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Standing Committee on Infrastructure and Communications - 24/09/2014 - Infrastructure planning and procurement

BRENNAN, Mr Rory, Executive Director, Infrastructure Investment, Infrastructure Australia

COLLETT, Mr James, General Manager, Planning Analysis Branch, Department of Infrastructure and Regional Development

HALL, Ms Jessica, Acting General Manager, Infrastructure Policy Branch, Infrastructure Investment Division, Department of Infrastructure and Regional Development

POWER, Ms Philippa, Acting Executive Director, Policy and Research Division, Department of Infrastructure and Regional Development

Committee met at 08:07

CHAIR ( Mrs Prentice ): I declare open the committee's 10th public hearing for the inquiry into infrastructure planning and procurement and welcome back witnesses from the Department of Infrastructure and Regional Development and Infrastructure Australia. Since our last meeting, the Productivity Commission has released its final report into public infrastructure, and today the committee may wish to discuss this and any other issues that have arisen during the course of the inquiry.

Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the House. I invite you to make brief opening statements, if you wish, before we proceed to discussion. Mr Brennan, nothing for you?

Mr Brennan : No.

Ms Power : Nothing for us either.

CHAIR: Excellent!

Mr THISTLETHWAITE: Perhaps you will need to take this on notice—I do not know whose responsibility it is. Could you detail for the committee which infrastructure projects that were election commitments of the current government or have subsequently been announced by the current government after the election have had cost-benefit analyses done for them and, if there have been cost-benefit analyses done, where the committee accesses those to have a look at the findings.

Ms Power : I think the detail of that is something that we would have to take on notice.

CHAIR: But you do have cost-benefit analyses of some projects?

Ms Hall : Cost-benefit analysis is actually undertaken by the proponent that puts it forward. The states and territories put those cost-benefit analyses through to Infrastructure Australia.

CHAIR: Okay.

Mr Brennan : Of the projects that were funded in the budget, a number of those projects are on the Infrastructure Australia infrastructure priority list. Three of them are at the threshold category, which means that we are confident that the benefit-cost ratio will be greater than one to one, but we are not yet confident about what the actual number is; that is the hurdle to get to 'ready to proceed'. Those three projects are: Gateway Motorway North; Great Northern Highway—Muchea to Wubin; and the North West Coastal Highway—Minilya to Barradale.

CHAIR: So the first one is Brisbane, I take it? Is the first one Brisbane?

Mr Brennan : The first one is the Gateway Motorway North upgrade.

CHAIR: In Brisbane?

Mr Brennan : In Brisbane, yes.

Ms PRICE: And the other two are in WA.

CHAIR: The other two are in WA? How appropriate. Thank you.

Mr THISTLETHWAITE: Could you also outline for us the projects where you understand cost-benefit analyses are being done at the moment?

Mr Brennan : I understand that for all the projects that were funded in the budget the proponents either have cost-benefit analyses or are in the process of developing them.

Mr THISTLETHWAITE: Okay. So it is only those three as far as you are aware?

Mr Brennan : They are the ones where we have reviewed the cost-benefit analyses and we are confident about them. For most of the others, we are either awaiting cost-benefit analyses, or we are going through an iterative process with the proponent—asking questions and getting answers—get greater confidence in their cost-benefit analyses being done.

CHAIR: Do you set the criteria for the cost-benefit analysis or does the proponent do that?

Mr Brennan : It is a general economic approach. We have our own guidelines for how we expect proponents to conduct their own cost-benefit analyses and there are national guidelines for transport projects on how a cost-benefit analysis is conducted—the parameters that are used and the assumptions that are allowed to be in there. There are rules about what you can assume in terms of costs and benefits, how you treat different costs and benefits. There is guidance on our website and there is guidance on the National Transport Commission website as well. Those are being revised at the moment by Austroads to broaden the approach to cost-benefit analysis to bring in what are currently termed 'wider economic benefits'. That work is going on at the moment; it is expected to conclude either late this year or early next year, at which time those guidelines will become part of the national guidelines for cost-benefit analysis of projects.

Mr THISTLETHWAITE: You said that there are three on the priority list that you were comfortable would meet the one to one ratio. How many projects are on that priority list?

