A ‘Big Australia’ means cripplingly expensive infrastructure projects

By Leith van Onselen

I have noted previously that one of the key reasons why Australia’s high population growth (immigration) is lowering the living standards of existing residents is because of the strain that it places on infrastructure, which inevitably leads to more congestion on roads, public transport, as well as more expensive housing.

Basic math (and commonsense) suggests that if you double the nation’s population, you need to at least double the stock of infrastructure to ensure that living standards are not eroded (other things equal).

In practice, however, the solution is not that simple. In already built-up cities like Sydney and Melbourne, which also happen to be the major magnets for new migrants, the cost of retrofitting new infrastructure to accommodate greater population densities can become prohibitively expensive because of the need for land buy-backs, tunnelling, as well as disruptions to existing infrastructure.

In the case of Sydney, we have already witnessed these diseconomies of scale with: 1) the North West Rail Link, which is expected to cost an astounding $8.3 billion, 2) the WestConnex road project – the $17 billion 33 kilometre motorway under construction that is more expensive per kilometre than the Chanel Tunnel; and 3) the F6 freeway extension in southern Sydney, which is estimated to cost an insane $14.5 billion.

Not only are these projects hideously expensive, but they often create major indigestion for Sydney residents during the construction phase. Moreover, in the case of WestConnex, existing free public roads like the state-owned M4 (that have already been paid off) will be tolled to help fund the project, raising costs for residents.

Yesterday, we received yet more evidence of the blow-out in costs of providing Sydney infrastructure with vocal mass immigration supporter, Peter Martin, revealing that the new underground tunnels linking Rozelle to the northern beaches will cost almost $14 billion to build, according to confidential New South Wales Cabinet documents. From The SMH:

The proposed 14-kilometre tunnel tollway between Rozelle and Allambie Heights will cost $14 billion to build, almost as much as the 33-kilometre WestConnex project.

The enormous price tag, in a costing for cabinet seen by Fairfax Media, excludes an extra $8 billion that would be spent on operation and maintenance of the tunnel over the first 35 years.

It will require the erection of six exhaust ventilation stacks for which sites have been identified, several within metres of schools.

The $14 billion price tag includes about $340 million for property acquisitions, $5 billion for the direct cost of construction, $2.3 billion for indirect costs and $5 billion for contingencies and cost escalation.

As many as 20 houses would need to be acquired and demolished to build the tunnel, as well as 30 multi-occupancy buildings and 20 commercial buildings, most of them near exhaust stacks…

The previously undisclosed total of $14 billion compares with $16.8 billion for WestConnex (up from $10 billion when it was first announced) and $14.5 billion plus operational and maintenance costs for the proposed F6 Extension to the Illawarra region.

It raises questions about the capacity of the state budget to sustain all three road projects.

And today, The SMH reveals that tolls will be charged in both directions on the Sydney Harbour Bridge/Tunnel to help pay for the Western Harbour Tunnel and Beaches Link:

The plans for the new tolls, detailed in cabinet-in-confidence documents, also reveal that motorists will be slugged about $8 (in today’s dollars) for a one-way journey by car on the entire length of the proposed Western Harbour Tunnel and Beaches Link.

The documents show the new tolls on the Harbour Bridge and Harbour Tunnel will help cross-subsidise the third harbour crossing and the Beaches Link, whose tolls will be insufficient to cover the full cost of building, maintaining and operating them.

Under the proposals contained in a “Final Business Case”, $3 tolls for cars will be placed on northbound trips on the Sydney Harbour Bridge and the Harbour Tunnel from 2022 to make them the same as those on the proposed Western Harbour Tunnel.

