Published on November 26, 2013
National initiatives for ports and freight Thank you [ ] I’ve been invited here today to provide you with a snapshot of national port and freight initiatives. I’ll start by running through some of the challenges facing industry and governments in the ports and freight space. Then I’ll discuss how governments are responding. Policy Challenges The policy challenges facing Australia’s infrastructure sector over the medium to long term are significant. Major economic transformation in Asia presents an opportunity for Australia to grow our economy. But we need to improve our international competitiveness to make the most of this opportunity. Productivity in Australia is stagnating and this has the potential to significantly impact our livings standards in the future. Between 1985 and 2008, transport sector productivity growth averaged 1.6% per annum, compared to 1% across all sectors. But productivity growth has flattened out in recent years. An ageing population will increasingly affect taxation revenue, government spending priorities and the supply of skilled and unskilled workers. Page | 1
For example there were 7 people working to support each Australian 65 years and over in 1970, 5 today, but by 2050 the ratio is projected to fall to 2.7 workers to 1. Yet even though a quarter of Australian government spending is already directed to health, age-related pensions and aged care, spending on these functions is projected to increase significantly over the next 40 years, pushing the share of spending to almost half. These changing demographics will mean that we need a better approach to the planning and prioritisation of infrastructure investments. We critically need to meet the future expected growth in passengers and freight as efficiently as possible. And we need to get the most bang for our investment buck. The growing freight task A key issue the transport industry will be facing is the expected growth in the freight task. The Bureau of Infrastructure, Transport and Regional Economics has forecast that between 2010 and 2030, the size of the freight task will double: truck traffic is predicted to increase by 50%; rail freight is expected to jump 90%; and the number of containers crossing the nation's wharves will increase by 150%. In addition, the volume of freight flown into and out of Australia has more than doubled over the last twenty years and is expected to increase by almost 110 per cent by 2030. Page | 2
The increase in imports creates pressure at our ports and airports, distribution hubs and on metropolitan road networks. Our declining domestic manufacturing sector unfortunately puts even greater pressure on our ports, with even more of the freight task going through our ports Meanwhile, increases in agricultural and mining exports create pressure on regional roads, as well as local roads where farm-gate access is critical. In short, increases in freight will require the entire supply chain to do more. Governments have recognised that dealing effectively with these challenges means there is a need for much stronger collaboration between governments at all levels and industry. The P word – planning – is front and centre of strategic thinking. This is a great change from just a few years ago. I remember in the mid-noughties meeting with a Chinese delegation interested in our approach to national ports planning. Language and translation always make discussions at meetings with international delegations difficult, but the silence after I indicated there was no national ports plan in place was even longer than usual. It would be a very different conversation today. Response by governments So what are governments currently doing to address the challenges that I’ve just outlined? Page | 3
Firstly governments approach these challenges in the recognition that the right decisions can only be made by undertaking long-term, integrated planning. For too long governments worked on a very ‘silo’ basis – ports were ports, roads and rail were roads and rail, urban planning was urban planning, and it was not necessary to think across the silos. This is probably the biggest single area where attitudes have changed. Limited efforts to plan, protect and acquire (on a timely basis) land for freight hubs and corridors has the potential to significantly increase the costs of the development and ongoing operation of transport infrastructure. Decisions on ports can fundamentally change the requirements for connecting road and rail infrastructure. And for Port Botany, clearly the issues facing Kingsford Smith airport are also critical Failure to protect corridors can result in preferred routes being ‘built out’, by encroaching development, sub-optimal routes being used and diverted or expensive alternatives (such as tunnels) requiring development. And the Commonwealth already has a number of initiatives underway that broadly address our infrastructure challenges, such as the National Infrastructure Construction Schedule. And reforms to the role of Infrastructure Australia including structural changes to the role of the CEO and the development of a 15-year pipeline of major infrastructure projects to be revised every 5 years based on national, state and local infrastructure priorities, which will be informed by a new evidence-based audit of our infrastructure base. Page | 4
Ports and freight regulation has, and remains, largely a matter for state and territory governments and the operation of ports and the transport of freight is generally driven by the private sector. Governments have over time though come to recognise the need for a nationally coordinated approach to ports and freight issues, which brings all parties together to promote improved economic, social and environmental outcomes nationally. And that there is a need to integrate thinking about all the issues needed to make a port work – the regulations directly affecting ports; the regulations affecting how you get freight to and from a port; the investments required both for the port and the connecting land infrastructure; and the urban planning issues that can have a fundamental effect on port outcomes. Just recently the ACCC’s 15th report on competition in container ports commented, and I quote: ‘Port expansions must be accompanied by targeted investments in road and rail connections to container terminals if Australia is to be ready to meet all the challenges associated with an expected doubling of the freight task over the next twenty years.’ The ACCC went on to comment on the need for broader reforms – to heavy vehicle road provision; to provide better signals to shippers about modal choices to get containers to and from ports, and to use price mechanisms to get better use of landside port facilities by truck operators. In recognition of these types of issues the National Ports Strategy was endorsed by COAG in July 2012 and in May 2013 the Standing Council on Transport and Infrastructure endorsed the National Land Freight Strategy. Page | 5
