PVO To The Point - Sky News Australia - 2 May 2016

Topics: Asset Recycling Initiative

PETER VAN ONSELEN: We’re going to talk about something very separate though, it’s one of the lead issues in the Budget it seems, certainly according to the reports in today’s newspaper. I’m joined by Major Projects Minister, Paul Fletcher. Thanks for your company.

PAUL FLETCHER: Good afternoon Peter.

PETER VAN ONSELEN: This $5 billion in total for major projects, as it’s called, is there actually any new money in that, as opposed to the detailing of what was outlined in the 2014-15 Budget?

PAUL FLETCHER: Look there certainly is new money. So one of the components is the Asset Recycling Initiative, and there’s additional money there beyond what has been announced previously. So this is the Government’s policy to boost jobs and growth by supporting state governments to withdraw capital from existing assets and reinvest that in new productive infrastructure. So there’s 2.19 billion going to New South Wales – some of that’s been announced before but not all of it – and that includes for example the Sydney Metro, which is the new rail line running from Rouse Hill in the north-west all the way under the harbour and through to join the Bankstown line. It includes the Parramatta light rail, there’s some money for technology on motorways and a whole range of other projects. In Melbourne it includes over $800 million, $877.5 million, including $857 million for Melbourne Metro. So that’s new, and that is a very significant commitment to this major transformative rail project in Melbourne. Two nine kilometre tunnels, there are going to be five or six new stations, two in the CBD, one at Arden, one at Parkville, running from South Kensington to South Yarra. And not only will that provide better connectivity into the CBD but it will improve the operation of the entire Melbourne network because it will take pressure off of the city circle and in turn that will mean more capacity across the whole network.

PETER VAN ONSELEN: But can I just ask though, on this idea of it being new money, you’re right, some of it is new money, but isn’t it new money that was always slated and promised if the states privatised some of their assets? That was always the precondition to the money flowing, that had already been if you like planned some years ago in that ’14-15 Budget. States have now made that commitment so therefore the money starts to flow, that’s a fair summary isn’t it?

PAUL FLETCHER: Look it is, but let’s bear in mind that the intention here was to create an incentive for the states to withdraw capital from existing assets, reallocate it to productive infrastructure. We’ve seen the Victorian Government respond, for example, with the Melbourne Port privatisation. There’s money going to the ACT, to the Northern Territory, there’ll be some new money announced going to the Northern Territory, and of course additional money going to New South Wales beyond what had previously been announced. But can I make the point, there’s also additional components in the Budget beyond that very important Asset Recycling Initiative.

PETER VAN ONSELEN: Things we haven’t seen yet which we’ll see tomorrow night you mean?

PAUL FLETCHER: Well, or things that have been just announced in the last few days but are now being picked up in the Budget. So we made an announcement about three weeks ago of a $1.5 billion commitment to Victorian Infrastructure, that will be included in the Budget. And so that’s for example $500 million for the Monash Freeway upgrade if it’s matched dollar for dollar by the Victorian Government. On a similar basis money for the M80 Ring Road, $350 million, $220 million for Murray Basin freight rail to allow farmers in the north and west of Victoria to get their products to market more efficiently. Again, all about leveraging the capacity of infrastructure to drive productivity and efficiency.

PETER VAN ONSELEN: Well on that, previously it was sort of described as the money flows if there are productivity-enhancing measures that are followed, now though it has been more formally tied in terms of the money that’s going to flow. How does that work in this sort of context of possible federation reform that we’ve been talking about, this whole idea of the Commonwealth coming in and if you like tying the money if states are to get it? It doesn’t sound like a new compact between the Commonwealth and the states.

PAUL FLETCHER: Well if you take the Asset Recycling Initiative to start with, the way that that was set up was it was always intended as an incentive to the state governments to reallocate capital to new infrastructure projects. And there were some conditions that needed to be met, particularly it needed the new money- the states needed to reallocate the money into productive infrastructure. Provided those conditions are met, and the Commonwealth Treasury makes an assessment of that, then the money is allocated in accordance with that. And then in relation to money that’s under the infrastructure investment program, so this is the $50 billion that the Turnbull Government is investing in new infrastructure right around the country, over 2014-15 through to 2019-20, and some elements of that being announced in this Budget, including for example $200 million for the Ipswich Motorway in Queensland, the Darra to Rocklea section of that.

PETER VAN ONSELEN: I just want to ask you one final thing, we’re eating into To The Point time, but we can blame the French for that. What I want to ask you is about this idea of this business advisory group looking at infrastructure projects. Why can’t Infrastructure Australia do that? Why do we need some new body to oversee that?

PAUL FLETCHER: You’re referring to one of the elements …

PETER VAN ONSELEN: That’s right.

PAUL FLETCHER: … of what was announced in the Smart Cities announcement on Friday.

PETER VAN ONSELEN: $5 million going into [indistinct]?

PAUL FLETCHER: Well there’s some money set aside for that, and there’s also $50 million for improved planning at an early stage in relation to major infrastructure projects, because the money spent up front can give you much better outcomes down the track. But look, in terms of that particularly team the notion is essentially as we talk about using the Commonwealth’s balance sheet, for example providing loans to underpin projects, and we’ve already done that in relation to WestConnex where Stage 2 of that major freeway project in New South Wales is supported by a $2 billion concessional loan, but the idea is do we need to have a few more people with some relevant financial skills there to add to the significant skills and capability that are already in the Commonwealth, just to make sure we’re seizing all the opportunities in this area.

PETER VAN ONSELEN: Paul Fletcher, we appreciate you joining us. Good luck with the Budget tomorrow – well, you won’t be delivering it, but obviously you’ll be giving Scott Morrison a good help along …

PAUL FLETCHER: I will. I will be supporting him strongly.

PETER VAN ONSELEN: … and some of your issues are in the mix. I can imagine. Alright, thanks for your company.

PAUL FLETCHER: Thanks Peter.