Home' Future Building: The Australian Infrastructure Review : Volume 5 Number 1 Contents futurebuilding 89
Volume 5 Number 1
We know that infrastructure is the key to
However, Australia's infrastructure base
is inadequate to meet our future needs, with
the Organisation for Economic Co-operation
and Development recently stating that
'Australia's infrastructure falls short of current
Furthermore, the Australian economy
is transitioning from a period of heavy
investment in the resource sector to a period
of production and output.
This new production phase will
continue to make a significant contribution
to the Australian economy. However, it
is vital that we invest, and stimulate new
infrastructure investment across the country,
both to ensure that we support new jobs in
the short and medium term as the resource
investment boom tapers off, and to have the
productive infrastructure in place to build a
stronger economy for the future.
This is why the Australian Government is
committed to building the infrastructure for
the 21st century.
Since coming into government 12
months ago, the government has placed
a heavy focus on working with state
governments and the private sector to
implement an infrastructure agenda that will
drive the next wave of economic growth.
We are doing this in three ways.
The first step was to implement a strong
pipeline of projects for the next six years. We
did that in the budget by investing a record
$50 billion in vital infrastructure projects
across the country. Our budget measures will
leverage over $125 billion of investment,
and add one per cent to gross domestic
product once the projects are completed.
Importantly, we will deliver many of
these projects sooner than expected by
using innovative financing models. This
includes WestConnex stage two, which,
through a $2-billion concessional loan to
the New South Wales Government, will be
delivered 18 months ahead of schedule. This
means that stage one and stage two will be
delivered at the same time.
Another example is in Perth, where we
are partnering with the Western Australian
Government to deliver the long-awaited
Perth Freight Link under a public-private
partnership. This will be the state's first
major infrastructure project delivered with
a contribution from the private sector. The
project will deliver a freight route directly to
the Port of Fremantle, ensuring that produce
can get to market more effectively and
efficiently, and reducing congestion on local
Importantly, we are building on this
pipeline of projects by establishing the
1 OECD working paper -- Boosting Productivity in Australia,
February 2013, p. 24
$5-billion Asset Recycling
Fund. It has been clear for
some time now that, while
private investors are reluctant
to invest in new 'greenfield'
infrastructure projects, they
are willing buyers of state-
owned assets. The initiative
encourages the states to sell
existing assets to private
investors and recycle the
proceeds of those sales into
new, productive infrastructure.
This fund will secure the
viability of many new exciting
projects, like an airport rail link
for Melbourne and another
harbour crossing for Sydney.
The second step in our
infrastructure agenda was to
reform institutions. We have
already delivered important
reforms to Infrastructure
Australia, which will allow it
to play a vital role in planning
the next 15 years of Australia's
Under our reforms,
Infrastructure Australia will
undertake a comprehensive
audit of Australia's future infrastructure
needs, and develop, in partnership
with state governments, a 15-year
The priority list will provide investors
and the construction industry with a higher
degree of transparency and certainty about
what, where and when infrastructure projects
will come to market.
The third step is to reform the
There has been a growing concern
among industry leaders and the community
that the delivery of public infrastructure in
Australia was inefficient and expensive,
and that we were not using private sector
investment to the best of our ability.
Upon coming to government, we
tasked the Productivity Commission with
undertaking a comprehensive review
of infrastructure delivery and financing.
Simply, the Commission's findings show
that the system is broken and in desperate
need of reform.
The Commission's report identifies
that no single reform will address the
infrastructure challenges facing Australia,
but rather that comprehensive reforms to
project financing, selection, governance and
planning will be required.
The implementation of many of these
reforms will be critical to building a strong
infrastructure base at less cost to taxpayers.
I am currently consulting with state and
territory governments on these reforms, and
the Australian Government will respond to
the Commission's recommendations later
Some of the areas we're looking at
include better selection of projects and
the manner in which we plan projects; the
transparency involved; how we better procure
projects and reduce costs in this area; and
how we better use and collect data to guide
selection and execution of contracts.
We've said from the very beginning that
we didn't want the Productivity Commission
to just be another report to sit on the
government bookshelf. We wanted an action
plan on how we can deliver projects quicker
and at less cost, so that we can get better
outcomes for the Australian people and
If we can make the right infrastructure
choices today, we can build a stronger
economy and a better Australia for tomorrow.
NEW FUNDING FOR PRODUCTIVE
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