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Standing Committee on Infrastructure and Communications - 29/08/2014 - Infrastructure planning and procurement

CORKE, Mr Kerry, Policy Adviser, Australian Logistics Council

SHEPPARD, Mr Duncan, Director, Communications and Policy, Australian Logistics Council

[09:27]

CHAIR: I welcome representatives of the Australian Logistics Council. Thank you very much for coming today and providing evidence. Although the committee does not require you to give evidence under oath, I should advise you that the hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the House. I would invite you to make a brief opening statement, if you wish, before we proceed to discussion.

Mr Sheppard : Thank you, and thank you for the opportunity to appear before the committee to discuss the ALC submission. The Australian Logistics Council is the peak industry body for the major Australian logistics supply chain customers, providers, infrastructure owners and suppliers. Our members span all parts of the supply chain and are united in the cause to improve supply chain efficiency. The logistics industry is a major contributor to the Australian economy, with a recent report by ACIL Allen to ALC showing it contributes about $130 billion to the Australian economy each year. If it pleases the committee, I could table a copy of the report. The report also found that a one per cent improvement in efficiency would yield a $2 billion a year benefit. That one per cent efficiency improvement can be achieved by better identification and delivery of key infrastructure projects and better targeting of scarce infrastructure dollars. However, congestion, poorly planned and maintained infrastructure and urban encroachment all impact on the ability of industry to move Australia's large and growing freight task efficiently. ALC reaffirms the positions discussed in our submission but would like to update the committee on a number of developments since it was prepared.

As you are aware, the PC final report into public infrastructure has been published by the government and, broadly speaking, the Australian Logistics Council supports most of the recommendations contained in the report. Some recommendations relating to, for instance, the creation of a fund to encourage what is known as asset recycling have been addressed by the government. However, there were some recommendations contained in the commission's draft report that were varied in the final report. For instance, the commission's final report recommended that roads be funded through the re-implementation of state based road funds rather than the originally recommended national fund. This fund would be administered by a separate entity operating at arms-length from government, with all road charges directly hypothecated to road funds. ALC agrees with the road funds concept. However, it is disappointing the commission adopted an approach that will see jurisdictions potentially having different approaches as to how roads are funded. ALC's preference is for a truly national system—for example, the national energy market.

The commission also recommended the Commonwealth encourage jurisdictions to undertake pilot studies on how vehicle telematics could be used for distance and location charging of cars and other light vehicles. These studies should be designed to inform future consideration of a shift to direct road user charge of cars and other light vehicles with the revenue hypothecated to roads. Heavy vehicle trials could also be developed on a similar basis. ALC believe that this is an important task that should be developed by state and federal Treasuries. Treasuries have greater capacity to move more quickly to develop a new system so as to create a new revenue stream for investment in infrastructure that does not rely on general taxation.

The other relevant recommendation that changed from the draft report relates to corridor preservation. In the draft report, the commission floated a national corridor preservation process involving intergovernmental planning and agreement on commitment of funds for corridor protection. ALC supported this idea in its submission to the committee. However, in the final report the commission said corridor preservation was principally a function for the states. It said a national approach to corridor preservation would require agreement on sharing of the cost of land purchase, potentially resulting in a significant shift in responsibilities between levels of government. The commission said there was no compelling argument beyond the question of its greater fiscal capacity for the Commonwealth to be responsible for funding corridor protection measures. This is also a disappointing outcome because it is clear that in our discussion with state governments, the lack of available funds is a major issue when it comes to corridor protection.

ALC look forward to the upcoming white papers on taxation and the Australian Federation to properly assigned the tier of government responsible for infrastructure of national significance and to provide greater clarity on how appropriate revenue streams can support the development of critical logistics infrastructure.

CHAIR: Thank you very much.

Mr THISTLETHWAITE: Can you elaborate on that point you made in your submission at page 6, I think, about the Productivity Commission report and land planning and corridor preservation—the point you are making that there is no consistent strategy for the use of reserve land prior to its use for public infrastructure? How can we practically tackle that at a Commonwealth level?

Mr Sheppard : From ALC's perspective, we think there needs to be a greater national focus on the issue of corridor preservation. What we have seen on a number of occasions throughout the country is that inappropriate developments in and around key freight routes, urban encroachment around key freight rates, is effectively crowding freight out. What we would like to see is a greater national approach and the Commonwealth having skin in the game, effectively, where there is a Commonwealth involvement to play a funding role to actually provide the funding mechanism to preserve those key freight routes. When we are speaking to state governments, they simply do not have the funds. Whilst they have been successful in identifying key freight corridors, until there is a funding mechanism in place to actually protect those corridors for the long term, they simply remain lines on a map. We believe that the Commonwealth has a greater role to play in a national approach to preserve those key freight routes. That was an issue identified by the PC is the draft report. Unfortunately, it was not carried through in the final report. We think there is scope for greater national coordination to preserve those key freight routes.

Mr THISTLETHWAITE: Are you saying that the routes are in plans and have already been identified?

Mr Sheppard : The states as part of the National Land Freight Strategy process are undertaking state based strategies. Many of those strategies are either completed or in draft stage. Those strategies are identifying key freight routes. They have also been asked as part of the NLFS to identify places for freight. The states have, by and large, identified those key freight corridors, those key freight routes, but as of yet there is not appropriate action on identifying the funding mechanisms to protect them for the long term.

