Infrastructure Australia (IA) has urged governments to stop making infrastructure spending announcements before business cases have been submitted and properly assessed.
Its just released report, Prioritising Reform, looks at progress that has been made since the release of 2016’s Australian Infrastructure Plan.
IA chief executive Philip Davies – who also announced he would step down in July – said there had been progress on a number of fronts, including better integration of land-use planning and transport, an increased openness to using government debt to fund projects and smarter business case development.
However he said there was room for improvement, with a lack of a national population plan, government unwillingness to tackle road user pricing reform and continued infrastructure pork barrelling cause for great concern.
Speaking at the Committee for Economic Development Australia’s (CEDA) State of the Nation event on Monday, Mr Davies said continued “early stage announcements” by governments and oppositions was troubling.
“After three years in the job, my observation is that governments and oppositions need to be more disciplined around proper planning, evaluating all available options, and seeking the solutions with positive cost-benefit ratios prior to a funding announcement,” he said.
“Project funding must be conditional on identifying the best solution through a proper business case. Otherwise, we get the wrong projects or gold-plated projects, and we deny vital funding to other worthier investments.”
Recent analysis by Fairfax found that marginal seats received three-and-a-half times the funding of safe seats.
Mr Davies said bipartisanship and cooperation across all levels of government was needed for big infrastructure projects.
“I know this does not fit well when infrastructure investment is a vehicle for redistributing taxes back to the states and territories and winning political favour,” he said.
“However, it is critically important that we invest in the right project solutions at the right time and in the right place.”
Population strategy needs clarity
Another concern Mr Davies raised was the lack of a national population strategy, which he said had exacerbated community unease about immigration.
“A national settlement plan would focus on how we grow, not how much we grow, and it would allow us to plan beyond political and budgetary cycles,” he said.
“A nationally focused plan of this kind would create a broader economic vision for growth and allow state governments to develop better integrated land-use plans for the delivery of infrastructure, housing, education.”
Get some spine on road pricing
And while the government signalled support for an inquiry into road pricing reform in 2016 – a topic widely regarded as anathema to governments, due to the difficulty in selling it to voters – unsurprisingly nothing has happened.
“Road market reform has the potential to deliver significant improvements in network performance and address fairness issues, while also establishing a secure and sustainable source of funding for our roads,” Mr Davies said.
“Given the significance of this change and the scale of community consultation and consensus-building involved, it’s vital that governments move forward on this important opportunity for reform.”
With what is likely to be his last public address at CEDA, Mr Davies said there was much more work to do.
“Australians have never lacked vision,” he said. “We have a long and proud reformist history from which to draw inspiration.
“If we truly embrace the national reform agenda outlined in the Australian Infrastructure Plan, Australia will secure the social and economic benefits of great infrastructure for many generations to come.”
- Read Prioritising Reform