In November 2013, the Productivity Commission (PC) released its final report on An Ageing Australia: Preparing for the Future, which projected that Australia’s population would swell to 38 million people by 2060 (mostly via immigration) and warned that total private and public investment requirements over the 50 year period are estimated to be more than 5 times the cumulative investment made over the last half century:

The likely population growth will place pressure on Australian cities. All of Australia’s major cities are projected to grow substantially. Sydney and Melbourne may grow by around 3 million each over the next 50 years (figure 2). In response to the significant increase in the size of Australian cities, significant investment in transport and other infrastructure is likely to be required. This is true both within the cities themselves and for the links between regional and major cities. Policies will be needed to reduce congestion problems, and to ensure adequate infrastructure funding and investment efficiency…

ScreenHunter_15678 Oct. 25 14.34

Total private and public investment requirements over this 50 year period are estimated to be more than 5 times the cumulative investment made over the last half century, which reveals the importance of an efficient investment environment…
ScreenHunter_15679 Oct. 25 14.39

In last year’s Migrant Intake into Australia report, the PC revised up its population estimate by 2 million to 40 million, with Sydney’s and Melbourne’s populations now projected to hit more than 8 million mid-century. The PC also stated that if immigration is maintained at the last decade’s average, then Australia’s population could hit 50 million mid-century. This obviously means that the infrastructure requirement would also be much higher than stated above, and the PC does not have much faith that Australia’s policy makers can deliver on such a requirement:

Assuming that net overseas migration (NOM) continues at the long-term historical annual average rate of 0.6 per cent of the population, the Australian population is projected to grow to 40 million by 2060 — some 13 million larger in 2060 compared to natural increase alone. Over the past decade, however, NOM has averaged around 1 per cent of the population annually. If NOM continued to grow at that higher rate, the population projection would reach close to 50 million by 2060, or an additional 23 million people…

Immigration, as a major source of population growth in Australia, contributes to congestion in the major cities, raising the importance of sound planning and infrastructure investment. While a larger population offers opportunities for more efficient use of, and investment in, infrastructure, governments have not demonstrated a high degree of competence in infrastructure planning and investment. Funding will inevitably be borne by the Australian community either through user-pays fees or general taxation…

There are also impacts on the price of land and housing particularly in metropolitan areas. While this is beneficial to property owners, it increases costs and thereby reduces the living standards for those entering the property market…

In determining the migrant intake, the Australian Government should give greater consideration to the implications for planning and investment in infrastructure…

Let’s be honest for a moment: it is the federal government’s mass immigration program that is primarily responsible for the 87,000 people per year projected increase in Sydney’s population to 6.4 million over the next 20-years, which would effectively add another Perth to the city’s population:

Blind Freddy can see that running a high immigration program requires massive investment and costs a lot, and that these costs are made worse by the diseconomies of scale discussed above. The huge infrastructure costs also force unpopular asset sales, increased debt borrowings and austerity – none of which is a desirable outcome.

Clearly, the most obvious and least cost policy solution to mitigate Sydney’s infrastructure woes is to significantly dial back Australia’s immigration program and forestall the need for costly new infrastructure projects in the first place. Because under current mass immigration settings, expensive solutions like WestConnex, the F6 freeway extension, and The Western Harbour Tunnel and Beaches Link tollway will be required over and over again as rapid population growth continually outstrips the supply of transport infrastructure.

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Comments

  1. DarkMatterMEMBER

    These people are unaware that they are trying to integrate completely incompatible economic models. Immigration fixes the economy by making it bigger. Ponzi economy makes infrastructure prohibitively expensive. Automation makes extra people worthless. It is such a puzzle! How can this all work like magic puddings are supposed to?

    • We need to get bigger – Indonesia will have a population;ation approaching 400m in 30 years time. Its economy will be larger than ours – its armed forces will be bigger than ours in five to six years!

      Australia will be populated one way or the other. As a country grows, it needs infrastructure – if it costs a lot of money, fine, we spend a lot of money.

      The illogical argument here is that you can preserve the status quo. The “Truth” is, we are all recent arrivals. More is not the problem. Planning is… and UE actively opposes certain big decent infrastructure projects in Melbourne – well traffic jams are the consequence. Try Sydney…

      Get spending. This is a growing country. Have a look at Europe, they put in a tunnel into a mountain just to preserve a supposed 200 year old vineyard (and I can guarantee it was nowhere near 200 years old). We need to grow up – and we need effective leadership with good communication skills, and thick skin. i.e. a leader… Now, we have MT (big fan base here at MB HQ) with the innovation economy… oh, BTW, how is that going??? Lemonade stands anybody? More coffee shops?

      • ErmingtonPlumbingMEMBER

        What are you arguing the “Number” should be RT?

        Is 200,000/year not enough?,…should we turn the printing presses on and get that intake up to 1 million people per year? Just keep ahead of Indo on our defence spend.?

