Speech to the Australian Road Forum and Victorian Civil Construction Industry Alliance, Melbourne
27th September 2007
It’s a pleasure to be here today in a forum that understands the urgency and importance of the challenges facing Australia when it comes to transport infrastructure.
No challenge is greater than the need for national leadership and a long term vision that goes beyond the next three year electoral cycle. Auslink has been a good start, delivering a five year funding and planning horizon.
In fact I have been down in Geelong this morning to announce Victoria’s first jointly funded Auslink 2 project under a Rudd Labor government – Stage 4A of the Geelong Ring Road, a $125 million project that will include the Anglesea overpass of the Princes Highway.
When it is finished the Geelong Ring Road will avoid 29 sets of traffic lights and reduce travel time across the city by 60 per cent, easing the frustration of commuters, parents getting kids to school, tradespeople travelling to worksites and truck drivers under pressure to deliver freight on time.
It is one of many projects in our major cities that are desperately needed to get rid of gridlock on our roads and improve transport efficiency.
But it is a drop in the ocean when I look around the nation at the billions of dollars worth of projects that are there to be done.
The truth is we have to take transport planning to a new level in this country.
We need a ten year plan based on proper cost benefit assessments and national priorities. Under a Rudd Labor government, Infrastructure Australia will lay the foundation to deliver that.
Its first priority will be to conduct a national audit of Australia’s infrastructure and produce an Infrastructure Priority List within the first year of the next Parliament. One of Australia’s biggest problems with national infrastructure planning arises from the lack of clear responsibility and accountability for infrastructure provision.
State and Territory governments cannot do everything. Nor can the Federal government. Australian business itself must pull its weight if we are to build a modern, internationally competitive transport system to support Australia’s growing economy over the coming decades.
I think both sides of politics now agree that the role of the national government in transport infrastructure centres around the freight task and the needs of the economy, freeing up State and Territory funds for public transport.
A long term national freight and logistics strategy for the country is essential. But the Howard government has not been able to deliver one or effectively implement transport planning and funding policy that separates freight and people movement. And when it comes to planning there is also a need to look hard at physically separating freight and people movement.
The growth in the freight task means that metropolitan rail networks are increasingly struggling under the weight of demand for passenger and freight paths on limited below rail infrastructure, particularly at common peak times.
As the National Transport Commission says, “Separating freight and passenger rail networks should be considered as part of a national freight plan.”
Under a Rudd Labor government, this will be high on the COAG agenda in the next Parliament. But for the Howard government, the reform process has simply been too hard.
It has been much easier to play the blame game – criticising the States and Territories for eleven long years in an attempt to cover up a complete vacuum when it comes to national leadership. That is where a Rudd Labor government will be different.
Just as it was Labor governments in the 1980s and 1990s that made the tough decisions on reform and delivered a productivity boom for the nation, it will be left to Labor again to lift the reform process out of a decade of stagnation.
Federal Labor will work cooperatively with State and Territory governments to achieve a clear delineation of responsibility for transport infrastructure funding and delivery and it will be linked to national reform agreements.
The link between transport infrastructure and the efficiency and international competitiveness of the nation is too important to ignore the need for reform on this front.
The role of the national government will be clearly centred around economic transport infrastructure and increasing efficiency across the whole transport system.
The role of State and Territory governments will be to invest in public transport systems which are properly integrated with their planning processes for residential development and centres of business, employment and services.
And there is unquestionably a role for the private sector. The M7 in Sydney and Eastlink here in Melbourne show us why. For a $2 billion investment the estimated value of travel time saved by Eastlink is more than $170 million a year. And the time savings from freer flowing arterial roads around Melbourne will deliver a further $250 million every year.
Fuel savings alone are valued at $23 million each year and of course, with those savings come big reductions in greenhouse emissions and the greenhouse intensity of urban transport.
Importantly Eastlink will improve road safety outcomes and apart from the obvious social outcomes the annual value of reduced road accidents is estimated at close to $10 million.
Over the construction period from 2004 to 2008 the project has and will generate about 7500 extra jobs in Victoria for each of those years.
During its operational phase, it will provide for the creation of 6500 extra jobs every year including more than 2000 in the Scoresby corridor.
The magnitude of Eastlink will lead to a $15 billion boost to Victoria’s gross state product over the life of the project.
These are very significant benefits for the state of Victoria.
