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Infrastructure and Transport

Estimates & Committees
Scott Ludlam 31 May 2011

Rural and Regional Affairs Committee   Thrusday 26 May 2011

Senator LUDLAM: I was expecting to put some of these to Infrastructure Australia, so you might want to help with a bit of traffic management and I can boot some of them off to Mr Deegan on notice.

Mr Mrdak: Certainly. What were the questions in relation to?

Senator LUDLAM: To Infrastructure Australia. I know you tend to deal with the consequences of their decisions rather than the decisions themselves so, if I stray into their territory, you can let me know. There are some fairly major budget and policy announcements in this space that are not necessarily reflected by budget commitments in a major way yet but that point to the direction that the government seems to be heading. IA has increased funding in their role, including reviews of regional infrastructure plans; the work that the major cities produce that Minister Albanese released last week-those are ones that I can think of; the COAG Reform Council, doing work on city planning and so on-all of these things that relate to the way that infrastructure is invested in and funded in Australia. Can you tell us specifically what that means for your portfolio? What are the most significant changes, from your point of view, from the last time we were here, or 12 months ago?

Mr Mrdak: You are absolutely right: these are quite fundamental direction-setting decisions that the government has announced in the budget this year. They continue a strong direction that this government has had in place since 2007: firstly, investment in public transport and also urban investment, and also a strong direction changer in terms of federal government engagement in planning and investment in our urban areas. There are three categories of decisions which were announced in the budget. The first is to improve the capability and capacity of Infrastructure Australia to provide advice on priority investments, hence the additional resourcing. Also, as part of that package, transparency around the Infrastructure Australian processes in terms of investment decision advice, as well as a role we will take on, which is publishing a national construction schedule, which shows all of the investment that is taking place by governments across Australia to give some certainty and direction for private sector investment, and a range of special tax provisions, which will be included in the future to encourage investment by the private sector in infrastructure investment, which is in projects which have been deemed by Infrastructure Australia to be national priorities. There is that whole allocation process of decision making and allocation of resources through the Infrastructure Australia process and also incentives for private investment; that is one component of the budget.

The second, as you have outlined, is the national urban policy, which sets out direction setting in terms of how we better integrate land use planning and investment decisions, including how the Commonwealth guides its future investments, in terms of both nation-building and other Commonwealth programs, to try to get a much better alignment between land use planning and the like. The third component is the fact that, with the COAG Reform Council, the Commonwealth has made clear that future investment decisions in our urban areas will be dependent on the COAG Reform Council findings in relation to the state plans meeting the national criteria, which is a more direct relationship between what we see is improved planning outcomes and Commonwealth investment decisions.
In those areas you have a much clearer delineation of Commonwealth future investment directions. The key part of the national urban policy is setting out some clear objectives and principles of what the outcomes the Commonwealth wants to see in urban areas, and to which it will in the future much more closely tie its investment decisions; a continuation of a very strong Commonwealth decision to continue to fund urban infrastructure and public transport; and finally an improved transparency and allocative process around the Infrastructure Australia advice, as well as incentives for private sector investment. Quite significant direction setting and investment decisions have been announced in this budget.

Senator LUDLAM: The fourth one I should have mentioned was that we have got a national freight strategy that we did not have this time last year, which presumably will help guide some of that decision making as well.

Mr Mrdak: That is correct. Infrastructure Australia current has a draft document which has been out since February. They are now getting comments in on that. Mr Deegan, who was here earlier today, outlined that the intention is for the Infrastructure Australia Council to consider that in July with a view to bringing that forward to the Council of Australian Governments later this year.

Senator LUDLAM: I might just check with the chair whether we are able to keep Mr Mrdak until shortly after one?

Mr Mrdak: Senator, you get me for the whole two days.

Senator LUDLAM: We will get you for two full days.

CHAIR: Hang on, sorry, I have missed something here. Did you want to run something-

Senator LUDLAM: No, I am just checking to see whether we can go after one o'clock.

CHAIR: Okay.

