IN THIS EDITION

1. business case released 2. Inquiry into National Freight and Supply Chain Strategy Priorities report released; TIC meeting endorses Inquiry and discusses progress of heavy vehicle reform

3. Two contractors shortlisted for $375 million Mordialloc Freeway project 4. Queensland Government announces $897 million for M1 upgrade; Queensland Major Projects Pipeline released

5. Industry news 6. Industry appointments

7. IPA news

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1. North East Link business case released

This week, the Victorian Government publicly released the business case for the $16.5 billion North East Link (the Link). The business case finds the Link has a Benefit Cost Ratio (BCR) of 1.3 and a nominal cost of $15.8 billion. It also provides additional information on the procurement approach, and indicative delivery timeline, with construction scheduled to start in the first quarter of 2020.

The release of the business case follows the allocation of $110 million for further planning and design funding and initial procurement details for the Link in the 2018-19 State Budget. The business case has also been provided to Infrastructure Australia (IA) for assessment. IA currently lists the Link as a Priority Initiative on the Infrastructure Priority List.

The preferred corridor for the Link (Figure 1) includes the construction of an 11-kilometre connection between the M80 at Greensborough and the Eastern Freeway at Springvale Road. The preferred corridor will utilise an existing road reserve along the Greensborough Highway, connected to a new six-lane tunnel running between Lower Plenty Road and Manningham Road, under the Yarra River.

Figure 1: North East Link

Source: Victorian Government

North East Link will be tolled by the State through a state-owned entity (State Toll Co). The business case notes that toll revenue will fund approximately 22 per cent of the project cost (circa $3.5 billion), with the State to provide the balance.

The reference procurement approach included in the business case comprises:

a primary package comprising the middle section of the Link, including the tunnel, which will be procured as an availability Public Private Partnership (PPP), with a single private operator (PPP Co) to design, construct, operate and maintain the road; and one or two secondary package(s), which will deliver the outer sections of the Link. These package(s) will be procured as design and construct (D&C) contracts with separate private sector partner (or parties).

The scope of the secondary packages will be finalised following further stakeholder consultation. Post construction, the road assets delivered through the Secondary Construction Package(s) may be included as part of the Availability PPP.

The business case notes that using a PPP procurement approach ensures a clear differentiation between the private operator and the State Toll Co. This approach also allows the State to “consider divestment/monetisation options in the future, once toll revenues have matured.”

The Victorian Government has previously procured major roads under availability PPP arrangements, such as in ’s southeast.

As shown in Figure 2, the Victorian Government has committed to commence procurement of the Link within 100 days if re-elected at the 24 November State election. Contracts are expected to be awarded by early-2020, with construction scheduled to start in the first quarter of 2020 and be completed by 2027.

Figure 2: Preliminary procurement timeline

Source: Victorian Government

Relevant links

Read the North East Link business case HERE Read the Victorian Government’s media release HERE View North East Link on infrastructurepipeline.org HERE

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2. Inquiry into National Freight and Supply Chain Strategy Priorities report released; TIC meeting endorses Inquiry and discusses progress of heavy vehicle reform

The Commonwealth has released the final report of the Inquiry into the National Freight and Supply Chain Priorities (the Inquiry). The Inquiry’s recommendation to establish a freight measurement and performance body in the next five years aligns with the prime recommendation in Infrastructure Partnerships Australia’s recently released report Fixing Freight: Establishing Freight Performance Australia.

The Inquiry was tasked with identifying the main challenges and priorities for Australia over the next 20 years to improve freight and supply chain efficiency and capacity. The Inquiry’s report provides the foundation and priorities for the National Freight and Supply Chain Strategy (the National Strategy), which is expected to be developed over 2018.

The Inquiry found that while Australia’s freight task is increasing, current transport infrastructure will not keep pace with future demand. In addition, the report finds that a national approach is needed to coordinate investment and reform across three key supply chain areas, including:

import/export freight; inter- and intra-state freight; and urban freight.

In order to address each area, the Inquiry identified a number of five key focus areas across investment, reform and governance – further segmented into 54 priority actions. The Inquiry notes that these actions would help to improve the productivity and efficiency of Australia’s supply chains. The key focus areas include:

developing a national and integrated approach targeting proper planning, infrastructure investment and regulation; measuring freight performance to monitor domestic and global competitiveness; planning for future and current needs in order to protect freight corridors from urban encroachment; protecting the accessibility and future expansion capacity of freight precincts; and communicating the importance of freight through training and educational courses.

