Second Reading Speech: Appropriation Bill (No.3) 2017-18, Appropriation Bill (No. 4) 2017-18
I rise today to speak on the Appropriation Bill (No. 3) 2017-18 and the Appropriation Bill (No. 4) 2017-18. I welcome the opportunity to inform the House about the nature of the Turnbull government's commitment to investment in nation-building infrastructure. I want to make three points in my remarks this morning. Firstly, we are seeing unprecedented levels of infrastructure investment by the Commonwealth government. Secondly, this substantial investment is driving economic growth; it's driving investment; it's driving employment outcomes. Thirdly, our program of infrastructure investment reflects key policy priorities of the Turnbull government, including increasing and improving productivity and efficiency in the Australian economy and finding a greater role for private investment and private capital in the infrastructure sector.
Let me turn to the unprecedented levels of infrastructure investment we are presently seeing. In the first budget given by the coalition government after coming to government, we promised that we would invest $50 billion in infrastructure by 2020-21. We are well on track to doing that. Let me take you through the actual spending levels over the past few years. In 2013-14 the total Commonwealth infrastructure spend was some $7.3 billion, in 2014-15 it was $6 billion, in 2015-16 it was almost $6 billion, and in 2016-17 it was more than $9 billion, whereas in 2012-13, the last full year of the previous Labor government, the amount spent on infrastructure by the Commonwealth was $4.5 billion, materially less than the kinds of numbers I've just been quoting.
If we look at the average annual spend on infrastructure across the Rudd-Gillard-Rudd years, the average Commonwealth spend on infrastructure across those years was just over $6 billion. By contrast, since 2013-14, under the coalition government, average Commonwealth infrastructure funding is around $8 billion a year. That is, on the one hand, $6 billion under Labor on average each year and, on the other hand, around $8 billion on average each year under the coalition. So do not be fooled by the ludicrous claims repeatedly made by the member for Grayndler that in some way the Turnbull government is spending less on infrastructure than was spent by the Rudd-Gillard-Rudd government, because the facts say precisely the opposite. The Turnbull government is spending more on infrastructure than the Rudd-Gillard-Rudd government spent and, in fact, we are spending at record levels. In last year's budget we committed that, over the 10 years from 2017-18 to 2026-27, there will be $75 billion in infrastructure funding and financing across grants, equity investment and loan investment. Some of the highlights of that $75 billion spending will include a commitment to spend $10 billion over the next 10 years on the National Rail Program, a $9.4 billion equity investment in the massive Inland Rail project and a $5.3 billion equity investment in Western Sydney Airport.
So it's interesting to note that not only are we spending more—materially more—in absolute terms than the previous Rudd-Gillard-Rudd Labor government; it's also instructive to note that the share of total public infrastructure spending coming from the Commonwealth is materially higher now than it was in the Rudd-Gillard-Rudd years. Under the Rudd-Gillard-Rudd government, 24 per cent of total public infrastructure investment came from the Commonwealth. That figure now stands at 29.9 per cent.
Let me mention some of the major projects and classes of project that are being funded by the Turnbull government. The first class of project is major highways connecting or running from our capital cities. For example, there is a commitment to spend $6.7 billion towards a whole range of projects at various points along the Bruce Highway, which runs approximately 1,700 kilometres from Brisbane to Cairns. We're spending $5.6 billion to upgrade the Pacific Highway between Sydney and Brisbane so that by 2020 there will be four lanes all the way between our largest and third-largest cities.
We have committed $9.4 billion to Inland Rail. That will be an equity injection into the ARTC—the Australian Rail Track Corporation—to build a 2,000-kilometre inland rail route between Melbourne and Brisbane. That will allow rail freight to go between those two cities in 24 hours, much faster than the current times, and, in turn, will make rail freight a more attractive proposition compared to road freight and increase rail's mode share of the freight travelling between Melbourne and Brisbane. That's economically desirable. It's also desirable from a road safety perspective, as we shift some freight, which presently goes in trucks, onto rail.
One of the other major classes of project is the transformational investment we are making to build Western Sydney Airport. Due to be operational by the end of 2026, Western Sydney Airport will give Sydney much-needed additional aviation capacity. According to the joint study into the aviation needs of Sydney, which reported to the previous government in 2012, by 2027 there will be no additional slots available at Kingsford Smith Airport, and by the mid-2030s there will be no additional capacity. So it is vital for Sydney and vital for the nation that we have additional aviation capacity in Sydney, and the Turnbull government is getting on with delivering Western Sydney Airport to meet that objective.
