The first Australian Infrastructure Plan: More about productivity than projects
Infrastructure Australia has just issued its National Infrastructure Plan. On past experience, state governments and the infrastructure industry will immediately search for the list of big projects.
But they would be advised to take a different approach this time. The Plan is much more than just a shopping list. Arguably for the first time, the nation now has an infrastructure plan that is soundly based and credible. In Infrastructure Australia’s words, “In developing the Plan, we have prioritised the user—the commuter waiting for a train, the family paying their electricity bill and the business looking to capitalise on overseas markets”.
This reflects the changes to Infrastructure Australia itself with a new independent board and clearer governance. On the surface this may not seem earth-shattering, but we should not underestimate the impact of these arrangements. The board’s immediate task was to undertake a comprehensive audit of Australia’s infrastructure needs. Again, seemingly obvious, but not something which had been done before. The audit was completed in April 2015 and independently identified 81 key findings that need to be considered.
It broke new ground.
This audit was not of the physical conditions of the nation’s infrastructure but rather a critical assessment of what infrastructure is needed to support the economic development of Australia. In the case of transport infrastructure, the audit focused on where congestion constraints would impede population growth, social outcomes and growth in personal wealth unless well planned investments were made.
Quite simply, the Plan puts a clear holistic strategy ahead of individual projects. Of the 93 priorities on the priority list, only 50 are designated projects, with the remaining 43 being initiatives or policy solutions. Not all constraints need to be solved through financial investment. Infrastructure Australia makes the case that unless significant policy reform is implemented, sufficient funding will not be available to meet future infrastructure demand.
Reform agendas include: network optimisation; increased use of technology; a freight supply chain strategy; corridor reservation; the extension of user pay arrangements and sharing economic value created through infrastructure investment.
National infrastructure planning and the Australian Government’s approach to infrastructure funding will fundamentally change on the back of this Plan. It is a genuine game-changer and for the first time infrastructure planning exceeds the duration of governing terms.
The states in particular should grasp the opportunity to revisit their approach to infrastructure challenges. No longer can state governments and oppositions ignore the prioritisation of the nation’s economic and social interests when seeking Federal Government financial support for major infrastructure projects. State governments and oppositions will still set their own agendas and plans in respect to projects they fund – but these need to acknowledge and take into account the national Plan.
So what should state governments do? Rather than just focusing on new projects they would be advised to look to unlocking improvements in existing infrastructure. An innovative approach should yield results, whether it be fairer user pay pricing or smart digital monitoring of traffic using big data to unlock traffic flow.
If the states rise to the challenge set by the Infrastructure Australia Plan, a more disciplined and consistent approach to infrastructure planning should result, to the benefit of all Australians.
As a nation, we cannot increase productivity without rethinking our approach to infrastructure. But if we get it right, we have a powerful equation for growth.