The Hon Andrew Constance MP | New South Wales Minister for Transport and Infrastructure

The Hon Andrew Constance MP

New South Wales Minister for Transport and Infrastructure

Key points:

• At $68.8 billion over the forward estimates, New South Wales is able to fund a record level of infrastructure because of asset and budget reforms. • The high level of committed investment in New South Wales does not yet include the projects funded from the electricity leases. • Strong partnerships with industry and the community sector are an important way to lead and shape the reform discussion. • The enlarged level of infrastructure activity in New South Wales is testing the public sector’s project management capabilities, but leaving a legacy of skilled procurers.

We need to get politics out of infrastructure.

Previously in New South Wales, politics took charge of infrastructure, and the community was left at an enormous disadvantage. Going forward, in New South Wales and all states, major political parties need to be on the same page in relation to infrastructure. This consensus is fundamental to reform.

The poles and wires transaction in New South Wales is important to the community, and critical to the future prosperity of the state. The transaction was prosecuted successfully because the community understands that, through the recycling of capital, the Government is able to invest in more productive infrastructure. The other options were to raise debt or increase taxes to build infrastructure. However, our government chose to put in place mechanisms to recycle capital to start to reshape and rebuild New South Wales, and the results are now starting to show.

The community is witnessing milestone mania in Sydney, with construction milestones achieved for the Sydney Metro Northwest and the International Convention Centre Sydney this week alone. The community is witnessing the Government getting on with building the programme promised to them. New South Wales is a growth state, and the progress is something to be excited about.

As Minister for Transport and Infrastructure, my role is to ensure that we carefully plan our pipeline, and that we deliver our projects on budget and on time.

As a government, we carefully consider the independent advice given to us by Infrastructure NSW and within the State Infrastructure Strategy, which was recently updated. This is an important tool that makes our long-term vision clear.

To give us more visibility across the infrastructure programme, we’re implementing enhanced project assurance across the Government. We’re making sure that the right skills sit within agencies, and that the right

governance structures are in place to manage projects well. The assurance function has become particularly important, allowing us to seek independent advice and expertise to identify risks, which must be addressed before we proceed with key decisions on major projects.

There are currently more than 600 projects – each with an estimated total cost of more than $10 million – underway across the state. Over the forward estimates, the New South Wales infrastructure programme is some $68.6 billion; that is before the $20 billion that is expected to be realised from the poles and wires transaction. The New South Wales State Budget released earlier this year brought forward around $590 million for the planning and development of key Rebuilding NSW projects, to really turbocharge the Rebuilding NSW programme. A key feature of – and the game-changing public transport project within – the Rebuilding NSW plan is the Sydney Metro, which is advancing at a rapid pace. The Sydney Metro project is going to be one of those signature projects that will completely reshape the city. Sydney Metro will provide high-frequency, turn-up-and-go, single-deck, driverless train services

from the north-west sector through Chatswood, and across Sydney Harbour. A separated line through the city will provide new stations at Barangaroo, Martin Place, Pitt Street and Central, and will continue to Bankstown.

Sydney Metro is important because it will increase the capacity of the rail network by 60 per cent across the morning peak, enabling 200 trains to get to the city each morning instead of 120. We are excited about this project because it offers real improvements across the network, and therefore to the quality of life of citizens across the city, who will now be able to see more of their families, and get to work on time.

Congestion is going to cost the state economy $8 billion every year by 2020, and regional communities will also be affected if we don’t do something. The Commonwealth Government should look very closely at supporting public transport, because the impact of congestion on the national economy is potentially huge. We have to improve productivity, and a key way to achieve this is to advance key passenger transport projects in our state capitals.

Another important and visible project being delivered by the New South Wales Government is the CBD and South East Light Rail through George Street. I’m conscious that this project has the ability to impact upon the delivery reputation of this Government, so we’ve formed a strong partnership with the delivering consortium, and we’ve consulted extensively to ensure that the project is delivered in line with community expectations. We’re investing very heavily in a public awareness campaign to ensure that the community is aware of the disruption. I’m confident that when the project is delivered, George Street will become one of the great boulevards of the world.

The developments in Sydney, both planned and underway, are going to create a truly remarkable transformation of the city. We have the new AMP building at Circular Quay, new hotel developments in and around the CBD, and upgrades and redevelopment in and around Wynyard Station, Barangaroo and the International Convention Centre. There are around 96 projects happening across the city at this time.

