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Speech for Regional Ports in Focus 2007



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KS02/2007 24 May 2007

Speech for Regional Ports in Focus 2007 by the Hon De-Anne Kelly MP, Parliamentary Secretary to the Deputy Prime Minister and Minister for Transport and Regional Services

Venue: Grand Mercure, Mackay Date and time: 9.55am, 24 May 2007

Keynote Address: Regional Ports - A Federal Government Perspective

Thank you for the invitation to speak with you today, I am pleased that such an event is being held in Mackay, a place close to my heart. This is an opportunity for me to meet members of the port sector - an opportunity that does not arise often, given the long length of our coastline and the distances between many of our ports.

I would like to briefly highlight the importance of ports before I focus on Australian Government initiatives that are significant for ports. These include promoting a consistent national system of regulation that has been outlined by the Council Of Australian Governments (COAG) and strong investment in building a safe, integrated and high-performing national network of road and rail systems that connect with our key ports through Auslink.

Australia depends almost exclusively on shipping to move its imports and exports. Close to 99 per cent of all our merchandise trade is moved by sea. We have the fifth largest shipping task in the world, in terms of tonnage and kilometres travelled. The efficient operation of Australian ports is therefore imperative to the trade task.

Our international maritime trade has increased significantly over the past decade, increasing from 408 million tonnes in 1994/95 to 681 million tonnes in 2004/05

This rapid acceleration in demand has put a strain on the capacity of ports. This has been exacerbated by the time it takes to plan, finance and build new capacity and the move to larger ships requiring longer berths, upgraded stevedoring equipment and deeper shipping channels.

Since becoming responsible for maritime matters as the Parliamentary Secretary I am much more appreciative of the maritime sector's awareness of the significant future challenges ahead of us to fulfilling our significant transport task.

Substantial and sustained growth is forecast for the volumes of cargo moving through our ports during the next twenty years.

The Bureau of Transport and Regional Economics (BTRE) recently predicted Australia's sea trade will continue to grow over the next twenty years, largely due to a positive economic outlook for Australia and its trading partners.

Over the next twenty years, containerised trade is forecast to almost triple from 5.2 million Twenty-Foot Equivalent Units (teus) in 2004-05 to 14.9 million teus in 2024-25. Brisbane will be among the biggest movers, increasing by about 7.4 per cent.

Total non-containerised trade is forecast to increase by 3.8 per cent a year over the next twenty years, from 0.6 billion tonnes in 2004-05 to 1.4 billion tonnes in 2024-25. The main increases are forecast to occur in regional ports.

The total number of cruise passenger visits is projected to increase from 375 thousand in 2004-05 to 795 thousand in twenty year's time.

About 30 thousand visits were made by all ships at all Australian ports in 2004-05. The number of ship visits is forecast to increase to around 54,800 in 2024-25.

These figures highlight the challenges facing ports, governments and port users in ensuring that our ports can handle this strong growth.

As you are all aware, the development, maintenance and management of ports and harbours falls within state and territory jurisdiction. The Australian Government's focus is directed at the coordination and integration of transport services including ports. It provides leadership

where necessary by highlighting issues that impact on ports and driving economy-wide reform policy through COAG and other forums. The Australian Government will also get involved directly where port-related issues fall within its area of responsibility.

Two examples from the past demonstrate the involvement of the Australian Government in port-related reform.

The first is the reform of the waterfront which resulted in crane rates, for example, increasing from 18.8 containers per hour in March 1998 to 27 containers per hour in the latest published figures.

To support the Australian Government's waterfront reform agenda, the stevedoring levy was introduced in 1998 and effectively funded the major reform and restructuring of the stevedoring industry through redundancy payments.

"The recent screening of the Bastard Boys has inspired much public debate about the ABC's portrayal of this very important reform. Regardless of what you think about the ABC's recreation of 1998, the fact remains that the reforms led to a significant increase in crane rates at our country's ports."