      • Better we choose – or inevitably, it will be chosen for us… there is only a binary out come. Arguments against are superfluous, some say that robots will decide the next wars, I disagree, people do. But even still, they will have plenty of robots. Their defence forces logistically are not that far behind us. Our hope is now the moat.

        Moreover, when considering strategic opportunities, its usually a confluence of events that are unpredictable that allow such events to occur – either a great war is already ensuing, or there is a super volcano eruption in Yellowstone, etc. Just saying, as Indonesia become more religious, and we become less; as they become more economically powerful, with growth rates far exceeding ours; as their military claims become emboldened; as they require more land due to population pressures, we are the target.

        Frankly, it doesn’t matter how you cut it – use existing status quo as justification, demographic trends will dictate otherwise. Think about this, lets say we captured an army of 3 million, or millions started arriving by boat, the numbers of men we needed to guard are enormous. We couldn’t afford to feed and clothe, and ultimately it means nothing to the nation, because they could raise another 3 million tomorrow. And the next day, and the day after that…

        The shallowness of the above argument, based on living standards, without taking existential threats is truly naive.

        I am not saying this will happen in a decade or even two… but the above will happen, its almost mathematically certain.

      • Ronin8317MEMBER

        Having more people will mean zilch to Australia’s defense. The size of the economy doesn’t matter as much as manufacturing power, which is why Russia is still a powerful player on the global stage. We are getting rid of our car industry, we are getting rid of our oil refinery industry, we are getting rid of our ship building industry, and all we have right now are really expensive houses.

      • Your children will tell you the answer on that one… wars have aways been about people. Re-read what I actually wrote. The above event is more than likely to occur in a stage of flux.

        You cannot have a country with enormous resources and large undeveloped areas of 15 million people (as per nonsense article the other day) – next to one that is economically and militarily bigger with a population of 365 million.

        And thats just at 2050, the discrepancy gets larger with time. At the end of the day, its just politics of justifiable force and necessity. Everything else is fluff.

      • If it’s a numbers game then what difference does 25 or 40million make against 400m?

      • Indonesia might be big, but messing with Australia wouldn’t be in their interests. There aren’t many valuable resources within range of their power base that could justify the backlash they’d suffer if they tried seizing any of ours. Just force projecting to our main power base (south eastern Australia) would be way outside their capability. Failure to take out our southern industrial area would work out for Indonesia about as well as Japan hitting Pearl Harbour worked out for them.

      • Hunger is a powerful motivator… The Japan/US example does not fly – Japan had no choice, oil sanctions about to cripple her economy… it was a desperate gamble – over enormous distances. Doomed to failure.

        With some notable exceptions, more ignorance and arrogance, history is littered by wars typically won by people, and more of them the better. How many Romans were in the Roman army? Nort many… They are also won by the bigger economy. Having a bigger military helps too… Indonesia will have all three before long.

      • @RT I love the disconnect in UE’s mind where the use of Technology is a right only for the righteous (naturally meaning us or was it US).
        I’ll let you in on a military secret: In the US since about 1990 there has been a continuous push to use commercial grade products in military projects. Those ridiculously priced Mil spec parts of the 1980’s aren’t used by anyone anymore, there are no top secret Military grade microprocessors, they’re all just commercial grade products protected by controlling the environment. With this in mind there is really no big difference between the quality of the $2000 drone vs the $200K drone and soldiers the world over are becoming aware of this. During the Iraq Shock’n’Awe continuous bombing era it was widely reported that Military Patrol’s were communicating with each other using their own iPhone’s because they worked even when their Military battlefield grade radios were rendered completely useless.
        Hate to be the one to tell UE this but the next war will be won by those that can master the production and use of commercial grade product and skillfully deploy this technology towards achieving their Military objectives.
        Over sized Military Budgets don’t win wars matter of fact most people would say they have exactly the opposite effect they create a drag on innovation.

      • Look I know where you are coming from, but I somewhat Disagree – historically military innovation is primarily driven by military expenditure. Was the same for the Greeks, Romans and the British Empire…and the reason why Turkey, Japan, Korea are now driven by domestic sourcing…

        I don’t normally enclose large bits of text – but this is truly worth while
        ***********

        June 19, 2017
        The Irony of High Tech
        Technology is a major foundation of national power. Its uses are obvious. But the path from innovation to obsolescence is frequently less obvious.

