MINERALS COUNCIL OF AUSTRALIA

GS010/2008
28 May 2008

Minerals Council of Australia
Minerals Industry Seminar 2020 Vision
Building Capacity for Global Expansion

Hyatt Hotel

Parliamentary Secretary to be introduced by Session Chair, Mr Brendan Pearson, Deputy to the Chief Executive, Mineral Council of Australia

Building Australias Infrastructure - Australia 2020

Thank you for the warm welcome Brendan. Good afternoon ladies and gentlemen. Its a pleasure to be able to join you today to take part in this cutting edge forum. And can I also congratulate the Minerals Council for facilitating yesterdays discussions on Sustainable Indigenous Communities. Many Indigenous communities play an important role in the mining sector and it is imperative that their voices are heard. I am interested in learning the results and content of those deliberations.

Introduction

Looking around, I see a number of familiar faces here this afternoon. Some of you I met in my previous life with Woodside Energy, others I have met more recently in my role as Parliamentary Secretary for Northern Australia.

I say this to emphasise that I have a genuine understanding of the issues facing the mineral industry -- and a real interest in ensuring that we get the right infrastructure in place to make sure that we can meet the global demand for our mineral products.

And Ive seen the bottlenecks firsthand.

I recently visited Newcastle and counted 32 container ships waiting offshore to load coal.

The Ports in Western Australia are an integral component in delivering staggering economic growth. The eight major Ports stretching down the WA coastline from Broome through to Esperance, collectively handle almost half of Australia's commodity exports - and this percentage is climbing.

It is not only Western Australia however, that is experiencing unprecedented economic growth.

The Northern Territory recently saw an export increase of $210 million to record a trade surplus of $1.3 billion. The Darwin Port Corporation has projected further growth with a one million tonne increase in cargo trade this financial year.

Recent figures from Queensland show that the Ports Corporation of Queensland seaports, make a major contribution to that state's economy - responsible for 4,400 jobs and a $1.14 billion injection to regional economies. increase in jobs generated.

So, what are we going to do to ensure synergy between the road, rail and ocean transport routes?

First up we have established Infrastructure Australia to provide a strategic national blueprint for unlocking bottlenecks and modernising the nations infrastructure. This includes - but is not restricted to - our transport, water, energy and communication assets.

I am sure there are many of you here today who are wondering how this new advisory body will interact with industry, government and stakeholders to help bring about the rapid refocus we need.

A refocus and a fresh approach to better integrate our infrastructure networks - including our vital transport links -- across the country.

A refocus which will help us to build a sustainable economy, create better cities and productive and vibrant regional centres.

Strategic infrastructure facilities in the energy, transport, communications and water sectors all play a vital role in our national productivity and export competitiveness.

Australias future economic challenges - including climate change and population ageing - and more immediate concerns around capacity constraints and inflationary pressures, critically need a forward looking infrastructure sector.

By establishing Infrastructure Australia, the government is taking a long-term view that extends beyond the three-year election cycle and commits significant funds to ensuring that real issues can be identified and addressed.

This view has been informed by a number of reports and commentary that, in short, highlight the need to develop and implement a cohesive and integrated strategy for policy reforms, project identification and delivery.

Infrastructure Australia, or for the sake of brevity, can I say IA, will put in place an ongoing cooperative process for the Commonwealth, States and industry to identify and prioritise infrastructure projects.

Infrastructure Australia - role and function

IA is an advisory council of 12 members appointed by the Minister and Chaired by Sir Rod Eddington. My colleague, Minister Albanese, recently announced the 11 other members.

They include five members with relevant private sector experience (including Sir Rod), three members nominated by the Australian Government, three nominated with the consensus of the States and Territories and one with local government knowledge.

The state nominated members are:

• Dr Kerry Schott, Managing Director and Chief Executive Officer of Sydney Water;

• Jim Hallion, Chief Executive, Department for Transport, Energy and Infrastructure, South Australia; and

• Anthony Kannis, Executive Director, Agency Resources, Department of Treasury and Finance, Western Australia.

Kerry, Jim and Anthony all have extensive experience in infrastructure related issues.

The local government nominee is Professor Peter Newman, Head of the Curtin University Sustainability Policy Institute. Professor Newman is widely respected for his work on sustainable cities.

In addition to Sir Rod Eddington, the nominees from the private sector are:

• Garry Weaven, Executive Chair, Industry Fund Services;

• Phil Hennessy, Brisbane Chairman, KPMG;

• Ms Heather Ridout, Chief Executive, Australian Industry Group;

• The Hon Mark Birrell, Chairman, Infrastructure Partnerships Australia; and

• Ross Rolfe, of Babcock and Brown.

To provide an Australian Government perspective:

• Terry Moran, the Secretary of Prime Minister and Cabinet (who will be represented at meetings by Deputy Secretary Mr Mike Mrdak); and

• Mr Ken Henry, Secretary of the Treasury (who will be represented at meetings by Executive Director David Tune) have been appointed.

Under the leadership of Sir Rod, this group has the capacity to cut through and identify the critical issues as well as the proven abilities to find innovative solutions to infrastructure challenges.

The intellectual calibre and diverse experiences of these individuals underlines the important role Infrastructure Australia will play in our fresh approach to national economic management.

So what is IAs role?

IA has broad functions that give it the ability to examine all aspects of the operation of nationally significant infrastructure including its adequacy, capacity, financing, planning and regulation. Its role is not limited to the delivery of new infrastructure. While IA is established under Commonwealth legislation, it will operate in a genuinely national context.