Among the key priority actions was the establishment of an independent freight observatory to collate data and measure freight performance. The Inquiry states that in addition to finding agreement on the National Strategy, success in the first five years would be achieved by the following:

establishment of freight performance benchmarks and KPIs; creation of a freight observatory, capturing data, analysing and reporting against KPIs; development of government plans, strategies and planning processes consistent with the National Strategy; and establishment of a national framework to assess investment decisions.

According to the timeline in the Inquiry (see Figure 3), the National Strategy will be considered by all transport, infrastructure and freight ministers in Australia at the Council of Australian Governments’ (COAG) Transport and Infrastructure Council (TIC) meeting in November 2018.

Figure 3: Timeline for implementation of the Inquiry

Source: Federal Government

The Inquiry report was released as the COAG Transport and Infrastructure Council (TIC) met in Darwin to discuss the national freight system, heavy vehicle road market reform, and Autonomous Vehicles (AVs). The TIC comprises all state, territory and Commonwealth road, transport and freight ministers.

Following the release of the Inquiry report, the Council reinforced the need for a national and consistent freight approach with a commitment to develop a 20-year National Strategy, to be implemented from 2019.

On road reform, the Council noted the commencement of the National Heavy Vehicle Charging Pilot. The Council also decided upon several actions, including:

modelling and consultation on implementing independent price regulation of heavy vehicle charges; and refining a prototype model for a forward-looking cost base for heavy vehicle charges.

The Council also agreed to have a harmonised and ‘purpose built’ national law in place for AVs. The National Transport Commission (NTC) has been tasked with providing further advice on possible regulatory approaches. The Council agreed that key elements of any national law for AVs should:

require automated driving systems to be approved under a future safety assurance system, before they are able to be used legally in vehicles on public roads; ensure that automated system driving entities can be held liable for the actions of vehicles which are operating in automated mode; determine who should be held responsible for vehicles operating at low, conditional and high levels of automation; and provide mechanisms for ensuring compliance and enforcement.

Relevant links

Read the Inquiry into National Freight and Supply Chains Priorities report HERE Read the TIC meeting communique HERE Read IPA’s report ‘Fixing Freight: Establishing Freight Performance Australia’ HERE

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3. Two contractors shortlisted for $375 million Mordialloc Freeway project

The Victorian Government has shortlisted two proponents for the $375 million Mordialloc Freeway project. The shortlisted proponents include a joint venture comprising CPB Contractors and Seymour Whyte, and a joint venture comprising McConnell Dowell and Decmil.

The shortlisted parties have been invited to submit tenders for the project, with the contract expected to be awarded by the end of 2018.

$300 million was first allocated towards the project in the 2017-18 Victorian Budget, with the 2018-19 State Budget committing an additional $75 million towards an expanded project.

The Mordialloc Freeway will see the construction of:

a four-lane, nine kilometre freeway between Springvale Road in Aspendale Gardens and the Dingley Bypass; new entry and exit ramps at Springvale Road, Governor Road, Lower Dandenong Road and Centre Dandenong Road; a new interchange at Thames Promenade; and a shared path for cyclists and pedestrians.

Figure 4: Mordialloc Freeway alignment

Source: VicRoads

The Environmental Effects Statement (EES) for the project is presently under development and will consider how best to manage potential environmental, social, economic and cultural impacts.

Construction on the project is expected to commence at the start of 2019, and be completed by the end of 2021.

Relevant links

Read the Victorian Government’s media release HERE View Mordialloc Freeway on infrastructurepipeline.org HERE

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4. Queensland Government announces $897 million for M1 upgrade; Queensland Major Projects Pipeline released

The Queensland Government has announced $897 million will be provided in the upcoming Budget for the M1 upgrades between Varsity Lakes and Tugun, and between Eight Mile Plains and Daisy Hill. $487.5 million, half of the total contribution, will be provided between 2018 and 2022.

The funding commitment represents half of the total cost of the projects, which is being matched by the Federal Government on a 50:50 basis.

A business case for the project is expected to be submitted to Infrastructure Australia, which has listed both projects as Priority Initiatives in its Infrastructure Priority List.

Work on the M1 upgrades is expected to commence by 2020.