Mr Brennan : Total projects? Off the top of my head, I think there are about 70 projects.

Mr THISTLETHWAITE: Okay. Can you provide us with that list?

Mr Brennan : I can.

Mr THISTLETHWAITE: Thanks.

Ms Hall : Can I just follow up on that. In regard to the national guidelines that are currently being developed, wider economic benefits will not be part of the cost-benefit analysis. There is a methodology being determined that will look at an additional methodology for wider economic benefits, but we are seeing that those will actually be determined separately to the traditional cost-benefit analysis. The department—through Austroads, the states and territories and IA—has just developed an overview of the appraisal documentation and methodology that is currently out for consultation at the moment. I have brought a copy of that paper for you, if you would like it?

CHAIR: Yes, we would. Thank you.

Mr GILES: Further to the deputy chair's questions, Mr Brennan: a project which is on the priority list that you did not refer to is the Melbourne East West Link. I understand that it is the case that a cost-benefit analysis is before Infrastructure Australia—is that right?

Mr Brennan : That is right.

Mr GILES: But as of today you cannot tell us whether it does reach the 1.1?

Mr Brennan : No. We are still in discussions with the Victorian government. We posed a number of questions to them about their cost-benefit analysis and we are working through with them to get clarity around the assumptions they have made—how they have calculated some of the benefits. We are also discussing with them the interrelationship between that project, the stage 1 of the East West Link, and the CityLink-Tullamarine widening project. There is significant physical and operational overlap between the two projects and we are just seeking to understand what the economic overlap and implications between each of the projects are.

Mr GILES: But, as of today, you have not formed the view that there is a one-to-one or better ratio?

Mr Brennan : No.

Mr GILES: Further to that, to the department, can you confirm that $1.5 billion has been paid to the state of Victoria in respect of East West Link stages 1 and 2, and perhaps set out the basis upon which that payment has taken place.

Ms Hall : I would have to take that on notice for you.

Mr GILES: This may well be a question on notice and a matter for the acting CEO. I noted that Mr Fitzgerald made some public comment on this project on 12 September, where he said:

… Australia has a good track record in infrastructure procurement and delivery, which can be attributed in part to contracts being honoured across changing governments … Historically, incoming governments have honoured the contracts of their predecessors, and a divergence from this established approach could adversely effect—

I think it should be 'affect'—

investor confidence.

I wonder if I could get a comment from Infrastructure Australia—and I appreciate it may not be appropriate from you now—about how a public statement like this in the context of the Victorian political debate—where the view of the proponent clearly would change in the event of a change of state government on 29 November—sits with the role and functions of Infrastructure Australia?

Mr Brennan : No. I think I would leave it to Mr Fitzgerald to answer that.

Mr GILES: It may have to be a question on notice, but I think it is an important matter.

CHAIR: I do not know that it is in their remit to answer that one.

Mr PITT: The proposal around the 15-year rolling list—from my personal viewpoint as an engineer—I still consider to be too short. I would be interested in some comments from you about what that should be—whether the 15 years is adequate, or whether we should consider extending it.

Mr Brennan : The government tasked us with a national infrastructure audit to feed into the development of a rolling 15-year plan. The approach that we have taken is primarily to structure the audit along a macro-economic modelling approach to identify where the economic contributions come from in Australia to GDP. At a national level and at a regional level there are 73 statistical areas that the Australian Bureau of Statistics has identified which identify contributions to gross domestic product. We have a forecast in terms of where we think economic growth will happen across Australia to 2031—so a little bit more than 15 years. We have a pretty good view of the contribution that comes from infrastructure in terms of the change in GDP over time and therefore where there might be gaps emerging. The government has asked us to review the national infrastructure audit every five years. This is a fairly new exercise. Certainly, the approach we are taking is a fairly unique one around the world, and there is a lot of interest in the approach from around the world. We are likely to be revising that view of change in economic growth more frequently than every five years. If we get to a stage where we think that the 15-year horizon is too near then we may want to extend that. But at the moment, really, we are looking to see what the result of the first audit is in terms of identifying what might be in the plan before we start expanding or contracting that.

Mr PITT: To follow on from that, we have had a number of submissions about stranded assets as a particular problem. If we look at something like the coal industry, where you may spend a large amount of money on infrastructure and then have dramatic changes in price, that is something that is very difficult to predict. What is our risk in that area at the moment?

