Former Victorian Premier, Steve Bracks, has written an Op Ed in The Age today arguing for greater investment in well-targeted infrastructure, which offers the prospect of seeing Australia past the mining investment cliff, whilst also raising living standards:
Infrastructure is the new black in political circles…
Done right, a burst of ‘‘shovel-ready’’ infrastructure projects should help our labour market make the transition from the construction phase of the mining boom by creating building jobs in our cities and regional areas.
Continuing investment should ease the burden on our roads and public transport systems, making commuting to work from the sprawling corners of our suburbs quicker and safer. It can aid the community and economy in dealing with the challenges posed by climate change. It can lift productivity across industry and help build our nation…
Governments must pay close attention to public needs and views in selecting projects and investment partners.
Bracks goes on to explain how industry super funds, which he is now a part (he is chairman of Cbus Super) can play a role in financing long-term infrastructure.
While I do not dispute Bracks’ claims – after decades of under-investment and high population growth, most people living in Australia would agree that infrastructure is in desperate need of upgrading – I am curious as to why he did not practice what he preached when leader of Victoria between 1999 and 2007?
Under his leadership, two particularly expensive and poorly targeted pieces of infrastructure were commissioned, neither of which met basic cost-benefit requirements.
The first, Victoria’s desalination plant, cost a whopping $6 billion, is the biggest reverse osmosis plant in the world, and is certainly well in excess of Melbourne’s future needs. And because of this project, Victorians are now lumped paying a holding charge of $1.8 million a day for the next 27 years, totaling around $18 billion, regardless of whether any water is pumped (to date, not a single drop of water has been ordered). Accordingly, household water bills have increased by between $167 to $222, with two-thirds of that price rise related to the desalination plant.
The second, the MYKI public transport ticketing system, cost a whopping $1.5 billion and has been plagued by problems, is highly inflexible, and was arguably not even needed in the first place (the system it replaced, Metcard, worked just fine).
While well targeted infrastructure investment offers Australia the double dividend of supporting growth and jobs as the mining investment boom fades, whilst also expanding Australia’s productive base and improving living standards, if done poorly, it equally risks raising household’s costs without improving living standards, as is the case with the above projects commissioned by Steve Bracks in Victoria.
