Transcript: Press Conference, 8/10/15

PAUL FLETCHER: I just want to make some comments on Labor's announcement that it will borrow $10 billion to finance further infrastructure.

The Turnbull Government has a $50 billion infrastructure plan which we are implementing now. The Pacific Highway between Sydney and Brisbane, $6.7 billion on the Bruce Highway to upgrade that from Brisbane up to Cairns, and a whole range of projects around the country, WestConnex and NorthConnex in Sydney for example. 

The Turnbull Government has a $50 billion plan and we are implementing that plan right now and the question really needs to be asked, given Labor's track record, the last government, with Pink Batts, with school halls, with their mismanagement of the NBN and so many other projects, does anybody really believe that Labor can implement a plan?

QUESTION: Minister, [indistinct] is it now [indistinct] borrowing Australia's future [indistinct] access [indistinct] so cheap that surely now is the right [indistinct]?

PAUL FLETCHER: Every dollar that's borrowed has to be repaid. Labor has a $57 billion black hole already, this will now add to that black hole and it's very important that we fund infrastructure - I emphasise the Turnbull Government has a… plan to fund infrastructure and we are delivering on that plan. It's a $50 billion plan. Labor's forward spending on infrastructure when they left government was $34 billion. So, we are spending money on infrastructure all around the country. And it's very important that infrastructure projects be assessed through a careful and rational process. That's the role of Infrastructure Australia and project proponents need to bring forward business cases, they need to do cost benefit studies so that Infrastructure Australia can recommend which are the right projects. Now, Labor seems to be suggesting that Infrastructure Australia is going to have a new and separate role of also investing in projects. We believe Infrastructure Australia does important work in its present role and we have a $50 billion investment program in infrastructure around the country which the Turnbull Government is progressing.

QUESTION: What scope for private investment do you see in that? Is it mostly government spending or are you looking to co-opt infrastructure funds and the like into backing those projects?

PAUL FLETCHER: Look, can I say, we are certainly very eager to encourage private sector investment in infrastructure and in a range of projects that are part of the current Turnbull Government $50 billion infrastructure plan. There is scope for private sector investment, for example, the investment in NorthConnex and in WestConnex in Sydney, both involved private sector investment either at the present stage or at a later stage. But the key point really is this, that any private sector investment and infrastructure requires a financial return. So, there needs to be a way that the investors get a return on their investment. So, Labor's talking about, for example, superannuation funds investing as part of this proposal. And there's certainly a role for superannuation funds but the projects need to be ones which generate a financial return. Now, public transport projects, rail projects for example, typically the fair revenue does not cover the operating costs, let alone offer a repayment of the capital costs.

So, it's all very well to talk about a greater role for superannuation and for the private sector and of course that is absolutely worth exploring and that is something that the Turnbull Government continues to do and we have private sector involvement in a number of projects but it's not a silver bullet because unless a project generates a financial return, the private sector, including superannuation funds is not going to be in a position to invest in.

So, look we welcome the fact that Labor is talking about infrastructure. Infrastructure is very important to Australia's productivity and efficiency. That's why we are investing $50 billion. We've got a $50 billion infrastructure plan across a whole range of projects around Australia. We're in constructive discussions with state governments about the way forward for that program but Labor's plan to invest - Labor's plan to borrow another $10 billion for infrastructure announced today really is - needs to be put in context against the $50 billion plan that the Turnbull Government has and they really need to answer the question, if this is about further investment, where are the projects which generate financial return? And so these are the questions that Labor needs to get more detail on in relation to their $10 billion borrowing on this one.

QUESTION: Just to be clear on the numbers though, you're saying a $50 billion plan versus their 10 billion. Aren't you spending more?

PAUL FLETCHER: I want to make a couple of points there, first, we've got a $50 billion plan. Now, Labor is talking about a - borrowing $10 billion, I'm making a point that in context of the existing scale of investment, you need to understand what they're proposing against that scale of investment. I'd make the point also that included in our plan is $4.2 billion for asset recycling. So, this is where the Commonwealth makes money available to state governments to support them realising capital presently invested in assets and reallocating that in other assets. So a good example is here in New South Wales where the Baird Government has a plan to realise many billions of dollars from a long term lease of the poles and wires. And they've laid out a plan as to where that money will go - including into the Sydney Metro, a major rail project, for example.

