SPEAKING ON A BILL | WEST GATE TUNNEL
Mr Melhem: I also rise to speak on the motion moved by Ms Wooldridge. I am somehow pleased that the opposition has started talking about local content and talking about encouraging companies and projects in Victoria to actually use local content. I recall a similar issue in the 57th Parliament when Ms Wooldridge’s party was in government and construction was underway to build Webb Dock. The company decided to import the steel from China, and when the then opposition raised that issue the government at the time did not even blink. They did not worry about any of it. They did not make an issue out of it. They did not even try to address the problem or try to even talk to companies about major projects and about local content. The point I am making is just the sheer hypocrisy of the Liberal government and the coalition in trying to be seen to stand up for local content and local jobs.
Their history is just appalling. In fact every time someone raised the issue of local content they said, ‘No, no, we can’t interfere. Let the market decide. Let the market to deal with these issues. We will run away from it’. I am actually pleased to be a part of this government. Even in my previous life as a union leader of the Australian Workers Union (AWU)—and the Australian Workers Union name was mentioned, and I will come back to that later on—we continually advocated for local industry participation in government contracts, procurement policies and major infrastructure projects, going back to the days of the Bracks and Brumby governments when I was heavily involved, along with other unionists and union leaders—Ms Stitt was part of that as well as Mr Dargavel and various other union leaders—in trying to develop what we call the Victorian Industry Participation Policy. That is how the whole thing started. I am going back 15-plus years. Slowly but surely there was advocacy by the labour movement and the Labor Party as to how we could get industry to participate in Victorian infrastructure, and we slowly started mandating local content. It took a while, but we got there.
This government, the Andrews Labor government, is leading the country by example, by mandating. We have actually started mandating local content. We are not talking about it; we are making it mandatory, whether it is trains, trams, buses or infrastructure projects. Yes, we are actually proud that we got the consortium when they bid for the project to achieve 92 per cent local content. Unfortunately, yes, we are disappointed, and I am disappointed—in fact I am pissed off—that they are in the process of ordering 33 000 tonnes of steel from China instead of giving the Australian market or the local producers and fabricators a chance to actually bid for it. I still do not quite accept necessarily that the company has done the right thing; I do not think they have. I think they have been opportunistic. The Premier was very clear in his criticism of the company and about not giving the companies a fair go and a fair chance, and that matter is being looked at by Transurban as we speak in trying to find out what went wrong, how we can fix this and, most importantly, if the horse has already bolted on this one, what provisions are available for us, or recourse, to take further action—but more importantly how we can learn from that for future projects to make sure that whatever arrangements we put in place are very tight and cannot be broken. That is where the focus should be.
I said earlier about the coalition suddenly being interested in the issue, which is great, but let us not play politics on this. I expected the opposition to say, ‘Well, we will support the government, and we want to work with the government to make sure these things do not happen again’. I have not heard a commitment or anything from the coalition that they are happy to have 90 per cent local content. I tell you what: in my days when I was the head of the AWU, I was happy with 25 per cent. When we were talking about Bombardier making trains in Dandenong and other projects, 25 per cent was better than nothing. Now we have gone beyond the 50 per cent to 90 per cent on that project. Ms Wooldridge talked about how the West Gate project started with the West Gate distributor and half a billion dollars. I think it was a good start. As the member for Western Metropolitan Region, if I had to wait—and I am waiting now—for a bigger project to provide bigger benefits for my constituents in Western Metropolitan and Geelong and Ballarat and Bendigo, which is the West Gate Tunnel, I think it is worth the bloody wait. It is a great project. Yes, we have moved away from the West Gate distributor. It was only a small project trying to alleviate or take some pressure off the West Gate and provide access to the port. This project is a market-led proposal by Transurban to the government basically to do a bigger project delivering for many, many years to come, expanding the West Gate Freeway to 12 lanes. Also they want the tunnel, which is going to be permanent and much better than the West Gate distributor, which was originally designed. So definitely my constituents in Western Metropolitan Region are very pleased with the progress of that job. Yes, the cost has gone from $5 billion to $5.5 billion because it is 10 times the size.
