Vic-Labor-Master-1-12-14-Final

The Red Book An analysis of the infrastructure and related policies of the incoming Victorian Labor Government

Infrastructure Partnerships Australia is a national forum, comprising public and private sector CEO Members, advocating the public policy interests of Australia’s infrastructure industry.

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JONATHAN KENNEDY HEAD OF GOVERNMENT RELATIONS AND REGULATORY AFFAIRS INFRASTRUCTURE PARTNERSHIPS AUSTRALIA Level 8, 8-10 Loftus Street, Sydney NSW 2000 PO Box R1804, Royal Exchange NSW 1225 T| 02 9240 2050 E | [email protected]

Contents

1 Introduction ...... 3 2 Assessment of the economic & fiscal outlook ...... 5 2.1 Economic Outlook ...... 5 2.2 Fiscal Outlook ...... 6 2.3 Analysis of Victorian Labor’s election costings & fiscal strategy ...... 7 3 Analysis of historic and projected infrastructure investment ...... 8 4 A revised framework for project assessment, prioritisation and delivery ...... 11 4.1 Infrastructure Victoria ...... 11 4.2 Projects Victoria ...... 12 4.3 Construction industry regulation ...... 12 5 Investing in skills & job creation ...... 14 6 Port of Melbourne privatisation ...... 15 7 Transport ...... 16 7.1 Establishing a Victorian Transport Building Fund (VTBF) ...... 16 7.2 Major transport project & programme commitments ...... 16 7.3 East-West Link ...... 18 8 Value Capture ...... 19 9 Social Infrastructure ...... 20 9.1 Healthcare ...... 20 Western Women’s and Children’s Hospital ...... 20 Monash Heart Hospital ...... 20 Casey Hospital expansion ...... 21 Health system capacity review ...... 21 Health system reform ...... 22 9.2 Education ...... 22 9.3 Social Housing ...... 23 10 Utilities ...... 25 Appendix A – Major transport projects in detail ...... 26 1 Melbourne Metro Rail (Estimated Cost $9 billion to $11 billion) ...... 26 2 Level Crossing Removal Programme (Estimated Cost $5 - $8 billion) ...... 27 3 West Gate Distributor (Estimated Cost: $400 million – $500 million) ...... 28 4 New rail extension from South Morang to Mernda (Estimated Cost: $400 million – $600 million ...... 29 5 Suburban & Country road upgrade and repair (Estimated Cost: $2 billion) ...... 30

1 Introduction

The Victorian State Election on Saturday saw the Labor Party, led by Daniel Andrews, record a comfortable victory over the Denis Napthine-led Coalition. The election of an Andrews Government will see a mix of good outcomes for the infrastructure sector, set against the likely cancellation of the contracted East West Link motorway project.

The incoming Government brings the promise of a renewed programme of major transport and health projects, funded through ongoing brownfield asset recycling, and identified and/or delivered by new, infrastructure-dedicated institutions of government.

Moreover, the election of a government with a stable majority will of itself offer greater certainty than the hung parliament that has just expired.

Conversely, the Andrews Government has been elected with a strengthening narrative that would see the cancellation of Stage One of the East West Link motorway. Until recently, the project enjoyed cross party support, but local opposition along the corridor and other considerations saw Labor later change to outright opposition – and a commitment to cancel the contract.

Obviously, such a step would likely see high monetary and reputation costs to Victoria.

Table 1: Key priorities of the Andrews Government

Machinery of government  The establishment of Infrastructure Victoria to undertake prioritisation and advisory functions; and  The formation of Projects Victoria as a dedicated government delivery agency; and  Likely to retain Partnerships Victoria in current form. Asset recycling  Commitment to lease the Port of Melbourne; and  Will establish Victorian Transport Building Fund with the proceeds; and  Likely to see other assets and businesses privatised. Projects

Melbourne Metro Rail (Circa $9 billion to $11 billion)  Will double the size of the city loop;  New stations constructed at Domain, Parkville, Arden, CBD north, and CBD south, as well as fast tracked enhancements and additional works;  Project will include delivery of 19 new trains;  Increases capacity on the suburban network by 20,000 passengers during peak periods; and  Likely to be considered under a PPP, and was announced as such by then-Labor Premier John Brumby in 2010.

Level Crossing Removal Programme (circa $5 billion to $8 billion)  Will see 50 grade separations between the suburban road and rail networks; and  Offers congestion relief on road and rail systems.

Suburban and country road investment programme (estimated > $2 billion)  Eight year programme of upgrades and repairs; and  Half of the programme is pre-committed to rural and regional roads.

Health infrastructure projects (circa $450 million across three projects).  $200 million for a new Western Women’s and Children’s Hospital in Sunshine;  $150 million for a specialist cardiac hospital at Monash University; and  $106.3 million for an expansion of Casey Hospital.

Machinery of government

The Andrews Government will undertake relatively substantial changes to the machinery of government which supports the state’s infrastructure programme – including the appointment of two new agencies.

