Speech: A national agenda for infrastructure—The projects and policies Australia needs

It's a great pleasure to be invited to present at CEDA's Annual Economic and Political Overview for 2016. The Economic and Political Overview series has been bringing leaders together for this important discussion for over 30 years.

This time has been a period of transformative economic change for Australia. Change that led to greater productivity, jobs and trade growth.

We have maintained a world renowned quality of life and over two decades of uninterrupted economic growth.

Just last month, Australia's population hit 24 million people—approximately 17 years earlier than what was officially predicted by the ABS in 1999.

Australia's population growth now exceeds that of our peers, outstripping countries like the UK, Canada and the US.

By most growth measures, Australia is doing well. While we still face economic risks—like slow global growth—there is little doubt that our nation is well positioned for the future.

By 2031, Asia will represent around two-thirds of the world's middle class population. Our proximity, and the quality of our exports and skills, will provide us with even more opportunities to continue our national success story.

The question is whether we can fully seize the growth opportunities we are being presented with.

Nowhere is this more urgent than in infrastructure.

Considered and well-thought-through infrastructure investment is one of the most effective ways we have to drive our ongoing economic growth.

To ensure we can take advantage of our opportunities we need infrastructure that:

  • Strengthens our global role as an exporter of resources, services and products, with improved networks and gateways that boost connectivity;
  • Meets our needs as a highly urbanised nation, enhancing the liveability of our cities, and
  • Underpins our prospects for sustainable growth, by focusing on resilience and whole-of-life asset management.

I'm afraid to say that currently, despite recent increases in government spending and increased private sector participation, there is a real gap in the overall quality of Australia's infrastructure.

Australia should be in the top 10 nations globally on infrastructure performance, but we are rarely regarded as even top 20 today.

If we keep doing the same thing, our performance will continue to fall behind.

The time has come to implement long-term reform and secure the social and economic benefits that come from good infrastructure.

The Australian Infrastructure Plan

slide showing cover images of Australian Infrastructure Plan Reports

[Click image to view larger slide]

Last month Infrastructure Australia released the first 15 year Australian Infrastructure Plan. The Plan builds off the work we completed in the Australian Infrastructure Audit last year.

It is the roadmap—the agenda for change that Australia needs to perform better in regards to its infrastructure.

The Plan is ambitious, but it is also pragmatic—it explains the change required, but also explains how to make that change happen.

Delivered alongside the Plan is a refreshed Infrastructure Priority List. The List provides clear strategic direction and guidance to decision makers on the infrastructure investments that will underpin Australia's continued prosperity.

Together, the Plan and the List provide the solutions for the nation over the next 15 years.

Both are the result of extensive consultation, filtered through the independent and objective lens of IA's Board.

If we deliver the reforms and priorities outlined in both documents we can capitalise on the economic opportunities from a rapidly growing Asia Pacific; enhance the liveability of our cities and regions; and secure the social and economic benefits of good infrastructure.

It won't be easy, but it will be worth it.

Australia's Infrastructure Future

slide showing projected population of Australian capital cities, 2011-2061

[Click image to view larger slide]

When we released our Australian Infrastructure Audit in 2015 we projected that by 2031 Australia's population would grow to more than 30 million people. Most will live in our four largest cities—Sydney, Melbourne, Brisbane and Perth.

A growing population is undoubtedly a source of economic dynamism.

It provides a larger domestic market for businesses, increases the size of the labour force, and facilitates an injection of new ideas.

But growth also places additional demands on cities, regions and ultimately government budgets.

slide showing key points of growth in congestion as mentioned in speech

[Click image to view larger slide]

The Audit identified that if we fail to act comprehensively to harness and deal with this growth, Australia faces a future of congestion and constraint. The road congestion alone is projected to cost the Australian economy $53 billion by 2031.

This congestion has real world consequences for ordinary people…

Increasing bottlenecks and delays will mean it takes longer for Australians to get to work or home, our goods will take longer to reach ports and shops, and the many services we rely on from infrastructure will decline.

In the Plan we identify that to sustainably meet our projected population growth, we need productive cities and productive regions.

In our capitals, we need to grow up, not out while maintaining and enhancing our world-class liveability standards.

