Part 1: Year in review

Performance Snapshot

  • 18,236 vehicle import applications assessed under the concessional arrangements of the Motor Vehicle Standards Act 1989
  • 31 Round 5 projects funded through the Remote Airstrip Upgrade Program
  • National Stronger Regions Fund $243.4 million towards 184 projects that support regional development
  • National Water Infrastructure Development Fund co-funded five water infrastructure projects, including two in northern Australia
  • Department led development of the National Infrastructure Data Collection and Dissemination Plan released in June 2018
  • An airport lease was granted to WSA Co for the Western Sydney Airport site on 17 May 2018
  • Western Sydney, Launceston and Townsville city deals now being implemented
  • Transport and Infrastructure Council endorsed 12 projects under the National Heavy Vehicle Safety Initiative
  • The department funded upgrades to the wastewater treatment plant on the Cocos (Keeling) Islands, the Cascade Pier and capital works at the school and health facility on Norfolk Island
  • Release of BITRE's Progress in Australian Regions Yearbook 2017
  • Community Development Grants 110 projects completed, a further 130 projects commenced
  • WSA Co was established in August 2017
  • 3,425 vehicle certification type approvals and amendments, 7,356 Registered Automotive Workshop Scheme (RAWS) import approvals and 7,135 RAWS used vehicle plate approvals
  • $18.3 million to operate 52 Regional Development Australia Committees which support the development of their regions
  • Successful election to Category B (from Category C) of the International Maritime Organization
  • Supported ICAO's assessment of Australia's safety oversight arrangements resulting in our implementation score increasing from 85.05% to 94.98%

Secretary's review

I am pleased to deliver my first annual report as Secretary of the Department of Infrastructure, Regional Development and Cities. I have enjoyed my first year leading the department and I am proud of the contributions we make across infrastructure, transport and regional development.

I would like to acknowledge the contribution of the department's former secretary, Mr Mike Mrdak AO. Mike led the department for many years and made significant contributions to many areas of policy. I look forward to building on this legacy in the coming years.

Machinery of government changes

2017–18 has been a year of change for the department. In December 2017, machinery of government changes saw transport security responsibilities (Program 2.1) move to the new Department of Home Affairs. At the same time, the department gained responsibility for cities from the Department of the Prime Minister and Cabinet, as well as responsibility for water infrastructure policy from the Department of Agriculture and Water Resources.

The cities and water infrastructure functions complement the department's work on urban infrastructure and regional development. An example of how this work comes together is the Western Sydney City Deal agreed by all three levels of government in March 2018. Cities staff advised on the deal to build on the Australian Government's $5.3 billion investment in the Western Sydney Airport. This city deal has a strong focus on land use planning, with governments working together to plan the Badgerys Creek ‘Aerotropolis’ precinct surrounding the airport.

The machinery of government changes mean that the programs in this report differ from the Portfolio Budget Statement prepared for the department. Unlike the Portfolio Budget Statement, this report omits the Transport Security Program 2.1, and includes information about administered items relating to cities and water infrastructure. To reflect the new cities responsibilities, the 2018–19 Portfolio Budget Statement includes an updated purpose and outcome, and a new program has been added—Program 3.3, Cities—to Outcome 3, Regional Development, Cities and Local Government.

I would like to thank transport security staff for their contributions and wish them well as they continue their important work keeping Australia's transport system secure. For information about transport security activities undertaken in 2017–18, I refer readers to the Department of Home Affairs 2017–18 Annual Report.

Organisational restructure

The department implemented several changes in 2017–18 including an organisational restructure and new governance framework. The new structure includes a third deputy secretary, and a transition to a three group structure: the Transport Group, the Regional and Territories Group, and the Infrastructure Group.