The first of these, Infrastructure Victoria, is designed to provide the State with independent advice on infrastructure strategies, as well as reviewing and determining project priorities.

Alongside these tasks, Labor has also committed that Infrastructure Victoria will undertake a detailed options analysis to resolve the best location for Melbourne’s future port capacity. The issue sees Labor supporting a new site the west of Port Phillip Bay – pending advice from Infrastructure Victoria – while the former Coalition Government was preparing Victoria for a port at Hastings.

This complex work will no doubt form a real priority, given that it will be needed in advance of the privatisation of the Port of Melbourne – a key underpinning of Labor’s fiscal and infrastructure strategies.

A second priority output for Infrastructure Victoria will be advising the government on how value capture models might be deployed to assist in funding Melbourne’s Level Crossing Removals Programme.

Infrastructure Victoria’s advisory and strategy roles will be complemented at the project level by a new project management agency in the public sector, called Projects Victoria. While detailed information is limited, it is likely that this agency will replace the function of Major Projects Victoria – and see additional reporting and other enhancements.

A key focus of Projects Victoria will be the successful management and delivery of the Level Crossing Removals Programme.

Again, while detailed administrative arrangements are to be determined by the incoming Premier, it is unlikely that the change in project and strategic governance agencies will see a substantial change in the role played by the Treasury’s Partnerships Victoria.

Infrastructure Partnerships Australia is pleased to provide the national infrastructure sector with The Red Book: The infrastructure and related policies of the Victorian Labor Government and we hope that it proves useful in considering the opportunities that exist under the Andrews Labor Government.

2 Assessment of the economic & fiscal outlook

2.1 Economic Outlook

The Pre-Election Budget Update (PEBU), released in November, confirmed a broadly positive economic outlook for the State, with real Gross State Product (GSP) increasing to 2.75 per cent in 2015-16, and remaining at that level across the forward estimates (see Figure 2).

In-line with an improving headline economic indicator, employment growth is also expected to strengthen over the forward estimates, increasing from a low base of 0.75 per cent in 2013-14 to 1.5 per cent by 2015-16. Concurrently, unemployment is forecast to fall from a 2014-15 peak of 6.5 per cent to 5.5 per cent by 2017-18.

Figure 2: Victorian economic forecasts

Source: Department of Treasury and Finance, 2014

In the medium term the State’s improved economic outlook will be underpinned by the national economy’s transition towards non-resource drivers, supported by an expected depreciation in the exchange rate and (forecast) ongoing low interest rates. Longer term, growth will be underpinned by sustained population growth – with the PEBU forecasting Victoria will remain one of the fastest growing states over the next decade.

But equally, the State’s economic outlook is not without its challenges for an incoming government. Victoria has the third highest unemployment rate of any state or territory, and recorded the third lowest rate of economic growth of any jurisdiction in the year to June (CBA, 2014) (see Figure 3 below). Victoria also remains heavily exposed to further potential job losses in core industrial sectors such as manufacturing and the automotive industry.

Figure 3: Economic growth, per cent change June quarter on decade average

Source: CBA State of the States Report, 2014

The PEBU also cautions about the risk of delays in the (expected) strengthening of household consumption, ongoing uncertainties surrounding inflation forecasts and potential volatility in financial markets.

2.2 Fiscal Outlook

Reflecting the broader economic trends, the incoming government contemplates its agenda within an improving fiscal outlook – with forecast operating surpluses, falling general government debt and a stable AAA rating.

The PEBU confirms an estimated $1.1 billion general government operating surplus in 2014- 15, growing to $3 billion by 2017-18, which is largely unchanged from the 2014-15 Budget brought down in May this year (see Figure 4). Existing budget settings see revenue forecast to grow by 3.4 per cent, while expenditure will grow by 2.3 per cent.

The State’s debt position is also strong, with net debt set to fall in real terms from 2014-15, and compares favourably with other Australian jurisdictions, with Victoria one of only two states (the other being New South Wales) to enjoy a stable AAA rating.

Nonetheless, ratings agencies caution that failure to maintain discipline on expenditure would soon put pressure on the rating.

Figure 4 – General government fiscal aggregates

Source: Department of Treasury and Finance, 2014

2.3 Victorian Labor’s election costings & fiscal strategy

The Andrews Government released its costings on the Thursday prior to the election, which sees a commitment to achieve the forecast surpluses outlined in the Pre-Election Budget Update.

As outlined in Figure 5 below, the costings, audited by accounting firm Moore Stephens, outline $3.3 billion in new recurrent spending commitments over four years – with $3.3 billion in offsets.

The costings also include an unspecified contingency plan to cover any potential compensation payments for the cancellation of the East West Link project.

In respect to capital, the incoming government’s costings suggest between $6.1 billion and $6.7 billion in new capital commitments over the four year estimates period – with between $2.4 billion and $3 billion in net offsets from the proposed sale of the Port of Melbourne.