Our cities must move to high frequency mass transit networks with turn-up-and-go services that save people time and money.

Smaller cities and regions need to also play their part and should capitalise on growth for themselves but to also relieve pressure on the larger cities. Better connected regions will facilitate growth and provide people with more opportunities to live and work.

So, how do we ensure that we choose a future of liveable, efficient cities, productive regions, cheaper infrastructure services and sustainable infrastructure?

Governments at all levels will need to be planning for it for the long term.

The Role of the Commonwealth

At the Commonwealth level, the Australian Government currently holds the principal levers to influence population growth and ensuring we capitalise on all its benefits.

It is charged with determining migration policies and has an indirect influence on natural population increases through taxation and social policies.

It is also best placed to provide long-term leadership to other levels of government.

slide showing key points of national population policy as mentioned in speech

[Click image to view larger slide]

That's why we have advocated in the Plan for the delivery of a National Population Policy.

The Policy should:

  • Identify Australia's long-term population pathway over the next 50 years;
  • Identify the requirements to service this level and type of growth; and
  • Outline what role the Australian Government will play in managing these challenges and opportunities.

Once developed, the Policy can be used to inform the development of migration policy by the Australian Government and the development of infrastructure and land-use planning by state and territory governments.

I want to be clear that this is not about advocating for a “big” or “small” Australia. It's about ensuring that we influence our population growth in our best interests and fully capitalise on the potential benefits for the economy and community.

Planning for our future will allow us to shape it.

The Role of the States and Territories 

slide showing key points of long term planning as mentioned in speech

[Click image to view larger slide]

All State and Territory governments will need to create long-term infrastructure plans, for the next 15 years and beyond.

By doing this governments can better plan for changes in demand for infrastructure, identify emerging issues and establish a pipeline of well-conceived infrastructure reforms and investments.

To be effective, this planning should be integrated across different infrastructure sectors and networks, and aligned with broader land use and economic development plans.

In addition to this, governments need to commit to conducting feasibility studies on proposed projects before they commit the capital to building them.

The certainty created by long-term planning and the resulting pipeline of investment, increases the quality and reduces the cost of infrastructure. A well-developed long term plan will limit the influence of short-term thinking by providing decision makers with a robust evidence base from which to identify future infrastructure priorities.

The Investments

Finally, governments at all levels will need to be making specific, well-thought-through investments to ensure that we can build a positive future for Australia.

slide showing key points of infrastructure Priority List as mentioned in speech

[Click image to view larger slide]

That's why alongside the Plan, we released a refreshed Infrastructure Priority List.

Taking the data collected for the Australian Infrastructure Audit and the Northern Australia Audit as the primary evidence base, Infrastructure Australia has undertaken an assessment of our infrastructure gaps and requirements.

And we have also analysed both the challenges and the potential solutions through extensive consultations with all states and territories, industry and the community.

Through this approach we have developed a priority list of 93 nationally significant investment opportunities that all levels of government (and sides of politics) can choose from.

It's a consensus list of transformative projects.

Our proposed future investments will add capacity to our infrastructure networks to make people's lives easier. They will make the drive to work faster and more reliable, make the seat on the train more available or make the water bill more affordable.

These future initiatives also reflect the policy we are advocating for in the Plan.

slide showing photo of managed motorway and map of Sydney road

[Click image to view larger slide]

For instance, to support our growing capital cities we advocate in the Plan for more high-capacity, high-frequency public transport services across all modes.

That's why, in the List, we are proposing world class mass transit metro systems in Sydney, Melbourne and Brisbane. Metro systems like what some of you would have experienced in cities like Paris or London.

We also advocate in the Plan for the greater use of technology to manage and monitor traffic flows by collecting, storing and analysing data on traffic counts, travel times, congestion incidents and faults through sensors at intersections.

So, in the List, we are proposing a series of potential investments in NSW, Victoria and Queensland—the M4 Motorway Upgrade, CityLink-Tullamarine Widening, M80 Western Ring Rd upgrade and the M1 Pacific Motorway Upgrade—all utilising this technology.

As a broader piece of work we are also recommending a Network Optimisation Portfolio that would address congestion issues right around the country by upgrading existing road networks with new technology such as real-time information systems, variable lane control and traffic management centres, among many others.