  • Within the Transport Group, led by Pip Spence PSM, we have established the Portfolio Coordination and Research Division, which brings together some of the work previously undertaken by Policy and Research Division and other areas of the department. This is the new home for cross-cutting initiatives which are managed through temporary taskforces—this year there has been the Transport Technology Futures Taskforce, and the Freight and Supply Chain Inquiry Taskforce. The Aviation and Airports, and Surface Transport Policy divisions complete this group.
  • In the Regional and Territories Group, led by Judith Zielke PSM, the Regional Development and Local Government Division has been established. This division is responsible for regional and dams policy, regional programs and local government. The Corporate Division and the new Territories Division—where our work supports Indian Ocean Territories, Norfolk Island and the Jervis Bay Territory—are also located in this group.
  • The Infrastructure Group, led by Luke Yeaman, is made up of the Infrastructure Investment Division, the Western Sydney Unit, and the new Inland Rail and Rail Policy and Cities divisions. As part of the new structure, the Rail Policy and Planning Branch joined the Rail Policy Division and the Land Transport Market Reform Branch joined the Infrastructure Investment Division.

The new governance framework is comprised of three new departmental committees—chaired by our deputy secretaries—to provide strategic oversight and governance for the department. The People Committee is chaired by Luke Yeaman, the Finance and Operations Committee by Pip Spence PSM, and the Performance and Reporting Committee by Judith Zielke PSM. The aim of this framework is to improve performance, sharpen the focus on accountability and transparency, share more ideas and create greater collaboration, and encourage flexibility and openness to innovation.

These structural changes are now fully implemented and helping to ensure the department is best placed to pursue its purposes in the years ahead.

Our performance

While readers will find more detailed information and analysis in the Activities and Annual Performance Statements sections of this report, I would like to highlight some of our key achievements in 2017–18.

Road and rail investment

The department is working with the Australian Rail Track Corporation Limited (ARTC) to deliver the Inland Rail project following the Australian Government's commitment in 2017–18 to fund full delivery of this initiative.

The Victorian and New South Wales governments have signed bilateral agreements with the Commonwealth, laying out the shared objectives, roles and responsibilities of all jurisdictions. The department has opened regional offices in Dubbo, Toowoomba and Wodonga, which provide on-ground community and stakeholder engagement along the Inland Rail corridor. In January 2018 a major project milestone was reached with the first delivery of steel for the Parkes to Narromine project. The Inland Rail project requires 262,000 tonnes of steel to accommodate double-stack trains up to 1,800 metres long, travelling at 115 kilometres an hour with a 21 tonne axle load.

The government's $75 billion pipeline of investment in road and rail continued in every state and territory, including through programs such as Bridges Renewal, Black Spot, Heavy Vehicle Safety and Productivity, and Roads to Recovery. The investment in road and rail will improve the efficiency and safety of our freight and commuter routes. Major projects that received funding this year include the:

  • Pacific Highway upgrade—$876.8 million
  • Bruce Highway upgrade—$533.6 million
  • Western Sydney Infrastructure Plan—$310 million

Road safety

Improving road safety remained a focus for the department's activities this year. The launch of the Australasian New Car Assessment Program (ANCAP) safety app in May 2018 was an exciting development. This enables consumers to access ANCAP safety rating information before they purchase a vehicle. The app is the first platform with a ‘compare’ function that includes a side-by-side visual comparison of the key safety features of up to three vehicle models. This is part of a broader strategy to improve communication and education on new vehicle safety features and safer vehicle choices that the road safety program funded.

The department continued its work developing road vehicle standards, including international standards. In March 2018, our contribution to the United Nations World Forum for the Harmonization of Vehicle Regulations (the peak forum for development of international road vehicle standards) helped establish a new Global Technical Regulation on electric vehicle safety, as well as changes to 24 United Nations Regulations, 18 of which are relevant to our local vehicle standards.

The government introduced the Road Vehicle Standards Bill and related bills to Parliament in February 2018, a package of legislation that will modernise and strengthen the laws governing road vehicles when they enter the Australian market. This provides the framework for effective and efficient regulation of vehicle standards for years to come.

To progress a national best practice model for roadside drug testing, the department cochairs the National Drug Driving Working Group, which had its first meeting in March 2018. Eradicating drug driving is a strong focus of governments, with data released by the Victorian Government showing that in the last five years about 41% of drivers and motorcyclists killed in the state who were tested, had drugs in their system. Cannabis and stimulants were the most common substances detected.1

Maritime and aviation priorities

The department and the Australian Maritime Safety Authority (AMSA) had a successful year promoting the Australian Government's maritime priorities. This culminated in Australia's re-election to the International Maritime Organization (IMO) council after successfully campaigning to move from membership of Category C to Category B. Category B consists of 10 IMO members with the largest interest in global seaborne trade. This is an excellent result, as category B has never before been successfully contested, and ensures Australia's interests are represented at the highest levels of international maritime policy making. It reaffirms Australia's significant contribution to developing international standards on maritime safety, security and pollution prevention.

