IN THIS EDITION

1. Secretary of DIRDC Dr Steven Kennedy discusses Commonwealth infrastructure pipeline and challenges ahead at the IPA Transport Breakfast Series 2. New NZ Government hands down Budget 2018-19

3. WA Government releases 2018-19 State Budget 4. Downer & Seymour Whyte JV awarded $450 million upgrade

5. John Holland announced as preferred bidder for $543 million Victorian Heart Hospital 6. JCL Joint Venture and SCS Joint Venture shortlisted for WestConnex Stage 3b - the Interchange

7. Industry news 8. Industry appointments

9. IPA news

Home About us Contact

1. Secretary of DIRDC Dr Steven Kennedy discusses Commonwealth infrastructure pipeline and challenges ahead at the IPA Transport Breakfast Series

This week, the Secretary of the Federal Department of Infrastructure, Regional Development and Cities (DIRDC), Dr Steven Kennedy PSM, addressed Infrastructure Partnership Australia’s first Transport Breakfast Series event of the year in . Dr Kennedy focused on the infrastructure components of the 2018-19 Federal Budget including the approach to delivering a 10-year infrastructure pipeline and the associated risks.

The Transport Breakfast Series provides a forum for the heads of transport and infrastructure departments from the Commonwealth and each of the major states to update the sector on key project and reform priorities, in response to the delivery of each Federal or state budget.

[L-R] WSP’s Phil Nicholls, IPA’s Adrian Dwyer, DIRDC’s Dr Steven Kennedy PSM, EY’s Janice Lee and Clayton Utz’s Peter Staciwa

Source: IPA

Dr Kennedy’s address highlighted that the infrastructure priorities contained within the 2018-19 Federal Budget draw on Infrastructure Australia’s (IA) Infrastructure Priority List (IPL).

In addition, he discussed the $3.5 billion Roads of Strategic Importance (ROSI) programme and the $1 billion Urban Congestion Fund contained within the Federal Budget.

T urning to the Commonwealth’s principles for funding projects with states, Dr Kennedy indicated that these include:

major projects being subject to a robust business case assessment before the Government investment amount is finalised and funding starts to flow; investments being predicated on state and territory governments providing a reasonable share of funding; and exploring opportunities for private investment and value capture to defray the capital costs of projects on an equal basis.

Regarding the Commonwealth’s infrastructure expenditure, Dr Kennedy discussed the initial funding allocations for projects under the Federal Government’s ten year infrastructure programme.

Dr Kennedy also emphasised the risks to infrastructure expenditure. While he agreed on the need for more infrastructure spending in the near term, he warned that if the current stock of planned infrastructure investment is delivered too quickly, this could create further pressure on capacity within the construction sector and in turn increase costs for taxpayers.

Dr Kennedy emphasised the importance of understanding “what problems we are trying to solve” through infrastructure investment. He ended his presentation by stating that all infrastructure challenges require a sustained approach to planning and delivery, and strong collaboration across all the tiers of government, private providers and the community. IPA would like to thank our sponsors for their generous support of the Transport Breakfast Series:

Venue host, Peter Staciwa, Partner, Clayton Utz;

Series sponsor, Janice Lee, Director, EY; and

Event sponsor, Phil Nicholls, Client Director, WSP

△ back to top

2. New NZ Government hands down Budget 2018-19

This week New Zealand’s Minister for Finance (Treasurer), Grant Robertson, handed down the nation's 2018- 19 Budget, the first by the new Government since being elected in 2017. Through repealing tax cuts by the former Government, and capitalising on a strong economy, the new Government has committed NZ$42 billion (A$38.5 billion) towards capital investment over five years while maintaining a growing operating surplus.

The 2018-19 Budget reveals that through the repeal of tax cuts planned by the former Government, higher than expected taxation revenue and a strong economy, the Government can deliver an additional circa $24 billion (A$22 billion) over the forward estimates.