        Technologies that define an era usually come from a major geopolitical power. Roman engineering, for example, helped shape the Mediterranean world. British technology created and sustained the industrial revolution. These empires could absorb the cost of innovation because they had the money to do so and because they knew it would only reinforce their power. And because technologies are meant to reinforce power, even the most benign were invented for military purposes.

        The Origins of the iPhone
        Consider the iPhone, an invention of Apple, the genius of Steve Jobs, and a helpful, hip, and harmless product. Or so it would seem.

        The centerpiece of the iPhone, as is the case with so many electronics today, is the microprocessor. The microprocessor was the fruit of the labor of a variety of scientists and engineers who were sponsored by the US government, which needed a lightweight computer for missiles, aircraft, and other systems. The technology quickly found use in the F-14 fighter aircraft, intercontinental ballistic missiles, and submarine-launched nuclear missiles.

        Fast forward to 1985. General Dynamics, known at the time as GTE, helped the US Army create an advanced network for a device invented some 12 years earlier. The device was the cellphone, which would face its first true test in Operation Desert Storm. The Army needed a reliable wireless communications system that could be easily deployed, and the cellphone fit the bill.

        Many of the iPhone’s accessories and ancillary functions were developed for similar purposes. The idea of digital photography was developed by the National Reconnaissance Office, which needed a better way to produce photographs taken by their satellites. (Chemical photography required developing, and that meant that the film had to be ejected by the satellite and caught by an aircraft in the air.) The NRO, therefore, developed a digital camera that could stream pictures back to earth. The descendants of this camera—this tool of spycraft—are found in every iPhone.

        Maps and location services—a fixture on every iPhone—likewise have military forebears. GPS was originally meant to accurately guide the systems and vehicles of the armed forces, not Uber drivers. The satellites that make GPS possible, even today, are operated by the US Air Force.

        And then there is the Internet, which is available literally at our fingertips. It was developed by the Defense Advanced Research Projects Agency, more commonly known as DARPA.

        The more recent generations of iPhones, meanwhile, feature voice recognition software. SIRI, as we’ve come to know her, was originally a DARPA-funded project of SRI International, an American research institute.

        The Mature and the Obsolete
        A few points follow. The first and most obvious is that the iPhone, an icon of innovation, is actually a composite of older technologies; only SIRI was invented this century. To its credit, Apple updated those technologies, fused them into a single platform, and turned that platform into a brilliantly packaged and marketed product. Still, what is called “high tech” is frequently an older innovation updated for modern use. It’s evolutionary, but it isn’t revolutionary.

        Second, the military is a primary source of innovation in our society. The 50 or so years the Cold War was fought, for example, was a heyday of technological growth. The technology needed to support global war—in space, in the air, on the sea, under the sea, and on land—required unbound creativity. In this regard, the United States, with its intellectual and financial resources, had the advantage. But the public is either unaware of or indifferent to the fact that much of the technology we now consider peaceful was designed to allow the US to wage global thermonuclear war.

        Third, we are reminded not just of the age of technologies but of their maturity. Maturity is different from obsolescence. The microprocessor cannot be considered cutting edge—it was put to practical use before 1970. But neither can it be considered obsolete—it is still widely used. It has become a foundation of society even though it is no longer being radically innovated. The same could be said of the automobile and the internal combustion engine. It was incredibly useful and would be sold for more than a century, but the basic innovations were in place around 1970, and the industry mostly became about marketing thereafter. The microprocessor has a bright future, but its heroic days are behind it.

        The greatest innovations follow this loose pattern: A handful of scientists create possibilities, which are later developed for military use before being sold in consumer markets. Governments, which are responsible for national defense, typically underwrite the research; private industry, which eventually benefits from it, is too risk averse. Put differently, the private sector builds off the foundation created by the government.

        As well the government should underwrite this research: New generations of technology are needed to raise productivity. If the model that has been in place since before World War II continues, then another generation of entrepreneurs will take advantage of military research and development, deploy it, and announce how much they dislike government interference in their work. Selling products is important, but we need to understand the role that war plays in consumer products. For the pacifists who love technology, and the libertarians who love it at least as much, there is a deep irony at work.

