Senator RICE: I will start with the new Infrastructure Australia priority list that has just been released. Congratulations on getting the new list out. It is good to see that a larger number of the priority projects now have full business cases. What is the rationale for the projects that have ended up as high priority and priority? Can you outline the rationale for how those projects have ended up on that list?
Mr Davies: As part of the overall assessment process, we are looking at threshold questions around if the potential project is nationally significant. Then we go through an assessment process that looks at the relative impact of that potential project, and that really leads us to looking at the economic, social, environmental and strategic merits of each of those potential projects. Through that process we are assigning projects that are going to have a greater economic impact as high priority projects, or indeed initiatives, if they are at the early stage. Then, everything else is characterised as just a priority. So I think the important message is that the fact they are all on the list means that they are nationally significant and a priority, and therefore the high priority is really a reflection of the higher economic impact of that.
Senator RICE: Is all of that rationale and assessment publicly available on your website?
Mr Davies: Yes, it is. It is all part of the process on the website.
Senator RICE: Do you think it is important to have all that rationale and that assessment publicly available?
Mr Davies: Yes.
Senator RICE: It seems that of the projects you have about half dealing with urban congestion and national connectivity and freight. I think 14 projects overall have been either high priority or priority, and seven of them are dealing with urban congestion. It appears that of those seven urban congestion ones only one is a public transport project. Can you comment on the fact that you seem to have a lack of balance between road projects and public transport projects?
Mr Davies: If you remember back to when we relaunched the priority list in February of this year, at that stage there were 91 initiatives on the list and indeed only to projects. As you recognised in your opening remarks we have had a very good period of time since February, where a number of these initiatives have come back to us as business cases and indeed have gone through the assessment process and been assessed by IA's board. So we now have a much healthier number of projects on the list. In terms of what comes forward to us, that is a combination of bottom-up evidence, which was the basis for establishing the priority list back in February. But it is very much down to the jurisdictions in terms of what they are working on and advancing. I think it is fair to say that a number of these business cases are ones that either have previously been developed by a jurisdiction or have been brought through in perhaps a more accelerated way since we relaunched the list. The short answer is that what comes to us is really outside of our control. It is what is ready to come to us from the jurisdictions. Keep in mind that many of these business cases can take 18 months or two years to actually develop. It is just the nature of what has come to us. In terms of the categorisation, we find that useful to us in terms of organising the list and just getting our own minds around what the different problems are we are seeking to solve and what some of those projects might be. There is no use for it other than that, in terms of ordering it on the list.
Senator RICE: Is it a concern to Infrastructure Australia that the road projects seem to be coming to you in much greater numbers? We only have one public transport project: the Perth-Forrestfield link. The executive summary of the infrastructure plan really focuses on the importance of high-frequency interconnected public transport systems, the need to be reducing our greenhouse gas emissions, the role of public transport in doing that, and the role of public transport in enabling people to shift from cars to public transport. So you have a plan that says we need to be putting high emphasis on improving our public transport systems, yet what is coming through it you are largely only road projects.
Mr Davies: In terms of what has been assessed and put on the list most recently, we have some rail projects as well as road projects. I think it is important to mention as well that we are currently assessing some very significant public transport projects, such as Melbourne Metro, cross-river rail and Sydney Metro. So there are some very significant business cases in the pipeline.
Senator RICE: But you also have in the pipeline some business cases for further road projects, like the Western distributor, the Armadale road and the Swan Valley bypass.
Senator STERLE: Beauty, bring on the Swan Valley bypass! Anything that moves trucks up and down that west coast—you beauty!
Senator RICE: Do you concede that in the projects that are being brought to you for assessment these road projects seem to be getting more of a priority from state governments than public transport projects?
Mr Davies: The order in which state governments want to develop their projects is really a matter for them as part of their strategic plans. We are looking at the bigger picture through the priority list in terms of the evidence base that we developed through the audit—what are the problems were are seeking to solve? We have a number of initiatives. Some of them on the priority list are actually quite strategic, high-level initiatives. It is really a matter for the state and territory governments, or the private sector for that matter, in terms of what they bring to us.
Senator RICE: In order to meet the outcomes that you have set out in your infrastructure plan, do you feel that is going to be necessary for the states to have a better balance of public transport versus road projects? Otherwise, your plan is just meaningless; it is not able to be implemented.
Mr Davies: I think the state government response to the problem is a matter for them. They do the detailed work of the modelling and the integrated planning, so the order in which they want to tackle urban congestion, which clearly was a big discussion point after we did the audit, is really a matter for them. Urban congestion is a big part of the problem we are seeking to solve.
Senator RICE: So basically your plan just sits there to be taken account of or ignored by the state government at will.
Mr Davies: The plan provides an evidence based baseline for all governments, as well as the private sector, to refer to.
Senator RICE: But if the states want to prioritise road projects, you cannot do anything about that?
Mr Davies: That is a matter for the states.
Senator RICE: I also see that inland rail is the only project on the list of longer term projects rather than nearterm projects. Why is that the case?