Mr Brennan : Generally, in the mining and gas areas that risk is largely taken by investors as opposed to government. We think that investors are probably in a better position to make a call on that risk than government is. It is their money at stake. Where a proposal has come to us that seeks publicly provided infrastructure to support commercial activities, we take a fairly close look at just how sustainable we think that is. There have been very few examples where that has happened. Probably the most notable ones are a proposal for Oakajee Port in Western Australia and a proposal for some work to be done on the Port of Darwin; also there is Abbot Point. In all those instances, the investigations into those projects have found they probably would not be sustainable from a financial view, and they have not proceeded. Oakajee is pretty much on ice. The Port of Darwin plans have changed completely in terms of what they are proposing there. There was a proposal for Abbot Point of a massive expansion which has been pulled back by the Queensland government, and now they are trying to go into a collaborative exercise with investors to figure out what might be the best expansion plans for that port. That is probably a good model.

Ms PRICE: It is nice to see you again. I feel like I have seen you many times in the last 12 months. We have had industry super come to talk to us a couple of weeks ago about their views on how we can use private super funds to contribute to public infrastructure. I am interested in your thoughts on that—a good idea, a bad idea? How might it actually come about?

Mr Brennan : Australian superannuation funds have been significant investors in both greenfield and brownfield, probably with a preference towards brownfield infrastructure such as secondary sales of existing assets. We like to think the capital recycling initiative that the government is proposing, in terms of the bonus payment made when states privatise existing assets and recycle that money into new infrastructure will—particularly with the sale of existing commercial assets—provide a real opportunity for more Australian super fund investment in infrastructure. There is still a real barrier to Australian super funds getting into more greenfield infrastructure. Although they say they are keen, the evidence is that they may be not so keen. They have a natural lack of appetite for bid risk—the risk that you might not be the winning bidder. You spend money—

Ms PRICE: They very clearly told us they would like to make sure that they knew were going to win before they got started on the path.

Mr Brennan : Yes. Everybody would like that.

Ms PRICE: Wouldn't we all! Utopia.

Mr Brennan : There is a lot of opportunity. Even without the asset recycling fund there is going to be a lot of privatisation, be it long-term lease, sale or whatever. There is going to be a lot of opportunities for Australian super in the near future. We think it is very much a win-win, particularly in terms of selling the issue of privatisation; the transfer of an asset from the community's hands through government to the community's hands through their super funds is a pretty good message. We think it has the marginal economic benefits that come from those transfers; they are significant enough support. The opening up of the ability to invest in new infrastructure is a real added bonus.

Mr VAN MANEN: My question is probably to follow on from Mr Pitt's. With your longer-term planning for infrastructure—I agree, I think 15 years is too short; I think we should be looking at much longer—but of greater concern to me are two things. One is the depth of analysis that is done. You referred only to economic development, but what about population movement et cetera as well? And also the notion of dealing with congestion, which is an issue around all of our capital cities. But at the end of the day, if you have 100-kilometre-an-hour freeways coming into traffic lights in the centre of town and they are down to 60 kilometres an hour, you are still going to get a traffic jam at some point; you are never going to relieve that.

How far do we go in spending enormous amounts of money, potentially in the longer term, actually not to solve the problems we are looking to solve? In your work as part of that longer-term planning, do you comment on alternatives in terms of the planning process that we can maybe start to use to solve part of the problem of people going into major cities all the time—start to break it down to a more regional level and get stuff out of the major cities and have people living and working closer to home?

Mr Brennan : First of all, regarding the first point you mentioned: the National Infrastructure Audit is using a macro-economic model to look at the globe—how the global economy affects Australia going forward—and has modelled three population scenarios. We are looking at: a median scenario, which is in line with the ABS's median growth part; high growth, which is basically coming from increased levels of migration; and low growth, which may be as a result of a slowing down both in natural growth as well as immigration. So we have three quite distinct scenarios that we are looking at to see what three outcomes might be.

