In its annual report to the Council of Australian Governments (COAG), Infrastructure Australia has warned that ‘frustratingly slow’ progress of reforms to infrastructure planning and delivery has caused a slowing of Australia’s productivity.

 

Chairman of Infrastructure Australia, Sir Rod Eddington, said that the nation’s productivity had slowed over the past decade due to infrastructure shortfalls – time lost in travel, delays at ports, lost production due to water restrictions.

 

In his introductory letter to the Minister for Infrastructure and Transport, Anthony Albanese, Sir Rod stated that what was missing was a sense of the urgent need for action.

 

The report identifies the transport and water sectors in particular as needing urgent reform, areas  which governments have been well advised on. It notes that regulatory reform, particularly in the transport sector, has proceeded slowly.

 

"Remarkably, despite analysis suggesting that regulatory reform in the transport sector could offer benefits of many billions of dollars over the long term, there is still resistance to sensible reforms,  e.g. establishment of national safety regulators for rail, road and maritime industries."

 

Another criticism was the reluctance of governments to use pricing to manage demand and signal the need for investment. This was particularly evident in the road transport sector.

 

"Although congestion is recognised as a major economic cost, and there is growing realisation that we cannot build our way out of it, the obvious answer is largely ignored."

 

Sir Rod said that action was needed to reform the way Governments choose the right projects, finance those projects, and operate and maintain them.

 

“Governments must also improve the planning of major infrastructure projects and foster use of the current networks more productively by demand management and pricing mechanisms.

 

“Currently the debate around infrastructure is about individual projects rather than policy development and systemic issues such as tax rates and charging, and levels of service.

 

“All governments need to communicate the imperative for action to their constituents and get on with the job,” Sir Rod said.

 

In the future, Infrastructure Australia will produce an expanded infrastructure pipeline emphasising projects that could be privately funded, and projects in regional Australia.

 

Infrastructure Australia is working with the new State Governments in NSW and Victoria regarding any changes to their State’s infrastructure priorities.

 

Infrastructure Australia has recently set up an Infrastructure Financing Working Group comprising experts from the public and private sectors to identify new ways of financing infrastructure. The Group will consider:

  • Encouraging superannuation funds to invest in infrastructure by restructuring how projects are put to the market;
  • Updating guidelines on public-private partnerships, particularly in the area of demand risk;
  • Recycling of Government assets to fund investment in new infrastructure; and
  • Finance models such as land value capture.

 

Key areas of focus for Infrastructure Australia over the next four year, as set out in the report, include:

  •  getting the strategic settings right in the infrastructure sector. This will involve extending the approach used in developing the National Ports Strategy to other areas;
  • financing reform, particularly developing practical options to secure additional private funds for investment in infrastructure;
  • an expanded infrastructure pipeline, with strong emphasis on projects that could be privately funded, and projects in regional Australia; and
  • communicating the need for a more mature (and challenging) debate about our infrastructure and how we pay for it.

 

Infrastructure Australia has also released the project assessments and working appraisals of cost benefit analyses, for Threshold and Ready to Proceed projects, prepared by the National Infrastructure Coordinator.

 

Infrastructure Australia’s report Communicating the Imperative for Action can be found here.