Figure 5: Summary of Victorian Labor election commitments

Source: Victorian Labor Financial Statement, 2014

A full costings list is can be accessed HERE

3 Analysis of historic and projected infrastructure investment

Reflecting its comparatively strong fiscal position, Victoria is forecast to substantially lift public infrastructure investment across the forward estimates. The settings in place at the time of the Pre-Election Budget Update (PEBU) saw Victoria set to increase infrastructure investment by circa 21 per cent over the four years FY2014/15 to FY 2017/18, compared to the four preceding years.

As outlined in Figure 6 below, general government infrastructure investment is projected to increase from $5.8 billion in 2014-15 to $7.3 billion in 2015-16, averaging $7 billion per year over the course of the forwards.1

Figure 6: General government infrastructure investment (As at the 2014 Victorian Pre-Election Budget Update)

8 7.3 7 7 6.7 5.8 5.8 6 5.3 5.4 5.4 5.5 5

5 4.4 4.5 4 3.3 3.1 3 2.7 2 2.2

Billions ($) Billions 2 1.6 1 0

Source: Department of Treasury and Finance, 2014

These settings see Victoria in line with other states, investing circa $1,093 per capita per year over the next four years, compared with an average of $1,092 per capita across all mainland states (see Figure 7).

1 This is taken from the Pre-Election Budget Update (PEBU) and therefore does not include Victorian Labor’s election commitments that were not budgeted at the time of the PEBU. 9

Figure 7: Average annual per capita infrastructure investment (2014-15 to 2017-18)

Source: IPA analysis based on state budget papers

4 A revised framework for project assessment, prioritisation and delivery

The election of the Andrews Government signals an overhaul of major project planning and prioritisation, with Victorian Labor committing to ensure that “infrastructure priorities extend beyond a single electoral cycle” (Victorian Labor, Platform 2014).

Central to this revised approach is a commitment to establish Infrastructure Victoria, a body charged with providing independent, transparent advice on infrastructure projects and priorities.

Infrastructure Victoria will differ slightly from Infrastructure NSW in that it will be limited to strategic roles only, with public sector procurement to be managed under the new Projects Victoria agency.

It is understood a decision on the future of existing project delivery agencies, including Partnerships Victoria, Major Projects Victoria and the Linking Melbourne Authority (LMA) has yet to be made – pending advice to the incoming government upon assuming office.

Nonetheless, it is unlikely that the Treasury’s Partnerships Victoria unit will see a substantial change in its role structuring privately financed projects.

In respect to industry regulation, the incoming government has committed to abolish the State’s construction industry’s code of compliance.

The Victorian Code of Practice for the Building and Construction Industry requires contractors undertaking State Government public building and construction projects, and subsequent privately funded projects, to comply with certain conditions aimed at ensuring value for money.

This section of the Red Book analyses these commitments in further detail.

4.1 Infrastructure Victoria

Victorian Labor has committed to establish a new independent body, entitled Infrastructure Victoria, to enhance rigour in the assessment and prioritisation of major projects.

“Infrastructure Victoria will mean future governments won’t be distracted by politics or able to hide vital information from voters. This expert body will keep the pipeline of major projects full and steady,” Mr Andrews has stated.

Infrastructure Victoria, modelled on Infrastructure NSW, will be tasked with providing independent, transparent advice on the State’s infrastructure projects and priorities.

The independent agency will evaluate proposals for, or enhancements to, state significant infrastructure, and will advise the Government on appropriate funding and financing models – with Labor committing to make the agency’s recommendations public and to ensuring the government responds publicly to its recommendations in a timely manner.

Infrastructure Victoria will also be tasked with developing and publishing research on the economic and social benefits of a given project, as well as coordinating infrastructure funding submissions from the State and its agencies to the Australian Government and other bodies.

One of the first tasks facing the new agency will be to advise the incoming government on the optimal location for a second container port. Labor has previously indicated its preference is for a second container port at Bay West, west of the city, but has stated that a final decision will be subject to Infrastructure Victoria’s advice.

As a priority, Infrastructure Victoria will also be charged with responsibility for developing a Value Capture Strategy to supplement Victorian Labor’s level crossing removal programme (see Appendix A for further details on the level crossing removal programme).

4.2 Projects Victoria

Complementing the establishment of Infrastructure Victoria, Victorian Labor has also committed to establish Projects Victoria, a major project delivery agency that will consolidate capacities from across the public sector.

The agency will be tasked with delivering the priorities identified by Infrastructure Victoria, and will be required to publicly report on the performance of all capital works under its management and oversight.

Besides overseeing the scope, design and delivery of all major projects, Projects Victoria will be tasked with undertaking research and developing guidelines for applying appropriate procurement models for different types of projects.

The new agency will also be charged with ensuring that workforce planning provides for mentoring programmes, apprenticeships, traineeships and cadetships across all State Government departments.

It remains unclear which elements of Victoria’s existing framework for public project delivery will be retained under the proposed structure – including Major Projects Victoria, the Government’s existing in-house delivery agency.

4.3 Construction industry regulation

In a significant move for infrastructure, the incoming government has committed to abolish both the State code of practice for the construction industry and the Construction Code of Practice Compliance Unit.