But, we are not just advocating for investment in our major capital cities. We are also ensuring that we support our fast-growing regions with targeted smart investment that uses what we already have more effectively.

slide showing photos of Northern Adelaide Plains water infrastructure and map of South Australia region

[Click image to view larger slide]

For instance, the Northern Adelaide Plains in South Australia produces approximately one third of South Australia's agriculture, the equivalent of 160,000 tonnes of fresh produce.

And there is growing demand for their product both domestically and overseas, presenting an opportunity to further expand food production. An opportunity only prevented by the availability of natural water.

So, in the List, we are recommending an expansion of the Bolivar Wastewater Treatment Plant to make an additional 20 gigalitres of recycled treated wastewater for use in agriculture. The alternative is to invest hundreds of millions of dollars to update the treatment plant in order to meet stricter environmental standards for wastewater to be released offshore.

By comparison, the project will increase the value of agricultural production in the area by at least $115 million per annum. This is exactly the sort of smart ‘better use’ investment we should be looking at right around the country.

Finally, the Plan also has a heavy emphasis on ensuring we conduct feasibility studies, develop business cases and preserve corridors to ensure that we are able to invest in what's needed today… and for the future.

While successful corridor preservation regimes have existed in the past, this is now rarely the case. Long term corridor preservation is often overlooked in government budgets in preference to funding near-term priorities.

So in the list, we are for example recommending preservation of the corridor for a rail connection to Western Sydney Airport. This will ensure that once the airport grows in capacity that we are able to efficiently and relatively cheaply develop a public transport link to this large piece of Sydney infrastructure.

Similarly, we are recommending the protection of the corridor for a dedicated fuel pipeline to the new airport to ensure we have efficient, safe and cost effective transportation of jet fuel in high volumes.

In addition to this we are recommending protection of the corridors for High Speed Rail on the East Coast and new ring roads around Melbourne and Sydney. The game changing investments of the future.

Market Reform

slide showing key points of funding the infrastructure we need as mentioned in speech

[Click image to view larger slide]

This is just a small sample of the projects and initiatives we are recommending as part of the Plan and the Priority List.

However, if we are to deliver more and better infrastructure to meet our growth potential, we will require more funding, and better use of that funding.

This funding task extends beyond the substantial capital investments associated with new infrastructure, to include the costs of operation, maintenance, renewal and disposal. We will need to find sustainable funding streams.

The way to solve this problem is to reform our existing infrastructure markets.

In Energy, that means:

  • We should transfer remaining legacy publicly owned businesses to private ownership; and
  • Remove unnecessary retail price regulation.

In Telecommunications, that means:

  • We need to complete the rollout of the NBN, and privatise it when it is complete.

In Water, that means:

  • Establishing genuinely independent economic regulation and ultimately transferring metropolitan water utilities to private ownership.

And, in Transport, that means:

  • Routinely exposing public transport services to contestable supply through franchising, and
  • Establishing an inquiry into the existing funding framework for roads, so that we can do away with existing taxes and transition to a fairer user pays model.

These recommendations on market reforms may seem ambitious, but if we are to provide the best outcomes for users, and ensure we can build our new infrastructure and maintain what we have—they will be necessary.

Conclusion

slide showing cover image of Australian Infrastrucutre Plan Priorities and reforms for our nation's future report

[Click image to view larger slide]

So with the release of the Plan and Priority List: we are presenting a whole package that works together: the reforms we need to make, the investments we need to deliver and the mechanisms to deliver both.

The Plan provides the vision to address our infrastructure gaps and ensure Australians have access to infrastructure that supports innovation and secures prosperity. It is a document designed to help solve the problems of today and set us up to meet the challenges of tomorrow.

But the Plan will only be as good as the commitments and leadership that follow. This strategic document must be turned into a well-led and carefully articulated action agenda, across all levels of government.

We have a choice.

A choice between a future of congestion and constraint… with increasing bottlenecks and costly delays.

Or, a future of vibrant and liveable cities, productive regions, affordable infrastructure services and resilient infrastructure.

To me, the choice is clear. Thankyou.