The change in population creates a demand for infrastructure in itself, but also has an impact on economic growth—either positive or negative. I think we have quite a good picture in terms of having three quite distinct scenarios for people to look at. We have a sensitivity analysis here in what might be needed, and as we go forward we can say, 'Okay, it looks like we are trending more onto this one rather than that one, and therefore that will have implications for the future infrastructure.' Again, 15 years out is not that far when you talk about major infrastructure, so we are going to have to keep quite a close eye on just how reality pans out against those forecasts.

Ms Hall : I think part of the issue with that is that when you actually have a look at population growth, if you go too far out in your views of population growth then you are actually becoming a little bit more 'crystal ballish', I guess. It is about getting that balance right between how you make sure that you have the right long-term projections with regard to your population before you become a little bit imaginary versus what a good lead time is for infrastructure. It is about getting that right balance.

Mr VAN MANEN: In that planning around population, or that prediction of population, what role does demographics play in that? Because our society is changing demographically as well.

Mr Brennan : The population forecasts are disaggregated into demographic breakdowns, so we have a pretty clear idea in terms of age and sex—those sorts of things.

Mr VAN MANEN: My other concern is the discussion around our infrastructure deficit. If you have a look in particular at Queensland, west of Toowoomba, we have had enormous, very rapid development of coal-seam gas and other activities, yet the infrastructure has not managed to keep up with that. What is our capacity to actually start to deal with some of our infrastructure deficit, in a reasonable manner that actually facilitates some of those economic benefits we are looking to obtain? At the moment, that deficit is possibly hampering economic activity.

Mr Brennan : I think there is a significant capacity, although it is going to be difficult politically. More widespread application of user charges and cost-reflective user charges is the way we can ensure there is going to be the most efficient response to infrastructure need. If we continue to provide free infrastructure then it will be overused and you will have the congestion effects that you talked about. So, while it is very difficult politically to move there, it is pretty clear that the infrastructure sectors have moved in that direction. Users pay and users say, and the infrastructure is put in place. Where that does not happen, we have deficits and congestion. I think it is a pretty stark choice.

Ms ROWLAND: To follow on from that answer, the Harper draft released yesterday discussed cost-reflective pricing for roads. Assuming we adopt or accept that as a proposition, how would that be factored into decisions of government when choosing what infrastructure projects are worthy of government assistance? I take your point about the infrastructure deficit; but, at the same time, how will this reflect on areas, particularly urban areas where there is limited capacity to pay, especially for commuters attempting to get into CBD areas?

Mr Brennan : I think there are examples of how you deal with affordability in existing sectors where there are user charges. Before I joined infrastructure I was with Sydney Water. If you were a customer of Sydney Water, which everybody in Sydney is, you get charged the same price regardless of your economic circumstance. Rather than trying to provide for different economic circumstances in terms of price, that is taken care of through community service obligations that are instigated by the New South Wales government. So relief can be provided outside the pricing mechanism to people whose economic circumstances make it more difficult for them to afford the full cost. I think all the research that I have seen has suggested that that is a better approach than trying to manipulate the pricing to adjust for that. The tax and welfare system is better set up to provide relief for the people who find full costs unaffordable.

Ms ROWLAND: To translate that into an actual example: are you talking about explicitly not having something like M4 M5 Cashback? Would you advocate that as an inefficient mechanism?

Mr Brennan : M5 Cashback has nothing to do with economic circumstance. It is that, if you have a privately registered car, you do not pay the toll. So that is not it. I think your question was: if people find it unaffordable, what provisions can you make to enable them to access that infrastructure? I think Sydney Water is probably the example I would learn toward in terms of being the most efficient economic approach to the problem.

Ms ROWLAND: Let's take that on board. One of the key bottlenecks in Sydney has been access to public transport—for example, parking at public transport locations. We have the new north-west rail link that is being built at the moment, but we already have significant congestion around those suburbs, with people parking in the streets and no provision made to actually get people to the mode of transport in order to utilise it. Do you have a position or can you suggest any model to enable affordable access to be provided there?

The reason I raise this is that it is continually shunted between state and local government in particular—whose responsibility it is, for example, to provide parking at train stations or major bus interchanges. I held the view for a while that we could have a mechanism where, if you live in a certain area, you get a certain rebate or other relief. Is that something that you have looked at in your modelling, or something that you think should be built into decisions about how to spend public money on infrastructure?

