Address to Infrastructure Partnerships Australia Annual Infrastructure Leaders Forum

E&OE

MICHAEL MCCORMACK:

… I always encourage people to be part of the Chamber of Commerce because they are certainly, great drivers of our economy and when it comes to our economy, when it comes to the infrastructure, chambers of commerce, be they small town chambers of commerce and advancement societies and progress associations, right up to the state body and the federal body run by James Pearson – they’re the sorts of organisations that we need to get really actively involved in the political discussion, in the discussions our nation needs to have about what infrastructure people would expect and indeed deserve.

I am the Minister for Infrastructure, Transport and just lately, after the latest changes – Regional Development. And I’m very proud of those portfolios; I’m very proud to be a part of Government which has, as you know, the future of these sectors front and centre of everything that we do as far as policy making is concerned. Infrastructure supports economic activity and efficiency, liveability and certainly the productivity capacity of our communities - the connector between people and markets, and the safety of our citizens. On our Australian roads last year, 1,227 people sadly lost their lives and 35,000 people were injured. Those figures are way too high and we should always want to make sure that whatever infrastructure we put in place, it’s mindful of getting people home, getting people to work, getting people from point A to B, wherever they want to be, to where they want to go, sooner and safer. And we’re taking a leadership role in infrastructure, investment and reform, those sorts of things, not just road safety but making sure that we’re building things that we need to – whether its ports, whether its rail, whatever the case is – to make sure that we get better outcomes for our industries, for our [indistinct], for our farmers, for our small businesses and for our communities.

I welcome the input from organisations such as Infrastructure Partnerships Australia, who help guide thinking on future developments. We’re focused on getting more from our infrastructure investment dollar, the taxpayers’ dollar, and so we need to make sure that we can get maximum value for money, maximum bang for buck. Indeed we need better integration between our infrastructure needs and in planning, especially in and around the urban centres. We’re becoming a more informed investor and having a say in where and how and why taxpayers’ funds are invested, and we’re encouraging those who are best placed and have the skills to fund and deliver the infrastructure we need, especially the private sector and capitalising on technology advances. And that’s why the discussions that we have at forums such as this are so important, that’s why organisations such as the organisation running this particular forum is also so critical to our thinking and to the way that we put into plan the vision that we have.

There are developments, rapid developments in our Asian region and around the world which continue to challenge our competitors; and the capacity of nations to respond to their infrastructure needs is often marked on [indistinct] targets and this is the important measure for the governments to consider, because we know that infrastructure is essential to boost our productivity capacity, our development capacity and better connect us to international markets. Of course, we’ve had great success in recent times – Scott Morrison, one of his first jobs as new Prime Minister was to go and forge better trade relations with Indonesia,  to sign a deal that builds on a recent signing with the Trans-Pacific Partnership-11. That’s a $13 trillion opportunity for Australian businesses, Australian farmers, Australian markets. But also the free trade agreements we’ve got with Peru, signed earlier this year; with South Korea, China and Japan - they are enabling our businesses, our farmers to be able to compete very well on a global stage because we’re geographically best placed to do just that - and the important thing is, we need the infrastructure to be able to capitalise on those markets.

We know that to be successful, we need to work in partnership with industry and as a Federal Government, as a Commonwealth Government in partnership with state and local governments. Local government level – that’s where it all starts, and we should never ever underplay the significance that our local councils, those people that are very coalface of interaction between people and communities and Government - that’s where it all starts and we should never forget that. And with this in mind, the Government is not going to ignore the chorus from industry for a better approach. Industries said we need certainty, we need consistency of work so we can grow our businesses and keep our skilled personnel employed. We have future projects to plan and we know how to invest for the future. That’s industry. Government doesn’t always share those same ideals when we get bogged down sometimes in bureaucracy, we get bogged down with politicking of the day; we need to make sure that we’re in train, in tune with industry.  And this Government is providing that certainty. This Government is industry focussed, we’re jobs focussed, we’re future focussed. So today, put simply, I’ll talk about how we’re supporting you and about what the informed investor is. This concept of course has multiple leanings; you’ve heard us say that we’re no longer an ATM for the states - I’ve said it often - but its also about knowing that the industry also knows that we’re investing taxpayer funds. We need to make sure there is a value for the dollars. We made a major shift in the way the Australian Government invests to support industry. We’re committed, as I said, to a nationwide $75 billion decade-long infrastructure pipeline. In the 2018/19 budget we invested an addition $24.5 billion in new infrastructure projects; our pipeline of projects looks out over 10 years. As I said: That planning, that vision, that future focus…we’ve made this commitment to create certainty for industry. And we’re conscious of the fact that investment of that nature does take planning and does take vision and that’s where we need industry participation to tell us what we should be doing and how we should be doing it. Of course, there’s 600 major projects at the moment and more than 24,000 smaller projects have been delivered, are being delivered, have been committed or are under construction; made possible by us focussing on what is needed and taking on board that industry advice. And it proves the point that we cannot deliver up all the projects at once and that’s why we’re focused now over a 10-year period.