The Victorian Code of Practice for the Building and Construction Industry, which has been in operation since March 2012, requires contractors undertaking state government public building and construction projects, and subsequent privately funded projects, to comply with certain conditions aimed at ensuring value for money.

Compliance with the code is overseen by the Construction Code of Practice Compliance Unit, housed within the Department of Treasury and Finance (DTF).

The code received strong backing from the Productivity Commission’s 2014 Inquiry Report into Public Infrastructure, which recommended that the Commonwealth and all state and territory governments adopt its building code and implementation guidelines.

As well as abolishing the code, the incoming Government has committed to move the State’s industrial relations function away from DTF – however it has not stated whether this function would be merged into another department, or a new industrial relations agency.

In addition, the incoming Government has committed to ensure all government funded projects require contractors to use active Labour Market Testing, before applications for 457 visa workers can be approved.

5 Investing in skills & job creation

Job creation will form a central focus for the incoming government, with an ambitious commitment to stimulate the creation of 100,000 full time jobs.

The investment-driven plan, entitled Back to Work, includes a $100 million fund to provide payroll tax relief to companies hiring unemployed youths, the long-term unemployed and retrenched workers into full time work. Legislation enabling the appropriation will be introduced during the first sitting week of the new Parliament.

The fund will provide payroll tax relief of up to $1,000 per employee, with payments made as payroll tax rebates (or by cheque, for those employers below the threshold) after workers complete a three month probation. Commencing 1 July 2015, 50,000 payments will be available per year, for two years.

In addition, the Government will establish a Premier’s Jobs and Investment Panel – an independent body comprising of senior business and industry leaders, which will provide direct advice on the expenditure of $500 million (over four years) in investment to drive growth and create high-skill, high wage jobs.

A further $200 million will be provided for a Future Industries Fund. The Fund will provide companies with grants of up to $1 million to support job-creating projects in six identified high-growth areas. These include, amongst others, key infrastructure sectors such as new energy, transport, defence and construction technology.

General grants of up to $500,000 will also be available to any company engaged in manufacturing, engineering and emerging sectors. Companies seeking general grants must contribute $3 for every $1 awarded.

$200 million will also be provided to support job-creating projects in regional Victoria. This will be complemented by the establishment of Regional Business Centres, providing expert advice and assistance to businesses looking to expand or relocate to regional Victoria.

To assist Victorian businesses to expand into rapidly-growing overseas markets, Victorian Labor has also committed to establish three new Victorian Government Business Offices – one in South America, one in Singapore and one in Turkey.

6 Port of Melbourne privatisation

The privatisation of the Port of Melbourne, under a circa 40 – 50 year lease, is a long- standing commitment for the incoming government.

Analysts have suggested a “medium term” lease (40-50 years) of the Port could realise anywhere from $4.4 billion to $6.6 billion, with strong appetite from domestic and overseas pension funds. While the Port was tipped to be offered to investors in FY 2015/16 – and with incoming Premier Daniel Andrews previously stating that if elected, his government “would want to make very significant progress in the first calendar year”, it is likely that it will be offered in or beyond 2016/17, given the commitment to a detailed options study of future port capacity (discussed elsewhere in The Red Book).

The Port of Melbourne is the largest container, automotive and general cargo port in Australia, servicing Victoria, Tasmania, and parts of southern NSW and South Australia. It is expected to reach its capacity of about eight million container movements a year by around 20352.

In outlining its proposal to divest the Port of Melbourne, Victorian Labor has consistently pointed to the strong precedent set by New South Wales, with the proceeds from port sales recycled into new infrastructure. Victorian Labor’s Project 10,000 policy document describes the lease of Port Botany and Port Kembla as “a common sense way to get things done”.

2 http://www.premier.vic.gov.au/media-centre/media-releases/3696-12-billion-infrastructure-project-delivers- jobs-and-prosperity.html]long.html

7 Transport

Victoria Labor’s transport policies, contained in its Project 10,000 policy platform document, centre on reducing road congestion, increasing capacity on the metropolitan rail network and improving funding for suburban and country roads.

Delivering on this ambitious pipeline will be assisted by Victorian Labor’s long-standing commitment to the privatisation of the Port of Melbourne, with proceeds to be directed to a Victorian Transport Building Fund (VTBF).

This section outlines Victorian Labor’s key transport and port commitments in greater detail.

7.1 Establishing a Victorian Transport Building Fund (VTBF)

The establishment of a Victorian Transport Building Fund (VTBF) forms a key component of the incoming government’s transport agenda.

The VTBF will be a dedicated transport investment fund established with the proceeds from the lease of the Port of Melbourne, with further revenue derived from asset recycling initiatives and value capture. Payments out of the fund will be directed towards key transport infrastructure projects, the first of which will be Labor’s Level Crossing Removal programme.

The use of asset recycling to recapitalise the VTBF is modelled closely on the NSW Government’s Restart NSW programme, which Victorian Labor has described as an effective means of funding infrastructure projects without bearing unsustainable debt levels.

The incoming government will also develop guidelines to align the work of VTBF and Infrastructure Victoria.