Ms Wooldridge also talked about the method by which payment is going to be made in relation to how we are going to fund it. I suppose there are three methods. You can have 35, 40 or 50-year tolling for the West Gate part of the project on its own, you can pay the money up-front with the government paying it from general revenue or you can extend the current CityLink Transurban tolling for 10 years, which includes the Tullamarine widening project as well. Also, there are significant benefits for the Monash Freeway, which is part of the project. We tend to ignore that. People in the south-eastern part of Melbourne, northern, western Melbourne, Geelong, Bendigo, Ballarat—everyone is going to benefit from the West Gate Tunnel Project. The cost of that project is going to be shared throughout the state. Everyone is going to share it. So it is not really just suddenly one specific part of Melbourne; it is actually affecting the whole road network in Melbourne. That is the method we agreed on, and that is the method we implemented. I have talked about industrial relations on the project. I was reading in the Herald Sun this morning about mayhem and that the sky is going to fall in and all these problems with the project. The project has been going for a while, and guess what? I drive on that road more or less every day. It is progressing really well.
There has not been a single incident in relation to any industrial action on that project. This project is running really well, and I want to commend the approach that the construction unions have taken. Yes, there are still some issues between the construction unions and the company about what enterprise agreement should apply, but all the subcontractors working on that project have an enterprise agreement. There is no project agreement yet with the actual principal contractor, but that has not had any effect or impact on the delivery of the project. In fact the widening of the West Gate Freeway itself is progressing ahead of schedule. It is going really well without a single incident. I know there have been some comments in the paper that war is going to break out and so forth. Let us hope not. I do not want any war to break out between unions on this major infrastructure project. They should be able to sort out their differences, and I am sure they will.
Mr Finn interjected.
Mr Melhem: They will sort that out because it is far too important. As political leaders, as legislators, we should be advocating common sense. We should be advocating and urging the industrial parties to play by the rules and have some common sense, because these major infrastructure projects in the state are too great for us to compromise. There are a lot of things happening in this state. There is this project. There is the North East Link, and planning has commenced on that. There is the airport link, the Metro Tunnel—and the Metro Tunnel has been going on for a while. Again, if we are talking about industrial relations ‘mayhem’, I am not aware of a single incident on that huge project. They are both covered by the AWU and the CFMEU. But no, we want to create this sort of perception that Victoria is the wild west. Well, let me give you some bad news about that view—it is not. There has not been a single problem or walkout on any of these projects. That is a credit to these unions and their members, and it is a credit to the companies actually running these projects. Yes, there are a lot of arguments and feuds about worker conditions and about EBAs and what to apply, but that is normal. That is part and parcel of industrial relations. Let me turn back to the local content and the steel. I share the frustrations of the Premier and Ben Davis of the AWU for not seeing that 33 000 tonnes being ordered here. The reasons given by the consortium—the decision is made by the consortium and not by the government in relation to that—were that after they had done some research and put out the tender, the West Gate Tunnel Project authority advised they were not able to source the product here in a timely fashion. They are talking about 28 000 tonnes of heavy girders that need to be fabricated in a 12-month period, peaking at 4000 tonnes per month, and supplied to the project. Through an exhaustive nine-month procurement process, CPB and John Holland have concluded that the current Australian capacity to supply heavy girders to the West Gate Tunnel Project is approximately 1600 tonnes a month.
Basically that is what the consortium have advised the government in relation to that. That is currently being investigated, obviously, by the Transurban authority and by the government so that they can find out the truth and also what can be done to salvage that. It is important to note that the project has already awarded massive contracts to local steel suppliers—for example, 100 per cent of the reinforced steel and stressing strand is being supplied by Liberty Steel, which is over 127 000 tonnes. That is one of the biggest single steel orders in Australian history. Liberty Steel, for those of you who do not know who Liberty Steel is, used to be the old OneSteel, which nearly went bankrupt a few years ago because of the conditions on the Australian market. It was purchased by the current group, Liberty Steel, which is based in the UK. One of the biggest challenges that OneSteel had at the time was competition from imports and lack of access to major projects without being given some sort of preferential treatment for local content. When OneSteel was in liquidation a few years ago—and when I say a few years ago, I am talking about during the term of this government—this government played a major role along with the South Australian government, while unfortunately not getting much help from the federal coalition government, in basically directing some local content toward the steel industry. That made it a bit more attractive for the owner of Liberty Steel to make a bid for it. The administrators of OneSteel then sold that business to Liberty. Now there has been some heavy investment in that steel mill, which is based in Laverton. I had been dealing with them for many, many years prior to that. It used to be part of the Smorgon group, which also operated a large network of reinforcing product with their main operation in Sunshine. The 127 000 tonnes of reinforced steel will be manufactured in my electorate in the western suburbs of Melbourne. That is something I am proud of, to be part of a government that actually does what it said it would do, with a Premier who is actually driven by delivering on his commitments about making sure local content is enforced, making sure it is delivered and making sure local jobs are put in place.
