The Future of Infrastructure Conference

Michael Kilgariff, Managing Director, Australian Logistics Council

Tuesday 19 August 2014

Michael Kilgariff, Managing Director, Australian Logistics Council

Lessons from the B20

• Two major pressures facing all advanced economies: ageing or poorly managed assets and public balance sheets and fiscal pressures.

• Around $60–70 trillion dollars of additional infrastructure capacity will be needed globally by 2030, but only $45 trillion will be realised.

• Greater involvement by the private sector is needed to fill the void.

Economic Significance of the Australian Logistics Industry

• Represents 8.6% of the nation’s GDP in 2013

• Directly contributed $131.6 billion to Australia’s economy in 2013.Australia’s economy in 2013.

• Employs around 1.2 million people

• A 1% improvement in the efficiency of the sector generates $2 billion of gains to the economy each year

Asset Recycling

• Commonwealth proposal to offer states financial incentives if proceeds from assets go towards productive infrastructure.

• Funds from the sale of Port Botany and Port Kembla have gone towards major infrastructure projects like West Connex.

• ALC encourages the Senate to pass the necessary legislation.• ALC encourages the Senate to pass the necessary legislation.

Infrastructure Investment and Pricing Reform

• There needs to be a more efficient way of providing infrastructure for high priority freight routes.

• ALC supports reform to deliver a more efficient and sustainable freight logistics networknetwork

• Reform of the system needs to be based on the premise that ‘money follows the freight’

• Reform needs to be progressed by central agencies, not transport departments

Cost Benefit Analyses

• Recent ERA report found project evaluation practices could be improved by ensuring that evaluation processes, including cost-benefit analysis, are applied more rigorously to all major applied more rigorously to all major infrastructure projects and outcomes of these evaluations are published.

• The public release of CBAs gives industry and the community confidence that public funds are being spent wisely, are being spent on the right projects, and are targeted at developments that will maximise economic return.

Key Freight Logistics Issues in Victoria • Port Freight Shuttle – aimed at improving efficiency to and from the port

• Industry looking for greater certainty on long term freight planning

• Coode Island – where greater certainty is needed to drive long term • Coode Island – where greater certainty is needed to drive long term investment

Five keys to success

- Encouraging greater private sector investment in infrastructure

- Reforming how infrastructure is priced and funded

- Ensuring the right projects are selected for funding

- A commitment to long term freight planning- A commitment to long term freight planning

- Capitalise on efforts to get more freight on to rail