IA can initiate its own work and the Minister for Infrastructure, Anthony Albanese can also direct IA concerning the performance of its functions, and in regard to relevant Council of Australian Governments decisions.

IAs first task will be to conduct an audit to determine the capacity and condition of nationally significant infrastructure. IA will consult widely as part of the audit, including with owners and operators of existing infrastructure assets.

After the audit is complete, IA will draw up a national priority list, which it will deliver to COAG in March 2009.

The priority list will provide governments and private investors with clear direction on viable, productive investment that will deliver significant benefits to our county.
A pipeline of projects will facilitate better long-term planning and construction of key national infrastructure.

IA will also complete nationally significant guidelines for the operation of Public Private Partnerships by the end of this year.

How does this feed in to Government policy making?

IA is an advisory body. If its recommendations are to be reflected in government policy making, there needs to be a mechanism for governments to consider, discuss and implement its advice in an agreed national framework.

COAG has established the COAG Infrastructure Working Group, chaired by Minister Albanese. The working group is tasked with developing IAs forward work plan, with assisting IA to define the terms of the audit and with developing mechanisms for consideration of IAs reports and recommendations by COAG.

The Infrastructure Working Group has already prepared a summary report that provides an overview of strategic infrastructure priorities at a national level and in infrastructure areas where the Commonwealth has significant funding and regulatory responsibilities.
This will be available for the first meeting of Infrastructure Australia on 4 June.

What does this mean for the Minerals council priorities?

While the Infrastructure Working Group is addressing infrastructure issues directly with IA, other COAG working groups are considering and providing information on social infrastructure issues, indigenous issues, skills shortages, and climate change issues.

These are some of the areas that the Minerals Council has highlighted as issues important and impacting on its priorities. While we cant pre-empt what recommendations and findings IA will make, it is reassuring to know and acknowledge that industry-identified priorities are broadly in sync.

Building Australia

Of specific interest to the Minerals Council will be the Governments announcement of the Building Australia Fund to finance critical national infrastructure. The Building Australia fund will receive an initial allocation of around $20 billion and ensure the Government captures the benefits of the commodities boom and the significant rise in Australias terms of trade by investing in the future.

These funds will be sourced from the budget surpluses expected to 2008-09, with the possibility of further deposits being made from future surpluses.

The Governance arrangements will be finalised in the coming months, now that the quantum of the initial deposit is known. We expect the fund to be up and running by the first of January 2009.

Allocations from the Fund will be guided by Infrastructure Australias national audit and infrastructure priority list that I mentioned earlier.

Infrastructure Australias leadership role in planning and coordinating investment in infrastructure will also be complemented by a range of other Government initiatives in key sectors.

• We have set up the Office of Northern Australia to provide high level advice and improve cooperation and planning for major initiatives in that vast area of our country that lies above the Tropic of Capricorn.

• We have also moved the Northern Land and Water Taskforce into the Office of Northern Australia and extended its terms of reference to identify development opportunities across a range of sectors.

• And we have set up a Major Cities Unit which will work closely with Infrastructure Australia.

Australia has become one of the most urbanised countries in the world, with around 80 percent of us living in one of our major cities.

Australias major cities, and by this I dont just mean the capitals but places like Townsville and Newcastle, are facing a myriad of infrastructure and planning challenges.

What doesnt help is that cities currently have to deal with a range of federal government departments and agencies on issues affecting them, which can be confusing, cumbersome and costly.

A more coordinated and integrated approach is needed. The Major Cities Unit, which will be located within the Department of Infrastructure, will do just that.

And as I said, the Major Cities Unit will work closely with Infrastructure Australia to make our cities more productive, sustainable and liveable.

• The Government is also undertaking important reviews of Australias aviation and coastal shipping industries; and

• will provide $75 million in 2007-08 towards the development of feasibility and planning studies to address urban congestion.

• In telecommunications, the Government has called for proposals to develop a National Broadband Network to provide high speed broadband services to at least 98 per cent of the population, and will provide up to $4.7 billion from the Building Australia Fund.

• Under its 10-year $12.5 billion Water for the Future policy framework, the Government is also bringing a comprehensive coordinated approach to water supplies.

Conclusion

While considerable steps have been made to reform infrastructure sectors over recent decades, significant opportunities remain to promote competitive and well functioning national infrastructure markets -- and to improve regulatory and planning systems.

Reviewing regulation that is not necessarily industry specific, but which can have a significant impact on the costs and timeliness of investment in key infrastructure - such as planning and land use regulation - will help ensure there are no inappropriate or unexpected impacts on investment decisions.

There is also an important role for well targeted, cost effective and timely investments in areas where infrastructure shortfalls are most pressing. It is vital that decision-making for public infrastructure investment is supported by objective, transparent processes, including an assessment of all economic benefits and costs.

Additional infrastructure investment challenges are impacted with factors such as the economy currently operating at close to full employment, domestic inflationary pressures, achieving effective competitiveness in contracting arrangements and not over crowding efficient private sector investment.

To sum up - the infrastructure challenges and opportunities are significant. Australias future economic performance and national productivity can only be enhanced by the commitment towards developing long term planning resulting in real outcomes.

Ultimately, the work and advice of Infrastructure Australia will inform the Governments allocations from the soon-to-be-established $20 billion Building Australia Fund.

Thank you