Mr THISTLETHWAITE: Have you done any work on where you think the money could come from to protect the corridors?

Mr Corke : There is a concept called value capture, wherein various mechanisms such as taxation schemes try to determine as far as possible the benefit when somebody operates a development, such as happens in Western Australia. Where a landowner gains value from the property that he owns because development is coming his way, a proportion of the perceived value can be captured. That is one mechanism. A second mechanism is indeed perhaps a greater use of user charging in a direct manner, so that there is a direct correlation between the use of infrastructure and those who gain the benefit of it. They would be two examples of the sorts of things that will probably have to happen in the immediate to long term.

CHAIR: I am interested in the use of reservations. At a state level, it is my understanding from the evidence we have received that there is not a national collective of existing reservations, be they existing or historic rail corridors. There are all sorts of corridors that are already sitting as assets, for want of a better word, in a range of areas. I know there are in my part of the world. The states, I understand, have a collective of these. Are you aware of any broader collective of these at a national level or do you believe that this also feeds into not just freight corridors but the whole freight task ahead?

Mr Sheppard : As part of the National Land Freight Strategy, jurisdictions have been asked to map the key freight routes. Those key freight routes have been provided to the Commonwealth to inform decision making and to also get a better idea of where we need to invest in the future. The issue from ALC's perspective is that, whilst those key freight routes and key corridors have been by and large identified by their jurisdictions, there is not yet a commitment by the Commonwealth to necessarily fund those key freight routes. What we would like to see is a conglomeration of those key freight routes included in the national land transport funding mechanism to ensure that once they have been identified they are appropriately funded for the long term.

Mr Corke : That is right. The planning functions will always, invariably, remain in the states. The issue that pertains from ALC's perspective is identifying those routes of national significance that bear the burden of enhancing Australia's productivity through being available and allowing freight to move from generation points to places of export and for the Commonwealth to then, having had those particular routes of significance identified, have the capacity to ensure, either through land reservation and funding land reservation or otherwise offering incentives to the states, that those routes are available for use to facilitate the efficient movement of freight.

Ms MARINO: The current freight task is what, and the projected freight task is what, ahead of us? They are probably a couple of things that would be useful to put on the record here.

Mr Sheppard : The exact figures are in that report. Off the top of my head, the current freight task is about 300 to 400 billion tonne kilometres per year. By 2030 it is expected to double and it is expected to triple by 2050 to about 1,500 billion tonne kilometres. I will take it on notice, but the exact figures should be contained in that report based on figures from the Bureau of Infrastructure, Transport and Regional Economics.

Ms MARINO: I think for this committee's sake those figures are important in looking ahead.

Mr Sheppard : I will take that on notice.

CHAIR: I notice one of your recommendations is that the Australian government should make a condition of eligibility for funding compliance with a set of good practice principles and policy processes. I think it is recommendation No. 3 in your report. Do you see that being the role of Infrastructure Australia or a different body?

Mr Corke : Predominantly, yes—that would be the perceived role of Infrastructure Australia as the prime adviser of the government in relation to infrastructure matters. Now that it has its new charter, following the consideration of the amendments for legislation by the government, it is well placed to provide that advice.

CHAIR: Do you have a view as to what that good practice code should look like?

Mr Corke : That would be a matter for those with a greater background in building and construction, but nevertheless we feel that Infrastructure Australia would be best placed to commence the facilitation of discussions that would enable those sorts of guidelines to be developed.

Mr THISTLETHWAITE: I have one more question—I am asking this because it relates to my electorate. Have you had a look at the WestConnex proposal?

Mr Sheppard : Yes.

Mr THISTLETHWAITE: What is your view on the fact that it does not connect up with Port Botany, which I understand is the largest freight port in the country?

Mr Sheppard : ALC supports in principle the WestConnex project. We believe that it is important to have extra freight capacity throughout Sydney, particularly linking to the port. ALC has expressed a desire to have WestConnex link up to the port; however, we also recognise the extra funding burden that would be placed on the New South Wales government to deliver an exact and precise link to the port. Notwithstanding that, we would like to see improved freight efficiency to the port; however, we recognise the funding challenges being faced by the New South Wales government.

Mr THISTLETHWAITE: So it is your view that it should connect to the port?

Mr Sheppard : In an ideal world there would be a connection to the port; however, we recognise that the funding challenges being faced by the New South Wales government make that prohibitive.

CHAIR: The new role of Infrastructure Australia, which you have mentioned before—do you see that they have a broad enough role now? Are there other any other roles they should undertake?

Mr Sheppard : We recognise that the work it will be doing to undertake the national infrastructure audit and develop a rolling plan of infrastructure projects is an important first step. We would also encourage it to potentially look at a national corridor protection scheme, which we think is an important piece of work that can be undertaken to support a more national approach to identifying and preserving for the long term the national corridors that are required for the freight tasks that we are going to experience over the next 20 to 30 years.

CHAIR: Any other comments?

Mr Sheppard : No.

CHAIR: Thank you for attending the public hearing today. The secretariat will send you a draft transcript of proceedings, so requests can be made to correct any errors of transcription. Thank you for the additional report, and any other further material that you would like to send through would be appreciated.

Mr Sheppard : We will provide the freight data. Thank you.

Proceedings suspended from 09:43 to 10:00