        George Friedman
        Editor, This Week in Geopolitics

      • Can I also say, if history is any guide, countries who lose their ability to self source war material, don’t typically last long in history intact (Australia?) – and critically, lose their manufacturing prowess.

        Australia is now almost totally reliant on armament sources from third parties (heck, we cannot even refine our own fuel. A decent naval blockade?). What ever we do create, is typical via licence. In a war situation – we would be totally screwed. And at the end of the day, we are on our own. Countries may feel for their plight, but they have to mange their own business, for the net benefit of their own citizens.

      • Rt , are you a Baby Boomer?
        Also do yourself a favor and research populations around the world. A lot of 1st words going backwards, but according to you the 3rd world will only come to DOGSHIT Australia!
        OPEN YOUR EYES, AND YOU SHALL SEE.

      • Gen X – older than UE, younger than H&H, and prettier than both…

        Do yourself a favour, look at Indonesian military capabilities, look at population growth – but more importantly, look at their economic growth. They don’t have to be as rich as the average Aussie – just half or a third as much… and they will leave us in the weeds.

        People like you never saw China coming… for a reason. Its your Oz exceptionalism. IMHO – The only truly exception country globally, is the US. Whose truth wealth is the Mississippi Basin.

      • ErmingtonPlumbingMEMBER

        I think The loss of our manufacturing capacity, is a greater problem to our defensive capabilities, than a to small a population rate of growth.
        If the geopolitical “situation” does seriously deteriorate in our region in 30 years time, then I’m sure we can rustle up a Nuclear deterrence in a fairly short time,…especially considering such a deterrence will only require the application of, by then, Over 100 year old technology.

        We could set up some kind of Failsafe Automated Doomsday Machine,…We could call It, Operation Spoilsport!,…ensuring any Attack,..is a Lose Lose proposition.
        We had just better be sure to inform “The Enemy” before turning it On.

        https://youtu.be/ozg7gEchjuM

      • ErmingtonPlumbingMEMBER

        You Know RT,… if modern civilisation does come to near collapse,…whether through Atomic warfare, super volcanic eruptions or even another extinction level Asteroid strike,…I’d like to think we could keep the Fairdinkum, Aussie way of life going on,….Underground,…sacrifices would have to be made though,…especially by “the Ladies”.

        https://youtu.be/c8L8NopVwdg

      • Waste of time growing the population
        quoting you….
        “Can I also say, if history is any guide, countries who lose their ability to self source war material, don’t typically last long in history intact (Australia?) – and critically, lose their manufacturing prowess.

        Australia is now almost totally reliant on armament sources from third parties (heck, we cannot even refine our own fuel. A decent naval blockade?). What ever we do create, is typical via licence. In a war situation – we would be totally screwed. And at the end of the day, we are on our own. Countries may feel for their plight, but they have to mange their own business, for the net benefit of their own citizens.”

    • nexus789MEMBER

      Investments in infrastructure are non-productive and add nothing to the ‘competitiveness’ of the economy. Not only does the infrastructure bill rise the ‘pot’ from which it funded from is shrinking. The only solution is either more debt, cuts in programs elsewhere, or a combination of both. In any event the ‘system’ will collapse.

  2. I think Vic never had road tunnels till 1998. And if Vic did not have mass immigration, perhaps there would be no need for road tunnels.

    There were tolls on the West Gate Bridge and they got removed after 30 years. So we had infrastructure that was fully paid for and free to use by 1998!

    The cost of these Sydney tunnels is unbelievable insane. And for what? To allow 457 visa staff to replace Aussie staff?

    • The critical problem is if you let infrastructure lag population it gets real expensive fast. I’m not a fan of Big Australia, but if you did want a Big Australia, you would be piling on the infrastructure well before the immigration starts. Doing it backwards gets you costs that are in line with E-W link where land acquisition should have happened decades ago. Next up is completing the western/eastlink loop which, of my, the property is worth at least $1m a plot now.

  3. I reckon these muppets just ‘throw a dart’ when predicting the cost of these projects. When has any major project been on the money. How was Gladys the other day when commenting on the proposed Northern Beaches tunnel and the location of exhaust vents …. ” nothing has been decided it is still a long way off”.

