31/01/2014 - 05:40

The road less travelled

31/01/2014 - 05:40


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Australia’s top infrastructure adviser has challenged governments around the country to be more rigorous in their evaluation of projects.

The road less travelled

The 2013 state election provided a powerful case study of how policy making can go off the rails when politicians are in charge.

Labor caught many observers by surprise when its public transport commitments captured the public imagination and gained wide support.

The Liberals responded with their own proposals, including a rail link to the airport in addition to their light rail plans.

Ever since the election, the timetable for these supposedly ‘fully costed, fully funded’ projects has continued to slide as the re-elected state government has struggled to balance the books.

Infrastructure Australia’s national infrastructure coordinator, Michael Deegan, spends his working life evaluating the country’s current infrastructure assets and future requirements.

He also looks for smarter ways to plan ahead.

An example is Infrastructure Australia’s reform and investment framework.

It requires project proponents to demonstrate what purpose will be served by a project and what gap that project will fill.

The framework also seeks to ensure that the business cases for those projects are fully developed before funding is provided.

Imagine if this process had been consistently applied in Western Australia.

Would the airport rail link get a tick? Would Ellenbrook have a rail service? Would the ‘tier 3’ rail lines in the Wheatbelt have been shut down? Would the botched refurbishment of Muja power station have proceeded?

Nationally, what shape would the NBN take?

It would be great to know the answers.

Like all independent policy agencies, Infrastructure Australia is currently fighting political headwinds.

The main reason for that is its very independence. It is proceeding with an audit of Australia’s current infrastructure asset base and developing a 15-year national plan that will go some way to prioritising the country’s infrastructure needs.

Mr Deegan acknowledges that, ultimately, decisions about infrastructure investment will remain with elected governments.

But his dream is a system that ties funding decisions to a process for rigorous project assessment.

He believes Australia’s roads system is the area most in need of reform, based on a review conducted last year by IA.

“Australia’s roads were the only piece of infrastructure to fail every single test despite affecting nearly every Australian,” Mr Deegan said in a recent speech.

“We have never spent more on our roads, yet the problems are everywhere. Some roads are in disrepair, some hardly used and others congested.

“We simply cannot solve this problem through money for new roads alone.”

Mr Deegan said that, unlike other infrastructure and government services, road spending was not subject to any meaningful efficiency test.

“In education, there are literacy tests, in defence, performance reviews, in rail, on-time running. In roads there is purely a photo-op of a fresh piece of bitumen,” he said.

Mr Deegan advocates some fundamental reforms that Business News has long supported.

This includes giving the private sector more opportunities to invest in transport infrastructure.

Another is more use of user charges, similar to what occurs in sectors like energy, communications and water sectors, where infrastructure is almost completely funded from user charges.

Selling existing assets to the private sector is a third option, to deliver private sector discipline, improve the ability to finance expansion projects, and improve governance – where the government is no longer both the regulator and the owner of the assets.


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