Now, the Commonwealth Asset Recycling Fund allows a 15 per cent bonus or additional contribution on the proceeds the State Government receives through a process of realising its capital in existing assets. Now, that's available around Australia and, for example, if the Victorian proceeds with the privatisation of the Port of Melbourne then it would be eligible to receive funding under the Asset Recycling Fund. And that, for example, could be available for the Melbourne Metro rail project.

QUESTION: Hasn't that been held up though? The Recycling Fund… [indistinct]

PAUL FLETCHER: Well, it continues to be our policy commitment and the money is available there from the Federal Government. Can I make this point about the Melbourne Metro rail project, which was one of the ones that was included in this list of projects that Labor has issued today. We need to see a business case for that. And my understanding is that the business case for that will not be available, I'm told, until early next year.

So we certainly encourage the provision of a business case on that and on other projects where state governments wish to put forward a project. But there is a process there - let's see a business case, let's see a cost-benefit analysis. Because what we need to do is have the most rational prioritisation of projects. Of course, budgets are finite at federal and state level so we need to make sure that the money is going to the projects that deliver the highest national benefits in terms of efficiency.

QUESTION: But what do you need to get that asset recycling money through the Senate?

PAUL FLETCHER: Well, we're continuing to engage on that but the key point is that is our policy commitment and that money is available to state governments.

QUESTION: And can I also have the chance- sorry, Inland Rail… there was a mention about that that needed to be built for further initiatives to take straight out of the Sydney network. What- where is that process at and what's your disposition?

PAUL FLETCHER: Well, there's a recommendation or a proposal that's been put to the Government and obviously that's now a matter for the Government to consider and there's not really much more I can say about that.

QUESTION: Do you think it'll be before the election we find out?

PAUL FLETCHER: All I can say is that will be a matter for the Government to consider.

Can I just make some comments, too, about the other issue that's around in the portfolio area today, which is the question of the emission defeat devices that have been installed in Audi and Volkswagen vehicles. This is a global issue affecting the Volkswagen Group. They have installed, it seems, these devices into their- some of their diesel powered vehicles. The effect of them is that when a vehicle is going through emissions testing it operates differently to its normal mode of operation, and as a consequence, it appears to emit less during that period than it emits in its normal operation.

This is a very troubling issue - it's a global issue. The Australian companies - Volkswagen Australia and Audi Australia - announced yesterday over 90,000 vehicles in Australia have been sold with these devices. The companies have been in discussion with the Government. We have asked and the companies have agreed to provide a mechanism so that customers can go to their websites, put in the VIM - the Vehicle Identification Number - of their vehicle to find out if the diesel powered vehicle they own, manufactured by VW, Audi or Skoda, has one of these devices.

The vehicles are safe to drive but it is important that there be a process to allow these devices to be fixed and the companies will have more to say about that in due course. The Government is also considering the question - and this is through the ACCC - of potential responses in relation to the conduct of these companies. This is a breach of the Australian design rules, and that in turn is a breach of the Australian consumer law. And so that it is a matter that the Australian Competition and Consumer Commission is investigating in consultation with my department, the Department of Infrastructure and Regional Development.

QUESTION: And what sort of penalties would there be if they have been found to breach?

PAUL FLETCHER: Look, there are significant penalties that are potentially available under that legislation and that's obviously a matter we'll be considering.

QUESTION: Sorry Minister, I'm going to have to [indistinct]

PAUL FLETCHER: Yes.

QUESTION: Do you support state governments sort of [indistinct]

PAUL FLETCHER: Look, those are really … So I'm asked the question…

QUESTION: [Talks over] state governments [indistinct] amalgamations.

PAUL FLETCHER: …would I support state governments in relation to council amalgamations. That is a matter for state governments. Constitutionally, state governments have responsibility for local government and that is just the way our constitution and our allocation of responsibilities works. I have some Federal Government responsibilities in relation to local government but I will leave it to state governments to develop and implement policies in that area. Thanks very much.

QUESTION: Can I just ask you generally do you support the New South Wales Government bipart(*) process? So getting an independent panel to…

PAUL FLETCHER: [Interrupts] The New South Wales Government is managing the issues of how it deals with the structure of local governments, and that is a matter for the New South Wales Government. I'm obviously being kept informed but I'm not going to comment on that because that is being handled, very capably, by the New South Wales Government. Thanks very much.