It’s an extraordinary time for Sydney, and also one that requires careful management. That is why the Government has appointed the CBD Coordinator General to manage the difficulties that the city is going to experience during this challenging construction period. We believe we can make it work.

From 2011 to 2031, Sydney will grow by 1.6 million people. There will be more than 27.5 million journeys occurring every weekday, as well as around 1.6 million freight and commercial trips. That population growth is equivalent to a population bigger than the size of Auckland, so planning has to

be done right, and projects have to be delivered that both address the growth and set us up for the future. Of course, the Government needs to work in partnership with the private sector to be able to do that. The private sector brings a level of innovation and discipline that the Government needs to leverage if we want to deliver the program successfully.

From a regional perspective, $6 billion is earmarked for regional New South Wales from the poles and wires transaction. The agricultural and mining sectors need to be supported by that investment. Regional producers require efficient and reliable access to markets, and regional communities need quality and reliable services. In delivering projects, both in the city and in regional areas, it is important that investments have sound benefit–cost ratios, and provide wider economic benefits.

New South Wales is an exciting place to be because, even by international standards, what is happening here is unprecedented. In the past, from a transport perspective, governments have embarked on one mega project every 10 years or so. At the moment, we are planning or delivering more than 30 high-profile projects across government, as well as the nation’s largest urban road and rail projects. Sydney has not seen this type of infrastructure investment before.

It is also important that we ensure that there is a perpetual cycle of infrastructure investment, which is very much about looking at the mechanisms of infrastructure funding, and extracting better outcomes from the infrastructure that we already have. The Government is spending $1 billion on Sydney’s Rail Future plan, which focuses on improvements to the Western Line. This project considers the intersection of freight and passenger rail, and invites better productivity outcomes and better use of existing transport assets.

We need to look at other reforms, too, including value capture. This is an important concept, and one that we need to really look at more in the future; sharing the profit margin created by our investment in infrastructure, and using this to sustain our infrastructure delivery programme. Another factor that will contribute to sustaining a perpetual infrastructure investment cycle is the relationship between the Commonwealth and the states, and I am focused on working closely with the Federal Government to facilitate and grow infrastructure rollouts.

It’s an exciting time to be the Minister for Transport and Infrastructure, and I look forward to working with my Ministerial colleagues and yourselves to deliver enormous benefits for generations to come.

The Hon Andrew Constance MP New South Wales Minister for Transport and Infrastructure

Andrew Constance was elected to Parliament as the Member for Bega in 2003.

Following the election of the O’Farrell Government in 2011, he was sworn in as the Minister for Ageing and Disability Services, where he championed the person-centred reforms that were necessary steps towards the National Disability Insurance Scheme (NDIS).

In 2013, Mr Constance became the Minister for Finance and Services, with responsibility for many areas across government such as WorkCover, CTP, Sydney Water, Government Property, Department of Finance and Services, Office of State Revenue, Land and Property, and IT.

His reform agenda included the decade of decentralisation, better utilisation of government property and assets, implementing the government’s IT strategy, and involving the private sector in service provision to improve efficiencies and savings to the New South Wales taxpayer.

In April 2014, Mr Constance was sworn in as Treasurer, and added Industrial Relations to his responsibilities the following month. He handed down the 2014–15 State Budget, which delivered increased funding for infrastructure and child protection, and oversaw the scoping study for the ‘poles and wires’ transaction.

Following the election of the Baird Government this year, Mr Constance was sworn in as Minister for Transport and Infrastructure. The Minister oversees some of the biggest infrastructure projects in the country, including Sydney Metro, which will see the construction of a second harbour rail crossing delivering more trains and faster services for the entire city.

ROADS AND MARITIME SERVICES LEADING INNOVATION IN DELIVERY MODEL PARTNERSHIPS

Roads and Maritime Services is an agency operating within Transport for NSW, and is responsible for implementing strategy and delivering customer-focused services in a costeffective manner.

Roads and Maritime Services’ core business is to: • BUILD – delivering roads and maritime infrastructure • MANAGE – optimising customer journeys on our networks • MAINTAIN – maintaining more than $70 billion of New South Wales’s roads and maritime assets.

Roads and Maritime Services’ purpose is in ‘enabling safe and efficient journeys throughout New South Wales’.

Roads and Maritime has an enormous delivery task in the next five years, with an aim to build and maintain some of the country’s largest infrastructure projects.