This is reflected in the increased level of net capital spending, which is NZ$10 billion (A$9.2 billion) more over the forward estimates than the previous Government in their 2017-18 Budget.

The increased spend flattens the trajectory of Crown net debt repayments, with Budget forecasts showing net debt falling below 20 per cent of GDP by FY2021-22, a year later than forecast in the 2017-18 Budget.

The tax revenue increase coupled with continued improvements in the overall fiscal condition provide for an increase in operating and capital spending allowances. These allowances are focused on investments in public services and infrastructure, particularly in the social (housing and health) and transport sectors.

This is headlined by a number of previously announced programmes such as Kiwibuild and the Provincial Growth Fund, and underlined by the transport infrastructure programmes announced through the draft Government Policy Statement (GPS) on Land Transport released in April 2018. In housing, in particular, the Government has extended the policy of the previous Government to allow Housing New Zealand the ability to borrow directly from the market, forecasting it will borrow up to NZ$2.9 billion (A$2.7 billion). This will help deliver the Government’s plan to build 6,400 public housing dwellings over the next four years.

Read more

3. WA Government releases 2018-19 State Budget

Last week the McGowan Government handed down its second Budget, headlining a reduced FY2017-18 deficit of $1.3 billion (halved from $2.6 billion in the mid-year forecast). The Budget is projected to return to surplus by FY2020-21, with Western Australia (WA) benefitting from $1.2 billion in Commonwealth infrastructure grants over the forward estimates. The infrastructure focus of this year’s WA Budget is predominantly on transport, water and health related projects. Funding was also included in the Budget for the establishment of Infrastructure Western Australia.

The Budget highlights an operating deficit of $1.3 billion for FY2017-18, a 50 per cent downward revision from the mid-year forecast. This is underlined by higher than expected revenue and lower than expected expenses.

WA Treasurer, Ben Wyatt, provided an update on the status of prospective asset divestments such as WA TAB and Landgate.

The Treasurer noted that consultation on the future of WA TAB was ongoing with a decision expected to be made later in 2018, while for Landgate he indicated divestment options are under investigation, with a decision on the potential transaction to happen “in due course”.

Read more

4. Downer & Seymour Whyte JV awarded $450 million Princes Highway upgrade

The NSW Government has awarded the $450 million Princes Highway upgrade between Berry and Bomaderry to a joint venture between Downer and Seymour Whyte.

As shown in Figure 10 below, the 10.5 kilometre highway upgrade project will see four lanes of new divided highway, two lanes in each direction, between Mullers Lane in Berry, and the Cambewarra Road roundabout in Bomaderry.

Figure 10: Berry to Bomaderry upgrade

Source: NSW Roads and Maritime Service

The project is designed to:

increase road capacity; improve traffic flow; increase overtaking opportunities; and improve safety outcomes.

The Berry to Bomaderry Princes Highway upgrade project has been under consideration since 2009, when a preferred option was announced. The project was approved in March 2014, and the NSW Government provided $19 million in FY2017-18 to commence construction.

The project will complete more than 30 kilometres of upgrades on the Princes Highway between Gerringong and Bomaderry since work commenced in 2012.

Major construction is expected to commence this year, and be complete by late 2022.

Relevant Links

Read the NSW Government’s media release HERE View the Princes Highway Upgrade – Berry and Bomaderry on infrastructurepipeline.org HERE

△ back to top

5. John Holland announced as preferred bidder for $543 million Victorian Heart Hospital

This week, the Victorian Government announced John Holland as the preferred proponent for the $543 million Victorian Heart Hospital. In conjunction with the announcement, the Government also released the first designs of the new hospital.

The Victorian Heart Hospital is a project that the Government is undertaking in partnership with Monash University and Monash Health. It will be Australia’s first dedicated cardiac hospital and the Victorian Budget, released earlier this month, confirmed that the Government would fully fund the project. An artist’s impression of the preferred design shown in Figure 11.

