Paul Fletcher MP

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Speech to launch response to the Australian Infrastructure Plan - ‘Building our future, on good advice’

Portfolio Speeches Thursday, 24 November 2016

It is a pleasure to be here today on the occasion of the release of the Turnbull Government’s response to Infrastructure Australia’s 15 Year Plan.

A little later this morning, the Prime Minister will deliver his Annual Infrastructure Statement to the Parliament, and as part of that statement he will formally respond to the Infrastructure Australia 15 Year Plan.

This morning’s event however is an opportunity to reflect in a little more detail on the work that Infrastructure Australia has done, as well as explain a bit more fully some of our thinking behind the key elements of our response.

Infrastructure Australia does vital work in developing and maintaining the Infrastructure Priority List, which is effectively a central register of potential infrastructure projects which have been assessed as worthy of investment. The Turnbull Government has committed funding towards 14 of the 15 projects on the Infrastructure Priority List.

But another important part of its mandate is to provide independent advice regarding the infrastructure policy challenges and opportunities facing Australia – and to do so with a longer term perspective than may come naturally to politicians caught up in the vagaries of day to day issues.

In the 15 Year Australian Infrastructure Plan, delivered to the government earlier this year, Infrastructure Australia certainly set out a comprehensive agenda of recommendations across a wide range of infrastructure sectors – transport, communications, energy, water and other areas.

There are 78 recommendations relevant to all levels of government – proposing a wide range of reforms to improve the delivery of infrastructure nation-wide. The Turnbull Government’s Response reflects our recognition that reforming how we plan, prioritize and pay for infrastructure is critical to sustainable long term productivity growth.

Of the 78 recommendations made in the Plan, the Australian Government is supporting 69 of them.

This demonstrates that the 15 Year Plan will guide key infrastructure policy directions for the Turnbull Government. Many of these recommendations are reflected in reforms we have already commenced, and as I will outline to you this morning, we are now taking steps to implement a number of others.

The Turnbull Government is certainly pleased with the quality and comprehensiveness of the Plan, and we welcome the fact that it contains a range of innovative and in some cases provocative ideas.

While we have not accepted every recommendation, it is of great value to the government that we have an independent body prepared to offer frank and fearless advice - and that has certainly been the case with this plan. It reflects the expertise and broad perspectives of the board – which collectively has extraordinary experience across many aspects of infrastructure – and the skills of the staff. I do want to particularly acknowledge Chairman Mark Birrell and Chief Executive Phil Davies.

The infrastructure policy debate in Australia – as well as debate about specific projects – benefits considerably from the independent, fact-based work of Infrastructure Australia, as well as the analogous bodies which now exist in a number of states, such as Infrastructure NSW, Infrastructure Victoria and Building Queensland. While decision making must properly remain the province of elected parliamentarians, having high quality independent advice which is publicly available clearly informs the quality of the debate and leads to better decisions.

Five key areas of our response

Let me now turn to the government’s response to the Australian Infrastructure Plan. We have issued a detailed formal response document, but today there are five key areas of our response which I would like to highlight.

Urban Rail Plans

First, to better understand current and future rail needs, the Australian Government will work with state governments to agree urban rail plans for Australia’s five largest cities (including their surrounding regions).

Understanding our growing cities’ capacity to move high volumes of people and freight is fundamental to keeping our cities efficient and liveable.

Our population is projected to increase to around 30 million people by 2030 – 7.4 million more than in 2011, and with 75 per cent of this growth projected to occur in our four largest cities.

Given these facts, it’s clear we have to plan for growth.

This work will include examining global trends and drivers of urban rail (including technology developments and changing demographic patterns) and linkages between rail and urban planning, and its outcomes will better inform Government investment.

The Turnbull Government certainly recognises that extensive work has been done by a number of state governments on these issues. I could mention for example the Perth Transport Plan, issued earlier this year, and of course there are analogous documents around the country.

The intention here is not to re-invent the wheel, but to build on existing work, and reach an agreed position between the Commonwealth and State Governments regarding the way forward for rail in the five big cities (including their surrounding region.)

This work, which addresses several of the recommendations made by Infrastructure Australia, will provide a strong foundation for future rail investment decisions by all levels of government in Australia, as well as the private sector.

Road Reform

Secondly, we are responding to IA’s recommendations regarding heavy vehicle road reform. Federal and State Transport Ministers have endorsed a road map for heavy vehicle road reform, which aims to create a market for the provision and use of heavy vehicle infrastructure. Phase one is already underway, delivering improved transparency around road expenditure, investment and service delivery – through the publication of heavy vehicle infrastructure asset registers and expenditure plans.

However, there is significant room for more reform to provide more efficient and fairer outcomes for both taxpayers and end-users.

