Abbott gets pork on his fork

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We know now what the Abbott Government does with “frank and fearless advice”:

THE Abbott government has dumped its top infrastructure adviser in a brutal decision to clear the way for its new agenda on road and rail investment amid a political row over the scrutiny of billions of dollars in new spending.

Infrastructure Australia head Michael Deegan was told to go on paid leave ahead of the formal abolition of his position under changes to be fought over when federal parliament resumes on Tuesday.

The edict, confirmed in writing yesterday, followed Mr Deegan’s outspoken criticism of the Coalition plan to overhaul the way Infrastructure Australia advises ministers on major projects.

…Coalition sources said Mr Deegan had been too close to former infrastructure minister Anthony Albanese and had to go in the wake of his complaints about government policy last month.

And a quick reminder of why Mr Deegan was outspoken with the support of the BCA:

The Business Council of Australia has called on the Abbott government to scrap plans to potentially muzzle and water down the independence of Infrastructure Australia, the leading public advisor on nation-building projects.

The council, which is playing a major role in the government’s audit commission, insists planned changes to Infrastructure Australia must ensure it remains free of political interference.

The BCA push, in a submission released on Monday, supports the head of Infrastructure Australia, Michael Deegan, who blasted Deputy Prime Minister Warren Truss last month for proposed changes that would give him ministerial power to dictate entire classes of projects to be spared from the advisory body’s scrutiny.

This is not in anyone’s interests except the Government in the short term and not even in its longer term. Infrastructure in the next decade is one of the key mitigating factors in Australia’s post-boom economic adjustment to better competitiveness.

Thoroughly and independently analysed productivity based infrastructure will help close the the widening gap between our current living standards and productive capacity. Without it, other more painful factors will be forced to shift further instead, like real wages falling more than otherwise. Not to mention that infrastructure development will be vital to unclogging our cities as the great population ponzi marches on.

The Abbott Government’s roads agenda is not at the top of either Infrastructure Australia’s or the Productivity Commission’s productivity list and putting pork on the fork of a minority rural party driven by agrarian socialism is not in the national interest, period.

Ken Henry is out this morning bewailing similar:

AUSTRALIA does not have the infrastructure to seize the full potential of the Asian century, Ken Henry, a former Treasury secretary and current NAB and ASX director, has warned as he called for “more creative, innovative thinking” about the nation’s infrastructure needs.

…”We do not have the infrastructure requirements for an economy and a society that is well connected with Asia,” said Dr Henry, who also spearheaded the Gillard government’s Asian century white paper.

“There is enormous potential in the Asian century and we simply don’t have the infrastructure assets, the infrastructure services, to ensure that in the commercial space — but also the social space — we make the most of those connections,” he said.

…The SMART research group has produced a green paper, which criticises “wasteful” spending on projects as a recurring problem. Research from consultant McKinsey, for instance, says Australia is spending more than is required as a percentage of GDP but the spending is inefficient.

Pork!

Comments

  1. Such a banana republic this Abbott is building… He clearly couldn’t care less about this country. This is exactly how I saw him before the election and he is being more brazen than I expected. It’s scary as the natural lack of protest will only encourage him.

  2. TheRedEconomistMEMBER

    I’d be interested to hear everyone’s thoughts on the Adelaide to Darwin Railway.

    it has been seen as a White Elephant and considering the South Austrailan economy has rolled down the gutter in the last 2 or 3 years …. Has it met it expectations?

    Or do we need to look long term and assess over 20/30 or 50 years. Will it have a great legacy?

    http://news.smh.com.au/breaking-news-business/adelaidedarwin-rail-must-improve-ntc-20090824-ew3b.html

    You would think Tony would have been there for the 10th celebration considering he wants to to be seen as Bob the builder

    http://news.ninemsn.com.au/national/2014/01/22/18/50/adelaide-to-darwin-railway-10-years-old

    • The Darwin railway went broke in grand scale and only has a chance of being profitable now that hundreds of millions of dollars have been written off.

      It is of course a shame that the cost of land at both ends (especially Darwin) has been driven up by greedy governments seeking to extract monopoly returns.

      It is not as though any workers or businesses would move to either place to take advantage of ready availability or bargain prices for land to rent or buy.

  3. As the voice of cynical realism, I’d like to point out that I can’t actually think of any good far sighted infrastructure we have done over the last 30 yrs.

    I can think of lots of pork, and other make work road/tunnel projects.

    • Dedicated bus transit roads in West Sydney.
      New rail lines from Chatswood to Epping, Rouse Hill to city.
      The M7 has been extra great for productivity I would imagine with such visibly thriving commercial zones that have been built next to it.
      There have been some schools (from BER) with too small kitchens and other problems but I am sure most have contributed to better educational outcomes.
      The insulation thing was poorly managed with some tragic outcomes but there is still a lot of energy efficiency in place as a result.
      There are subsidised solar pv and solar hotwater installations which have net gains in energy efficiency (freeing up capital for investment elsewhere).
      These all may have elements of pork and make work but on the whole were good investments.
      What would be free of any taint in this world? Edleweiss on a 17th century swiss mountain?
      We can see for ourselves that the masters of capitalism in NY circa 2007, given much more than a fair go by their political masters didn’t quite come up with any edelweiss.