Figure 11: Artist’s impressions of the new Victorian Heart Hospital

Source: Victorian Health and Human Services Building Authority

The new hospital will have capacity of at least 195 beds and will be available for both private and public patients.

Other features include:

a new helipad; cardiac catheterisation laboratories; cardiac theatres and a sterilising unit; an advanced cardiac imaging centre; a heart rhythm centre; a medi-tourism facility; links with Monash Medical Centre including pathology and pharmacy; and an entire floor dedicated to Monash University and the Monash Cardiovascular Research Centre.

The hospital will be located in Clayton on the Monash University campus. Early works are expected to start by the end of this year, with the hospital scheduled to open in 2022.

Relevant Links

View the Victorian Heart Hospital on infrastructurepipeline.org HERE Read the Victorian Government’s media release HERE

△ back to top

6. JCL Joint Venture and SCS Joint Venture shortlisted for WestConnex Stage 3b - the Rozelle Interchange

This week, the NSW Government announced that the JCL Joint Venture (John Holland, CPB Contractors and Lendlease) and SCS Joint Venture (Salini Impregilo, Clough Projects and Samsung C&T) have been shortlisted for the next stage of the bidding process to build WestConnex Stage 3b - Rozelle Interchange (including Link). WestConnex Stage 3b - the Rozelle Interchange (which includes Iron Cove Link), and the main tunnel works together make up Stage 3 of WestConnex (see Figure 12).

Construction of the Stage 3 will be in two stages:

construction of the main tunnels between St Peters and Rozelle is anticipated to start in 2018 and open to traffic in 2022; and the Rozelle interchange and the Iron Cove link will be completed a year later, in 2023.

Stage 3b - the Rozelle Interchange will provide a new underground motorway interchange to City West Link and an underground bypass of between Iron Cove and with links to the future Western Harbour Tunnel.

Figure 12: Stages of the WestConnex project

Source: NSW Government

The Rozelle Interchange will be delivered under a lump sum design and construct contract (D&C). The current procurement approach (termed as a Collaborative Contractor Client model) is intended to allow the NSW Government to work in collaboration with the preferred bidders in order to develop, refine and optimise solutions for the design and construction of the project.

The NSW Government is currently in the process of selling its 51 per cent stake in the Sydney Motorway Corporation to help fund Stage 3. Expressions of Interest (EOIs) closed in 2017 with a targeted transaction closing date of mid-2018.

Relevant links

Read the NSW Government’s media release HERE View WestConnex on infrastructurepipeline.org HERE

△ back to top

7. Industry news

The Australian Competition and Consumer Commission (ACCC) has released preliminary advice for feedback regarding the Sydney Transport Partners (STP) consortium's interest in taking a majority stake in Sydney's WestConnex Motorway. The STP consortium is led by .

A Statement of Issues is a device used by the ACCC to identify ‘issues of concern’, ‘issues that may raise concerns’ and ‘issues unlikely to raise concerns’. The Statement is used to gather feedback to inform the ACCC’s final position. It asserts that “incumbent toll road operators have significant advantages in bidding for subsequent concessions. Advantages arise due to control of detailed traffic data and the ability to leverage existing concessions when seeking new concessions”.

The ACCC is seeking submissions from interested parties by 31 May 2018. Read the Statement of Issues HERE

The Commonwealth Treasury has released the first stage of exposure draft legislation and explanatory material on the package of measures relating to the tax treatment stapled structures, which was announced on 27 March 2018. Consultation and submission on the exposure draft legislation is open until 31 May 2019. Read the exposure draft legislation HERE

BIS Oxford Economics has released Engineering Construction in Australia 2018-2032, revealing that public infrastructure investment will rise 10 per cent to $96 billion in 2017-18 Read the overview HERE

AMP Capital has released a report entitled, An Investment Oasis in a Barren Land, describing the potential benefits of private investment in the water sector. The report discusses challenges facing the water sector and potential opportunities for private capital to solve these challenges through investment. Read the report HERE

NSW Ports will introduce an environmental incentive to apply to vessel related charges levied at Port Botany and Port Kembla, to reward higher standards of environmental performance. The environmental incentive will be applied to vessels that perform better in reducing their emissions than the levels required by the current emissions standards of the International Maritime Organisation, and is expected to be implemented on 1 January 2019.