The second is the National Competition Policy reforms. The objective for ports reform as part of those initiatives was to create incentives to improve productivity and efficiency of port services. Much has been achieved in this respect, and the gains made compare well with other industries. Those gains have underpinned Australia's strong economic performance over the last decade and contributed to Australia's significant growth in real income during the same period.

On transport, COAG has agreed to a three-phased reform program to provide better price signals for transport freight infrastructure providers and users to enable Australia to meet more efficiently the forecast growth in the national freight task.

COAG has also agreed to endorse a simpler and consistent national approach to the economic regulation of nationally-significant infrastructure, including specific measures to enhance regulatory outcomes for nationally significant ports and rail networks and the streamlining of third-party access regimes. This includes a commitment that each jurisdiction undertake public reviews of the regulation and effectiveness of competition in significant ports by the end of 2007.

This initiative is aimed at reducing regulatory uncertainty and compliance costs for owners, users and investors in significant infrastructure and to support the efficient use of national infrastructure. This should lead to the provision of a simpler and more consistent national system of economic regulation for nationally-significant infrastructure, including ports.

Achieving simpler and more consistent regulation is important. Getting the investment decision right is just as critical, if not more so.

Whilst acknowledging that ports are critical links in the transport chain, it is equally important to recognise that ports do not work in isolation. They need to work in harmony with other ports (both domestic and international) and with the road and rail networks transporting the cargoes to and from the ports. This is the reason the Government places such importance on engaging with other economies in forums such as the Asia-Pacific Economic Cooperation, known as APEC and is putting so much energy into AusLink.

AusLink was announced in June 2004 and signalled a fundamental change to the national land transport agenda. Importantly, it signalled the Australian Government's decision to take a leadership role in how we respond and plan for the future demands on our land transport infrastructure.

As part of the COAG reforms, AusLink's planning and coordination function has been extended to incorporate access to major Australian ports, enhancing the existing framework and direction for better transport planning, funding and investment decisions.

The major benefit of extending the relevant corridor strategies to encompass ports is that long-term planning and strategic coordination between complementary elements of export infrastructure is facilitated along the major freight corridors, supply chains and ultimately across the national Network.

AusLink activities fall into two broad streams. Firstly, direct investment in our road and rail infrastructure to the tune of $15.8 billion over the five years to June 2009 on already identified priorities across Australia. Even though this was a major increase on the previous five years it will be followed by an even bigger program of $22.3 billion from 2009 to 2014, making a total of $38 billion for the decade. This represents the biggest investment programme of its kind in Australia's history: one that is designed to match the rapid increase in world trade and

our desire to share in the economic growth that it brings.

Secondly, a new approach to planning our investment into the future.

AusLink Corridors are the primary links between our main urban centres and provide the basis for supply chain connectivity between our major ports and their landside hinterlands. Their impact on our competitiveness explains why they are the focus of AusLink planning and the need to provide a new policy approach to linking the transport sectors.

We can't predict everything but we can plan to be ready for change so that we make the most of the assets we have. For example, we already know that port congestion will become a major problem within a decade if we continue with business as usual assumptions. We therefore need to plan to put more freight into and out of the ports by rail and to encourage state and local authorities to inhibit urban encroachment on port land.

As such, under the AusLink programme, a key focus of the investment has been on bottlenecks in the urban areas and linkages to ports.

Congestion growth in Australia's capital cities is affecting all levels of government and having significant economic impacts, not least because most of our major non-bulk ports are situated in our capital cities. Urban traffic growth is causing significant bottlenecks that impact on port access routes.

The costs of building new urban transport infrastructure are extremely high, including on the AusLink Network. Consequently, if we can make improvements to congestion management measures,we can obtain higher productivity from existing and new urban transport infrastructure, making the most of our investment and improving transport efficiency and reliability for industry.