      • Meh. Putting in a couple of rail lines does not amount to far sighted infrastructure, especially when you put it in the context of the mess that is NSW rail.

        Giving dubious subsidies to energy efficiency does not amount to far sighted in my book either.

        Can you point to something that is not associated with the big city housing ponzi (road/tunnel/busway) or is a regional make work program (road/fly-over) and has made Australia a better place to actually build things, make things or improved our productive business capacity.

        There’s stuff sure, but nothing that falls into the far sighted category, and nearly all is just pork.

        The only things i can think of is large infrastructure associated with selling dirt and coal to China, and really that is just entrenching the Australian position of not actually making or doing anything.

      • Apologies aj.
        I quickly, minutes after writing the above, hit the delete button which obviously didn’t delete yet. It is comment awaiting a moderator. Next time I will choose the edit button!
        I felt it was over egged and had unnecessary tangents.
        Anyway – I agree that funding roads generally is wrong but for different reasons to the ‘housing ponzi’. I think it is a bad idea because of peak oil. Talk about stranded assets…
        In the context of peak oil, rail and busways are a very good idea which Kjell Aleklett’s the president of ASPO advises should be the greatest priority for peak oil preparation.
        I don’t see how the M7, the rail lines or the busways are just pork. There are populations living out there that now have infrastructure that cuts travel times and improves the reliability & resilience of their transport needs. Further, they have more jobs because business is locating out there as well. If a local politician won the funding for each of them that simply does not imply at all that it was pork.

      • Anyway – I agree that funding roads generally is wrong but for different reasons to the ‘housing ponzi’. I think it is a bad idea because of peak oil. Talk about stranded assets…

        Electric cars are a drop-in replacement for nearly all use cases today.

        About the only roads that might end up “wasted” are inter-city highways. Anything up to 100km of a population centre is within range of electric vehicles already on the market.

  4. “Thoroughly and independently analysed productivity based infrastructure will help close the the widening gap between our current living standards and productive capacity. …….. Not to mention that infrastructure development will be vital to unclogging our cities as the great population ponzi marches on.”

    This is self-contradictory. Building urban infrastructure where there is little to no production happening at the expense of regional infrastructure, where we all seem to think Australia’s productive future really lies, will have negative effects on productivity and simply add to our monetary and fiscal difficulties.

    You go off on these dozey anti-NP rants with perjorative words like ‘agrarian socialism’. In fact the removal of the independent arbiter on infrastructure is likely (one would hope from the point of view of what the independent arbiter role should be) to result in the normal political response of putting more and more essentially non-productive infrastructure in more populated areas where the votes are.

    “Not to mention that infrastructure development will be vital to unclogging our cities as the great population ponzi marches on.”
    Your cause and effect re roads and the population ponzi is a about face. What is the point of having millions of non-productive people then spending all your money on infrastructure to make it easier for them to get around?….Which is precisely the sort of problem that results from a population ponzi!

    • ‘What is the point of having millions of non-productive people then spending all your money on infrastructure to make it easier for them to get around?’

      This is the extent of our innovative and productive powers these days. There’s no other game in town. Our own national version of digging holes with one gang and paying another to fill them.

      • Productivity is not only about corporate efficiency.
        Government’s role is to serve it’s electorate.
        Having people stuck in cars/buses/rains for hours a day is non-productive, anti-family and a hindrance to acquiring additional skills through part time education.
        While I don’t agree with a “big Australia” approach, I also don’t agree that we should only build incfrastructure that serves the mining and agriculture industries. In fact, why shouldn’t they pay full freight for their own infrastructure?

      • Yes jimbo:
        * Holes – sorted for the foreseeable future now that most of the major infrastructure projects built to cope with increased mining exports are in place;
        * Houses – aka, the ponzi. Long live (a year of less would be good) land-banking and Third world rates of population increases.
        Hats off to the FIRE brigade, you collectively captured the economy. Probably wasn’t that difficult given the calibre of leadership in this country.
        The average bod is running around chasing some illusionary future, tied to large debts. Let them run. As long as they run in the paddock of the common-dream and play the game according to the rules, they are useful for political purposes.

      • Thanks flawse. This is a very big debate we need to have yet we are all watching the movie in black and white.

        A body like Infrastructure Australia to independently evaluate the worth of projects will deliver real and enduring benefits. But it is not sufficient. Government needs money to do the work – mostly state and territories responsibilities. The states can tax or borrow or sell assets or beg for grants from the Commonwealth.

