Car parks rorts symptom of a wider problem

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The Grattan Institute believes that the Morrison Government’s ‘car park rorts’ scandal is a symptom of a wider problem: that infrastructure projects tend to be rushed through without proper planning or scrutiny:

  •  “Australia’s state and federal governments have developed a costly habit of rushing major transport projects to market… invariably the taxpayer is left to pick up the tab”.
  • “The pork barrelling and cost blowouts on suburban train station carparks are only the latest example”.
  • “Rushing to market means risks are not identified or mitigated, and problems are not fixed”.
  • “Grattan Institute research shows that 28 per cent of major infrastructure projects – those valued at $1 billion or more – end up costing more than governments claimed when contracts were signed, and when they do the average blowout is more than $600 million. The price of a quick political win is often a long, slow, and unnecessary budget sink”.
  • “Governments sometimes suggest that if they didn’t move quickly, nothing would ever get built”.
  • “What can be done to break this costly habit of rushing megaprojects to market? Instead of grasping for votes, governments need to assess projects on their merits and only fund those that can withstand scrutiny”.

Grattan is broadly correct. However, it has missed one of the key reasons why infrastructure projects are rushed: the mass immigration policy pursued in the 15 years before COVID crush-loaded cities to such an extent that politicians were forced to respond with flashy ‘big ticket’ infrastructure announcements. This point was explicitly acknowledged yesterday by Judith Sloan:

And here’s another irony attached to the commuter carparks (and to the Urban Congestion Fund more generally): rising urban congestion is mainly the federal government’s fault through its years of promoting excessive immigration leading to extremely high rates of population growth.

When the population was allowed to grow by about 400,000 a year (another Canberra), with two-thirds of this increase the result of net overseas migration, what did the politicians think would happen to urban congestion? This is particularly the case as most migrants piled into Melbourne and Sydney.

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In the 15 years to 2020, Melbourne and Sydney added an insane 1.5 million and 1.1 million people respectively. With residents getting increasingly angry about the crush-loading, and both cities already built-out, politicians had no choice but to respond with rushed, complex and costly infrastructure projects.

The Intergenerational Report’s projected increase in the nation’s population by 13.1 million people (50%) over the next 40 years will require massive, complex and costly infrastructure projects to be rolled out on a regular cadence.

Growing the population so quickly obviously risks more rushed projects and waste – a carbon copy of the past 15 years of extreme growth. And these immigration costs will inevitably be ignored by the population boosters, including Grattan.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.