Mr Brennan : When we get a proposal for something like the north-west rail link, we would be looking at the way the proponent is proposing for people to access that infrastructure. That can be park and ride facilities for train stations or it can be local bus services servicing that facility. You are probably not going to get blanket coverage through bus services, so there is going to need to be a bit of a mixture in terms of that, and that is one of the things that we would be expecting to take into account in the cost-benefit analysis for those projects. The circumstances that you have in terms of people being able to access infrastructure will influence the benefits that flow from that infrastructure. If they cannot access it then you are not going to get the benefits. That is something proponents need to take into account and demonstrate how they are going to solve that problem. We have not proposed a solution. There are bigger fish to fry in terms of dealing with congestion than the availability of parking around railway stations. There are solutions particularly for outer suburban areas where the problem is not as great as it is in inner suburban areas. But we think congestion on major roads is a more significant issue than the availability of parking at a railway station.

Ms ROWLAND: I take your point. I do not know what other members of the committee think, but access to public transport is probably the biggest issue that I get as a local member—and it as the biggest issue when I was in local government. It is a significant bottleneck.

Mr VAN MANEN: It is a huge issue. At every single train station in my electorate parking is a problem. We want people not to drive into Brisbane, we want them to catch the train, but they have nowhere to park. In saying that, I am aware of a discussion going on between the Queensland government and a company in Brisbane to use the space above the car parks. They will build a bigger, multi-storey car park, and above that will be affordable housing, and also some housing at market prices, as a way to increase the parking availability and also to provide housing very close to public transport. I know that discussion is going on in Queensland at the moment.

Mr Collett : That was the point I was about to make; in a number of jurisdictions it is not just about providing a bus network or parking for people, it is about increasing the housing density around those transport nodes. That is a really important part of how we are going to enable people access so they can walk to the train station from their nearby property or live above the train station and not need to drive or catch a bus.

CHAIR: A good example of that is the CityGlider bus service in Brisbane where there was not accommodation and people who have bought near there now do not have cars. It is great. You have both had time to digest the Productivity Commission report. I was wondering whether you felt there were any aspects of the findings and recommendations that perhaps we could value-add to, as part of our inquiry, rather than just replicate something. Do you want to comment on that?

Ms Hall : Going back to your point about the infrastructure deficit: there is quite a good chapter in the Productivity Commission report about infrastructure deficit and the fact that we have to determine whether there is a deficit or not by thinking about how we better utilise our existing infrastructure in the first place. I think that is quite a valid point. That then leads on to what the role of governments would be in addressing any infrastructure deficit and how we would we actually go about doing that. That would involve the better utilisation of existing infrastructure and thinking about time-of-day charging and other technology solutions before we actually go and build new infrastructure. Then, if you are to build new infrastructure, what is the role of the Commonwealth and the state in that, or is that something that you try to encourage private sector investment to do instead?

CHAIR: I notice that in your submission that you say the minister has asked you to do a list of all the assets that exist. How long do you think that will take?

Ms Hall : The IA has been tasked to do an audit, and that is part of the economic discussion that Rory was talking about before with regard to how they are actually going to do that audit. I think a critical part of that audit—which they look at—is that, if they say that there is still an economic need, is there actually capacity within that infrastructure still to be able to manage the economic delivery that we are expecting over a long period of time? Something like Canberra Airport or Darwin International Airport, for example, has plenty of capacity going forward, even though you would want them to increase their economic delivery over a period of time. They are the sorts of things that I think are really important.

CHAIR: Do you have a time line on that?

Mr Brennan : Part of the audit is to identify nationally significant infrastructure. It is not everything—not all the kerbs and gutters; not all the pipes and wires. We have done that. What we have done is along the lines that Jessica said: we have looked forward and we have looked at how we think the contribution from specific pieces of infrastructure will need to change over the next 15 years in order to achieve the sorts of economic growth we are talking about. And there are really, probably, three or four options in terms of how you achieve that increase in contribution from bits of infrastructure. There is either latent capacity now that is not being used: you can optimise the use of the existing infrastructure. Or you might need to have new capacity.

I suppose a fourth option is a reform around how that infrastructure is used, particularly regarding pricing. We are going to identify in the plan how we think the contribution in that infrastructure will be able to be provided over that time from each of those four sources.