My constituents in the western suburbs of Melbourne who work in the steel industry and the steel mill at Laverton and in Sunshine have got job security now, and the workforce numbers have increased as a result of that. Significant contracts have also been awarded to local fabricators—for example, the pedestrian bridges have been awarded to local fabricators Thornton with Australian milled steel. The noise walls are being constructed with Australian milled steel. The northern portal and the Benalla shed construction were awarded to a local subcontractor. That is another success story in Benalla, where 400 people will be employed in that precast yard. They will be using Australian reinforced steel to produce noise panels and various noise walls. Various concrete products to be used on that project will use Australian steel. That is a great news story for regional Victoria. The piling cages as well will be using Liberty Steel. In relation to Transurban’s advice on their commitment to 93 per cent local content on the project overall, they say to us that it is on track, but that is something we need to obviously verify. We need to make sure that we deliver on that commitment because one thing I think no-one can dispute is the integrity of our Premier. When he says he will do something, he will not leave a stone unturned until he makes sure that he has delivered on his commitment. I must say, let us be frank about it, from time to time things might get in the way and things might get out of hand. We do not have full control of every single situation. But make no mistake: if we say we will deliver an outcome, we do deliver that outcome.
Our track record speaks for itself. That is why I am a bit perplexed about getting lectured by the opposition about our commitment to this project and to local content. As I said earlier, yes, I am disappointed. I am actually pissed off; I am more than disappointed. I share the frustrations of Mr Davis. But let me tell you: I still stand by the fact that we are still delivering a great project. We are still delivering an excellent result on local content. Give me one place in the Western world which actually can boast about delivering more than 50 per cent or 60 per cent or 70 per cent or 80 per cent local content on their projects. Give me one, just name one. I do not think you can. But we have delivered. We will continue to deliver on this local content, but we know there are challenges. Also in relation to this project, it is investing in local workers and driving social inclusion in the workforce. I think it is very important to talk about that for a few minutes because in my electorate we have people who are having difficulty finding work, people of low socio-economic background, and we have made it mandatory that the project has to make allowance for a minimum of 10 per cent of the workforce to be apprentices and trainees. So our young kids in Western Metropolitan Region will be getting a chance to actually get a job and get a trade. There will be nearly 600 of them. Actually we legislated for that. Legislation went through the house. It is the first time in the country where a state government has legislated mandates for local content and minimum numbers of apprentices and trainees.
I think there has been some criticism by those on the other side in relation to that, but I am pleased that they have supported the legislation. If they did not support it I think they would have been put under the pump. We have mandated that a minimum 10 per cent of the workforce must be trainees and apprentices. It is now law. So over 500 jobs are dedicated to people entering the workforce—apprentices and trainees. That is 500, and that could go up to 600 if the projection is right around there being 6000 people likely to be employed on that project. Also there are 150 jobs set aside for former auto workers, and a significant number of them have already started working on that project. There is also targeted recruitment of disadvantaged groups, with ongoing workplace support during their employment, and I think that is an area in which I want to commend the authority, Transurban, CPB and the unions. They are working closely together to ensure that people from disadvantaged backgrounds get a go on that job, because the best thing you can do for a person is to actually provide them with a job. That project is going to provide opportunity for our people. Also it will give an opportunity for hundreds of newly arrived migrants, Aboriginal people, people from refugee backgrounds and women, and I think it is very important that we maintain that. Let me now touch on some of the support this project has received.
