Back in 2014, the Productivity Commission’s (PC) released a 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”.
And in October 2016, the Grattan Institute’s Marion Terrill released a report entitled Cost overruns in transport infrastructure, which documented the spectacular cost blowouts on Australian infrastructure projects over the past 15 years.
Grattan’s analysis covered all 836 transport infrastructure projects valued at A$20 million or more and planned or built since 2001, and revealed that over the past 15 years, Australian governments have spent $28 billion more on transport infrastructure than they told taxpayers they would spend. Australia also compared poorly internationally:
When cost overruns around the world are compared from the time of the formal funding commitment or contract, Australia generally ranks in, or slightly worse than, the mid range.
Earlier this year it was revealed that Sydney’s $16.8 billion WestConnex project had joined the long list of large, bungled transport investment decisions by Australian governments, with the project approved before any business case had been completed.
Today, Peter Martin reports that the NSW State Government has been instructing transport officials to ignore public transport alternatives to motorway projects. From The SMH:
The revelation emerges in a memo prepared within Transport for NSW into potential rail improvements between Sydney and Wollongong – a project that could compete for funds with the proposed F6 motorway from the WestConnex interchange at St Peters to Waterfall.
But the document also suggests that the government has excised the development of public transport alternatives to other major toll-road projects. These include the Western Harbour Tunnel project, which is to be an extension of WestConnex, and the Beaches Link tunnel that is to extend that road to the northern beaches.
The WestConnex business case released in 2015 shows these roads are expected to increase traffic on the $16.8 billion WestConnex project…
The memo says the cabinet directive not to consider rail as an alternative is inconsistent with government principles and guidelines and “represents a fundamental shortfall in Transport for NSW meeting its responsibilities in achieving value for the state’s taxpayers”.
I have said it before and I will say it again: well targeted infrastructure investment offers the nation the ‘double dividend’ of supporting growth and jobs as the mining and dwelling investment booms fade, whilst also expanding Australia’s longer-term productive base and improving living standards.
This is doubly important given the government is wedded to running a mass immigration policy, which means that living standards of the incumbent population will be eroded over time via higher congestion, slower travel times, and lower productivity (amongst other things) unless there are commensurate investments in new infrastructure.
But if infrastructure investment is to be successful, it must follow rigorous due processes, including:
- evaluating each infrastructure proposal on its merits, regardless of mode (e.g. road or rail); and
- ranking proposals and undertaking decisions based on their net economic and social benefits, which necessarily requires the completion and public release of detailed cost-benefit analysis.
Unfortunately, government’s of all colours in Australia have failed to implement proper governance surrounding infrastructure provision, and have in many instances blown taxpayer dollars on poorly conceived or executed projects, without considering cheaper alternatives.
The end result is needless waste and lower productivity for the economy at large.