In June, the New South Wales Government announced a record $7.5 billion investment in roads, maritime and freight infrastructure, which was an increase of $2 billion from last financial year.

The $7.5 billion total includes $4.1 billion for regional New South Wales projects, including fast-tracking the Pacific, Great Western and Newell Highway upgrades; $180 million to ease congestion in the Sydney CBD; and $1.5 billion for maintenance projects.

‘Roads and Maritime has been given a clear mandate from government: deliver a massive and growing program of major road infrastructure improvements on time and on budget,’ Chief Executive Peter Duncan says.

‘To achieve this, we will call on the skills and resources from public and private sector engineering industries.

‘New models and approaches for delivery are already being trialled across the New South Wales infrastructure sector.

‘We have had great success with alliance partnerships on some of the larger and more complex sections of the Pacific Highway upgrade, and we have entered into a delivery partner model for the final 155 kilometres.’

The Pacific Highway upgrade is one of the largest road infrastructure projects in New South Wales and Australia.

The project includes providing a fourlane divided road between Hexham in

Newcastle and the Queensland border by 2020 – weather permitting.

Since 2011, the New South Wales Government has invested an extra $2 billion to the upgrade, with the Australian Government restoring the 80/20 funding split in 2013 (representing a federal contribution of $5.6 billion).

About 397 kilometres (60 per cent) of the 657-kilometre upgrade is now completed, with about 150 kilometres, or the distance of the M1 Motorway from Sydney to Newcastle, currently being built. The remaining sections of two-lane highway, including from Glenugie to Ballina, are being prepared for major work.

The Pacific Highway program office is responsible for overseeing the 657-kilometre upgrade, and is viewed as the benchmark for delivering major infrastructure projects across the state. The office has a strong focus on delivery resulting from a drive to lead a positive legacy.

‘A clear benefit of the program office is that it provides a single point of contact for the general public and key stakeholders, while also offering an integrated and collaborative office tasked with developing and delivering the upgrade program,’ Duncan says.

In order to realise Roads and Maritime’s vision of ‘driving a better highway upgrade’, the program office has adopted a delivery partner model to successfully deliver Australia’s largest regional infrastructure project – the final link in the Pacific Highway upgrade program: Woolgoolga to Ballina.

‘The delivery partner model is based on the approach used to oversee construction of infrastructure for the London Olympics, and supports collaboration and innovation by bringing businesses, workers, consumers and suppliers together,’ says Duncan.

It encourages the best ideas and solutions from the private sector, while also drawing on knowledge to ensure better engineering and design, customer outcomes and public value, including: • greater access to resources and optimising resources from within the public and private sectors • greater flexibility in resource use, to better respond to delays and disruptive events such as flooding • better customer outcomes, through a consistent and coordinated approach • economies of scale, and better access to competitive suppliers and subcontractors • direct engagement of design, management and construction skills to fast-track the upgrade.

‘Using this model, delivery partner Pacific Complete (comprising Laing O’Rourke and Parsons Brinckerhoff) will work closely with the Pacific Highway Office to oversee the project and handle multiple contracts for professional services and building the $4.36 billion upgrade,’ Pacific Highway General Manager Bob Higgins says.

‘Pacific Complete’s role is similar to a managing contractor/project manager role: packaging the work, carrying out the procurement and managing the contractors.

‘Roads and Maritime will remain the proponent and custodian of technical standards and policies, retain the “public face” for the project and make payments to contractors engaged by Pacific Complete.’

Pacific Complete has based its main office in Grafton, adjoining the Pacific Highway program office, with a number of additional satellite offices along the route.

The total project value of the 155-kilometre Woolgoolga to Ballina Upgrade is more than $4 billion, and it is to be delivered by 2020.

‘In the past we have developed partnerships with the private sector to build major infrastructure. With such a large program of work to deliver, we are innovating by establishing partnerships to tap into management knowledge as well,’ Higgins says.

‘The development of the Pacific Highway Delivery Partner model has been built on the advice and collaborative feedback received from an extensive pre-expression-of-interest (EOI) process industry consultation.

‘The delivery of the Pacific Highway program has been paralleled by increasing sophistication in contractual relationships, and has fostered a growing appetite and appreciation for partnership.’

Procurement models used for the upgrade include: • construct only • design and construct • design, construct and maintain • alliance partnerships.

Choosing the right model for delivery includes consideration of key criteria, including: • project size and complexity • industry appetite and market forces • state of the delivery program • availability and cash flow of funding • improved public value for the funding.