7.2 Major transport project & programme commitments

The incoming government’s signature transport projects include the Melbourne Metro Rail project, the Level Crossing Removals Programme and the West Gate Distributor.

Beyond these major project commitments there is a balanced focus between commuter rail and road projects, with commitments to rail projects such as the new rail extension from South Morang to Mernda, as well as to road projects such as through the suburban and country road upgrade and repair programme.

Table 8 below gives an overview of Victoria Labor’s key transport commitments.

Table 8: Key Transport Project & Programme Commitments Project Description Estimated Cost

Melbourne Project will double the size of the city $9 billion - $11 Metro Rail loop and construct new Stations at: billion3 Domain, Parkville, Arden, CBD north, and CBD south. It will also fast track enhancements and additional works throughout the rest of the metropolitan rail network.

The project will deliver 19 new additional trains and increase peak capacity by 20,000 passengers.

Level Crossing Project will remove 50 level crossings $5 billion - $8 Removals on the metropolitan rail network to billion Programme improve safety and reduce congestion.

Funding for the project will be sourced from the VTBF. The incoming government has also discussed the application “value capture” mechanisms to generate additional funding capacity.

Suburban and Project will deliver upgrades and $2 billion Country road repairs to outer suburban roads and upgrade and country roads over the next eight years. repair Suburban roads will be allocated $1 billion and country roads will be allocated $1 billion.

New rail Project will build a new rail extension $400 million - $600 extension from from South Morang to Mernda in million South Morang to Melbourne’s North. Mernda

West Gate Project will construct a tolled West $400 million – $500 Distributor Gate Distributor from Geelong, Ballarat million and the western suburbs into Docklands. It will include new bridge on-off ramps that create a direct route for freight travelling to and from Melbourne's port.

Tullamarine Project will deliver: $250 million Freeway  Additional lanes to the northern Upgrade section of the Tullamarine Freeway between the Western Ring Road and Melbourne Airport;  employ active lane management technology; and

3 http://www.infrastructureaustralia.gov.au/coag/files/2013/VIC_Melbourne_Metro_Brief.pdf 17

 ensure availability of a minimum of six lanes on the Tullamarine Freeway between the CBD and the airport.

Hoddle Street Project will install computerised traffic $60 million management systems along key junctions along Hoddle Street between the Eastern and the Monash freeways.

24 hour public Trial of 24 hour public transport for $50 million transport Fridays and Saturdays. Duplicate Project will duplicate Thompsons Road $175 million Thompson Road between EastLink and Clyde Road to ease traffic. Northern The package of upgrades include: $135.7 million Suburbs road 1. A new interchange connecting upgrades O’Herns Road with Hume Freeway; 2. Duplication of 1.4km of O’Herns Road east of the new interchange; and 3. Duplication of 3.9 km of Yan Yean Road, between Diamond Creek Road and Kurrak Road

$100 million bus The package will $100 million package 1. add new routes in Melbourne’s growth areas; 2. increase frequencies of existing services in high demand; 3. restore cut services; 4. provide new; and 5. build related infrastructure.

Appendix A contains further details on a number of these major projects.

7.3 Cancellation of the East West Link

As noted in the introduction, the Andrews Government takes office with a strong narrative against the East West Link motorway.

The likely considerable cost involved in terminating the contract is expected to be a further factor influencing the incoming Government’s decision – with recent estimates putting the compensation costs to the State at over $1 billion.

Victorian Labor’s election costings, released last week, include an unspecified contingency plan to cover any potential compensation payments for the cancellation of the project.

Incoming Treasurer, Tim Pallas, has also stated that while he did not believe the contingency would ever be used, citing legal advice that the contract had no legal basis, the incoming government has put aside "sufficient contingency to deal with even the most extreme and might I say improper of outcomes should it occur".

8 Value Capture

The Victorian Labor government is expected to place some emphasis on opportunities for value capture as a means to supplement the cost of its signature transport projects.

In particular, value capture will form a key focus of the Andrews Government’s circa $5-8 billion level crossing removal programme, with Labor committing to task Infrastructure Victoria with the development of a value capture strategy.

The Project 10,000 platform document states, “At some locations there is likely to be an opportunity to develop this newly available land and ‘capture the value’ created by the removal of the level crossing…While development opportunities will vary for each site depending on physical constraints, Victorian Labor will actively pursue appropriate development opportunities and reinvest the proceeds generated back into further improvements to the public transport system”.

The key objective of Infrastructure Victoria’s strategy will be to develop ways of using the value created by the removal of level crossings for the creation of additional free public car parking at, or close to, train stations, as well as for further removal of level crossings.

Value capture is also expected to form a key focus of the Melbourne Metro Rail project.

While a focus on value capture is welcome, it should be noted that even an ambitious application of the strategy is unlikely to yield more than a modest level of additional funding.

9 Social Infrastructure

9.1 Healthcare

The incoming government’s agenda for the healthcare sector includes a number of substantial capital investments in health infrastructure – including building a new Western Women’s and Children’s Hospital and a new Monash Heart Hospital.