In addition to the M1 commitment, the Queensland Government has stated that the upcoming Budget will deliver $45 billion in infrastructure over the next four years, signalling funding for the Cross River Rail, Cairns Convention Centre and Townsville Stadium.

The Queensland Budget will be handed down on 12 June. Infrastructure Partnerships Australia will provide a summary shortly after the Budget is released.

The Infrastructure Association of Queensland (IAQ), Queensland Major Contractors Association (QMCA) and Construction Skills Queensland (CSA) have released the 2018 Queensland Major Projects Pipeline. The report details 190 public and private infrastructure projects worth an estimated $39.9 billion (of which $16.1 billion is unfunded), likely to progress over the next five years.

The report notes that 70 projects (worth $18.5 billion) are currently under procurement or under construction, while 98 public and private projects are still awaiting funding commitments. However, the report acknowledges that 17 per cent of the pipeline (worth $6.9 billion) is unlikely to proceed in the next five years.

Of the projects anticipated over the next five years, $20.2 billion are forecast to be public infrastructure, with the remaining $19.7 billion expected in the private sector. The vast majority of works are expected in south east Queensland, which should field $13.6 billion in infrastructure funding, according to the report.

Figure 5 below shows the expected pipeline of work over the next five years by sector.

Figure 5: Total pipeline of work over the next five years

Source: Queensland Major Projects Pipeline

Relevant Links

Read the Queensland Government’s media release HERE View the M1 upgrade programme on infrastructurepipeline.org HERE Read the Queensland Major Projects Pipeline report HERE

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5. Industry news The Property Council of Australia has released a series of reports it has commissioned titled Creating Great Australian Cities. The papers consider issues including megatrends and disruption, benchmarking how Australian cities are faring, and examine international case studies and key lessons that could be applied to Australian cities. Read the reports HERE

Legislation has passed the NSW Parliament to establish a statutory authority overseeing the Sydney Metro system. The statutory authority will have responsibility of all elements of the metro system including planning, delivery and operations.

Lendlease has been awarded an eight-year contract to manage and maintain the Victorian Intelligent Transport Systems (ITS) and Communications Networks. The contract also involves upgrades to VicRoads’ ITS and the provision of a Network Operations Centre.

SMEC has been awarded a contract by the Queensland Department of Transport and Main Roads to provide Construction Administration Services on the $514.3 million Haughton River Floodplain Upgrade project in North Queensland. The project involves the construction of five new bridges, two new overpasses and the upgrade of 13.5 kilometres of road along the Haughton River floodplain.

The Energy Security Board has released a number of issues papers to assist in detailed design work of the National Energy Guarantee (NEG). Technical working papers and a draft final design document are expected to be available for public comment in mid-June.

Tunnelling on the $1.86 billion Forrestfield – Airport rail link, part of the METRONET programme in Western Australia, is now one quarter complete. The Forrestfield – Airport rail link is being delivered by the Salini Impregilo – NRW joint venture, with the project scheduled for completion in 2020.

Stage 1 of the Parramatta Light Rail project has been given planning approval. As part of the announcement, the NSW Government confirmed that construction on the project is expected to commence by the end of 2018.

Transurban has awarded Ventia a contract to provide incident response and maintenance services along the Lane Cove Tunnel and Hills M2 Motorway in Sydney. The contract will commence on 1 July 2018.

The Tasmanian Government has introduced legislation to the Parliament which would cap electricity price rises at the Consumer Price Index (CPI). This decision follows the Government’s announcement last year to delink Tasmanian wholesale prices from the Victorian Electricity Market.

The Queensland Government has announced that a $150 million theatre will be built on the Playhouse Green site at the Queensland Performing Arts Centre, with the state committing to fund $125 million of the project. As part of the announcement, the Queensland Government stated that most of the funds for the project will be included in next month’s State Budget.

The NSW and Commonwealth governments have announced that they will establish a Western Sydney Delivery Authority “to work on early delivery of utilities and other infrastructure, speeding up development and reducing costs for business” around the $5.3 billion Western Sydney Airport. As part of the announcement, Geoff Roberts has been appointed as Chief Coordinator to implement the Western Sydney City Deal. This role will be in addition to Mr Roberts’ current roles as Deputy Chief Commissioner and Economic Commissioner at the Greater Sydney Commission.

