Speeches: 2004
Presentation to local government managers
AusLink will commence on 1 July this year while R2R2 - as it has been dubbed - kicks in when the current program expires at the end of June next year. We are - as you know - yet to see the full details of how either program will operate. We now expect the Deputy Prime Minister, John Anderson, to release details of both programs on 7 June. While we are yet to see the fine print, we can have a reasonable go at predicting how these two programs might operate.
Address to Local Government Managers Association annual conference
Mr Ian Chalmers
Chief Executive, Australian Local Government Association
24 May 2004: Melbourne
I'm delighted to be here today to talk about two national transport programs that are of critical importance to local government - AusLink and the renewed Roads to Recovery program.
AusLink will commence on 1 July this year while R2R2 - as it has been dubbed - kicks in when the current program expires at the end of June next year.
We are - as you know - yet to see the full details of how either program will operate.
We now expect the Deputy Prime Minister, John Anderson, to release details of both programs on 7 June.
While we are yet to see the fine print, we can have a reasonable go at predicting how these two programs might operate.
I will start by looking at AusLink and its implications for local government and then go on to examine R2R2.
Before doing so, however, I would like to thank all of you for your participation in the campaign to renew Roads to Recovery.
Local government fought hard to secure the Roads to Recovery program - and we fought hard to keep it.
It was a robust but careful campaign that delivered the right result for local government and the communities we serve.
AusLink
The Australian Government announced its intention to develop AusLink exactly two years ago this month.
Six months later, in November 2002, John Anderson released the AusLink Green Paper.
This consultation document set out the broad thrust of what the Government hoped to achieve with AusLink.
AusLink was conceived as a means of addressing the massive increase in Australia's transport task which will take place over the coming decade.
Essentially, AusLink was to be - in the words of the Government - "a national land transport plan to develop and fund an integrated national land transport network".
The Green Paper was a very generalised document. It sought a co-operative approach to land transport between all spheres of government and industry to deliver significant improvements in the planning and funding of transport infrastructure.
The Green Paper attracted no less than 550 submissions, just over half of them from local government.
ALGA's submission pursued three key goals:
- The Commonwealth must provide additional funding for the new elements of AusLink;
- The Commonwealth must upgrade the current system, especially local roads by renewing Roads to Recovery; and
- There must be transparent, accountable and equitable distribution and decision-making arrangements, involving all spheres of government.
Not surprisingly, negotiations on AusLink have been extremely complex and time consuming.
The anticipated release of the White Paper was delayed time and time again.
By late 2003, AusLink had been dubbed 'Was-Link'.
It now seems likely that the White Paper will reveal a far more pragmatic program than was first anticipated.
Rather than a transport 'grand plan', AusLink will mainly be a vehicle for the funding of transport infrastructure which the Australian Government sees as its responsibility.
So, what will the White Paper look like when released in two weeks time?
Federal Budget
There were some clues in last week's Federal Budget.
Total new funding for AusLink - excluding R2R2 - will be substantial - $1.487 billion over five years.
Of this, $1.44 billion will go to the National Land Transport Network - namely the major road and rail links across Australia.
This includes around $265 million a year from 2006-07 for the AusLink 'regional pool'.
The remaining $47 million will be allocated over six years to administration and new IT systems for the Federal Department of Transport and Regional Services.
AusLink will also incorporate the existing National Highways and Roads of National Importance programs.
There are some important points that arise from the Budget papers.
The big increase in funds for the National Land Transport Network is still two years away. The allocation is $88 million for 2004-05, $108 million in 2005-06 and then jumps to $420 million in each of the next three years.
The Budget also notes that the Australian Government will - and I quote "share funding responsibility for projects within the national network with states, territories and the private sector". It will be very interesting to see how this will work.
Finally, the Budget confirmed additional local road funding of $1 million for the Northern Territory in 2004-05 and $26.3 million over three years for South Australia to address anomalies in local road funding.
The Budget gives little else away on details on the principles and procedures for the new Roads to Recovery program and AusLink.
Roads to Recovery Mark II
The Roads to Recovery program is - without doubt - a shining example of effective partnership between the Commonwealth and local government.
The announcement that the program would be renewed for a further four years is of enormous significance for local government.
It demonstrates the clear value of the program to our communities and holds out the prospect that future partnerships on this scale can be achieved in other areas.
As announced in January and confirmed in the Budget, the renewed program will run for four years from July 2005, at a funding level of $300 million a year.
A 'core' component of $200 million a year will be distributed to councils in a similar way to the current program.
The remaining $100 million a year is to be designated as a 'strategic' component.
This will be available to councils on a competitive basis for what John Anderson has called projects of 'strategic regional importance'.
What will constitute a project of regional strategic importance is still be determined, but the Government has made it clear that projects supporting emerging and expanding industries will be preferred.
Examples cited by Mr Anderson included upgrading a tourist route through several councils, or upgrading local infrastructure to service developing industries such as timber plantations, which put extra loads on local roads.
The intent is to provide a substantial incentive for local government to build on the many regional partnerships and capacity building initiatives already in place, although allocation criteria - for example state shares, type of works, timeframes and so on - are yet to be finalised.
Given that the new R2R2 program is likely to be run under the AusLink umbrella, it is essential that it be quarantined exclusively for local government.
The Commonwealth has given assurances that the arrangements for implementation of the new program will be discussed with local government, through ALGA and the state and territory associations.
The final decision will, however, be that of the Australian Government.
As always, the devil is to be found in the detail. ALGA has, therefore, developed a clear position on how the program should operate within the parameters set by the Minister.