        Urban facilities would be self-funding with reforms to State Land Tax to eliminate the manifold exemptions. We only need to recycle part of the uplift in land values to create a virtuous circle. And we could remove any number of behavior-distorting taxes to offset and keep the total government take about the same proportion of GDP.

        This change would bring a profound accountability to government. Infrastructure projects that fail to advance living standards (def: pork) will not lift land values and be obvious to all. Under this scenario, we may not even need an Infrastructure Australia body.

    • Jumping jack flash

      well said!

      If we decide to invest billions into infrastructure then Tony better man the toll-booths and make sure there are plenty of busloads and trainloads of Asian tourists.

      Having pristine roads and rail isn’t going to build a single extra factory.

      But, building extra factories IS going to mean better roads and rail are eventually required.

      In my opinion, Tony has got it arse about. But why? Well it is simple: Massive infrastructure companies, likely with vocal lobbies, are looking for more work. Nobody gives a tinker’s continental about the factories that are shutting down.

      • +1 And who else is in on the big population ponzi infrastructure game – oh yeah that would be the big unions that can leech mega bucks out of the projects. Cough desal cough.

        Big union and big infrastructure are in a symbiotic relationship on this stuff and they couldn’t give a rat’s arse about the fact the australian economy is a productive desert.

  5. “AUSTRALIA does not have the infrastructure to seize the full potential of the Asian century, Ken Henry, a former Treasury secretary and current NAB and ASX director, has warned as he called for “more creative, innovative thinking” about the nation’s infrastructure needs.”

    If you have a nation with no savings because of low interest rates and governments running deficits on current expenditures and social welfare where how the hell could you save for infrastructure? Henry always misses a few essential links in his great pronouncements. Why this bloke, who presided over so many years of disasters in Treasury and so may stupid forecasts, is regarded as a God is a mystery.

    • Looking at history, the link between interest rate and savings seems to be reversed. When the population wants to save, interest rate goes down. Once the banks can borrow unlimited money from overseas, domestic savings is merely another source of money.

      A lot of government urban ‘infrastructure’ spending is just land banking. When you look at what the local government does with the levee they charge the developer, a little of it goes into road/sewerage/etc, while most of it goes into buying up land to be used as ‘parks’. The ‘infrastructure’ destroys, rather than improve Australia’s competitiveness,

      • “…the link between interest rate and savings seems to be reversed.”

        If I recall correctly, the chart for Aussie “savings” rate pre- and post-2008 showed that our savings level was extremely low (negative?) pre-2008, even with “high” usury rates. Come GFC panic, usury rates slashed to record lows, the savings rate went up.

        The idea that low/no savings happens because of low usury rates is tenuous and simplistic, at best.

  6. I dont think there is any mystery surrounding which major projects will provide productive infrastructure to Australia.

    With an NSW focus I’d list them in the following order
    1) Airports
    2) Highways especially those connecting extra-urban to Syd metroplexes
    3) Efficient ports (probably outside Sydney)

    In my mind Airports is number 1 without a shadow of a doubt. The problem with the system, as it stands, is that almost all regional services fly middle-of-the-day schedules. What good is that to any business person?
    if they cant connect to a flight, If theycant fly in-out in a day. This definitely effects FIFO workers along with anyone else that would freely settle more than 2 to 3 hours drive from Sydney.

    Extra-urban highways is an extension of 1) it enables land outside the Syd valley to be just as viable as Syd valley especially if combined with a smallish apartment close to your actual Syd work site. This style of commuting for work Mon-Thur is very common in Taiwan and Japan, it truly enables a family home outside of Sydney.

    3) Efficient Ports, No modern nation can allow itself to be held to ransom by inefficient monopoly infrastructure like ports (airports included). Where inefficiency develops the role of govt is clearly to create an alternate solution. There are plenty of alternative sites along the coast for major port / rail link expansions pick one and start the project.

    If you’ve actually got the cojones to tackle any one of these three tasks then IMHO go for it, the last thing you need is the approval of some second rate “independent” commission.

    • You forgot one entry:

      4) Highspeed Rail

      A HSR implementation would be a good compliment to the highway system.

      Extra highways I agree with, although the implementation of said has been woeful in NSW, no forward thinking for capacity growth. Every single highway built over the last 30 years has had dismal execution: F1, M2, M5, M5, and M7. All have been built as 2 lanes each way, all needing upgrades 15 years later.

      I love the M7, use it a lot but why they only built it 2 lanes each way is criminal.

      As it stands now, NSW (read: Sydney) is choking itself to death with Big Australia. I can’t believe how everything is so busy now, making weekends a miserable experience fighting off people and traffic.

  7. I get the feeling all our Govts, across almost all sectors, and the bureaucrats, keep peddling the idea, in effect that if assets (read: land prices) just keep going, then everything will just sort itself out favourably….

    Baloney…it’s choking productivity and innovation (not to mention a whole lot of other intertwined, feed-ing-back, feeding-forward social issues…)