These strategies don’t fight our federal system; they recognise state and territory responsibilities but seek to ensure there is an overarching strategic umbrella to ensure we get the outcomes we need as a nation. They provide for strong linkages to the ports and freight strategies of the states and territories, as well as close collaboration with industry. The new Government is currently working through the details of its future approach to port and freight issues, but the core elements of the strategies will remain – highlighting the need for integrated approaches; recognising and respecting the respective roles of the Commonwealth, states and territories; and close collaboration with industry stakeholders, not least the ports community. In collaboration with the states and territories the Department is progressing a number of key reform initiatives that have been raised in our ongoing discussions with stakeholders. These initiatives include… Comprehensive ports master planning. Both Government and Ports Australia share the view that all commercially trading Australian ports need a comprehensive master plan, while recognising that these plans need to take account of the specific circumstances facing each port. On that note I’d like to take this opportunity to acknowledge the work of Ports Australia in developing and recently publishing leading practice port master planning guidelines. The port master planning guidelines document came about as response to the challenge from governments to move port master plans away from being developed in isolation – simply addressing Page | 6
‘within boundary’ issues – and give greater consideration to how port infrastructure co-exists with the communities around it. The document not only provides a strategic framework for port authorities to consider a range of internal and external factors that may impact on current and/or future operations, but it clearly outlines the tangible ‘on-the-ground’ benefits for critical port stakeholders that comprehensive master planning can bring. We anticipate the port master planning guidelines will be a critical tool for land use planning and corridor protection in and around our ports. We also envisage that the adoption of comprehensive port master plans can help policy makers at all levels of government in facilitating more efficient landside links with ports and key inland freight routes and intermodal terminals. I would like to note that many ports already have a master plan in place. The next step for ports, industry and governments will be to ensure that these plans will be as useful as possible for the future, by considering future planning in the context of the new guidelines. To achieve that the Department and Ports Australia are investigating the possibility of using a capital city and a regional port as locations for a port master planning demonstration case. The Department also continues to convene discussions between Ports Australia, the Department of Environment and Infrastructure Australia. These discussions are helping to ensure that the port planning guidelines have maximum value, not least in terms of potential streamlining of environmental approval processes. Page | 7
Mapping key freight routes Mapping the key freight routes in Australia is another core initiative. We define key freight routes as those routes that connect our nationally significant places for freight, and not surprisingly port connections are critical to the task. This work complements and builds on state and territory port and freight strategies, and involves the states and territories identifying their priority elements of the national freight system. While there have been various maps produced to-date, this is the first time that Commonwealth, state and territory governments have collaborated on mapping key freight routes. The mapping is intended to be an ongoing and evolving process for governments seeking to develop a deeper, more comprehensive understanding about the national freight network, and to ensure connected policy development. The mapping is also intended to provide the basis for conversations with industry about meeting the growing and changing national freight task. Mapping key freight routes will provide more certainty to industry— the key users of the system—in terms of governments’ long term integrated land use and transport plans and initiating partnership with industry in the planning and investment process. It will also support further actions to address each of the interrelated challenges I have outlined, and complement related reforms that are already underway including the national regulators. I should stress that the map of key freight routes will not amount to creating a funding network – the map is first and foremost about understanding the connections between our main places for freight. Page | 8
There will be infrastructure funding issues associated with significant elements of the mapping, but there are also significant planning and regulatory issues emerging that do not involve funding issues. An example will be issues related to heavy vehicle access, where the solution will likely lie with the new National Heavy Vehicle Regulator and negotiations with local government, rather than funding per se being the solution. But I might just mention here a couple of investment-related issues to highlight how we see the mapping process being used. Here in Geelong, the Australian Government has funded ARTC’s rail upgrades at the port, which have substantially increased standard rail guage access as well as providing extra sidings and storage facilities. Thinking more strategically about investments that improve the interface between our ports and the land transport network is a critical objective of the work we are doing. The mapping exercise is also confirming strong support for the inland rail connection between Melbourne and Brisbane, for which the Commonwealth has set aside $300m for pre-construction activities including a commitment to investigate a 24/7 dedicated freight connection from the Acacia Ridge Intermodal Terminal to the Port of Brisbane to link into the Melbourne to Brisbane Inland Railway. The key freight routes are to be mapped by mid-2014 with a view to the states identifying any funding, regulatory or corridor protection measures required for these routes by the end of 2014. There will be ongoing opportunities to amend the map to add additional routes that have been identified as key freight routes, as well as removing routes that are no longer relevant to this exercise. Page | 9