International and domestic aviation connects Australians with each other and the rest of the world. Under the Airports Act 1996, the department administers the Australian Government's interests in privatised airports nationwide including Western Sydney Airport. Construction of the Western Sydney Airport is on track. WSA Co opened its doors in Liverpool at the beginning of 2017–18. It is progressing site works, including the relocation of the major transmission line. In addition to the joint announcement on the new rail link to the airport by the Prime Minister, Hon Malcolm Turnbull MP, and the New South Wales Premier, Hon Gladys Berejiklian MP in March 2018, WSA Co also recently shortlisted the early earthworks tender, which is integral to preparing the site for construction. The early earthworks project will start later in 2018 and includes levelling 1.8 million cubic metres of earth, in addition to road and drainage works.

The department has been working closely with our global neighbours and aviation partners, including the International Civil Aviation Organization (ICAO), to enhance aviation outcomes worldwide. We are involved in more than 55 ICAO panels, working groups, committees and study groups. In April for example, we attended the Asia and Pacific and Middle East Regions Symposium, which concentrated on the challenges for states, regulators, airlines and other players in the global aviation industry. It has a particular focus on aviation safety management issues.

To improve regional aviation access, the Australian Government announced $7 million for 31 projects through the fifth round of the Remote Airstrip Upgrade program in March. The program is a sister to the Remote Air Services Subsidy Scheme, which subsidises flights to improve access for residents of about 266 remote communities, including Indigenous communities and cattle stations.

Regional development, local government and territories

The government's regional grants programs are key to delivering Australian regional development outcomes—in particular, creating jobs and stimulating local economies. The Building Better Regions Fund, National Stronger Regions Fund and Community Development Grants Programme are the major administered initiatives through which, in partnership with local stakeholders, important infrastructure and community investment projects are delivered.

The Regional Development Australia (RDA) network of committees continued in 2017–18. Following careful consideration of a 2016 independent review of the RDA program, the department is implementing several program reforms. These were announced in August 2017 and include a new charter focused on growing strong and confident regions which harness their competitive advantages and drive economic growth.

The Australian Government allocated $2.4 billion to local governments across Australia through the Financial Assistance Grants program. These funds support local priorities, and councils determine how they are spent. Local governments were also commended through another successful National Awards for Local Government. The awards are an annual celebration of Australian local government achievements, highlighting innovative and resourceful solutions that local governments have implemented to make a difference within their communities. I'd like to extend my congratulations to the 2018 category winners and in particular Wujal Wujal Aboriginal Shire Council in Queensland, the winner of this year's National Award for Excellence in Local Government. The awards are sponsored by the department, as well as LG Professionals Australia, Woodside Energy Ltd, the Department of Social Services, and Department of Communications and the Arts.

More than 4,500 citizens in the external territories and the Jervis Bay Territory maintain access to local and state government-type services through the department's program delivering services, legislation and infrastructure. Work to extend remaining Commonwealth legislation to Norfolk Island will continue into the foreseeable future to ensure its laws are consistent and contemporary.

Cities

Moving the cities policy functions into the department recognises the important and growing role urban cities and regional centres play in Australia's economic success. Well-planned and well-functioning cities boost productivity, attract talent and investment, encourage innovation and create jobs. I am proud of the achievements in 2017–18 to establish city deals—a new approach in Australia—which brings together the three levels of government, the community and private enterprise to create place-based partnerships. Three city deals are now being implemented: Western Sydney, Launceston and Townsville.

The year ahead

National freight volumes continue to grow at a rapid rate. Freight rates are a key factor influencing freight mode choice and the costs of freight-reliant business sectors, such as mining, construction, and retail and wholesale trades. As such, the department has a strong focus on improving freight outcomes. The government's new Roads of Strategic Importance initiative will complement major projects already underway, such as the Inland Rail, Bruce Highway upgrade and Pacific Highway upgrade. Through the Roads of Strategic Importance initiative, the Australian Government will provide $3.5 billion over the next decade to address pinch points and last mile access to ports, airports and freight hubs.