Senator LUDLAM: That is our lunch break, but you are going to be back-it will be the same folk here in room, all right.

Mr Mrdak: Nation building, I think, is scheduled to run after lunch.

CHAIR: We will just stop for a second. That is what I was having a conversation about with Senator Williams.

Senator LUDLAM: I have got quite a bit, and Senator Siewert has too.

CHAIR: You have got some as well?

Senator SIEWERT: I have got a short one.

CHAIR: I will tell you what I am planning with my colleagues, if there is the possibility of, with the blessing of Hansard and broadcasting, if we go into the lunch break with the possibility of an extra, say, 10 minutes and get it all cleaned up, then we can let the officers go and then bring back surface transport policy. That goes on how long your questions are, Paul, and also Senator Williams probably has about an extra 10 minutes.

Senator WILLIAMS: Might be 10 minutes changer in terms of federal government engagement in planning and investment in our urban areas. There are three categories of decisions which were announced in the budget. The first is to improve the capability and capacity of Infrastructure Australia to provide advice on priority investments, hence the additional resourcing. Also, as part of that package, transparency around the Infrastructure Australian processes in terms of investment decision advice, as well as a role we will take on, which is publishing a national construction schedule, which shows all of the investment that is taking place by governments across Australia to give some certainty and direction for private sector investment, and a range of special tax provisions, which will be included in the future to encourage investment by the private sector in infrastructure investment, which is in projects which have been deemed by Infrastructure Australia to be national priorities. There is that whole allocation process of decision making and allocation of resources through the Infrastructure Australia process and also incentives for private investment; that is one component of the budget.

The second, as you have outlined, is the national urban policy, which sets out direction setting in terms of how we better integrate land use planning and investment decisions, including how the Commonwealth guides its future investments, in terms of both nation-building and other Commonwealth programs, to try to get a much better alignment between land use planning and the like. The third component is the fact that, with the COAG Reform Council, the Commonwealth has made clear that future investment decisions in our urban areas will be dependent on the COAG Reform Council findings in relation to the state plans meeting the national criteria, which is a more direct relationship between what we see is improved planning outcomes and Commonwealth investment decisions.

In those areas you have a much clearer delineation of Commonwealth future investment directions. The key part of the national urban policy is setting out some clear objectives and principles of what the outcomes the Commonwealth wants to see in urban areas, and to which it will in the future much more closely tie its investment decisions; a continuation of a very strong Commonwealth decision to continue to fund urban infrastructure and public transport; and finally an improved transparency and allocative process around the Infrastructure Australia advice, as well as incentives for private sector investment. Quite significant direction setting and investment decisions have been announced in this budget.

Senator LUDLAM: The fourth one I should have mentioned was that we have got a national freight strategy that we did not have this time last year, which presumably will help guide some of that decision making as well.

Mr Mrdak: That is correct. Infrastructure Australia current has a draft document which has been out since February. They are now getting comments in on that. Mr Deegan, who was here earlier today, outlined that the intention is for the Infrastructure Australia Council to consider that in July with a view to bringing that forward to the Council of Australian Governments later this year.

Senator LUDLAM: I might just check with the chair whether we are able to keep Mr Mrdak until shortly after one?

Mr Mrdak: Senator, you get me for the whole two days.

Senator LUDLAM: We will get you for two full days.

CHAIR: Hang on, sorry, I have missed something here. Did you want to run something-

Senator LUDLAM: No, I am just checking to see whether we can go after one o'clock.

CHAIR: Okay.

Senator LUDLAM: That is our lunch break, but you are going to be back-it will be the same folk here in room, all right.

Mr Mrdak: Nation building, I think, is scheduled to run after lunch.

CHAIR: We will just stop for a second. That is what I was having a conversation about with Senator Williams.

Senator LUDLAM: I have got quite a bit, and Senator Siewert has too.

CHAIR: You have got some as well?

Senator SIEWERT: I have got a short one.