An ‘informed investor’ means that we’re smoothing out; that the boom and bust construction cycle has evened out, there’s phasing in, there’s consistency, continuity and once again, that word – an all-important word – certainty. We know that it’s important to have an eye to market capacity. And the other thing too is that I do want to work with State Governments to make sure that we do roll out the infrastructure where we need it. I don’t care what colour they might be as long as we get the infrastructure pipeline rolled out and in a timely fashion. Solving those intergovernmental agreements and making sure we get on with the job - that’s what people expect us to do in a bipartisan level, in a bipartisan way, and making sure that though we might be the Liberal-Nationals Government in Canberra, are working for all Australia…that no matter who might be in Government at a particular state level, we can get on with the job of working with them to deliver the other sorts of projects that we should be doing. And right now in Sydney, Melbourne, Brisbane, and Perth, there’s an enormous amount of infrastructure. But you look at the other capitals as well, we’re getting on with the job of doing just that. And certainly, I was very, very pleased to stand with Stephen Marshall, the South Australian Premier and Stephan Knoll on the North-South Corridor there just the other day, looking at what we’ve done but more importantly, talking about what we need to get on with and do for Adelaide and the South Australian State more generally.

Through the pipeline, we’re investing in projects at differing scale. from mega urban rail projects such as the long-awaited Melbourne Airport rail link - I’m delighted to hear about private sector investment and the encouragement in that regard this week, too. Western Sydney Rail, METRONET in Perth, upgrades on regional freight corridors through our new Roads of Strategic Importance Initiative, and of course, the $9.3 billion investment that we’ve committed to Inland Rail connecting 1,700 kilometres, that a corridor of commerce between Melbourne and Brisbane – We’re getting on with the job of making sure that that is nation-building infrastructure, not just for the areas between Melbourne and Brisbane, but indeed, our entire nation because when you build  that sort of nation-building infrastructure, everybody benefits, not just the states through which it goes.

It’s providing opportunities also for all areas of the construction infrastructure sector to benefit from this investment. And booming infrastructure work has pushed the number of cranes I’m delighted to read this week across Australia’s skylines, to a new high of 735, more than all of the US according to the latest RLB Crane Index. And in Melbourne, there’s a record 192 cranes over the skyline and in Sydney, that number is about 320. They’re impressive numbers. It shows that it’s not only Government getting on with the job but there’s confidence in the private sector, and that’s perhaps even more important because we need to have people backing themselves. We need to have large and small businesses alike backing themselves, and when they back themselves, obviously we’re getting behind and backing them too with a record low tax rates, the lowest the small business tax rate has been in 78 years, but making sure there’s the confidence, the certainty, to invest and to go forward. The 2018−19 budget pipeline provides for the next tranche of major projects but even we realise that that’s not enough and so that’s why we’ve also committed a quarter of a billion dollars to a new Major Project Business Case Fund. The Business Case Fund will ensure that as the pipeline projects are built, the next wave of priority projects are being planned and built That’s the key to that matter I’ve talked about earlier – that rolling investment approach.

Now, we’ve heard from industry that we need to consider the long-term development of the industry, ensuring that procurement and tendering practices are competitive in delivering value to taxpayers and level the playing field for the tier-two, tier-three companies as well as contractors through the supply chain. That’s of critical importance and I know each and every one of you would know that and understand it as well. The Australian Government generally does not have a direct role in procurement – that’s also largely the responsibility of states – but national leadership demands greater interest in ensuring the tendering processes are efficient, cost-effective, and flexible; and promote something that we are very keen on, something that the Prime Minister Scott Morrison is absolutely committed to, and that is competition in the market.

The majority of the Infrastructure Investment Program is delivered to states and territories through the National Partnership Agreement on Land Transport Infrastructure. Under the NPA, all projects receiving more than $20 million in Australian Government funding require local industry participation plans. So that’s critical, certainly when we want to make sure that local jobs are going to local projects, looking at local contractors, and local people doing them. This policy aims to ensure full, fair, and reasonable opportunity for Australian businesses to complete the work, and that’s really critical, particularly in the Western Sydney Airport project, and we’ve made sure that that’s happened. And as I said investment in transport infrastructure is providing certainty for industry that there is work ahead. It’s maximising the benefits of the investment. It’s making sure that we get on with the job of rolling out that infrastructure pipeline.