The Environmental Impact Statement (EIS) for a commercial and retail building above the Victoria Cross Station in North Sydney, being constructed as part of the Sydney Metro project, has been released for public comment. Three parties were previously shortlisted for the project, with the NSW Government expected to award the contract later this year.

Total trade in revenue tonnes that have passed through the Port of Melbourne grew by 5.6 per cent in April 2018, compared to April 2017. Total trade in revenue tonnes has also grown by 8.6 per cent to date in FY2017/18.

Transport for NSW is receiving submission on Western Sydney Corridors. Feedback is welcome on the Outer Sydney Orbital, the Bells Line of Road – Castlereagh Connection, the North South Rail Line and South West Rail Link Extension, and the Western Sydney Freight Line. The consultation period ends today but extensions can requested from [email protected].

GS Engineering & Construction has released first quarter results for FY2018 (South Korea) recording a pre-tax profit of ₩ 311 billion (A$383.8 million). According to media reports, this represents growth of 561 per cent compared to the first quarter of FY2017 (South Korea).

Metro Trains Melbourne, a consortium comprising MTR Corporation, John Holland and UGL Rail, delivered 99 per cent of train services across Melbourne in April, with 93.2 per cent running on time. These results exceed the contractually required benchmarks under the operating contract.

Melbourne Airport has released passenger data for April 2018 showing that 3.06 million people passed through its terminals for the calendar month. This result represents growth in total passenger numbers of 3.3 per cent compared to April 2017.

The Royal Bank of Canada has released second quarter financial results for FY2018 (Canada), reporting net income of CA$3.06 billion (A$3.13 billion) for the quarter. This represents a nine per cent increase in net income since the second quarter of FY2017 (Canada).

The Victorian Government has announced that $10 million will be allocated towards examining options to turn the current site of the Geelong Private Hospital into a Women’s and Children’s hospital. The announcement follows the closure of Geelong Private Hospital.

The Port of Brisbane, alongside PwC and the Australian Chamber of Commerce and Industry (ACCI) have launched a new tool to digitise the flow of trade information through ports. The Trade Community System is the first stage in what will be an end-to-end supply chain blockchain tool.

Melbourne Water has signed three-year agreements with a John Holland-KBR joint venture and an RCR/Abergeldie/Stantec joint venture as preferred service providers. As part of the agreements, the joint ventures are expected to complete most of Melbourne Water’s $500 million three-year capital works programme.

The Clean Energy Council has released its Clean Energy Australia report for 2018. The report highlights that 5,600 megawatts of energy will be produced with a total capital investment of $11.2 billion in large-scale renewable projects in 2018.

Auckland Council has released its 2018-19 Budget, detailing the NZ$26.2 billion (A$24.17 billion) of capital investment it intends to make over the next 10 years. An estimated NZ$12 billion (A$11.07 billion) in transport. About a third of this expenditure is expected to come from a Regional Fuel Tax for Auckland, which the Council has this week agreed to implement.

The Federal Government has signed over the lease for the site of the $5.3 billion Western Sydney Airport to WSA Co. The lease means that WSA Co now officially has the right to build and operate the facility. The NRMA has released a report titled Blue Highways. The report recommends the establishment of fast ferry connections between the ‘River City’ (Parramatta) and Harbour City (Sydney CBD) and a trial of on-demand ferry services in Sydney.

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6. Industry appointments

The respected Chief Executive Officer of Infrastructure Australia (IA), Philip Davies, has decided not to renew his contract with IA and will depart the organisation at the end of August. Under Mr Davies leadership, IA delivered the Infrastructure Audit, the Australian Infrastructure Plan and a renewed Infrastructure Priority List. Mr Davies previously headed up infrastructure advisory at AECOM and was a member of Infrastructure Partnerships Australia’s National Advisory Board. Mr Davies replacement has not yet been announced.

Separately , Peter Colacino has been appointed as Executive Director of Policy and Research at IA, commencing in the role on 2 July. Mr Colacino is a respected leader in the sector, having served as a National Policy Manager at Infrastructure Partnerships Australia and in senior executive roles at Transurban and Keolis Downer. Mr Colacino is currently the Executive General Manager – Partnerships and Growth at NRMA.

Jim Miller has joined JPMorgan as Vice Chairman of the Australian business. Mr Miller is currently Chair of Infrastructure Victoria and a former head of infrastructure at Macquarie Capital.