The government is also working with state and territory governments to develop the negotiating strategy for the new National Partnership Agreement on Land Transport Infrastructure Projects, support the strategic work program of the Transport and Infrastructure Council to implement the National Policy Framework for Land Transport Technology, coordinate delivery arrangements for the National Road Safety Strategy 2011–2020 and the National Road Safety Action Plan 2018–2020, and develop a national freight and supply chain strategy.

For cities policy, the Australian Government's Smart Cities Plan will remain the guiding policy framework. The department is looking forward to brokering and implementing more city deals, and to continuing to support delivery of innovative smart city projects through the Smart Cities and Suburbs Program. Successful Round 2 projects are anticipated to be announced in the coming months.

As in our cities, the department will continue to create value by partnering with community stakeholders in Australia's regions and territories. The grant programs that we administer support projects identified by communities that create jobs, improve the liveability of regions and drive economic growth.

For further details on our plan for the year ahead, I encourage you to view our 2018–19 Corporate Plan, which is available at infrastructure.gov.au/department/about/corporate-plan.aspx.

Financial performance for 2017–18

Departmental activities involve the use of assets, liabilities, revenue and expenses controlled or incurred by the department in its own right. Administered activities involve management or oversight by the department—on behalf of the Australian Government—of items controlled or incurred by the Australian Government.

This section should be read in conjunction with our audited financial statements for 2017–18 in Part 6 of this report, titled ‘Financial statements'.

Departmental finances

In 2017–18, the department reported a deficit on continuing operations of $2.2 million. This equates to a surplus of $5.9 million after allowing for net cash appropriation arrangements.2

Revenue from Government reduced by $6.8 million from 2016–17 mainly due to the part-year effect of Machinery of Government changes. Other revenue and gains increased by $3.6 million from the previous year mainly due to the recovery of costs incurred on behalf of WSA Co during its establishment.

Departmental expenses were $5.5 million lower than 2016–17 mainly due to the part-year effect of Machinery of Government changes, partially offset by the write-down of office fitout assets that were replaced or sub-let to other entities.

Table 1.1 Summary of departmental financial performance and position ($m)
2013–142014–152015–162016–172017–18Change
last
year
Revenue from government 231.1 250.2 261.7 248.5 241.7 (6.8)
Other revenue 5.8 6.7 4.7 4.3 8.1 3.8
Gains 8.2 26.3 10.4 1.1 0.9 (0.2)
Total income 245.1 283.1 276.8 253.9 250.7 (3.2)
Employee and supplier expenses 230.4 252.6 253.7 248.2 240.3 (7.9)
Depreciation and amortisation 11.6 12.5 12.2 9.3 8.1 (1.2)
Other expenses 1.1 8.1 2.0 0.8 4.4 3.6
Total expenses 243.0 273.2 268.0 258.3 252.8 (5.5)
Surplus (deficit) attributable to the Australian Government 2.1 9.9 8.9 (4.4) (2.2) 2.2
Plus non-appropriated depreciation and amortisation expenses 11.6 12.5 12.2 9.3 8.1 (1.2)
Operating result (loss) attributable to the agency 13.7 22.4 21.1 4.9 5.9 1.0
Financial assets A 136.0 130.8 133.5 147.0 144.9 (2.1)
Non-financial assets B 50.4 35.9 43.5 40.6 37.9 (2.7)
Liabilities C 106.8 85.9 68.7 73.5 63.6 (9.9)
Net assets – A + B – C 79.6 80.8 108.3 114.1 119.2 5.1

Administered finances

Total administered expenditure in 2017–18 was $10.4 billion. Of this, $4.9 billion was appropriated directly to the department for grants, subsidies and other administered expenses. The Treasury is appropriated directly for payments to and through states and territories for national partnership agreements.