CHAIR: I will tell you what I am planning with my colleagues, if there is the possibility of, with the blessing of Hansard and broadcasting, if we go into the lunch break with the possibility of an extra, say, 10 minutes and get it all cleaned up, then we can let the officers go and then bring back surface transport policy. That goes on how long your questions are, Paul, and also Senator Williams probably has about an extra 10 minutes.

Senator WILLIAMS: Might be 10 minutes

Senator LUDLAM: I have a couple of minutes more and then I will let everybody go to lunch. I am wondering the degree to which I can trespass into Infrastructure Australia's area. Can I ask you questions about the Building Australia Fund?

Mr Mrdak: Yes.

Senator LUDLAM: Can you tell us what the balance is on that fund at the moment?

Mr Jaggers: I understand that the uncommitted balance is $1,516 billion. The data I have is as at 31 March this year.

Senator LUDLAM: Budget paper No. 2 says, 'Nation Building now includes $7.6 billion in transport from the Building Australia Fund.'

Mr Mrdak: That is right.

Senator LUDLAM: That is already committed?

Mr Mrdak: They are commitments that were made in the 2009 budget.

Senator LUDLAM: I am wondering whether I am able to ask you folk, now that IA have done their bit, the decisions have been made, can I ask you about progress on rollout of some of those projects?

Mr Mrdak: Certainly, happy to take you through those.

Senator LUDLAM: I am going to concentrate on WA for a couple of minutes: the Great Eastern Highway, I think there is a duplication there. Can you tell us where that is up to?

Mr Jaggers: Can I just clarify: were you looking at Building Australia Fund projects or were you looking more broadly at projects funded from the Nation Building Program?

Senator LUDLAM: Yes, I think I should do that, yes, more broadly. You have given me the bank balance, so that is fine, but anything that comes within your domain, no matter which bucket it came out of.

Mr Jaggers: The Great Eastern Highway, certainly.

Senator LUDLAM: Yes.

Mr Jaggers: The Great Eastern Highway upgrade project is underway; planning and land acquisition has been occurring and preconstruction work has started, with lane construction work to commence in mid-July this year.

Senator LUDLAM: When is the estimated completion of that?

Mr Jaggers: Late 2013.

Senator LUDLAM: I understand that we might be coming back after lunch to continue with this.

CHAIR: We will.

Senator LUDLAM: I will leave it there if you like, and apologies we have got to keep you folk back a little way.

CHAIR: Thank you, Senator Ludlam. It is one o'clock, and in continuation at two o'clock Senator Ludlam. The committee shall suspend.

Senator LUDLAM: I will pick up where we left off. We were discussing a couple of the Western Australian infrastructure projects that you are now administering the rollout of the funding for. Can you step us through the biggest picture items in your budget? We started with the Great Eastern Highway. You have given us some detail on that. What else is going on at the moment?

Mr Jaggers: The Commonwealth committed $280 million to the Great Eastern Highway project, which is under way with land acquisition and preliminary works. That project is about expanding the Great Eastern Highway from four lanes to six lanes and putting in dedicated bus lanes, a bike path, as I understand it, and prioritised signals for buses. That project will start main construction in July, but it is already well under way. The other key projects around the Great Eastern Highway are the Roe Highway interchange. That project is well and truly under construction. Also, as part of the Gateway WA project, there are a number of projects in planning at the moment, including the Tonkin Highway south of the Great Eastern Highway. Senator, is there a particular project you wanted us to give you the details of?

Senator LUDLAM: No, I am just making sure we are catching the major ones. My understanding of the Great Eastern Highway extension was it was not to have a dedicated bus lane at all. Has that project changed significantly since the last time I asked about it? There were to be places where buses could pull off and get back into the run of traffic, but there was not going to be a dedicated transit lane, as far as I am aware.

Mr Pittar: My understanding of the project is that buses have priority at signalised intersections. I think you are correct; there is not a dedicated bus lane. They do get priority treatment at intersections. My understanding is that the project does involve pedestrian paths and bike paths as well.

