Transcript: ABC News 24, 8/10/15

JOE O'BRIEN: Staying with politics, and Federal Labor has unveiled 10 infrastructure projects it will support if elected.

The Opposition says they include a rail line to Western Sydney's Badgerys Creek Airport, Brisbane's Cross River Rail, and Melbourne's Metro Rail project. The Opposition Leader, Bill Shorten, says if Labor is elected it would expand the new-look Infrastructure Australia's role and commit $10 billion for it to provide guarantees or loans to projects.

[Excerpt]
BILL SHORTEN: If we were to be elected, we would make sure that this nation gets the infrastructure it needs - roads, tunnels, public transport. But we'd do it through an independent process where people can see the pros and the cons, and what I want to do is not just rely on Governments to fund these projects but to provide a class of investment, infrastructure for the superannuation holders of Australia so they don't just have to rely on shares.
The collapse in infrastructure investment by Government in the last two years, the ABS came out and said that for the quarter just passed compared to the last quarter of the Labor Government two years ago we're 20 per cent down. Yet motorists today driving to work sitting in congestion and traffic jams, people on crowded public transport, they not only want to see long-term investment in infrastructure, they want someone to get on with it now.
[End of excerpt]

JOE O'BRIEN: Bill Shorten speaking there a little earlier today. Now the Minister for Major Projects, Paul Fletcher, joins me in the studio. Paul Fletcher, welcome.

PAUL FLETCHER: Thanks Joe.

JOE O'BRIEN: So Labor has announced today it's committing funding for 11 major projects. Is any announcement like this welcome in the current economic circumstances?

PAUL FLETCHER: Well look, infrastructure is important and it's good to see both major parties engaging on it. But let's be clear, you said Labor is making an announcement on funding; it's actually an announcement on financing, and this is $10 billion that they will need to borrow. So it will add to the very significant debt that we are working to get down. But also what they have included in their announcement is a range of projects that are already contracted, funded, under way. So the Pacific Highway, four lanes Sydney to Brisbane …

JOE O'BRIEN: [Interrupts] But on that, it's saying there they will commit to the fast-tracking of those projects.

PAUL FLETCHER: Well actually they not saying that at all in relation to projects like the Pacific Highway and the Bruce Highway - 5.6 billion on the Pacific Highway is what the Turnbull Government is delivering, that will be four lanes Sydney to Brisbane by 2020. A $6.7 billion commitment to the Bruce Highway, that vital artery running from Brisbane all the way up to Cairns, a whole series of projects. When we came to Government, the Abbott Government, the Turnbull Government has continued this, we have got a commitment to a $50 billion infrastructure package, Labor was at 34 billion. So we are delivering more than Labor had committed to.
But really the key point is when you look at the details of what Labor's announced they have talked about some kind of investment in projects and getting the private sector or superannuation funds more involved. Now, that is a good aspiration but they haven't explained how they are going to do it. Because the key point is if you are going to have investment you need to be able to generate a return, and public transport projects don't generate a financial return because usually the fair revenue is not sufficient to even cover the operating cost. So it is no magic bullet here.

Now public transport, as Prime Minister Turnbull has said, is important. And he's said that the Turnbull Government will look at projects on their merits, but the important thing is we need to have a detailed business case and it needs to go through an assessment process by Infrastructure Australia. Now some of the projects that Labor is talking about here, like Melbourne Metro for example, a proposed rail project, there is no business case for that yet. My information is that there won't be one available until early next year. So on all projects, and this was a principle that Labor had committed to under Infrastructure Australia, all projects need to go-- major project, projects of national significance need to go to Infrastructure Australia first. And it is not clear from what Labor is saying, from this list of projects they've now given, are they committed to those come what may without a business case and are they going to bypass Infrastructure Australia?

JOE O'BRIEN: Well Labor argues that capital investment on infrastructure is actually falling. Has your Government been unable to stimulate the economy through spending in this sector as much as it would have liked?

PAUL FLETCHER: Look that … quite the contrary. There's a whole range of projects under way. In addition to the Pacific Highway and the Bruce Highway I have talked about, in Sydney you have WestConnex, NorthConnex, a major Western Sydney roads project. You have got in Perth the Gateway proj- the Swan Valley Bypass I should say …

JOE O'BRIEN: [Interrupts] But there are ABS figures that point to a collapse in infrastructure investment, why has that happened?

PAUL FLETCHER: I wouldn't describe it as a collapse. There are ups and downs …

JOE O'BRIEN: Twenty per cent.

PAUL FLETCHER: … quarter by quarter, year by year. Now we do have a specific problem in relation to Victoria where we committed 3 billion to the East West Link, a major infrastructure project, the Victorian Government, the new Government has said they don't want to proceed with that. So we are clearly open to discussions with that Government, but that is one significant factor. But overall there is a very strong infrastructure program being delivered by the Turnbull Government and, the critical point is, included in the Budget. So what we are delivering we have also worked out how it's going to be paid for.

JOE O'BRIEN: Well you say it's strong program but you can't argue against those ABS figures which shows there has been a significant fall in infrastructure investment.