Major expense items in 2017–18 were:

  • Infrastructure Investment Program ($4,642.7 million)
  • Local Government Financial Assistance Grant payments ($2,412.3 million)
  • Infrastructure Growth Package ($709.2 million)
  • Roads to Recovery ($700.0 million)
  • Western Sydney Airport ($348.8 million)
  • National Stronger Regions Fund ($243.4 million)
  • Community Development Grants ($131.2 million)
  • payments to corporate Commonwealth entities ($126.0 million)
  • Services to Indian Ocean Territories ($114.8 million)

Total administered programs were $449.8 million (4.2 per cent) lower than the latest budgets published in the department's and the Treasury's 2018–19 Portfolio Budget Statements, the variance was largely due to:

  • changes to the accounting treatment for concessional loans ($113.7 million)
  • delays in project milestones for Infrastructure programs ($177.2 million)
  • delays in project milestones for Treasury programs ($173.4 million)

Combined expenses in 2017–18 were $1.0 billion lower than the previous year largely due to:

  • determinations by the Treasurer to bring forward Financial Assistance Grant payments in both years (the equivalent of six quarterly payments were made in 2016–17 against four in 2017–18) ($1.2 billion)
  • land with a carrying value of $341.0 million was written down in 2017–18 after being leased to WSA Co and the operators of Melbourne Airport for no consideration. A similar write-down of $361.5 million occurred in 2016–17 associated with the Moorebank Intermodal Terminal and Melbourne Airport

The department also made loan advances totalling $721.8 million from the WestConnex concessional loan facility bringing the total amount advanced since July 2016 to $1.3 billion.

In 2017–18, the department changed its accounting policy for recognition of a commitment to provide a loan at a below-market interest rate. This required the restatement of concessional loan expenses and liabilities reported for the 2015–16 and 2016–17 financial years, mainly for the WestConnex loan commitments. Further details are disclosed in the Overview section of the financial statements.

Administered revenue increased by $188.6 million mainly due to the recovery of preparatory costs at the Western Sydney Airport site from WSA Co and accrual of interest on the WestConnex concessional loan facility. Administered financial assets increased by $1.2 billion mainly due to additional advances paid from the WestConnex concessional loan facility and equity payments to corporate portfolio entities.

Administered non-financial assets reduced by $366.1 million mainly due to the write-down of land leased to WSA Co.

The reduction in administered liabilities of $100.1 million reflects fewer commitments remaining under the WestConnex concessional loan facility as advances were made during the financial year.

Table 1.2 Summary of administered financial performance and position ($m)
2013–142014–152015–1612016–1712017–18Change
last
year
Taxation revenue 34.4 36.3 39.4 41.7 47.2 5.5
Non-taxation revenue 1,520.0 536.7 408.9 360.7 547.9 187.2
Gains 0.1 65.7 11.2 11.8 7.7 (4.1)
Total income 1,554.5 638.7 459.4 414.2 602.8 188.6
Employee and supplier expenses 100.4 124.2 137.2 157.5 174.5 17.0
Depreciation and amortisation 29.1 43.8 39.9 53.9 36.6 (17.3)
Grants 3,431.6 4,799.6 2,908.4 5,005.0 4,034.0 (971.0)
Subsidies 164.9 187.6 195.7 206.2 219.7 13.5
Other expenses 0.8 54.0 314.0 566.9 480.7 (86.2)
Total expenses 3,726.9 5,209.2 3,595.2 5,989.5 4,945.5 (1,044.0)
Financial assets A 4,727.8 5,391.2 5,387.6 6,422.5 7,573.0 1,150.5
Non-financial assets B 700.3 647.5 881.3 1,029.5 663.4 (366.1)
Liabilities C 66.5 71.6 367.6 270.2 170.1 (100.1)
Net assets – A + B – C 5,361.6 5,967.1 5,901.3 7,181.8 8,066.3 884.5

Note:

  1. Amounts associated with concessional loan expenses and liabilities have been restated (refer Overview section of financial statements)

Grants

Information on the grants awarded from 1 July 2017 to 30 June 2018 is available at infrastructure.gov.au/department/grants. Information on the grants awarded from 1 January 2018 to 30 June 2018 is available at www.grants.gov.au.

1 www.tac.vic.gov.au/road-safety/tac-campaigns/drug-driving

2 Under net cash appropriation arrangements, the Department does not receive an appropriation for depreciation and amortisation expenses. Separate capital funding is provided through equity appropriations

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Last Updated: 12 November, 2018