The Australian Government will progress next steps for heavy vehicle road reform with states and territories through the development of a forward looking cost base; and a discussion paper to inform consultation on options for an independent price regulator. In advancing this important reform, we will be consulting extensively with the heavy vehicle industry.

The Australian Government agrees with Infrastructure Australia that cost reflective road pricing for light vehicles should be further investigated, which is why the third element of our response relates to IA’s recommendation concerning road user charging for light vehicles. We will undertake a Study, led by an eminent Australian, into the potential benefits and impacts of cost reflective pricing for light vehicles on road users.

The study is expected to commence in 2017 and more information, including who will lead the study, its terms of reference, and work programme, will be announced in due course.

I am particularly keen to have a secretariat for the study which includes state and territory officials as well as staff from both the Department of Infrastructure and Regional Development, and Infrastructure Australia. Pleasingly, as I have discussed this with a range of state and territory Ministers, there has been a positive response.

Let me highlight that we have not accepted IA’s recommendation that government should commit to the full implementation of a light vehicle road charging structure in the next ten years. We think the priority is to have a thorough examination of this issue, so we can assess the costs and benefits.

The government would not make any decision to proceed down this path unless it was satisfied that it would deliver better roads and a fairer system. Moreover, it is not just the federal government that needs to be persuaded of the benefits – it is the state and territory governments as well.

As I have said on many occasions, if we were to move away from the present system under which Australians pay for the use of our roads, towards a system where what we pay is more directly related to the costs of providing the roads we all use, it would be a ten to fifteen-year journey.

Data Collection and Dissemination Plan

The fourth key element of our response will involve a focus on obtaining more and better data in the transport and infrastructure space, through a data collection and dissemination plan.

My Department will work with Data 61, with the ABS and states and territories, end-users and the private sector to make sure our analysis and investment decision-making is underpinned by a robust evidence base.

The Plan will make data publicly available by default (while protecting privacy and commercial interests) to encourage innovation – particularly to improve information for customers and support private investment decisions, by better identifying how well our transport services are performing and where improvements are needed.

As part of the plan we aim to collect and publicly release data on the performance of transport services, including freight and passenger, so that we can target improvements to these essential services.

Freight and supply chain strategy

The final key element of our response is that the Australian Government will develop a long-term national freight and supply strategy for reform and investment. To support this, the Government will undertake an independent inquiry to analyse how best to lift the productivity and efficiency of Australia’s freight and supply chain infrastructure.

The inquiry will focus on major container ports, airports and intermodal terminals. It will examine regulatory and investment barriers, as well as opportunities to improve capacity (and reduce the cost of transporting goods) through these areas.

This builds on the Government’s ongoing investment in improving Australia’s freight and supply chain infrastructure. For example, the Australian Government has now committed a total of $893.7 million to the Inland Rail project, which will reduce freight transit times between Brisbane and Melbourne by up to ten hours. We are also progressing the Moorebank Intermodal Terminal in Sydney which, when fully developed, is expected to be the largest warehouse and rail terminal precinct in Australia.

Funding and Financing

Let me also comment on the recommendations in the plan concerning funding and financing of infrastructure.

Earlier this year the Government adopted a set of Principles for Innovative Financing. The Principles, released in February 2016, set out expectations for our significant infrastructure investment.

Last week I launched a discussion paper on Using Value Capture to Help Deliver Major Land Transport Infrastructure, and sought feedback from industry and other stakeholders on the ideas set out in the paper.

As the Prime Minister has said many times, the Commonwealth is no longer an ATM, simply handing over grants to state and territory governments for infrastructure with little involvement in how the money is spent. We are determined to get maximum value for every taxpayer dollar we invest, and we will have a say in where and how Commonwealth taxpayers’ funds are invested.

Conclusion

Let me conclude, then, by saying that the Turnbull Government recognises that robust, well targeted investment in major public infrastructure is critical to our country’s long term productivity, and our comprehensive response to the Australian Infrastructure Plan sets out a clear path forward.

Although the response covers communications, energy, water and transport infrastructure, my remarks today have focused largely on transport – where there are significant productivity gains to be made.

In recognition of this, the Australian Government is investing a record $50 billion in land transport infrastructure that is changing and saving lives. Across all infrastructure areas, including the NBN, water infrastructure, regional grants funds and other major project funding our investment totals $80 billion.

I believe our approach is consistent with Infrastructure Australia’s advice.

Australia is enjoying its 26th year of economic expansion, amidst challenging world circumstances. Our decisions on the delivery of key infrastructure can contribute significantly to economic efficiency and growth.

But our success as a nation depends on good advice to inform good decisions.

In the Australian Infrastructure Plan, and in our formal response, I believe we have both.

Thank you.

Authorised by Paul Fletcher MP, Level 2, 280 Pacific Highway Lindfield NSW 2070.

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