PAUL FLETCHER: Well I can strongly argue against those figures because what we are seeing is a vigorous program of infrastructure investment which is supported by the Turnbull Government, and of course we are in discussions with governments, such as, for example, the Victorian Government, about the way forward there. But to suggest that the solution to this issue is a new method of financing, of borrowing money and somehow coming up with a new set of projects that will be able to get private sector finance involved, unfortunately is at odds with the reality. And in fact in the previous government, when Anthony Albanese was the Minister, that government, the Rudd-Gillard-Rudd Government sought to finance the Gold Coast Light Rail project with an equity injection - it didn't work because there wasn't a financial return, and so they had to return to a grant funding approach.

JOE O'BRIEN: But doesn't there have to be a rethink on this, and at least Labor is putting forward some kind of suggestions for reform of Infrastructure Australia to establish a credible pipeline?

PAUL FLETCHER: And again, we welcome the fact that Labor is engaging on this issue. This is an important issue. Can I make the point in relation to Infrastructure Australia, one question, one serious question which arises from what Labor has proposed is: does the role of Infrastructure Australia in their world now change to not only independently assessing projects but also financing projects? There seems to be a real tension there. Look there's a lot of detail we don't have. This is essentially an unfunded thought bubble. And can I make this point; Labor has a track record of announcing things in Opposition, when they get into Government and it turns out to be time to execute, to deliver, they do a very poor job. On the National Broadband Network, supposedly an infrastructure project that was going to be subject to their rule that Infrastructure Australia would do a cost-benefit before every major project, that did not happen with the NBN. And you look at the chaos of the Pink Batts …

JOE O'BRIEN: Yep, okay.

PAUL FLETCHER: … the school halls …

JOE O'BRIEN: Okay.

PAUL FLETCHER: … does anybody believe that Labor can deliver on any of this stuff?

JOE O'BRIEN: Okay, well while I've got you here I would like to talk to you on another issue which is within your portfolio area, and this is this Volkswagen announcement from last night …

PAUL FLETCHER: Yep.

JOE O'BRIEN: … 91,000 cars in Australia have that emissions cheating technology. We had the NRMA on earlier this morning they said they were really surprised by that number, basically double what they thought it was going to be. What had you thought it was going to be?

PAUL FLETCHER: Look, this is a serious issue. The Volkswagen group globally has, it now appears, engaged in very troubling conduct in which a whole series of their diesel-powered vehicles were fitted with these so-called emissions defeat devices. And what they do is change the way the engine runs when it's being tested and produces a lower emissions figure than it produces in its normal mode of operation. So this has caused very serious ructions for the Volkswagen Group globally, the chief executive has resigned, there's a new chief executive. In Australia we have, as the Federal Government, been pressing those companies to tell us which vehicles are affected. We got those numbers yesterday and they are large numbers, 91,000 vehicles across Audi, Volkswagen, and Skoda are the three relevant brands and both passenger vehicles and commercial vehicles.

Now, this is a breach of the design rules, so that is a very troubling thing, and in turn a breach of the Australian consumer law. So my department, the department of Infrastructure and Regional Development, is working closely with the ACCC. Now, the first thing that needs to happen is that owners of VW, and Audi, and Skoda diesel-powered vehicles need to be able to find out whether their vehicle is one of the ones that is affected and has one of these emission defeat devices installed. So in the press releases, the media releases that Audi and VW put out yesterday, they gave details about how consumers can contact those companies through their website to put in what's called the VIN, the vehicle identification number, to determine if their vehicle has one of these devices installed. That's the first thing. The second thing is they have committed not be selling affected diesel powered vehicles until …

JOE O'BRIEN: [Laughs] Which is- you'd think is the very least they can do.

PAUL FLETCHER: Absolute, absolutely, until this problem is resolved. And then …

JOE O'BRIEN: [Interrupts] Well I want to pick you up on a few points there. What do you think about the timing of this, the fact that it's taken several weeks compared to when we found out what the situation was in the US and Europe, and also the fact that they're suggesting that the refitting won't happen until the new year?

PAUL FLETCHER: We, the Australian Government, has met with these companies, we have been pressing them to provide this information. They did provide it yesterday, and now of course we need to understand what their plan is to correct on the vehicles that have this device installed, and we are pressing them for that information. We are also obviously pursuing through the ACCC in particular this question of whether there have been breaches of the law and what redress or what remedies are available for a breach of the consumer law.

JOE O'BRIEN: Yeah so you mention there breaches of design rules, and breaches of consumer law. Is it likely this is going to end up in the court? Could the Federal Government take Volkswagen to court over this?

PAUL FLETCHER: Well look, I don't want to pre-judge what actions might be taken, but I will simply say it is a serious matter and of course the ACCC as the relevant enforcement agency, together with my department, the Department of Infrastructure and Regional Development, is closely examining this. And it is a serious matter, and we will want to make sure there is an appropriate response.

JOE O'BRIEN: Now just before I let you go, because we have got to wrap up, just briefly on two more issues in relation to Volkswagen, emissions standards in Australia seem to be much lower than they are in several countries overseas, can they be looked at and lowered further so they're in line with overseas countries? And secondly, the testing of cars that come into Australia in future to ensure they do comply now that we know there has been some cheating going on?

PAUL FLETCHER: Well look … as your questions go to there's a set of immediate issues here, namely what is the position for owners of these vehicles, and what are the sanctions that may apply to these companies in relation to their conduct? There are also some broader questions we need to ask to see if there are lessons we need to learn from this episode, and obviously we will ask those questions within the Government.

JOE O'BRIEN: Okay, Paul Fletcher, thanks for coming in and having a chat us to.

PAUL FLETCHER: Thanks indeed.

ENDS