Speech - POPULATION, PARTICIPATION AND PRODUCTIVITY

The Planning, Funding and Building of our National Infrastructure

Address to Urban Development Institute of Australia Congress

 7 March 2013

Melbourne

The business of government is about maintaining our national security, strengthening our economy, protecting our environment while still providing a fair go for all.

All these require long-term planning.

And all these require policies to be implemented to turn these plans into reality.

Today I intend to focus on the future drivers of our economy.

As the former Secretary of the Treasury reminded us the better part of a decade ago, the three key drivers of the economic future of our nation are population, participation and productivity.

In other words, our people, how many of them work and how efficiently they work.

Each is critical in itself.

Each is directly related to the other.

And all are directly related to how we plan, fund and build the infrastructure we will need for the future.

We are a nation of 23 million located in an Asian Hemisphere of more than three billion.

One of our nearest northern neighbours, Indonesia, has a population of a quarter of a billion and rising.

And as per capita incomes rise, economies such as Indonesia will in the future dwarf economies such as Australia.

Australia’s current birth rate is 1.89 - still less than the replacement rate of 2.05.

Our natural birth rate has long been offset by our long term orderly migration program.

Successive generations of migrants from all corners of the world have made Australia much stronger and richer than we would otherwise have been.

It is worth pondering for a moment where Australia would be today, in terms of both our living standards at home, and our standing in the world, had we simply shut the door after World War II, and had Arthur Calwell not initiated the post-war immigration boom that transformed the face of modern Australia.

Our population stagnating at a little more than 8 million people.

Perhaps one the third of the country’s size today

Whereas instead we have managed to become the 12th largest economy in the world, a member of the G20, whose Summit we will host in Australia next year, by far the most significant international gathering of Heads of Government ever held in our nation’s history.

Population policy therefore remains fundamental for the future.

Beyond population, the second 'P' is of course participation.

Our workforce participation rate is critical for a number of reasons, both the aging of the population and our age-dependency ratio both, now and in the future.

The aging of Australia’s population is already evident. According to the ABS, the median age of the population in 2007 was 36.8 years. This is projected to increase to between 38.7 and 40.7 by 2026 and upwards again to between 41.9 years and 45.2 years by 2056.

Medical science is thankfully allowing us all to live longer.

But changes in our age-dependency ratio also represent real causes for concern.

It was 5:1 in 2010.

It is projected to be 2.7:1 by 2050.

At the same time our workforce participation rate has improved in recent year but more will need to be done to sustain improvements in the future.

The 2002/2003 Intergenerational Report puts the workforce participation rate for 2000/2001 at 64 per cent.

By the 2007 Intergenerational Report, this had increased to 64.5 per cent in 2005/2006.

As of January 2013, the latest ABS data puts the workforce participation rate today at 65 per cent.

But according to the 2010 Intergenerational Report, by 2050 it is projected to slide back to 60.6 per cent.

This brings into stark relief a core fiscal policy challenge of our time: how to fund the long term needs of our medical system and other related social outlays with a relatively smaller number of people in the workforce paying the taxes necessary to fund them.

Government policy must therefore aim to encourage more people into the workforce, to re-enter the workforce, and to remain there for longer if that is their wish.

That's why the Government has undertaken record investments in apprenticeships, traineeships and university places to make our young people as work-ready as possible.

That's why we've increased the childcare rebate from 30-50 per cent.

That's why we've introduced Australia's first paid parental leave scheme.

That's why we took the controversial decision of increasing the pension age to 67.

And that’s also why we have begun reform of the health system to invest more in chronic disease prevention and primary health care in the community, in order to reduce the exploding demand for acute hospital-based interventions, which at present take up the lion’s share of the nation’s health budget.

Still, more needs to be done.

But six months before an election, I've yet to see any policy from the alternative government of Australia, other than a plan to impose a new 1.5 per cent tax on Australian business to fund Mr Abbott’s version of paid parental leave, a cost that will of course be passed on to consumers.

Then there is the third "P" - productivity - which will also shape much of our economic future.

According to Australian Bureau of Statics, labour productivity growth at the end of the Howard Government had fallen to 1.1 per cent

It now stands at 2.7 per cent

There are many drivers of productivity growth including labour market flexibility; skills formation and capital intensity.

Again, the Government has been active on multiple policy fronts.

The purpose of the education revolution has been to create in Australia the best educated, best skilled, best trained workforce in the world.

Let us never forget, Australia is the sum of its people, their values and their talents - not the sum of the rocks that lie in the ground.

That's why the Australian Government increased our total national investment in education by a record $13.6 billion this financial year, on top of the $65 billion we’ve invested over the last four years.

This includes for the first time pre-literacy and pre-numeracy education for all preschoolers.