Major AusLink rail/port investment projects include:

• $110 million for improving rail access for freight trains between Strathfield and Hornsby in Sydney;

• $110 million for a new rail link from the Dynon intermodal precinct and the Port of Melbourne; • $40 million to the ARTC for the construction of a new bi-directional rail line between Tottenham and West Footscray; • $38.75 million towards the cost of Stages 2 and 3 of the Port River Expressway and

associated road and rail links in Adelaide; and • $12.7 million to improve rail links between Kewdale intermodal precinct and the Fremantle Port.

The Australian Government is committed to working with the states to reduce current and projected urban transport congestion within current jurisdictional responsibilities, under the auspices of the agreements made by COAG. These initiatives offer an important opportunity to improve Australia's congestion management capabilities, improve cooperation across governments and increase urban infrastructure productivity.

There has been substantial and sustained growth in our international trades. In recognising that ports are a critical link in the transport chain on which these trades depend, we must also acknowledge that the sharp increases in trade are straining the capacity of our ports.

Significant and sustained growth is forecast for the port sector for the next 20 years. The number of ship visits is forecast to almost double during the period, and the cargo throughput is predicted to almost treble.

Balancing port capacity and efficiency with future trade growth will be necessary to avoid disruption and restriction of cargo flows. Strategic and coordinated planning for an integrated transport system, including ports, is vital to avoiding potential "gridlocking" in the face of increasing trade.

COAG has recognised the challenges for the future and its initiatives are aimed at enhancing the progress that is being made through AusLink.

Governments provide the economic context and regulatory framework in which ports operate, and clearly the efficiency and effectiveness of our ports are dependent on the efforts of port operators working in unison with port users.

The Australian Government has been active by taking the lead in regulatory issues and investment through the AusLink process. On the maritime front our focus will be on improving economic efficiency and environmental safety through a range of reforms that will lay the groundwork for a strong Australian maritime sector into the future. I look forward to continuing working with you to achieve these important goals.

Before ending I would like to note some of the Australian Government's major infrastructure initiatives especially in the central and north Queensland region.

The Australian Government is providing more than $800 million in AusLink funding to Queensland for improvements to the Bruce Highway, which is the major coastal corridor that links the State's ports.

This includes an additional $268 million that the Australian Government paid to the Queensland Government last year for major new road works on the Bruce Highway between Townsville and Cairns. It followed the devastating impacts of Cyclone Larry and our strong desire to do something to upgrade and reduce flooding closures on the Bruce Highway for the people of North Queensland particularly in and around Innisfail. From these extra funds, $220 million was for new projects including a range of safety works such as overtaking lanes, road surface strengthening where the pavement has begun to break up, and some intersection improvements. Some of the smaller works have already been completed, some others are underway or close to construction while arrangements for several of the larger projects that take time to plan are currently being developed.

The remaining $48 million in additional funding was for major upgrading of the Bruce Highway near Tully, which is recognised as the most flood prone section, bringing the total amount of

funds made available for this project to $128 million. I am pleased to report that work has now commenced on this vital upgrade.

Closer to Mackay AusLink is also funding several other initiatives including:

• a $10m upgrade of the Bruce Highway between Mandurana and the Leap, north of Mackay, involving a new rail bridge and highway realignment, which I commissioned on 17 May 2007 • Pavement rehabilitation between Calen and Bloomsbury at a cost of around $3.5m;

and

• Realignment of the Highway and a new rail overpass between Plain Creek and Saltwater Creek at Wilmington near Bowen at a cost of around $23m

On 15 May 2007 the Australian Government announced the first offers of funds for projects in Queensland with an additional $250m in assistance for roads that was announced in the 2007 Budget under the AusLink Strategic Regional Programme. They include $6.5 million for improvements to the Peak Downs Highway near Mackay - to upgrade sections between Mackay and Nebo to improve travel times, safety and traffic flow and support the competitiveness of mining and pastoral industries.

I would like to reiterate my thanks for providing me with an opportunity to discuss some of the issues of interest to regional ports. The Australian Government appreciates the importance of regional ports to our economy. Gatherings such as these provide a forum for cross-fertilisation of ideas. We all gain something that can contribute to enhancing the operations of a very important sector of the maritime industry.