800,000 per annum since 2005, with most visitors destined for Melbourne. This is more than twice the growth generated in New South Wales in the same period, and brings Victoria close to the level of international tourism generated in Queensland. Almost all of these visitors arrive through Melbourne Airport.
In addition, 368,000 tonnes of international and domestic freight moved through Melbourne Airport during 2010, and food exports – fisheries products, livestockbased food, fruit and vegetables – were one of the largest components.
The Victorian Government’s Food-to-Asia Action Plan aims to boost exports of premium food and beverage to Asian markets. One of the key priorities under this plan is to improve travel times from farm to port.
Freight has been formally identified by the government as a key driver of the state economy, a point reinforced in last year’s release of Victoria – the Freight State, the Victorian Freight and Logistics Plan.
It found that the freight and logistics sector contributes $19–23 billion to Victoria’s GSP, or between six and eight per cent, making it a major contributor to the economic wellbeing of the state.
Melbourne is Australia’s biggest container port, with a 37 per cent share of the nation’s container trade – higher than any other city – and more than the total of the other ports combined if you exclude Sydney.
While work to expand the Port of Melbourne is well underway, capacity at
The Western Section of the East West Link will deliver Melbourne’s second river crossing
Melbourne Rail Link will give each train line its own dedicated path within the network
Swanson Dock and Webb Dock will be reached in the next 10 to 15 years, by which time the state will need a second port.
Hastings offers a number of advantages as the state’s second container port.
As well as being a natural deepwater port with a large landside area zoned for port use, Hastings has been servicing the steel, gas and bulk liquid trades for five decades. Developing Hastings also negates the need for another round of dredging in Port Phillip Bay, a prospect that attaches a high economic and environmental cost.
The expansion of Hastings also offers the opportunity to develop a more extensive warehousing and logistics industry in Melbourne’s south-east, closer to the city’s demographic centre. Since the construction of the Western Ring Road in the 1990s concentrated warehousing in the west, the West Gate Bridge has borne the brunt of containers transported westward for unpacking, and eastward as loose product.
Warehousing is a very mobile industry that will relocate to where it can operate most efficiently. By attracting warehousing to the east, an expanded Hastings will rebalance the metropolitan freight flows of import and export goods.
At its peak, the Port of Hastings is estimated to cater for nine million 20-foot equivalent containers by 2050 – more than three times the Port of Melbourne’s current throughput.
Our state is growing fast – in population, in the scale of the economy and in the freight task.
The challenge facing Victoria is to sustainably accommodate this dramatic growth.
Through some tough decisions on the expenditure side of the balance sheet, we’ve been able to maintain spending on infrastructure, despite the considerable challenges on the revenue side.
We are delivering a record spend on infrastructure, while at the same time delivering an operating surplus and keeping borrowings at reasonable levels – and we’ve only been able to do this through a combination of tough decisions and responsible economic management.
Our multi-billion-dollar investment is recognition that we have to keep ahead of the growth curve if we’re to maintain the state’s business and liveability edge.
A key component of the Melbourne Rail Link is a rail line to Melbourne Airport