This includes building 3000 new 21st Century libraries and 3000 state of the art classrooms (mainly with interactive whiteboards) over our 7500 primary schools since 2009.

That's also why we have built 370 new state of the art trades training centres to service our secondary schools and the vast array of trades we will need for the future.

That's why we have introduced Australia's first new national curriculum to ensure proper standards and to not punish the tens of thousands of kids who move interstate each year.

That's why we now have the first standardised literacy and numeracy testing, across the entire Australian school system, primary and secondary, so that parents and the community know how their kids and their schools are performing, and so that necessary interventions can occur early enough to make a difference.

That’s why we’ve installed more than a million computers in schools for all year 9 and above students, so that all kids have equitable access to the digital revolution sweeping across all workplaces.

We've also invested in 50,000 more university places.

That's also why we've undertaken record capital investments across our 43 universities and research institutions.

Our plan has been to produce more and more young people completing year 12 equivalent, with greater and greater skills, to enhance the productivity of our future workforce.

Capital intensity also drives productivity growth.

That's why the Government has undertaken the single biggest capital investment program in the country's history in the NBN to turbo charge productivity growth for the future by providing businesses with new technology platforms to source cheaper inputs and to find new markets.

The Government has had a clear policy plan and a record of policy achievement in investing in productivity growth – both in the skills and technology enablers.

But once again, six months before an election, I've yet to hear the policy plans of the alternative government, on the productivity challenge facing the nation - other than opposing practically all the measures I’ve just referred to, and other than a commitment to repeal the Fair Work Act.

Properly co-ordinated and properly implemented, these productivity-enhancing measures will shape our future.

Our success in all three economic drivers – population, participation and productivity - will in turn be shaped by a number of factors.

One major factor will be our national infrastructure planning, its funding and implementation for the future.

All our regions, rural and urban, remote and metropolitan are important.

Today I want to address in particular the longer term infrastructure needs of our cities.

Three quarters of all Australians live in our 18 largest cities.

And four fifths of our GDP is generated in our major cities.

Our cities (both CBDs, inner-suburbia and outer-suburbia) play a powerful role in enabling (or disabling) population growth, enhancing workforce participation and maximising our national productivity.

I have had the pleasure of living in three of Australia's great cities – Brisbane, Sydney and Canberra; and my wife, Therese, beats me by having lived in four - Adelaide, Melbourne, Canberra and Brisbane.

I am not, however, "from the city".

Like many Australians, I grew up in a country town of a couple of hundred people.

We later moved to a regional centre of about 10,000 people.

And then I ended up in the big smoke.

This has been a story happening all over Australia for decades now.

And that is why it is entirely appropriate that the Prime Minister and the Cabinet spends time this week examining the infrastructure needs of our biggest city – Sydney.

And that is why all our cities including Melbourne have been the focus of Australian Government policy as reflected in the last two editions of the Government's State of Australian Cities report released by Infrastructure Minister Albanese.

This report tells us what those in this room already know:

The expectations from those of us who live and work in our major cities for public infrastructure is increasing.

This requires detailed collaborative planning.

This also requires creative, flexible approaches to infrastructure funding given the enduring constraints on public finance and these challenges are reinforced by the continuing challenge of climate change - not just carbon emissions, but also with the projected doubling of the number of high and extreme fire risk days by 2050.

Then there are the challenges of our outer suburbs.

The outer suburbs are home to 3.6 million Australians.

The outer suburbs also represent the best of aspirational Australia. It is where new migrants have made Australia their home, where young people go to start their families, and where many Australians start their first steps of home ownership.

It won’t surprise you that the State of Our Cities report states that the outer suburbs can be transport-poor making it harder to get to work in the major employment hubs.

It is also where many of our small businesses are based – and one of the reasons that the NBN is such a vital leveler for the Australian economy.

Infrastructure planning and delivery has been a core priority of this Australian Government from the beginning.

That's why one of the government's most senior Ministers, Anthony Albanese, the Leader of the House, was appointed Minister for Infrastructure from the beginning.

This is the first such portfolio appointment in the history of the Commonwealth.

We also created Infrastructure Australia (chaired by Rod Eddington from here in Melbourne) in order to draw up, again for the first time in the Commonwealth's history, a national infrastructure priority list.

Furthermore, the Commonwealth committed to funding every single one of the projects identified on the 2009 priority list.

We have funded a $36 Billion Nation Building Program that is not only addressing vital infrastructure gaps but also helped keep our economy afloat during the Global Financial Crisis.

We have also created the Council of Australian Local Government and committed to working with local government to advance constitutional recognition for the third tier of government

We have allocated nearly $1 billion to the Regional Australia Development Fund to support the infrastructure needs of regional Australia.