CHAIR: Great. Is that publicly available?

Mr Brennan : No, not yet. We are expecting that to be out by the end of the year.

CHAIR: Okay, great.

Mr THISTLETHWAITE: The department's submission, at page 6, highlights coordinated strategic planning as an issue. We have heard a lot about that, in this inquiry, and the importance of it in terms of improving the efficiency of infrastructure delivery. My question is: there are not many examples of it actually happening in practice, so what is the Commonwealth doing to improve coordinated strategic planning?

I could perhaps use an example. Port Botany, I understand, is the largest container port in Australia, so it is an economically significant piece of infrastructure for Australia. They move about two million containers a year, I understand, at the moment. The cap on container movements has been removed, so they are going to increase to 3.2 million container movements a year over coming years—so it is going to get busier and busier. It is right next to high-density housing. The point about urban encroachment on Australian ports is not really relevant here, because the houses were there before the port. The population was there before the port; it is actually the port that is encroaching on the urban development.

The state government has a policy of medium- and high-density housing along Botany Road, which joins up to the port, because it is a public transport route into the city. You are getting more and more people living there, a busier port, more and more cars on the road and more and more noise. The number of emails I get now from residents about the noise from the port is killing us. You have a major infrastructure project in the WestConnex, coming past there, but it does not actually connect up to the port. It is beyond belief. You have primary school kids saying that this is ridiculous.

CHAIR: I do not think we expect people to solve your problems today.

Mr THISTLETHWAITE: No. My question is this: does the Commonwealth have the capacity to say to a state, 'Wake up to yourself. The project that you are putting forward is ridiculous because it does not connect up to the biggest container port in the country, and it should not go ahead in this form'? How can the Commonwealth actually deliver coordinated strategic planning in practice?

CHAIR: Isn't it simply: does the Commonwealth have the authority to tell the states to get their act together?

Mr Collett : I do not know if it is as simple as telling states to get their act together. I think there are a range of issues there. As Mr Brennan highlighted in terms of the work that Infrastructure Australia is doing, there are a variety of different ways that you can handle future demand for additional infrastructure or additional use of infrastructure. There are competing choices to be made between competing uses that you can make use of existing infrastructure. There are pricing signals you can send to try to make sure that existing infrastructure is used more efficiently. Then there are a range of other considerations in terms of what future demand you might induce out of other planning decisions.

One of the things that we are doing is working with jurisdictions through the Infrastructure Working Group, which sits underneath COAG's Transport and Infrastructure Council, to look at what the best national practice, the best practice around the country, is in terms of identifying and then thinking about protecting future transport corridors. Part of the conversation that is necessary in that space is to identify in advance to some degree which of the solutions you think you are moving towards. Are you trying to protect land so that you can put extra lanes onto a freeway in future or put a new rail line in? Or is it that road pricing or a price signal or some time-of-day incentives for people can actually mean that your existing assets can survive for a much longer period, and you do not have the need to arguably sterilise some very valuable and useful land to put in extra lanes or a railway line in future?

It is a fairly complex picture, but we are working with the jurisdictions to try to identify what some good practice in that regard looks like. We do have the national airport safeguarding work to draw upon, and we know that Ports Australia and others are very interested in that work in terms of conversations about how communities can understand the trade-offs associated. If you want a port, if you want the economic activity that comes with a port, then perhaps you need to understand that the density of housing around the port might be impacted by that or the amenity of people living nearby might be impacted by that.

We obviously have those debates in the aviation space and increasingly in the port space. Anyone who lives near a rail line will tell you that that impacts upon their amenity of life. So there are a number of considerations. Obviously the states are trying to balance the fact that they are trying to provide additional housing, additional density and housing in locations that people are attracted to, and they are weighing that against the fact that we need to protect some of these assets. It is an ongoing conversation.

One of the difficulties that we find is that there is a very limited amount that the Commonwealth can currently do to force the states to plan in particular ways. Even if you could, we run into all of those issues about the fact that you can deal with the current government of the day in a particular jurisdiction and get as much commitment as you can out of them, but that does not stop a future government of the same or a different persuasion coming in at a later period of time and saying, 'Well, we're now going to sell that corridor,' or, 'We're now going to plan it differently,' or, 'We have a different set of priorities, and we're going to allow housing much more of an upper hand comparative to a port, or a port a much greater upper hand comparative to housing.'