Arcadis has been appointed by Roads and Maritime Services (RMS) to provide detailed design and construction tender documentation services for the Clarence Bridge Replacement project in NSW. The project is expected to be complete by October 2018.

Legislation has passed the ACT Parliament allowing for the ACT Light Rail project to operate as a public passenger service in the Territory. Stage 1 of the ACT Light Rail project is being constructed by the Canberra Metro consortium comprising Pacific Partnerships, John Holland, Mitsubishi, Aberdeen Infrastructure Investments, CPB Contractors, Deutsche Bahn International, CAF and the MUFG. Stage 1 is expected to be operational in 2019.

WSA Co has commenced a Registration of Interest (ROI) process to be part of its Western Sydney Airport Technical and Design Services Panel. ROIs for the panel close on 21 May 2018.

The Federal Joint Standing Committee on the National Capital and External Territories will hold an inquiry into Stage 2 of the ACT Light Rail project. The inquiry will look into what Commonwealth and Parliamentary approvals will be required for Stage 2 of the project. Sumitomo Mitsui Financial Group has released full year results for FY2017-18 posting a net profit result of ¥1.16 trillion (A$14.1 billion). This represents a 15.7 per cent increase to ordinary net profit compared to FY2016/17.

Alstom booked €7.2 billion (A$11.31 billion) of orders globally for FY2017-18. This represents growth of nine per cent from the prior corresponding period.

Alstom will sell its stake in three joint ventures with General Electric across renewables, grid and nuclear for €2.6 billion (A$4.13 billion). The transaction is expected to take effect from 2 October 2018.

ACCIONA has released first quarter results for FY2018 reporting a net income of €61 million (A$96.78 million). This represents a 2.8 per cent increase in net income compared to the first quarter of FY2017.

WSP has released full year results for FY2017 headlined by revenues of CA$6.94 billion (A$7.22 billion). This represents an 8.8 per cent increase in revenue for WSP compared to FY2016.

Downer has been awarded a $150 million Engineering, Procurement and Construction (EPC) contract by First Solar for the Beryl Solar Farm project, located near Gulgong in NSW. The Beryl Solar Farm will have capacity of 87 MW when completed. Construction on the project is expected to take about 12 months to complete.

The Victorian Government has commenced an Expression of Interest (EOI) phase to design and construct eight schools in Victoria. The schools captured by the EOI process are Beveridge West Primary School, Botanic Ridge Primary School, Casey Fields (Five Ways) Primary School, Clyde North East Primary School, Craigieburn South Secondary School, Davis Creek Primary School, Lucas Primary School and Wyndham South (Riverwalk) Primary School.

The Federal Government has released further governance details on the $1 billion Urban Congestion Fund announced in the 2018-19 Budget. The facility will offer 50-50 funding between the Commonwealth and the states or territories focussing on projects providing last mile access to ports, airports as well as freight and employment zones

The Infrastructure Sustainability Council of Australia (ISCA) is holding a New Zealand Infrastructure Sustainability Summit on 7 June 2018 in Auckland. See the full details for the event HERE

The Australian Energy Regulator (AER) has commenced a review into the approach it takes in estimating tax for regulated energy networks. As part of the review, the AER has released an issues paper on the matter, with submissions closing on 31 May 2018. The AER will release an initial public report on the review in June 2018, with a final report due to be released by December 2018.

△ back to top

8. Industry appointments

The NSW Government has appointed Peter Achterstraat AM as the State’s inaugural Productivity Commissioner. Mr Achterstraat was the NSW Auditor-General between 2006 and 2013, and has also served as the Chief Commissioner of State Revenue and Deputy Commissioner of Taxation at the Australian Tax Office.