And the record of our investment in national infrastructure over the last five years has been formidable.

Transport

We the Australian Government have invested more in urban public transport since 2007 than the Howard, Keating, Hawke and Fraser Government's combined.

In fact we have invested more in public transport infrastructure than all federal governments combined since 1901.

If you look around the country, state by state, the results of these investments are slowing changing the face of Australia.

Considering where we are, it seems only fitting that we start this national tour of infrastructure in Victoria.

Through the National Building program we have invested a record $6.8 billion in Victorian infrastructure – $927.8 million this year.

If you break that down, that’s $201 per Victorian – more than double the $89 per person it was before our Government came to office.

Victoria is currently home to Australia’s biggest public transport infrastructure project – the Regional Rail Link.

The Federal Government has contributed $3.225 billion to this project that will connect West Werribee to Southern Cross Station.

I recall when I launched this project with then Premier Brumby at Southern Cross Station that this was the first major addition to the metropolitan rail network in more than half a century.

Heading north to New South Wales, federal infrastructure spending has again more than doubled from $132 per person to $265 per person.

If you add that all up, it has $11.6 billion invested through the Nation Building Program in NSW.

The Australian Government has contributed $618 million to the construction of the Pacific Highway Kempsey Bypass - which will include Australia’s longest bridge at 3.2km.

Last year I had the pleasure of visiting Justine Elliot in her electorate of Richmond up in Northern NSW. There we invested $347 million in the Sexton Hill road upgrade.

This is all part of our national commitment to create a dual carriageway Pacific Highway all the way from Sydney to Brisbane just like that which already exists between Sydney and Melbourne along the Hume.

In my home state, Queensland, the Australian Government has invested $8.7 billion in infrastructure in the Sunshine State, yet again more than doubling our investment from $143 to $314 per person.

This financial year will see the completion of the Cooroy to Curra Section B duplication and upgrade of the Bruce Highway - made possible because of an investment of $388 million for the Australian Government.

Closer to home, well closer to my home, the new Moreton Bay Rail Link between Petrie and Kippa-Ring received an Australian Government contribution of $742 million funding.

We're investing $365 million in the Gold Coast Rapid Transit Network project which is essential to de-congest the Gold Coast CBD.

Heading West, we have yet again we have boosted our infrastructure investment per person from $154 to $261- totalling $3.7 billion.

This includes $224 million in widening the Great Eastern Highway between Kooyong Road and the Tonkin Highway and another $236 million towards the Perth City Link – a project undergrounding city rail lines and constructing new rail platforms to connect Perth’s CBD and Northbridge.

Heading to South Australia - I spent yesterday with the formidable local member Tony Zappia out in the electorate of Makin.

Tony, his constituents and the good citizens of South Australia have received an increase of $164 in infrastructure funding per person – that adds up to a total investments of $2.7 billion through the Nation Building Program.

This has resulted in projects such as the new South Road Superway possible because of a $406 million Australian Government contribution and the extension of the Noarlunga railway line to Seaford thanks to a $291.2 million federal government investment.

Then on to the Apple Isle – Tassie has received $808 million in infrastructure funding - $89.8 million this financial year.

The Brighton Bypass opened in November 2012 having received $186.2 million in Australian Government funding.

The replacement of sleepers, rail and ballasts along key section of the Main North-South Rail was also possible due to a $55.6 million Australian Government contribution.

To our friends in the Territory, the Nation Building Program has invested $636 million - $100.7 million this financial year.

In an effort to provide better, all-weather access for local miners, cattlemen and tourists, we’ve invested $63 million to strengthen and widen sections of the Stuart, Victoria and Barkley Highways and another $40 million to strengthen and widen sections of the Central Arnhem Road.

Beyond these major road and rail construction projects, there has also been unprecedented investment in road and rail freight infrastructure as well around the nation in order to reduce infrastructure bottlenecks.

Australian productivity is reliant on our ability to successfully transport our goods.

With this in mind, the Government is committed to investing $7.4 billion by 2014 to improve and expand Australia's passenger and freight rail networks.

Such infrastructure is not only important for improving our national productivity but in reducing the impact of traffic congestion and tackling climate change.

An important element of our investment in our passenger and freight rail infrastructure is the landmark Moorebank Intermodal. Intended to relieve growing infrastructure pressures around Port Botany and the M5 motorway, once fully functional, it will remove 1.2 million trucks each year from Sydney's roads generate $10 billion in economic benefits

Social infrastructure

The Australian Government’s record investment through the Nation Building Program is literally changing the face of Australia. But the Government has also matched this with unprecedented levels of investment in social infrastructure.