    Gee that will placate the mob.

    I am no engineer but if they are considering a tunnel for cars wouldn’t putting a train tube line make sense at the same time? Seems like just another rent seeking great mates wankathon.

    • They deliberately ignore the cheap public transport options (such as the Wollongong train upgrade) in favour of the much more expensive motorway network, because they want to funnel more traffic onto the existing toll roads. Its all about building a monopoly transport solution that they can flog off at a higher price to private interests who can then go on to increase charges at triple the rate of inflation for years to come.

    • Yeh, no way do they accurately predict these costs. Its always an overrun. So if the upfront is bad enough now, the end will be vomit-worthy.

  4. And if you don’t live in Sydney or Melbourne why would you give shit? Well you do give a shit because every single taxpayer in Australia & also outside of Melbourne & Sydney is paying big time for this “Big Australia Property Ponzi Scheme” (BAPPS) & that sucks if it is of little benefit. When the punters left of the Blue Mountains finally wake up that they are being done over by BAPPS they will revolt. Don’t get me wrong, I absolutely love Sydney & love Melbourne but as an outsider I do not want to see this ridiculous Ponzi Scheme keep going. BAPPS is killing Sydney & Melbourne directly but indirectly BAPPS is also killing regional Australia (i.e. everywhere but Sydney & Melbourne). The “kids” will wake up & revolt eventually. The costs will get too high for even them to contemplate & then they will start to wake up & then decide to revolt. They will finally say “WTF what is BAPPS all about”?

    • the growth is happening west of the blue mountains too. even in dubbo you can observe inchoate urban sprawl emerging from the arterial roads in all of its it’s ugly and inefficient glory. the ponzi is an octopus that is swallowing the whole country.

    • That’s why value capture through a mechanism like land tax is is a more equitable form of taxation. If the infrastructure is done well it leads to benefits to the community, those benefits end up flowing into the cost of the land as people want to live near the new school, road or trainline. For this reason a land value tax is more like a services levy that will allow for good investment to recoup it’s outlay while not penalizing those who get no benefit from it. That’s much fairer than income and payroll taxes.

      • I am ok with value tax but because they build a road and my land increases in value doesn’t mean I’m happy or better off. The increase in value is due to increase in development opportunity/density and the end of a “community”. I’ll pass on the useless infrastructure and prefer we stop the population ponzi thanks. My kids will then have a better future.

  5. Let’s just say it how it is,

    Australia has amongst the worst urban planners tyat have ever graced this earth.

    It’s as if they have sticky taped this nation together with one half assed idea after another.

    • Half-assed? No no no no no no no and no, they are using their whole asses coming up with individual ideas that allow for rent-seekers to maximise the benefits they will enjoy… It might be stupid from a planning sense, but not from a rort sense

    • Exactly! We’ve gone from “Build it, and they will come” to: Let them come first, and we’ll think about building it later.

  6. not to mention hideously ugly cities. australia’s unique intrepretation of victorian architecture — which our major cities used to be replete with — is some of the most beautiful in the world. the more the ponzi packs into our cities, the more these heritage buildings will have to go, replaced with multi storey dog kennels that look like crap and structurally are built like crap. beyond the unique landmarks (which really only sydney has) and natural settings there’s going to be no reason to ever visit an australian city in the future – they’ll look and be like any any other generic, post-modern architctural wasteland you can see practically anywhere in asia.

    if you really want to depress yourself go look at old footage/photographs of what sydney, and especially melbourne, used look like fifty or so years ago. beautiful, stately archicture that rivalled, and often surpassed, all of the great architectural set-piece cities of continental europe. the ponzi doesn’t just trash our natural environment, it trashes our built environment as well.

  7. Saw a report recently that estimated the closure of a large road/arterial due to an accident costs the economy about $1m per hour. Now reduce the capacity of said infrastructure for years whilst we try and expand the network and recalculate the cost. That figure is never internalised as part of an advertised project costing.

  8. CharlieChaplin

    Emailed to Jessica Irvine after her last article supporting Big Australia…probably hasn’t read

  9. Lateral expansion results in an arithmetic increase in the cost of infrastructure i.e. if you population was spreading out across the country in a balanced productive economy.
    Vertical expansion, crowding into non-productive cities, results in a geometric/exponential rise in the cost of infrastructure while at the same time creating nothing to pay for it.