Beyond sizeable project commitments the incoming government has also committed to introduce health system reforms to improve the delivery of health services.

This section outlines Victorian Labor’s major health project and programme commitments in further detail.

Western Women’s and Children’s Hospital4

The incoming government has committed funding of $200 million to build a new Western Women’s and Children’s Hospital in Sunshine.

The new five-storey, specialist hospital will provide 237 beds, 39 special care nursery cots, four theatres and additional clinics, allowing for an additional 2,000 births per year. The planned special care nursery will be built to allow for the optional conversion into a neonatal intensive care unit in the future.

The new facility will be linked to Sunshine Hospital, which currently performs the third highest number of births of any Victorian hospital (following the two dedicated women’s hospitals). As a result, a new specialist Western Women’s and Children’s Hospital will free up theatre and bed capacity at Sunshine Hospital to enable up to 7,000 extra operations per year.

Sunshine Hospital currently provides 426 beds and its emergency department is one of the busiest in Victoria. Between 2005 and 2013, the number of births at the Sunshine Hospital increased 70 per cent, to 5,284 and is projected to increase further to 7,200 by 2023.

Monash Heart Hospital

Victorian Labor has also committed $150 million to build Australia’s first dedicated cardiac hospital at Monash University in Clayton – with an expectation that project partners will contribute the remainder of the estimated $300 million to $350 million total cost.

The proposed 195-bed, stand-alone facility will treat cardiac diseases from early childhood to advanced adult life. The hospital will include a 22-bed emergency department, ten cardiac catheterisation labs, specialist surgical and imaging facilities and tele-health services for patients in regional Victoria, interstate and overseas.

Cardiac services currently provided at existing Monash Health facilities will be relocated to the new hospital, releasing almost 5,000 square metres of space.

Monash Health, Monash University and Baker IDI will all be involved in the project, variously contributing expertise in cardiac care, research and education.

4 http://www.abc.net.au/news/2014-11-12/labor-to-build-melbourne-womens-and-childrens- hospital/5885512; http://www.danielandrews.com.au/policy/labor-to-build-womens-and-childrens-hospital- for-the-west/ 20

Figure 9: Artist’s impression of the new Monash Heart Hospital

Source: Herald Sun5

Casey Hospital expansion

Victorian Labor has committed $106.3 million for a major expansion of Casey Hospital, with the expansion expected to allow for 12,000 more patients, 8,000 more surgeries and 500 more births per year.

The expansion will include the construction of the hospital’s first intensive care unit, a new eight storey inpatient unit, four new operating theatres and a new surgery recovery centre. Capacity to provide CT and MRI imaging services at Casey will also be expanded, along with capacity for day surgery admissions.

An additional 96 beds will be opened in the upgrade, with extra room built to house a further 64 beds if demand increases in the future. In total, the size of the hospital will increase 35 per cent.

The existing Casey Hospital is a 229 bed hospital providing a range of health services for growth areas in Melbourne's outer-east. Demand data for Casey Hospital shows that 38,000 patients were admitted last year; 52,620 people attended the emergency department; and only around half of Category 2 patients receive surgery within 90 days.

Other health infrastructure funding commitments

Other funding commitments for new health infrastructure include $20 million for a new Intensive Care (12 bed) and Short Stay (eight bed) unit at Angliss Hospital, as well as $10 million for a cardiac catheterisation laboratory in Ballarat.

Health system capacity review

To inform recommendations about increasing the capacity of Victoria’s hospitals the incoming Government has committed to a State-wide audit of bed and theatre capacity, with the audit to be headed by AMA Victoria President, Dr Doug Travis.

The proposed audit recognises the capacity pressures on the current hospital network, with population growth, population ageing and increasing rates of chronic disease driving increased and changing demand.

5 http://www.heraldsun.com.au/news/victoria-state-election-2014/labor-backs-plan-to-build-australias- first-standalone-cardiac-hospital/story-fnocxssc-1227084883315 21

By 2021, the State’s population is projected to increase to 6.6 million people, with as many as five million people in metropolitan Melbourne. Additionally, the number of people aged 75 and over is projected to increase by 40 per cent in metropolitan Melbourne and by 29 per cent in rural and regional Victoria, with the over 75 years age group using five times as many health services as people aged under 75.

Health system reform

The incoming government has also committed to allow private midwives to provide birthing services in public hospitals. Under current settings, Victorian women cannot give birth with their own chosen midwife in a public hospital.6

The incoming government has committed to work with health services to establish pilot programmes at two hospitals for women planning to give birth in a public hospital as the private patient of an eligible midwife.

The expected benefits of this proposed reform include reducing pressure on maternity wards and improving choice for expectant mothers. It is also expected to improve affordability, as women will be billed as private patients under Medicare.

9.2 Education

The construction of new and upgrading of existing education infrastructure lies at the centre of Victorian Labor’s education plan for the State – with $1.3 billion in new capital spending.