Mr Davies: When we updated the priority list we tried to give some time and categorisation to two lenses. One was: when is this problem going to manifest? That was to try to encourage longer term planning. We have three timestamps—five, 10, 15 years—on when a problem is going to manifest. That is represented on the list. Then when the projects come forward the timestamp moves to: when do we need to implement? Obviously if it is a physical project, we asked, 'When will we really need this solution?' Inland rail falls into that longer term—
Senator RICE: Are you saying it is not needed in the short term?
Mr Davies: Inland rail, because that is now a project, has a longer term time line because of the time that it is going to take to construct. The department can probably speak with more detail on the implementation program, but it will be in the order of 10 years. So it will be a long-term implementation—
Senator RICE: What is your assessment of the need? How quickly it can be built obviously depends upon the resources that are put towards it. What is Infrastructure Australia's assessment of how urgent the need for inland rail is?
Mr Davies: We published our assessment back in May of this year. I am looking at it now. Within the assessment, we recognised that 10-year construction time frame. But clearly the activities to start the detailed planning and implementation of that project has already commenced. These projects take a long time to implement.
Senator RICE: But other projects do as well. Some of the other ones on the short-term list are equally complex projects; they have just been given funding priority to enable them to proceed more quickly.
Mr Davies: Our assessment does not take account of funding. That is a matter for governments. Rather, our assessment looks at two things: when is this going to be a problem we will need to solve and, then, if there is a project, when does it need to be up and running?
Senator RICE: Can I clarify something. What is Infrastructure Australia's assessment of the time frame it will be needed in? Are you saying that it is not needed until the longer term?
Mr Davies: Yes. That is reflected in the fact that it is a 10-year construction. So the solution is needed—
Senator RICE: But it could be constructed more quickly if the resources were available.
Mr Davies: It is a pretty complex project in terms of construction. The construction process is, again, a matter for the proponent and is part of the work they have done to put their business case and detailed work program together. In our assessment we are reflecting that that has been selected as the most efficient way of delivering that project. We are respecting that that is the best approach to deliver best value for money.
Senator RICE: Do you have a projected cost-benefit assessment for inland rail?
Mr Davies: For inland rail, again, we were provided with the business case by the proponent. The benefit-cost ratio was 1.1. That was the basis for our assessment. As you know, we do not do our own cost-benefit ratio. We assess the work done by the proponent.
Senator RICE: How is your assessment of Melbourne Metro going?
Mr Davies: Melbourne Metro is one of those large public transport projects of which we are currently reviewing the business case. That work is proceeding. Again, it is a very complex project, with a lot of supporting material and background analysis. We are working through that with the Victorian government. As always with these projects, there is a continuous flow of information and questions and answers.
Senator RICE: What documents have you been given by or requested from the Victorian government to help your assessment of Melbourne Metro?
Mr Davies: We have the base business case material and then there were a number—I do not have that number in front of me—of supporting documents that were provided. A large part of our role is to do our own due diligence on the business case. As is common with these projects, there will be a period of toing and froing with the—
Senator RICE: Can you take on notice the list of the documents you have been given or have requested from the Victorian government for the Melbourne Metro assessment. If you could get that back to us today, that would be terrific.
Mr Parkinson: We have quite a list of documents for that project. We can give that to you.
Senator RICE: In particular in that list of documents have you received the independent peer reviews that were done on the transport and economic modelling of the project?
Mr Parkinson: We do have a peer review of that project. Whether it fits your idea of the category of peer review I am not certain. We can certainly include that document in the list of documents we have received.
Senator RICE: We had a freedom-of-information request through the Victorian state government. There were some independent peer reviews of the transport and economic modelling. The transport modelling was undertaken by John Allard and the economic modelling was undertaken by KPMG. I would be interested to know whether you have those. Mr Parkinson: Yes, we have the KPMG report. I do not believe we have the other one.
Senator RICE: What do you see as the value those peer reviews add to the work you are doing?
Mr Davies: Generally speaking, as I mentioned, we are doing our own due diligence, so we will often be looking at the same kind of things that—
Senator RICE: So are they in some ways analogous to the work you are doing?
Mr Davies: Yes. We will be looking at similar things to any peer review. It is always helpful to see what kind of questions other people have asked. To be honest, we are doing our own independent peer review.
Senator RICE: But those independent peer reviews are of value to you?
Mr Davies: On occasion they can be, yes.
Senator RICE: Do you have an idea at the moment of what overall benefit-cost ratio we are looking at for Melbourne Metro? Mr Davies: I can only quote what is publicly available from the Victorian government, which is a BCR of 1.1.
Senator RICE: When is your review of Melbourne Metro going to be completed?
Mr Davies: That is a hard question to answer because, as I mentioned, this business case has evolved over several years. It is complex. Often you go and ask a range of questions and get some more information back. You then do more analysis and often come up with an even longer list of questions! So it is really hard to answer that question. From our point of view, we are trying to complete this business case assessment as quickly as possible.
Senator RICE: Do you have an indicative idea?
Mr Parkinson: I would say that that assessment is getting closer to being finished. I would not be so bold as to put a date on it.
Senator RICE: So sometime in 2017, presumably?
Mr Parkinson: Possibly before then.
Senator RICE: Possibly before 2017?
Mr Davies: Yes.
Senator RICE: That sounds optimistic.