There is no shortage of projects that could deliver similar results and no shortage of footloose capital looking for investment opportunities.
Not only is superannuation a universal right of all Australian workers, it has proven to be the most important savings vehicle ever put in place by any government of any political persuasion.
The savings in those industry superannuation funds now represent $1 trillion over a period of 15 years and they will be cash-flow positive until at least 2020.
They are going to grow exponentially because of the capacity of well-managed industry funds to make wise investment decisions, not just to the benefit of their own members but to the benefit of the Australian community.
Who owns the privatised airports in Australia at the moment, who is investing in the BOOT schemes and the PPPs, who is investing in the toll roads that are solving the problems of urban congestion in Australia?
It is the industry superannuation schemes put in place as a result of the leadership of the building industry unions and the ACTU back in the 1980s and the 1990s.
The missing ingredient today is the lack of government leadership when it comes to turning projects into reality and putting together commercial deals that deliver fair returns to all the stakeholders, including the community.
Australia now has some of the world leaders in PPPs, like Macquarie Bank and Babcock and Brown, but the reputation of PPP projects is mixed.
One of the reasons for this is that we have not moved fast enough to develop the institutional frameworks and the public service capability to put together robust and transparent projects and commercial arrangements that stack up.
We also have to address tendering and contract management.
In my view, much more can be done to establish true alliances between infrastructure developers and the contracting sector to drive productivity gains.
Such alliances must share risk and reward and build relationships that allow for long term commitment to mutually aligned objectives.
For example relationships that allow for bundling of projects so that developers can retain a construction workforce for follow-on projects.
This would provide certainty of long-term work for civil contractors and that is a shared benefit which has a dollar value.
Better contracting arrangements are particularly important for government infrastructure providers who cannot always recover the costs of construction and who are charged with both the responsible use of taxpayers’ money and the timely delivery of infrastructure to meet community needs.
Infrastructure Australia will be the start of the important process of developing sound institutional frameworks and public sector capability, and this will also be high on the COAG agenda under a Rudd Labor government.
Continuing public and private sector investment in infrastructure projects like Eastlink and the M7 are essential to underpin our future economic growth and too important for us to get PPPs wrong.
The truth is, governments – and the people whose taxes they collect – simply cannot afford to fund the level of infrastructure investment needed for the future without the private sector.
And the projects are there to be done, easing congestion in our major cities, making life easier for ordinary people and at the same time reducing our transport costs and improving productivity in the transport and logistics sector.
We are already among the world leaders in this regard, but in a country like Australia where we are a long way from world markets, where there are long distances between our ports and rural and regional communities, we have to stay at the top of the game.
And good road, rail and port infrastructure is vital to do that.
Take Melbourne – the sooner the channel deepening is done, the better.
Then there is the improvement of the Western Ring Road, increasing capacity and modernising traffic management systems, strengthening the West Gate Bridge to meet growing demand, upgrading rail links between the Dynon freight hub and the Port of Melbourne, and so on.
Likwise, the missing links in Sydney are all there to be done – the dedicated south west freight line is under construction, Enfield and Moorebank intermodal terminals, the M4 East, completion of the orbital linking the M2 and the M7 with the F3, widening the F5 at Campbelltown.
And in Brisbane – the Gateway duplication and its northern and southern linkages, the Trans Apex tunnels.
There should be no argument today about competition between road, rail or shipping.
The best interests of our major cities as a whole must come first.
In closing let me say that Federal Labor welcomes this year’s budget announcement of $22.3 billion for Auslink 2 for the next five year period from 2009 to 2014 to build on the Auslink 1 investment.
With Australia’s freight task set to double by 2020, our most important transport priority for the future is to make intermodalism work and to plan supply chains to take advantage of the different strengths of road, rail and shipping in the freight task.
It is my view that our national transport infrastructure priorities must be focussed on three things:
o Productivity gains in our key export supply chains like the wheat lines and our coal and iron ore rail and ports;
o Integration of our land transport system with air, sea and inland ports, to improve productivity in general freight movement; and
o The easing of urban congestion in our major cities.
With the 2007 election fast approaching, Federal Labor will be developing its own Auslink package, including rail, in consultation with State and Territory governments and the private sector.
And it will be based on the economic priorities outlined above – productivity gains in export supply chains and the general freight task, integrating land transport with ports, and easing urban congestion.
Thank you.