Senator LUDLAM: How is bus priority going to work at intersections if they are in the run of traffic? Do they just push a button and the lights change?

Mr Jaggers: There is a dedicated bus lane at the lights.

Mr Mrdak: That is not unusual. You see a lot of instances of the bus having a lane and the traffic lights providing for the buses to get an early signal to move forward, which gets them ahead of the traffic stream and gives them priority.

Senator LUDLAM: Yes, I have seen that. And is there going to be a cycleway going in from end to end at the same time as the expansion? That does not exist at the moment.

Mr Pittar: My understanding is that the project involves a cycleway.

Senator LUDLAM: Was that part of the Western Australian government's application?

Mr Pittar: That is my understanding. It was part of the overall project proposal report that came to us from the Western Australian government.

Senator LUDLAM: I have a couple of regional questions first and then I will return to road funding. The WA government has a proposal for a port at Point Torment in the West Kimberley and Oakajee in Western Australia's midwest. Have either of those been passed onto you out of the Infrastructure Australia process?

Mr Mrdak: No.

Senator LUDLAM: So both of those are still in the assessment phase?

Mr Mrdak: Yes.

Senator LUDLAM: The Northbridge Link sinking of the rail line is in your hands now?

Mr Mrdak: That is correct. The Commonwealth is funding that project, which is now under way.

Senator LUDLAM: Can you tell us, from your point of view, what the budget tells us about how you are disbursing those funds?

Mr Jaggers: The Australian government is contributing $236 million to the Perth City Link project. That funding is within the current program of works. The project is advancing very well. At the moment, I understand they have finalised the tender arrangements for major construction.

Senator LUDLAM: Do you know who the major tenderer is?

Mr Jaggers: Yes, it is John Holland and GHD consortium. They will be rail alliance partner. Construction is expected to commence in September this year.

Senator LUDLAM: When is it scheduled to conclude?

Mr Jaggers: Mid-2014.

Senator LUDLAM: As far as I am aware, this has been spoken about since about 1911. It is going to be great to have that underway and completed. The ministerial statement on the Nation Building Program says:
The Gillard government is rolling out the biggest road construction program since the creation of the national network 40 years ago.

CHAIR: Great, build more roads and create employment.

Senator LUDLAM: This is quickly slipping into satire because I am going to take this conversation in the opposite direction to where the chair would like to go.

CHAIR: Okay, you have the call.

Senator LUDLAM: The minister goes on:
We have almost doubled the roads budget, with three quarters of the funding earmarked for projects in Regional Australia.
That is, about a quarter of the funding earmarked for urban freeways and road projects where it is the largest construction program in 40 years. Is your department familiar with the concept of peak oil?

Mr Mrdak: Yes.

Senator LUDLAM: So what is going on?

Mr Mrdak: In relation to peak oil?

Senator LUDLAM: Yes, in relation to peak oil and the biggest road construction program in 40 years. Is there any contradiction inherent in those two concepts?

Mr Mrdak: I do not believe so. As discussed previously, the Australian government has a very large investment program. Since 2007, the Australian government has made a conscious decision to invest significantly in urban public transport, particularly heavy rail.

Senator LUDLAM: I am going to take to the public transport part of the portfolio soon.

Mr Mrdak: I want to give you quite a comprehensive investment picture.

Senator LUDLAM: I have got that.

Mr Mrdak: I do not believe there is an inherent contradiction in that. The growth of road traffic in Australia and the future demands of road traffic warrant significant investment in our road network.

Senator LUDLAM: Tell us about the future demands. I understand recent growth and it is the future demands part that unfortunately is the collision with the peak oil concept. The future demands are probably delusional.

Mr Mrdak: I do not think that is right.

Senator LUDLAM: Where are we going to be getting our oil from?

Mr Mrdak: For a decision on what alternative fuel sources may be available, a whole range of technological and vehicle investment decisions are taken. I do not think anyone is suggesting that peak oil, if and when it is reached, will reduce demand for private travel. The reality is consumers look to alternative modes of power source for travel.