A second benefit of Western Sydney Airport is that it will give the people of the rapidly growing Western Sydney area much better and more convenient access to air travel at an airport located within their community, rather than having to travel all the way across the Sydney metropolitan area to an airport located on the far-eastern fringe of the city. The third benefit of Western Sydney Airport is it will attract businesses and jobs to Western Sydney, an area where another one million people are expected to live over the next 20 years. It will support tens of thousands of jobs—some 11,000 anticipated direct and indirect jobs through the construction phase, and by 2031, five years after operations commence, there are expected to be around 28,000 direct and indirect jobs.
Let me mention just a few of the range of major projects presently underway within our capital cities: the $16.8 billion WestConnex motorway project in Sydney, a transformational project supported by the Turnbull government with a $1.5 billion grant and $2 billion concessional loan; major rail projects in Sydney like Sydney Metro City and Southwest with a $1.7 billion Commonwealth contribution; a $789 million Commonwealth contribution in Perth; the Monash Freeway and the M80 Ring Road in Melbourne, where the combined contribution by the Commonwealth is $1 billion; the enormous North-South Corridor set of projects—three projects, in Adelaide—with a total Commonwealth commitment of over $1.6 billion.
The second point I want to make to the House is that this unprecedented level of infrastructure investment is generating economic growth and creating investment and business opportunities. Interestingly, if you look at Australia's level of transport infrastructure investment and maintenance spending and compare it to other countries in OECD, looking at the 2014 data—which is the most recently published by the OECD—Australia's level of spending at 1.4 per cent of GDP was equal highest in the OECD.
Let me cite a recent report by BIS Oxford Economics which highlights the strong growth in publicly-funded engineering construction. The report says that in fiscal 2016 publicly funded engineering construction commencements was up 24 per cent and work done rose 11.3 per cent. The report observed the:
… pick-up in publicly funded work has been underwritten by the commonwealth government's Infrastructure Investment Program as well as strong growth in state government infrastructure programs.
The most direct effect of this investment is in employment outcomes. According to the economics team at the Commonwealth Bank, the lift in public infrastructure spending in fiscal 2018 will generate an extra 36,000 jobs in Australia. The same team finds that that lift in public infrastructure spending will directly add half a percentage point of GDP growth in fiscal 2018 and, including the multiplier effect, it puts the impact as high as 0.7 of a percentage point of GDP growth.
The Treasurer highlighted the impact of infrastructure investment when he recently announced the September quarter national accounts figures which found that:
New public final demand, across all levels of government, was up a solid 1.2 per cent in the quarter, to be 4.4 per cent higher through the year.
He noted that this growth was driven by government investment in building the capacity of our economy and our Defence Force. The total value of public and private construction work done in Australia increased by more than 15.7 per cent to a total of $61.8 billion—almost 30 per cent more than the same time last year.
The third point I want to make is that this unprecedented level of infrastructure investment is giving effect to key policy priorities of the Turnbull government, including driving productivity and efficiency in the Australian economy and finding a greater role for private capital in infrastructure.
Let me talk about the productivity consequences of the $5.6 billion I've mentioned that we're investing in the Pacific Highway. Already the journey time between Sydney and Brisbane is around an hour and a half less than it was before this massive program commenced. Heavy vehicles are saving a bit more—105 minutes. The total travel time saving will be 2½ hours when this massive project is complete or five hours on a return trip. The productivity benefits of that, with all the trucks going up and down the Pacific Highway between Sydney and Brisbane, are very, very significant.
In 2011, New South Wales Roads and Maritime Services commissioned an economic appraisal of the Pacific Highway upgrade program, including projects open since 1996, projects committed to completion by 2014 and remaining projects required to complete the duplication of the Pacific Highway. That appraisal found that the overall program would return $3.20 for every dollar invested. That is a very good rate of return, and it just demonstrates the productivity and efficiency benefits that are being secured through this unprecedented level of infrastructure investment being delivered by the Turnbull government.
One of the other policy priorities of the Turnbull government is maximising the role of the private sector in infrastructure investment. Let me mention that many of our major airports are of course now privately owned, including Brisbane Airport, which is investing some $1.3 billion in a new runway. It is private capital that is going to deliver public benefit with more capacity at Brisbane Airport, more flights and even better economic integration between Australia, Asia and other parts of the world, facilitated through flights taking off from and landing at Brisbane Airport. That capital cost is not required to be met by the taxpayer; it's met by the private owners of Brisbane Airport based upon their assessment of the fact that there is an economic return there. We are keen to encourage increased private sector involvement in infrastructure. Of course there will always be a strong role for government, but the more we can have private sector involvement, the more we can meet the large requirements for infrastructure that we face in our growing and prosperous country.
The points that I wish to make to the House this morning are that we are seeing unprecedented levels of infrastructure investment under the Turnbull government. That is generating economic growth, generating jobs and strengthening business opportunities. It reflects policy priorities, including driving productivity and efficiency in our economy and getting a greater involvement of private sector capital in the infrastructure sector.