This includes $1.125 billion for new and upgraded buildings, as well as $179.5 million for education support services. Eleven new schools have also been announced for inner city and outer suburb high-growth areas, with $87 million in works committed.

Policies announced cover all levels of education from kinder to higher education. Government schools will receive an initial investment of $510 million for new and upgraded school buildings. While private and Catholic schools, who educate one third of all students in the State, will receive an additional $120 million to expand and upgrade facilities.

Practical skill based higher education provider TAFE will receive an investment of $320 million as part of the TAFE Rescue Fund to upgrade facilities, reopen closed campuses and improve the finances of struggling institutions.

Victorian Labor has also committed $125 million for the establishment of ten new Tech Schools to be constructed alongside existing secondary education institutions in regional Victoria.

Early childhood education will receive additional investment of $50 million though capital grants to upgrade and build kindergartens across the State.

A full breakdown of the incoming government’s committed capital investment in education is provided in Table 10 below.

6 http://www.danielandrews.com.au/policy/more-choices-for-mothers-from-pregnancy-to-birth-and-beyond/ 22

Table 10: Details of education capital investment

Project/ Project Details Amount Programme Committed Education - Various locations across the $510 million Infrastructure state Upgrades TAFE - An upgrade to facilities and $320 million reopening closed facilities 10 New Tech - Located in Gippsland, Bendigo, $125 million Schools Ballarat, Geelong, Monash, Casey, Wyndham, Banyule, Yarra Ranges and Whittlesea regions Upgrades for - Labor Government committed to $120 million Independent match dollar for dollar and Catholic investment for building and Schools facility upgrades 8 New Schools - Mernda P-12 $50.5 million (High - Point Cook Senior School Population - Taylors Hill Senior School Growth Areas) - Davis Creek Primary School - Edgars Creek Secondary School - Armstrong Creek West Primary School - Gum Scrub Creek Primary School - Craigieburn North West Primary School Kinder - Investment in new kindergartens $50 million and upgrades 3 New Schools - Richmond High School $36.5 million (Inner City - South Melbourne Park Primary Areas) - Footscray Education Precinct

It has been estimated that Victoria will need between 500 and 800 extra schools to accommodate an anticipated 380,000 increase in school-age students by 2031. Most of the demand for new schools is expected to be in the densely populated inner suburbs and outer growth corridors of Melbourne.7

9.3 Social Housing

With demand for social housing outstripping supply, as well as an ageing housing stock and associated growing maintenance backlog, social housing provision has been identified by Victorian Labor as a further priority for reform.

In particular, the incoming Government has committed to the dual goals of increasing social housing supply, while also achieving better value for money for taxpayers.

7 http://grattan.edu.au/wp-content/uploads/2014/08/561-state-election-transcript.pdf 23

To achieve these goals, the incoming government has committed to investigate alternative finance options for social and public housing, as well as to encouraging local government to facilitate greater private and community investment in housing options.

More broadly, the incoming government has committed to continue to expand Victoria’s housing stock through the National Affordable Housing Agreement and State initiatives.

10 Utilities

Victorian Energy Efficiency Target (VEET)

Victorian Labor has committed to continue operating, and to further expand, the Victorian Energy Efficiency Target (VEET) scheme.

The Victorian Energy Efficiency Target (VEET) scheme is a Victorian Government energy efficiency initiative that seeks to help consumers minimise their energy costs by providing discounts on energy efficiency services and products. Following a review of the scheme earlier this year, the Napthine Government had committed to phase out VEET at the end of 2015.

Renewables investment

Renewables investment forms a key focus of Victorian Labor’s agenda for the State’s energy sector, with the incoming government committing to “wind-back” planning controls on renewables developments – including halving the exclusion zone around dwellings from two kilometres to one kilometre.

Victorian Labor has also committed to making the town of Newstead, on the Loddon River, Victoria’s first ‘Solar Town’ by transitioning it to renewable energy. As a first step, this will involve the provision of a $200,000 grant to Newstead 2021, the community group behind the project, to draw up a project master plan.

The creation of a $20 million New Energy Jobs Fund is a further key commitment. The Fund will offer grants of up to $1 million to firms and companies specialising in high-growth renewable sectors like new energy technology.

Appendix A – Major transport projects in detail

1 Melbourne Metro Rail (Estimated Cost: $9 billion to $11 billion)

The Melbourne Metro Rail project aims respond to the rapid growth in the number of people using the metropolitan train system, which has seen a 70 per cent increase in patronage over the last decade.

The project will double the size of the city loop and connect the Sunbury line in the northwest to the Pakenham-Dandenong line in the south east. New stations will be constructed at Domain, Parkville, Arden, CBD North, and CBD South. Capacity on the network is expected to increase by 20,000 passengers once the project is complete.

The project would also bring forward the timeline for enhancements and additional works throughout the rest of the metropolitan rail network. Figure 11 shows the proposed route for Melbourne Metro Rail.

Figure 11: Melbourne Metro Rail

Source: Project 10,000

The project is expected to cost between $9 billion and $11 billion in total. Victorian Labor has indicated it will seek as much as one third of the project’s total construction cost from the Federal Government.