Alan Docherty has been appointed Acting Chief Financial Officer of the Commonwealth Bank (CBA), following the resignation of Rob Jesudason. Mr Docherty has been the Chief Financial Officer Institutional Banking and Markets since joining CBA in 2003. Alstom has appointed Laurent Martinez as Chief Financial Officer, effective 1 July 2018. Mr Martinez was most recently Head of Airbus’s Services Business Unit.

Aurecon has appointed Doug Tapper as Technical Director – Energy, leading Aurecon’s energy business in Western Australia. Mr Tapper has recently worked across a range of energy projects in Western Australia.

Jonathan Ierace and Paul Shanley have been appointed as Associates in Rider Levett Bucknall’s Western Australian team. Both Mr Ierace and Mr Shanley have been part of RLB for many years.

Rob Adams will become Managing Director and Chief Executive Officer on Perpetual from 24 September 2018, replacing Geoff Lloyd who will step down at the end of the financial year. Mr Adams will join Perpetual from Janus Henderson Group where he is Head of Pan-Asia.

Andrea Abt has joined the Board of John Laing as a Non-Executive Director. Ms Abt was previously the Chief Procurement Officer for Infrastructure and Cities at Siemens.

△ back to top

9. IPA news

IPA hosted an Industry Leaders Luncheon with Anthony Albanese, Shadow Minister Infrastructure, Transport, Cities, Regional Development and Tourism. Mr Albanese spoke about the Federal Opposition’s response to the infrastructure components of the Budget and touched on what to expect from a future Labor Government should they be elected.

Social Infrastructure and Public Services (SIPS) Taskforce

IPA will be hosting a SIPS Taskforce with Anne Skewes, Deputy Secretary, Land and Housing Corporation and Peter Anderson, Executive Director, Communities Plus.

Ms Skewes and Mr Anderson will discuss Land and Housing Corporation’s future plans for public housing, as well as ongoing programs such as Communities Plus, and their main challenges.

Date: Wednesday, 30 May Time: 10.30am – 12.00pm Venue: Corrs Chambers W estgarth Brisbane - Level 42, 111 Eagle Street Melbourne - Level 25, 567 Collins Street Sydney - Level 17, 8 Chifley, 8-12 Chifley Square

Ms Skewes and Mr Anderson will be attending in Sydney.

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

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 2018

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 AM 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 2018

Time: 2:30pm - 4:00pm

Venue: Corrs Chambers Westgarth, located in: 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

△ back to top

Have you read our recently published paper - Fixing Freight: Establishing Freight Performance Australia?

If not - you can find it HERE.

Watch our 2018-19 Federal Budget Summary Follow Infrastructure Partnerships Australia on

If your colleagues are not receiving The Infrastructure Report, please encourage them to register for updates.

The information contained in this e-mail and its attachments is intended only for the above-mentioned recipient/s. Unless otherwise stated, copyright of any material transmitted herein shall remain vested in Infrastructure Partnerships Australia Limited. If you receive this electronic mail in error, please delete it from your system immediately and notify the sender by electronic mail or by using any of the media noted above. Any opinion expressed in this email and its attachments is not represented as the opinion of Infrastructure Partnerships Australia Limited unless that is stated or apparent from its terms. We believe, but do not warrant, that this e-mail and its attachments are virus free, however you should take full responsibility for virus protection. Infrastructure Partnerships Australia Limited reserves the right to monitor all e-mail communications passing through our internal and external networks. This message was sent by Infrastructure Partnerships Australia. Suite 3.03 Level 3, 95 Pitt Street Sydney NSW 2000 Australia. This message was sent to you because you are currently subscribed to The Infrastructure Report - Members' Newsletter.

To remove yourself from this mailing list or manage your details, please click here Click here to view this email in your web browser.