I mentioned earlier about the situation with OneSteel, now Liberty Steel. OneSteel found itself five years ago in a very bad position—or even before that, about six or seven years ago—because the steel industry was basically at a standstill, particularly in Victoria. If we look at the period 2010 to 2014, there was hardly anything happening in Victoria. If there are no orders, there is nothing to argue about, apart from the Webb Dock job. There is no point arguing about local content because there is not much happening. But since then—since we have been in government and basically commenced all these major infrastructure projects—the Victorian steel industry has been experiencing strong growth, and that is very, very welcome because of our investment. In 2018 Victoria’s engineering infrastructure construction activity increased by 26.8 per cent—the highest result of Australian states—while the national average dropped 34 per cent. So while everybody else was dropping, we increased the amount of steel we used and activity in the steel industry. Now I just have a quote here from the BlueScope Steel Western Port general manager, Jim Graham. He said: BlueScope is very pleased with the support the Victorian government has provided to the steel supply chain in Victoria, including through its use of Australian-made steel in major road and rail infrastructure projects. And the last quote is from Manufacturers’ Monthly of July 2018: Steel manufacturing booming in Victoria. So that is a headline about the status of the steel industry in Victoria. The reason why it is doing pretty well is our policies, because what we actually put in place makes sure that we mandate local product. If the coalition were in government during that period, I do not think we would be able to tell the same stories, because probably most of the steel used on these major projects—if there were any major projects—more than likely would have been imported, would not have been made in Victoria and would not have been made in Australia. They are coming in here and lecturing us about there being no real commitment about local content. Just look at the motion. They must have thought long and hard about drafting a motion like this. The motion says: … that commitments on the percentage share of local steel made products to be incorporated into the project by the consortium contracted to build the Transurban West Gate Tunnel Project … appear to have been ineffective— and then asks the minister to report on a regular basis. We will report on a regular basis; we do not have a problem with that. We do not have a problem actually showing the Parliament and the world that we are bona fide in our commitment to local content and that we are supporting local industry, because we have got the runs on the board. We have got some really good stories to tell. Are we going to have mishaps along the way? Yes, we will. That is one of them. We know we need to make sure that, going forward, we address this problem. I am yet to see the outcome of investigations where Transurban and the government are looking into the truth about what CPB have told us so far—that they could not source the product locally. So I will be keen to see the true outcome of whether they have tried—they have not left any stone unturned—to source the product locally and whether going to source that product offshore was the very last option. I want to be satisfied that was the case.
If that was the case, well, hey, we cannot do anything about it—that is life—and then we need to make sure that we learn from it and make sure that for the next project, the next few projects coming up, we are not caught short. If we need a similar product, which we will need for the North East Link, for example, we will need to make sure there is existing capability in Victoria and in Australia to basically meet that requirement. So it is all about learning from that. But if the company is found to be telling us fibs, that they decided to do it anyway based on cost and they just made up excuses, sure, we will need to deal with that, and we will need to deal with that harshly, because we are the ones who are committed to the 93 per cent. Transurban, CPB and John Holland had accepted to meet that criteria, so there had better be a good excuse why that happened. It is very important that we all live up to our commitment. I know we will live up to our commitment, and we have got a proud record of delivering on local content, particularly steel. I will never forget when the Premier made the announcement that the contract was signed with Liberty OneSteel to supply 100 per cent reinforced product. That was a great moment when I knew that the future of Liberty OneSteel in Laverton and Sunshine was actually secured for a number of years going forward, and that set the new benchmark that we can deliver quality products at a competitive price and continue to safeguard Australian jobs. I will finish off by saying this: again, I am not going to stand here and be lectured by the opposition about our commitment to local steel, because your record is dismal. Your record is basically a shameful record, really, on local content. You should not be standing there talking about it because you are the ones who sold out local industry. You are the ones who sold out the car industry. You are the ones who actually let down the steel industry. You are the ones who do not like to support any local manufacturing in the state. Mr Finn, before you interject, we are talking about hundreds of jobs of steelworkers in the western suburbs. Their jobs are secured right now, as we speak, because of the Andrews Labor government’s commitment to local jobs and because we mandated that that project use steel from the western suburbs of Melbourne and actually provide job security for your constituents and mine. With these comments I reject the motion.