Nicole Hollows will join Downer’s Board as a Non-Executive Director on 19 June. Ms Hollows is currently the Chief Executive Officer of SunWater in Queensland.

Rose Lee Wai-mun has joined the Board of MTR Corporation as an Independent Non-Executive Director. Ms Lee has joined the Audit Committee and Risk Committee of MTR Corporation as part of the appointment.

Ashurst has appointed Alex Guy and Dan Brown as Partners in its projects team in its Brisbane Office. Mr Guy and Mr Brown both join Ashurst from DLA Piper.

Rider Levett Bucknall (RLB) has promoted Roy Jones to Senior Associate in its Sydney office. Mr Jones first joined RLB in 2016.

Pria O’Sullivan will join Maddocks as a Partner in the firm’s Canberra office, effective 2 July 2018. Ms O’Sullivan is presently a Special Counsel at King & Wood Mallesons.

Alstom has appointed Laurent Martinez as Chief Financial Officer, effective 1 July 2018. Mr Martinez was most recently Head of Airbus Services Business Unit.

AMP has appointed David Cullen as Group General Counsel. Mr Cullen was most recently Group Company Secretary and General Counsel at AMP.

Shane Buggle will become Group General Manager, Internal Audit at ANZ Bank on 1 July. Mr Buggle was most recently Deputy Chief Financial Officer at the Bank.

Professor Hugh Durrant-Whyte has been appointed as NSW Chief Scientist and Engineer by the NSW Government, effective 3 September. Professor Durrant-Whyte is currently the Chief Scientific Adviser for the UK Ministry of Defence and has previously worked on automated container terminals at Port Botany. The Victorian Government has announced the governing board of the Victorian Environment Protection Authority (EPA), which will be chaired by Cheryl Batagol. Ms Batagol will be joined on the board by Greg Tweedly (Deputy Chair), Professor Joan Ozanne-Smith, Graeme Ford, Professor Rebekah Brown, Ross Pilling, Monique Conheady, and Debra Russell.

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7. IPA news

Water Taskforce

IPA will be holding a Water Taskforce with Matthew Edgerton, Executive Director – Water, Independent Pricing and Regulatory Tribunal (IPART).

Date: Tuesday, 12 June Time: 10:30am–12:00pm

Venue: PwC Brisbane - 480 Queen Street

Melbourne - 2 Riverside Quay, Southbank Sydney - Level 17, One International Towers, Watermans Quay, Barangaroo

Mr Edgerton will be attending in Sydney.

To register for the Water Taskforce, please email Katie Aherne HERE

Energy Taskforce

IPA will be holding an Energy Taskforce with Tim Nelson, Chief Economist, AGL Energy.

Date: Monday, 18 June Time: 2.30pm–4.00pm

Venue: Herbert Smith Freehills: Brisbane - Level 31, 480 Queen Street

Melbourne - Level 42, 101 Collins Street Sydney - Level 34, ANZ Tower, 161 Castlereagh Street

Mr Nelson will be attending in Sydney.

To register for the Energy Taskforce, please email Katie Aherne HERE

Social Infrastructure and Public Services (SIPS) Taskforce

IPA will be holding a SIPS Taskforce with Peter Achterstraat AM, NSW Productivity Commissioner and former Administrator of the National Health Funding Pool.

Mr Achterstraat will discuss the public health funding system, including its effectiveness and challenges, as well as touch on his expectations for his new role as NSW Productivity Commissioner.

Date: Wednesday, 20 June Time: 2:30pm-4:00pm

Venue: Corrs Chambers Westgarth Brisbane - Level 42, 111 Eagle Street

Melbourne - Level 25, 567 Collins Street Sydney - Level 17, 8 Chifley, 8-12 Chifley Square

Mr Achterstraat will be attending in Sydney.

To register for the SIPS Taskforce, please email Katie Aherne HERE

Tax Taskforce

IPA will be holding a Tax Taskforce with Jeremy Hirschhorn, Deputy Commissioner, Australian Tax Office.

Date: Tuesday, 26 June Time: 10.30am – 12.00pm Venue: DLA Piper Sydney - Level 22, 1 Martin Place

Mr Hirschhorn will be attending in Sydney.

To register for the Tax Taskforce, please email Katie Aherne HERE

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