ALGA Executive met in February and agreed on a position on principles and procedures for the new arrangements in four key areas.
- 1. Legislative basis
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R2R2 should have its own discrete legislation. This should ideally be done by extending and modifying the existing Roads to Recovery Act.
- 2. Funding quantum and allocation
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The Commonwealth must confirm funding of $1.2 billion over four years, at $300 million a year - i.e. no annual variation as happened with the current program, when $100 million was 're-phased' - to use the Government's euphemism - from 2002-03 until the 2004-05 financial year.
- 3. 'Core' funding component
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The $200 million a year 'core' component should be allocated on the basis of the present R2R formula, with funds paid directly to each and every council. The administrative methodology used for the current program is relatively simple, effective and well accepted and should be retained.
Substantial projects should continue to draw on funds allocated over more than one year.
- 4. 'Strategic' funding component
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The strategic funding component is the area of greatest uncertainty. ALGA considers it vital to ensure that:
- funding is allocated equitably across states and regions;
- there is a collaborative model to encourage councils to voluntarily pool their funds to agreed regional projects
- groups of councils or regional groups should decide how the funds are allocated in terms of regional priorities
- while there could be 'project partners' such as state government agencies or local industry, R2R2 funds must be paid directly to councils or local government regional groups
Some further issues for resolution on the strategic pool include:
- What are the project selection criteria and weighting? Who decides? Is the process transparent?
- It is very likely that the Commonwealth will favour regional partnerships in project selection, as proposed in the AusLink Green Paper.
It will, therefore, be important for each jurisdiction to have a strong regional transport group framework in place by late 2004, to submit proposals by early 2005.
It will be vital to keep the application, assessment and acquittal processes for the R2R2 strategic pool simple, and to maximise council discretion on allocation of funds.
While the consultations have been positive to date, we expect the Australian Government to reveal its final decision on R2R2 principles and procedures in the AusLink White Paper.
We can only hope that they have listened carefully to our arguments.
I'd now like to raise three further issues which may impact on the roll-out of AusLink and R2R2.
First, the ALP position. Last year, Labor said it supported the push for the Roads to Recovery program to be continued and called for the Federal Government to make an early commitment to renewal.
In January - following the announcement that Roads to Recovery would be renewed - Labor's transport spokesman, Martin Ferguson, said the ALP supported the R2R2 and AusLink regional proposals, provided the new funding was - and I quote - "strategically delivered".
He also committed Labor to supporting a Roads to Recovery "style" program.
ALGA is seeking assurances that the ALP will renew R2R to the same level and with, at least, similar conditions, if elected later this year.
Mr Ferguson will meet with ALGA shortly to discuss these matters.
Second, cost shifting.
Quite rightly, the Commonwealth wants to ensure that the states don't use the renewed program to cut their own local government road funding programs. This occurred in Western Australia, where $18m was cut from local road funding programs in last year's state Budget.
While the Commonwealth will retain the requirement that councils maintain at least their own current level of local road maintenance expenditure, it will also seek to ensure state governments meet the same commitment.
We can expect firmer compliance and monitoring of these commitments - especially for state road funding.
Third, will AusLink infrastructure funding be integrated into a wider National Land Transport Plan?
Much will depend on the Inter-Governmental Agreement negotiations that will need to be conducted with the states to implement the White Paper. I suspect these will be neither easy nor swift.
The other element of AusLink announced ahead of the White Paper is the so-called AusLink 'regional pool'.
ALGA consistently called for new funding to be made available for AusLink. We strongly opposed any move to tamper with existing local government road funding.
You may - for example - recall the Green Paper's proposition that a proportion of the identified local roads component of financial assistance grants be pooled for AusLink regional transport projects.
The new funding allocated in the Budget is, therefore, very welcome.
Some $810 million over three years will be available from 2006-07 - on a competitive basis - for regional transport projects linked to AusLink national objectives.
It will be resourced by reallocation of funds from the termination of the Fuel Sales Grants Scheme.
It could be a further opportunity for councils and regional groups to expand regional transport links.
As with the R2R2 strategic pool, many details are yet to be finalised.
There will, however, be two big differences between the R2R2 and AusLink regional pools.
- AusLink will have a far tighter focus on national transport outcomes, emphasising freight efficiency on the national transport network.
- And there will be much tougher competition for councils, with bidding open to states, the private sector, and rail interests.
Even so, innovative councils or regional groups should be able to access this funding - which would be 'icing on the R2R2 cake'.
I'd now like to look at how AusLink and R2R2 may affect asset management strategies.
As we know, it requires a lot of hard work to get and retain local roads funding from the Australian and state government. Those governments are demanding both a better case for providing such grants, and once received, are insisting that local government demonstrate that the funds have been spent effectively.
Good local road data and asset management systems are vital in being able to achieve this - whether determining where and how to use R2R2 grants or making an innovative case for AusLink regional pool funds.
In any case, such systems should be an inherent part of efficient transport infrastructure delivery.
There is, however, wide variation within local government in the use of road data and asset management systems. Capacity building in this area is crucial.
Already, state local government associations and individual councils are developing an exciting range of infrastructure management initiatives.
It is important we evaluate them well, disseminate the results and encourage adoption of the best practice systems.
In summary, we now have a rough picture about what we can expect from AusLink and R2R2.
The full details will - we hope - be fleshed out on 7 June.
But the first chance local government will have to fully assess these programs will come at ALGA's National Local Roads Congress to be held in the Barossa Valley in July.
I strongly encourage you all to attend and participate at this important meeting, which will help us determine our response to these critical new programs.
Thank you.
Ian Chalmers
24 May 2004
