Back in 2014, the Productivity Commission’s (PC) released its report into the provision of public infrastructure, which presented a scathing assessment of the governance, selection and execution processes by Australia’s governments, and recommended that governments build a “credible and efficient governance and institutional framework for project selection”, that includes “properly conducted cost–benefit studies of large projects, and their disclosure to the public”.
Then the PC followed-up in June last year claiming that governments are treating consumers like “idiots” by obscuring facts about poorly-chosen mega projects.
And earlier this year, the Grattan Institute released a new report entitled Roads to riches: better transport spending in which author Marion Terrill provided a damning assessment of Australia’s infrastructure selection processes.
With this background in mind, it’s unsuprising to read that this election campaign, both main political parties have promised billions of dollars worth of spending on dubious transport projects that lack full business cases, with most of the promised funding (almost $4 billion) flowing to the swing state of Queensland. From The SMH:
An analysis by the Grattan Institute has found the Coalition, Labor and the Greens have made big commitments to transport infrastructure that “not only lack proper business cases but are not even on the Infrastructure Australia priority list at all”…
“It turns out that all parties have ignored or shunned projects that we know to be worth doing,” Grattan transport director Marion Terrill said…
Labor has promised the most for transport infrastructure at $6.7 billion, followed by the Greens at $6.5 billion and the Coalition at $5.4 billion.
“The Coalition’s spending is more aligned with the projects we know to be worth doing than the other parties’, and Labor’s is slightly better aligned than the Greens’,” Ms Terrill said…
History doesn’t repeat, but it sure does rhyme.
For too long, government’s of all colours have failed to implement proper governance surrounding infrastructure provision, and have in many instances blown taxpayer dollars on poorly conceived or executed projects, often for short-term political gain.
Delivering more efficient infrastructure provision is critically important given the government has chosen to run a high immigration policy, which means that living standards of the existing population will be eroded over time via higher congestion, slower travel times, and lower productivity (amongst other things) unless there are commensurate investments in the right infrastructure projects.
Ultimately, sound infrastructure policy is about evaluating each infrastructure proposal on its merits, regardless of mode (e.g. road or rail). Investment proposals should be ranked and decisions undertaken based on their net economic and social benefits, which necessarily requires the completion and public release of detailed cost-benefit analysis, so that infrastructure decisions can be scrutinised and decision-makers can be held accountable.
Continuing the current approach, and picking infrastructure winners based on pre-conceived biases or political motivations, is a recipe for waste and is likely to end up being productivity destroying for the economy as a whole.