2 Level Crossing Removal Programme (Estimated Cost: $5 billion to $8 billion)

Under the Level Crossing Removal Programme, Victorian Labor has committed to the removal of 50 level crossings on the metropolitan rail network by grade separating the rail and road. The programme will aim to reduce congestion, increase the number of train services and improve safety.

Figure 12 provides a map of 40 of the crossings selected for removal.

Figure 12: Locations of level crossings to be removed

Abbotts Road DANDENONG 1 SOUTH 2 Bell Street COBURG 3 Bell Street PRESTON 4 Blackburn Road BLACKBURN 5 Buckley Street ESSENDON 6 Burke Road GLEN IRIS 7 Camp Road CAMPBELLFIELD 8 Centre Road CLAYTON 9 Chandler Road NOBLE PARK 10 Charman Road CHELTENHAM 11 Cherry Street WERRIBEE 12 Clayton Road CLAYTON 13 Clyde Road BERWICK 14 Corrigan Road NOBLE PARK 15 Edithvale Road EDITHVALE 16 Ferguson Street WILLIAMSTOWN 17 Furlong Road ST ALBANS 18 Glenroy Road GLENROY 19 Grange Road CARNEGIE 20 Hallam Road HALLAM 21 Heatherton Road NOBLE PARK 22 High Street RESERVOIR 23 Koornang Road CARNEGIE 29 Mountain Highway BAYSWATER 35 Skye/Overton Road FRANKSTON Kororoit Creek Road Murrumbeena Road South Gippsland Highway 24 30 36 WILLIAMSTOWN NORTH MURRUMBEENA DANDENONG 25 Lower Plenty Road ROSANNA 31 North Road ORMOND 37 Station Street BONBEACH 26 Main Road East/West ST ALBANS 32 Poath Road HUGHESDALE 38 Thompsons Road LYNDHURST 27 Maroondah Highway LILYDALE 33 Scoresby Road BAYSWATER 39 Toorak Road KOOYONG 28 Moreland Road BRUNSWICK 34 Seaford Road SEAFORD 40 Werribee Street WERRIBEE

Source: Project 10,000

In November 2014, Victoria Labor released the remaining 10 locations:

1 Aviation Road LAVERTON 6 Heatherdale Road MITCHAM 2 Balcombe Road MENTONE 7 Manchester Road MOOROOLBARK 3 Centre Road BENTLEIGH 8 McKinnon Road MCKINNON 4 Eel Race Road SEAFORD 9 Melton Highway SYDENHAM 5 Grange Road ALPHINGTON 10 Station Street CARRUM

The programme will be funded through the Victorian Transport Building Fund and managed by Projects Victoria. Victorian Labor has also indicated it will pursue all “appropriate value capture opportunities” to leverage the additional amenity from grade separation to contribute to the funding envelope for the level crossing removal programme.

3 West Gate Distributor (Estimated Cost: $400 million to $500 million)

The West Gate Distributor project aims to reduce the number of trucks travelling on the West Gate Bridge by diverting them onto a dedicated road link directly connected to the Port – seeking to ease congestion from Geelong, Ballarat and the western suburbs.

The project will see the construction of:  West Gate Freeway on-and-off ramps and an elevated road along Hyde Street, Yarraville;  upgrade and duplication of Whitehall Street between Francis Street and Somerville Road; and  strengthening of Shepherd Bridge and upgrade into Footscray Road

Figure 13 shows the proposed route of the West Gate Distributor

Figure 13: West Gate Distributor

Source: Project 10,000

Victoria Labor expects the West Gate Distributor will divert up to 5,000 trucks off the West Gate Bridge per day. This is expected to address the growth in truck visits to and from Swanson Dock over the next two decades, which is projected to increase to approximately 12,000 per day.

4 New rail extension from South Morang to Mernda (Estimated Cost: $400 million – $600 million

This rail extension project will see construction of eight kilometres of new duplicated track from South Morang to Mernda, with full grade separation along the line and no level crossings. The extension is expected to cater to the significant population growth expected in Melbourne’s north.

Two new stations are planned along the line, one at Mernda and another at a location to be determined in consultation with the local community. Provisions will also be made for additional future stations.

Victoria Labor has committed to fully fund the project. Construction is expected to begin in 2015 and be completed by 2020.

5 Suburban & Country road upgrade and repair (Estimated Cost: $2 billion)

The suburban and country road upgrade and repair package will see guaranteed future appropriations from the Department of Transport’s Better Roads Victoria Trust Account to regional and outer suburban areas, including:

1. a minimum of $1 billion allocated to repair and upgrade roads in Melbourne’s outer suburban and interface communities over eight years; and 2. a minimum of $1 billion allocated to repair and upgrade roads and level crossings in rural and regional communities.

Victoria Labor has committed to legislative changes to ensure a proportion of funding for these communities continue in perpetuity.

Legislative changes will also be made to mandate the compulsory payment of traffic camera and speeding fines into the Better Roads Victoria Trust Account.