I have already mentioned the record investment in education that has seen 23,610 projects, which have transformed 9484 schools thanks to an Australian Government investment of $16.2 billion.

For our health system with $711m invested in primary care infrastructure including more than 60 GP Super Clinics and 429 primary infrastructure grants for new and improved primary care facilities across Australia.

For local communities with new sports centres, community spaces and libraries with $1.12 billion for the Regional and Local Community Infrastructure program funding more than 6,200 projects – of which only 27 are still to be completed.

NBN

In addition to traditional economic and social infrastructure, this government is also investing in the National Broadband Network.

Because we are a digital nation of 12 million internet subscribers -

with continuing annual growth of 10%.

As of today only four per cent of Australian internet connections are dialup.

The NBN aims to make many current internet speeds feel in the future like dialup does to us today.

We have 2.9 million businesses online.

The digital economy is estimated in a report by the Department of Broadband, Communications and the Digital Economy to be worth 3.3 per cent of GDP – but we are currently behind the average of 4.3 per cent of industrialised economies and they are continuing to grow faster than we are.

It is also estimated that the NBN could add 1.7 per cent to our long-term average productivity growth by 2020.

Therefore the NBN is needed to bring us up to speed.

Imagine the landscape of Australian small businesses if all businesses had the type of access that meant they could have a profitable and productive internet presence. It would revolutionise the way Australians conducted businesses by giving our small and large businesses a level playing field in access to cloud computing and access to clients.

The NBN will bring about another education revolution in regional areas with access to content and resources for eLearning.

It will also transform the way our schools interact with their students, their families, nearby schools and schools on the other side of the world.

The NBN will make the government's investments in tele-health and personally controlled electronic health records pay real dividends in improved patient outcomes.

I also believe that we have failed to recognise the NBN’s potential in our tourism sector.

Being able to send high-resolution video and photos to potential visitors, for visitors to eyeball a tourism operator in full HD before signing up for an experience, and of course to make sure that the speeds they get in their hotel room are second to none.

This is just one example of how the NBN transformation of Australia is yet to unfold.

That’s before we get to the NBN’s impact on telecommuting as more and more business operations will be able to be conducted either from home or from outer suburban centres in turn helping over time to decongest our road networks.

The transformation of the NBN to the possibilities of the future is like giving someone from 1995 an iPad - the leap forward once we have the whole nation fully wired will be mind blowing.

We have done all of this in economic, social and digital infrastructure because we are not interested in the blame game between the feds and the states.

Historically the federal conservatives have washed their hands of their investment responsibilities in both our national economic and social infrastructure.

Beyond episodic investments in the national highway network, the national infrastructure spend prior to 2007 was marginal.

Even the spend on the national highway network was marginal.

Historically, the Australian government simply preferred to blame the states for the national infrastructure deficit.

And because the states were so cash strapped, the result was that the national infrastructure gap simply got bigger and bigger.

By contrast, this Australian government is now a major partner with both state and local governments on state and local infrastructure planning and investment.

In other words - you are either real about this stuff – as we are – or you can let the nation’s infrastructure fall behind, fall into disrepair, and eventually fall apart and take the economy down with it.

And we don’t intend to allow that to happen.

We have increased spending on roads and bridges by 23 per cent.

We increased spending on railways by 103 per cent.

And we increased spending on ports by 156 per cent.

Overall – Australia is investing $15.3 billion per year more than was spent in 2006.

In other words, we, the Australian Government are now helping shoulder the national burden.

Again we are six months out from an election.

We have heard nothing from the alternative government of Australia about its plans to tackle the national infrastructure deficit.

Other than in the case of the NBN where Mr Abbott has committed to simply rip it up, possibly lay out fibre optic to the node if you happen to live in the right place, not to all premises as we plan, thereby leaving the problem once again for someone else to fix.

Broadband as a technology has been around for a long time.

Over twelve years in office, there was something like 12 Coalition plans to roll out broadband across Australia.

They all failed.

And Mr Abbott's plan for the future appears to be the same again.

This will render our major cities and our regional centres absolute economic backwaters compared to the rest of the world, which is heading in exactly the reverse direction.

Conclusion

A thriving population needs hospitals, schools, viable tertiary education options and to be active members of the digital revolution.

To participate effectively, we need a smart population that have had access to the excellent education opportunities.

And increasing productivity requires infrastructure – people and goods and services need to be able to get from A to B, they need to be connected, and they need to be able to get to the future jobs – be they online or in our suburbs.

I am an optimist for the future of Australia.

I believe we can address our challenges in infrastructure – and we can market our expertise to the world – especially here in the Asian hemisphere.

And I believe that our government’s infrastructure plans have set the country back on the right track when it comes to preparing our country and our economy for the 21st century.