Senator LUDLAM: No, they will look to public transport. As to your saying 'if and when', the International Energy Agency said the rollover for conventional oil was 2006. We are not having the if-and-when conversation any more.

Mr Mrdak: I do not think that debate is completely closed. Setting that aside, the reality is that we are seeing a massive investment taking place in alternative fuel sources and alternative power sources. We have seen significant investment by the car manufacturers in electric power and fuel-cell technology, all of which will continue to provide private mobility. I do not disagree with you that the future direction will involve a significantly greater use of public transport in Australia. That is a significant part of government's agenda, but I do not think you can simply assume that a move away from traditional fossil fuels will of itself necessitate and lead to a reduction in demand for private vehicle use. Human beings have been remarkably adept at finding alternative power sources. I think you only have to look at periods when there has been oil scarcity or price increases to see the behavioural changes and technological shifts that have taken place. I do not think it is as clear cut as you are pointing out.

Senator LUDLAM: I guess we will get to find out fairly shortly. The library gave us a rough estimate of the roads to rail ratio of spending over the whole 2011-12 budget. Some of that is within your portfolio and I recognise some of it is not. They said it was about $5.3 billion on roads and $1.22 billion on rail, nothing for bike paths although I have just been contradicted by the information provided on Great Eastern Highway.

Mr Mrdak: Certainly on bike paths, as we have discussed, the Commonwealth recently funded a $40 million program.

Senator LUDLAM: The Australian Greens got that into the stimulus package and when that bucket ran dry there was not a dollar left over.

Mr Mrdak: Sorry, the Australian government set up a program and has funded the program and, as we discussed a little earlier, many road projects incorporate active transport pathways.

Senator LUDLAM: I might have been asking the question wrongly in the last couple of sessions. Are you happy with that rough order of magnitude of a $5.3 billion road funding budget?

Mr Mrdak: That is $5.3 billion for the current year?

Senator LUDLAM: Yes, 2011-12 according to the library. They admitted that was a rough estimate because it is difficult to aggregate them across the different places where funding occurs. Is that more or less consistent with what you have?

Mr Mrdak: It is broadly consistent. We would be happy to give you on notice the details of the actual road expansion in 2011-12 vis-a-vis rail.

Senator LUDLAM: I would appreciate that. There are a couple of break-outs I am after which as far as I am aware are not in the budget papers at the moment. The first thing would be: can you break out what fraction of that $5-odd billion on road funding has gone into the cycling infrastructure component?

Mr Mrdak: I will see if we can do that, yes.

Senator LUDLAM: If it is not possible to give us a dollar figure-although I imagine it probably is-then a kilometre figure would be helpful as well.

Mr Mrdak: We will need to seek that detail from the jurisdictions but we will undertake to do that.

Senator LUDLAM: That would be much appreciated. And is a spend of roughly $1.22 billion on rail more or less consistent as well?

Mr Mrdak: In the coming year? Again, I will take that on notice. I think overall the Australian government's current program is around $3.7 billion for rail, but I will take that on notice.

Senator LUDLAM: What I am interested in seeing-and what is very difficult to break out of the transport stats that are published by the Commonwealth and by the states for that matter-is the spending on passenger rail and freight rail where they are different lines. It is very difficult to establish the make-up of that figure. Could you provide that for us as well?

Mr Mrdak: Over the full Nation Building Program?

Senator LUDLAM: Yes, I would appreciate it if that data exists. I presume that it does.

Mr Mrdak: We can do that. The freight rail investment is largely through the Australian Rail Track Corporation, although there are a number of nation-building projects which we have in cities and then the passenger heavy rail system we do under nation building and the light rail. We can give you that information. We will ascertain that.

Senator LUDLAM: That would be great. I understand there is also now a small but increasing fraction in light rail that the Commonwealth is funding as well.

Mr Mrdak: Certainly we are currently funding one significant light rail project, which is the Gold Coast rapid transport project.