It is a very complex picture, and it is very hard to pick apart what the Commonwealth would do with additional powers, or how far we would get. Separately, I think there is a community expectation that the Commonwealth not necessarily get to the point of saying, 'We're not funding projects that a state government thinks are important; we're not funding projects that could relieve congestion or could solve particular problems in cities, because we think they've been created by some poor land use planning.' It is a very difficult thing where we need to influence the states; we need to help them see what each other is doing that is good in the planning space; and we need to help them move towards as good a national practice as we can. But whether there are specific things that the Commonwealth can do to force the states is a very, very difficult issue.

Mr THISTLETHWAITE: That is the point I am trying to make. It is fine in practice and as theory. Everyone has been asking the question here and putting that point of view. But there do not appear to be any examples that anyone can give us that we could highlight in this report that actually are working anywhere—

Mr Collett : I would certainly highlight Badgerys Creek—

Mr THISTLETHWAITE: Badgerys Creek, I take it, is different. That is a good example of the Commonwealth reserving land for the future.

Ms Hall : And working with the state to protect the land around it as well. I think that was a very key—

Mr THISTLETHWAITE: But where you have existing projects—

Mr Brennan : In relation to Port Botany, I think Infrastructure Australia and the Commonwealth's action on Moorebank Intermodal Terminal and the upgrade of the rail line is a good example. The Commonwealth led that activity. New South Wales had a target for a decade of increasing the amount of containers moved by rail, and it continually went backwards because nothing was being done on that rail link and there was not a terminal at the end.

Mr THISTLETHWAITE: True.

Mr Brennan : There are examples where the Commonwealth can strike out itself and provide incentives, a bit of a carrot, and provide that sort of opportunity.

Ms Hall : I think one of the reasons that the government has actually tasked IA to do their 15-year plan, irrespective of whether you think 15 years is long enough or not, is that one of the key things that we are expecting out of that plan is details on corridor and precinct reservation. That does not mean that you actually have to go out and purchase any of those corridors, but it is about identifying what are key economic precincts and being able to determine how best we want to plan around those going forward. Once IA has done that plan, we are in a better position to talk with states going forward.

Mr GILES: I am very happy for this to be on notice. I know the department does not seem wildly enthusiastic about value capture. There seems to be some enthusiasm for some of the City Deals projects in the UK—obviously Greater Manchester in particular—as a way of unlocking value capture where it might be hard otherwise. Could we get a response.

Ms Hall : I can take that. I would not say that the government or the department is unhappy with value capture. We do have some projects. It is just another tool in the toolbox.

Mr PITT: It appeared to me that there are a number of other locations where we could build container ports, where the land is much cheaper, and connect up with infrastructure which would fix some of your problems.

Mr Brennan : Yeah, exactly.

Mr PITT: If you dropped your throughput by 50 per cent—and I know of two locations. I am assuming that this is something that has been identified by IA, or others. That comes back to our project selection: which is actually in the best interests, and what is the greatest value for money? Are there those areas available somewhere in New South Wales? It is not an area I know well.

Mr Brennan : There are two options: Newcastle and Port Kembla. In the medium term, the view is that Port Botany is by far the most efficient and probably preferred by shipping companies. You cannot necessarily do this in isolation. In Victoria, I think there has been a very clear look at what the options are in terms of Port of Melbourne, and we have got two options: Port of Hastings and a west side option. There is really a lot of detailed thinking going into particularly Hastings in terms of the infrastructure that will be needed there and the benefits that might flow out of that, and then also looking at what the effects of the western option would be. I think Brisbane is extremely well served in terms of the Port of Brisbane. There is lots of scope for expansion there with the inland rail project and a dedicated freight line into Brisbane. I think that is probably going to be one of the real showcases for port development in Australia.

CHAIR: Thank you very much for coming today and attending the public hearing. The secretariat will send you a draft transcript of proceedings so requests can be made to correct any errors of transcription. Could you provide any of the additional material that you have undertaken—thank you for this exhibit here.

Resolved that these proceedings be published.

Committee adjourned at 08:53