A new report has called on the State and Federal governments to work together more effectively on infrastructure provision for major investment projects.
A new report has called on the State and Federal governments to work together more effectively on infrastructure provision for major investment projects.
The report is diplomatically worded but clearly indicates that Federal policies warrant the biggest changes.
The structure of Federal-State financial relations and the Federal Government’s preference for project-specific assistance come in for particular criticism.
The report was commissioned by the Technology & Industry Advisory Council, a State Government-appointed body.
Despite this, the report will add support for State Development Minister Clive Brown’s ongoing battle with the Federal Government over infrastructure provision.
Speaking at the launch of the report, Mr Brown claimed the Federal Government was one of the main beneficiaries from WA’s economic boom “but has to be dragged kicking and screaming to commit dollars to essential infrastructure”.
“As this report points out, current approaches to investment attraction and infrastructure provision in Australia are not working as efficiently as they should, principally due to a lack of coordination between Commonwealth and State governments,” Mr Brown said.
Recent flash points in the debate have included infrastructure funding for ChevronTexaco’s Gorgon project and BHP Billiton’s Scarborough gas project and Ravensthorpe nickel project.
The TIAC report, written by economic consultancy ACIL Tasman, cited provision of infrastructure on the Burrup Peninsula as an example of poor coordination.
The State Government is investing $183 million in common-user infrastructure even though only one project (Burrup Fertilisers) out of six touted for the site has proceeded.
In contrast, offers of Federal assistance have been tied to three successive proposals – Syntroleum, Methanex and GTL Resources – none of which has proceeded.
“The Western Australian approach reduces the risks and provides greater certainty to project proponents,” the TIAC report says.
The State Government’s approach has also won support from Chamber of Commerce and Industry of WA senior economist, Nicky Cusworth.
Speaking at an Engineers Australia forum last week, Ms Cusworth said ‘common-user’ infrastructure tended to be better than the Federal Government’s project-specific approach.
“The theory is that they try to pick winners but the reality is they tend to pick losers,” Ms Cusworth said.
The TIAC report cites the Burrup example again to illustrate problems with Federal-State financial relations.
It says current arrangements do not adequately account for the costs incurred by States in providing economic infrastructure.
Also, most of the tax and royalty benefits for the State would effectively be redistributed to other States.
“This creates a disincentive for States and Territories to invest in major projects that result in national economic benefit but that result in marginal or negative financial impact on the State,” the report says.
ACIL Tasman executive director Ian Satchwell said the report made a series of recommendations aimed at getting State and Federal governments to adopt a coordinated whole-of-government approach.