Senator LUDLAM: Hopefully you will soon be funding one for Perth as well if we can get the state government to actually ask you for money. That will be for a future session. The well of $40 million that you mentioned for bike paths is dry as far as I am aware. Can you tell us if there is anywhere else where the Commonwealth is spending money at all on cycling?

Mr Mrdak: That was an economic stimulus program. There are projects which we are funding and which I have undertaken to find for you that would incorporate active transport, but that would be done through the existing Nation Building Program for roads and the like.

Senator LUDLAM: If you are just rolling them all in together, firstly, that tells me that you will never be funding a cycleway unless there is a road attached to it, which is pretty poor.

Mr Mrdak: I do not think that has been the experience thus far. The $40 million program funded a number of dedicated bicycle ways which were not linked to roads.

Senator LUDLAM: It did, but that money has gone. That program does not exist any more-

Mr Mrdak: That program has been completed.

Senator LUDLAM: unless we find a way to persuade the government to put some more money in.

Mr Mrdak: You said that we would never do that, but we have.

Senator LUDLAM: You have because that money went into the stimulus package. But as far as the reality exists at the moment, you are not able to describe any cycling infrastructure that is being paid for by the Commonwealth apart from that attached to a freeway somewhere.

Mr Mrdak: Apart from that in that $40 million program and what is attached to it.

Senator LUDLAM: I really want to stop talking about the $40 million program because it is gone. You have just informed us you are spending on the Great Eastern Highway upgrade in Perth. There is cycling infrastructure attached to that. I am happy to acknowledge that that is being paid for. I want to know how much across the whole spend is made up by cycling.

Mr Mrdak: We have undertaken to get that for you.

Senator LUDLAM: Thank you. Can you give us a quick update on the major public transport projects that you are funding at the moment?

Mr Mrdak: Certainly. There are very significant ones. I will get Mr Jaggers and Mr Wood to advise. There are essentially a number. We have talked about the Gold Coast light rail project to which the Commonwealth contributed $365 million. A contract has been awarded to the franchise operator and that is now getting underway.

Senator LUDLAM: That is a great story.

Mr Mrdak: It is a very good urban renewal project. We are also funding two significant heavy rail expansions in Adelaide-Noarlunga to Seaford, and the Gawler electrification. Both of those projects are underway.

Mr Jaggers: Mr Wood will take you through a list of passenger rail projects.

Mr Wood: The Commonwealth currently has committed $7.3 billion worth of urban passenger transport projects.

Senator LUDLAM: Is that over four years?

Mr Wood: That is over the life of the program. As was discussed earlier, that includes the Parramatta to Epping rail link, which goes beyond the forward estimates, so that is $7.3 billion across the life of our programs. There is $291 million for the Noarlunga to Seaford rail extension-that is an extension of approximately five kilometres through the southern suburbs of Adelaide to rapidly expanding suburbs south of Adelaide. There is $293 million to the electrification of the Gawler line to the north of Adelaide-it is the major rail line north of Adelaide. There is $2.1 billion to the Parramatta to Epping rail link, a $20 million contribution for a study of the cross-river rail link in Brisbane, $742 million for the Moreton Bay rail link in Brisbane, $3.2 billion for a regional rail link in Melbourne, $365 million for the Gold Coast light rail link, $236 million for the Perth City Link-the Northbridge proposal you were talking about previously-and $40 million for a study of the Melbourne metro.

Senator LUDLAM: There is not a lot of new stuff there. Does the Commonwealth spend anything at all on behaviour change-TravelSmart-style stuff?

Mr Mrdak: Not in this portfolio.

Senator LUDLAM: In some other portfolio that you are aware of?

Mr Mrdak: I would have to check.

Senator LUDLAM: Strictly speaking that is not infrastructure, but if you would check for us-I have never managed to find a dollar in anybody's portfolio.

Mr Mrdak: We have recently, as part of the national urban policy, announced the new managed motorways program. That provides ITS, which is designed to ameliorate some of the traffic flow issues, but I think you are going to a different type of behaviour change.

 

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