Now, if we are being an informed investor, the Commonwealth needs to be involved earlier in decision-making processes to best influence the desired social, and economic returns on investment. We need expert advice to inform that investment strategy. So we established Infrastructure Australia as an independent body and tasked it with maintaining the national infrastructure priority list and providing assessments of major project business cases. IA’s Infrastructure Priority List was a major input into the development of the project pipeline of major business infrastructure with the rollout plan as we announced it in the Budget. In fact, 85 per cent of that pipeline were identified as high priorities or priorities on the Priority list – a lot of priorities there – published in March. I compliment and congratulate IA for the work that it has been doing. We need to pick the right projects and then plan, design, and invest to make sure that the project maximises its benefits, whether it’d be improved safety, reduced congestion - and that’s, I appreciate, a very big topic for anybody who lives in a capital city. We’ve invested $1 billion in the budget into just that: breaking through some of that congestion. We’ve got a lot of work to do. We’ve just made Alan Tudge the Minister for basically busting congestion as well as urban infrastructure projects and population. And it’s really important we have population as a portfolio on its own standing alongside obviously urban infrastructure and congestion busting, because it’s so critical that we make sure that the population is – as best as we can – evenly distributed so that we can maximise those infrastructure projects.

Now, over recent years the Government has undertaken numerous initiatives to encourage and support wider use of innovative financing. We’re interested in using alternative funding mechanisms, such as equity where appropriate, but we continue to recognise that financing should not drive investment decisions, not alone.  When determining how best to invest in a project, the Government considers a number of factors, including the best way to manage risk and how to deliver value for money for those people who give us the money to spend, and they’re the taxpayers as are each and every one of you. Commonwealth equity investments recognise that the Federal Government takes a longer-term view to investments than perhaps the private sector does. And that’s certainly the case for Western Sydney Airport.

I mentioned earlier, the Inland Rail, earlier. The businesses I speak with don’t care if the Government’s investing in Inland Rail through an equity contribution or as a grant; they just want to see it done. What they care about is the Government funding real construction, getting on with the job, the job of delivering 600 tonnes of steel at a little place called Peak Hill in Central Western New South Wales, earlier this year. We’ve just had the Narromine-Parkes section, the environmental impact statements ticked off on and work is beginning. It’s going to be a marvellous project, it’s just going to bring such rewards and such investment opportunities certainly for regional sectors.

The establishment of the Infrastructure Project and Financing Agency has strengthened our ability to maximise the use of innovative funding measures. Now, IPFA has been in operation for around a year. I know that prior to IPFA’s creation there was a misconception from some in the industry that IPFA would be competing in the market as a financier. I hope that a year on those fears have been laid to rest. This approach of better utilising innovative financing and funding mechanisms delivers better value for taxpayers and certainly under the leadership of chief executive officer Leilani Frew – who I believe is here today – IPFA has delivered milestone achievements on a number of nationally significant projects. I look forward to continuing to work with Leilani and her dedicated team to making sure IPFA ticks off on its KPIs and does just that, provides specialist PPP expertise through conducting the market sounding for such things as intermodal terminals. IPFA is supporting the negotiations process for the Western Sydney City Deal with the New South Wales Government. There’s so much that’s going to be done.

But of course, all organisations – either Government-backed or not – need to make sure that we do make consultation with all stakeholders; whether it’s private, whether it’s public, we need to make sure that stakeholders are engaged, that they’re fully aware of what’s happening and the investment opportunities are taken to maximise benefits for ultimately the customers who will use those particular infrastructure projects.

The Government understands its responsibilities in ensuring the whole construction industry benefits from the opportunities that we’re helping to create. It’s not old school industry policy; it’s about the Australian Government supporting the development of expertise and experience in our construction market to continue to be able to bid for work.

And it’s exciting times. Forums such as this, such as the deliberations and the decisions that you will take and make today, help form our framework for what we need to do. And of course, I can stand here as the Infrastructure, as the Transport and the Regional Development Minister and talk to you, but it’s also important that I listen from people such as Leilani, from people such as Adrian and certainly take on board those soundings with a better view, with a greater view, with a more widely-held  view from public perception about what we need to do as a Government to better serve the people who vote us in, the people who even don’t vote us in, those people who don’t vote for us - but we need to also make sure that we have value for money for our taxpayers, that we have those sorts of road projects, those sorts of rail projects, and indeed in the aviation sector, the sorts of investments that we make are what people need, want, expect, and most of all deserve so that we can get home sooner and safer, so that we can make the right financing decisions, so that we can take on board financing help by the private sector and that we can get on with the job of building a better Australia.

Thank you very much, ladies and gentlemen.