    • Sorry Flawse but, 2D expansion is not linear (nor arithmetic) but squared. We can squabble about the transition points where vertical expansion fails this rule and the costs rise by the cube if you like but the tipping point between one and the other (if there is one) is unknown. The problem IMHO is that the rate of growth exceeds the capacity to build and plan. That is the real cost that gets kicked into the future at inflated prices.
      Also your argument that rural is the most productive vs the rest is also not true. I would argue that industrial belts (think Ruhr valley or the Milan-Turin-Genoa triangle), are the most productive and they are medium density, infrastructure led but organically grown areas.

      • Jason
        If you think that I’ve said rural is the most productive you have read too much into what I have said. It depends!!! I’m talking about urban planning 101 if you like. If your city expands in a non-centric way, which pretty much goes with a productive economy, then you would not have a squared function (I’d grant that it depends a bit on the size of community you are talking but effectively the productive economy breaks the model up into smaller communities vs one big city). You are assuming the city is centric and everyone wants to get to the city centre.- which I grant is what we actually have here in Aus particularly in relation to Sydney and Melbourne – but really in that case you have a vertical situation.

      • Fair enough. But then the issue is double: on the one hand we have inward migration coupled with deindustrialization via outsourcing and automation killing middle-class white collar jobs; and on the other a socioeconomic policy (in common with other anglophone OECD countries) of not investing in infrastructure ahead. Both need to be tackled but it seems the brilliant sods think that by boosting the former they can do away with the latter. Either way not investing to at least keep up is going to cost dearly for decades to come.

  10. I have no idea how Australia can take any project and blow the budget:
    M30 tunnel around Madrid (built 10y ago): 43Km for 7 billion Euros
    Thameslink canal tunnel connections etc (65 stations, …) 6.5 billion GBP

    Fortunately the NY-NJ-NW Gateway project may make Australia’s engineering efficiency look good.

  11. I do have some minor problems understanding how reducing the Immigration numbers will result in cheaper Infrastucture projects, I do realize that the Phillips curve is broken (or at least very badly bruised) but I didn’t think it had actually transitioned to full Inversion where less excess labour = cheaper labour. It’s time to face the truth, these Infrastructure project costs are 100% about the creation of essential private monopolies, it’s monopoly money that pays to build these structures yet real hard earned coin, direct from our workers pockets that ultimately pays to use these over-priced structures. These absurd development costs are needed to justify the steps being taken to create a privately owned taxation system imposed on Sydney’s residents.

  12. truthisfashionable

    Still so Sydney centric in their thinking, what about the N and W in NSW which clearly is an acronym for Newcastle, Sydney, Wollongong.

    There was a proposal last year by a Chinese company, centurion group to build high speed rail between cambelltown and newcastle at a cost of $24bil or about $120mil per km.

    Cambelltown is the heart of the south west Sydney growth strategy and Newcastle is desperate to be more connected. We could easily have a more liveable state if the infrastructure planning would allow it.

  13. Lol used to be APRA, then it’s FIRB and now the big boogie man is immigration. Don’t get me wrong, definitely immigration doesn’t help but to say high structural costs of infrastructure is caused by immigration, give me a break.

    You sure it’s not the disbanding of board of works in the 80s, the fact all politicians these days are born post WWII period so they just don’t know what builds a country, the suffocating labour laws, high land prizes and a dysfunctional political oligarchy with legalised corruption that’s not to blame?

  14. “and $5 billion for contingencies and cost escalation.” This is why the Gov/Corp complex wants population QE. $5B is massive wedge. When you see that figure for cost overruns and contingencies. It should really read “pay off, drink for mates, contract inflation”.
    What a disgrace we are going the way of Brazil

  15. PPP is a rort for “Mates” (ref Cameron Murray). Voters must demand to know how political parties will pay for there infrastructure promises.Value-capture mechanism and planning and tendering processes must be transparent.

  16. Crocodile Chuck

    Its ‘members’ like ResearchTime that hold growth in this blog back.

    Who wants to pay to read comments by shitheads like him?

    The ‘Loon Pond’ has well and truly come to Macrobusiness!