Better national freight and ports data and performance measures Increasing policy focus on freight and the adequacy of infrastructure to support Australia’s growing freight task is increasing the demand for more detailed information on where freight moves. The national port and freight initiatives explicitly recognise the need for data and projections to help inform investment and policy decisions across individual ports, and road and rail links. Reliable and up-to-date information about current and projected future use of the network is essential to the efficient planning and management of the network. However because of the breadth and diversity of the freight task, detailed freight data is generally costly to collect and even when it is collected, commercial confidentiality can limit availability of the more detailed information required to inform planning. In response to this the Bureau of Infrastructure, Transport and Regional Economics is providing a series of overviews on different commodity or sectoral specific aspects of Australia’s freight task. The first three volumes of the series will deal with a background to the freight task, iron ore and grains and these will likely be released in the first half of 2014. In addition BITRE has made significant progress in studies on dedicated freight infrastructure, empty intermodal container parks, port rail intermodal supply chain operations, and Australia’s bulk ports. Page | 10
They are also reviewing the key performance indicators used in the Waterline index, which provides the latest data available on stevedoring productivity and landside performance at Australia’s major container ports, to support improved ports and landside efficiency. Community Engagement Another initiative we are working on is community engagement. Building community support for the transport of freight and freight hubs through effective community engagement has been identified by industry and governments as a key strategic issue. All parties acknowledge that even if there is physical infrastructure capacity to accommodate the freight task, without community support, moving freight will remain a challenge especially in urban areas – and in the first/last mile. The aim is to ensure that communities can make balanced, informed decisions about freight issues that impact on them. Research indicates that community concerns about freight centre on pollution, noise and road safety issues, but that community awareness of the increasing freight task is currently very low. This need to work with communities to aid understanding of the importance of freight was subsequently endorsed as a key initiative by the Standing Council on Transport and Infrastructure in May 2013. The release of the Leading Practice: Port Master Planning document is a key step in progressing this initiative and it notes how port Page | 11
master plans can aid in addressing social and environmental interface issues in and around seaport areas by using them as a tool to inform local communities as to how they can expect to see the port develop over the coming years. There is also work being done to develop community engagement with industry and state and territory governments on freight transport. Furthermore the Government welcomes the ongoing enthusiasm and expectation all stakeholders have for this initiative and we look forward to industry continuing to take a leading role on progressing it. Environmental Issues Finally I would like to note the work that the Government is doing on environmental approvals. I recognise that many Australian regional ports are located in sensitive coastal and marine environments, with several in or directly adjacent to World Heritage areas, and so require a wide range of management responses to comply with the different regulatory regimes that apply to the impacts that port operations, such as dredging, can have on the environment. Gladstone is an example of a port that has been subject to extremely close scrutiny in this regard. To aid port managers in this the Australian Government is committed to delivering a 'one stop shop' for environmental approvals that will Page | 12
accredit state planning systems under national environmental law, to create a single environmental assessment and approval process. The one stop shop policy will operate at the single approval scale and will remove duplication in the approvals process and lead to swifter decisions. We see the one stop shop policy and Ports Australia’s leading practice master planning guidelines as being highly complementary – adoption of leading practice approaches to master planning will undoubtedly assist ports with their environmental approval processes. Conclusion Addressing the challenges of ports and freight requires collaborative actions by all levels of government and industry – there is no alternative way forward. I believe we have made good progress in recent times in understanding the nature of the challenges, and what is required to address them. We look forward to using the processes we have established at the national level to implement the initiatives outlined and to identify new ones and I look forward to the close involvement of industry and the broader ports community in this. It is this collaborative approach and the long-term, integrated planning that underpins it that will go a long way to ensuring that we make the right decisions on the challenges facing Australia’s ports and freight sectors. Page | 13
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