Important lessons have been learnt from the London Olympic Delivery Authority experience, such as: • certainty of funding is critical to fostering innovation and partnership • the objectives of the client must be clearly aligned with those of the delivery partner • the role of the client and the delivery partner must be clear and defined, yet complementary • the structure of remuneration and rewards must be designed to add

incentive to the delivery of the project objectives • the selection process for the senior management, and cross-fertilisation and sharing of key staff.

The project objectives are clear: • significantly reduce road crashes and injuries • reduce travel times • reduce freight transport costs • support economic development • engage the community in the delivery of the highway upgrade and consider their issues, interests and needs • deliver the project in accordance with ecologically sustainable development (ESD) principles • manage the upgrade with a commitment to the safety of workers and the community • provide the best value for money • reduce the time frame for delivery of the project.

The contract framework for the Woolgoolga to Ballina delivery partner contains unique features to ensure the smooth collaboration between the Pacific Highway program office and Pacific Complete. The contract framework also aims to maximise the benefits of having an agency and private sector partnership. Some of the features include: • management fee – direct costbased fee • delivery partner margin – incorporating corporate overheads and profit, and ensuring that staff are incentivised and retained • risk allocation, with a commensurate rewards structure based on delivery against key performance indicators (KPIs); Roads and Maritime Services secures principal arranged insurance covering loss and damage to works, along with public liability, while the delivery partner must obtain professional indemnity insurance (importantly, the management fee is not at risk under the proposed framework) • the tenderers have been asked to propose an incentive scheme designed to foster cost-saving and time-saving solutions.

‘We have come a long way in the development of our relationship with private sector partners,’ Duncan says.

‘This awareness has resulted in the development of respect and trust, and an appreciation of the skills and expertise available to us from private sector infrastructure providers.

‘This growth and strengthening of partnerships has led to the implementation of a new partnership approach, which was

successfully used in the delivery of the London Olympic Games by the Olympic Delivery Authority.

‘In 1987, special legislation was enacted for the first major private sector partnership, with Transfield Kumagai Joint Venture to design, build and operate the Sydney Harbour Tunnel. Since then, we have developed our appreciation for the role of private sector expertise.

‘In time, we have developed partnerships that have assisted our in-house teams to define scope, achieve cost savings through value engineering, and help with tender evaluation and project delivery.

‘We started with the contracting of construction packages. We moved to design and construct projects. We then developed design, construct and maintain projects.

‘For motorway expansions, we led Australia in build, own, operate, transfer (BOOT) contracts with the M4, M5, M2 and Eastern Distributor motorways.’

Roads and Maritime has moved towards increased collaboration with industry, and has developed contracts with equitable risk sharing.

The agency has also moved towards seeking earlier private sector involvement during the procurement process.

‘It is certainly an exciting time to be part of the infrastructure delivery task in New South Wales,’ Duncan says.

‘The next few years will provide both challenges and innovative solutions as we meet the government’s mandate.’

Pacific Highway upgrade

• Sixty per cent of the highway has been duplicated to four lanes between Hexham and the Queensland border. • About 150 kilometres of highway is currently being built, which is the distance of the M1 motorway from Sydney to

Newcastle. • There are about 3000 workers employed directly on Pacific Highway worksites. • At peak building, there will be 4000 direct jobs and 12,000 indirect jobs on Pacific Highway projects. • More than 2000 nest boxes have been installed along projects currently underway, to minimise impact on native animals. • A total of about 14 million cubic metres of material will be moved as part of building the Woolgoolga to Ballina project. To put that in context, there are about 2500 cubic metres in a standard Olympic-sized swimming pool. • Journey times for light vehicles have been reduced by almost 1.5 hours. • Journey times for heavy vehicles are down by 1.75 hours. • The number of fatalities has been cut by more than half, from the high 50s to the low 20s.

General

The New South Wales road network is 184,859 kilometres, and includes: • 18,000 kilometres of state roads, including 4300 kilometres of national road network • 150 kilometres of privately funded toll roads • 2900 kilometres of regional and local roads • 5200 bridges and major culverts, and 23 tunnels • 4000 traffic signals, and more than 12,000 other road traffic facilities • 5000 square kilometres of enclosed waters • 27,691 square kilometres of coastal waters to 12 nautical miles • 49 commuter wharves • 3418 aids to navigation, including 191 courtesy moorings, on New South Wales waterways.