Home' Future Building: The Australian Infrastructure Review : Volume 8 Number 1 Contents futurebuilding
Restoring Australia’s productivity
growth – panel discussion
ignore the spread of benefit across our communities, we do that
at our own peril. Investment in infrastructure is actually a way
of bringing various parts of the economy along, particularly in
regional Australia. We need to keep the flow of FDI coming, but
we must also keep an eye on where that investment goes to
ensure that it’s inclusive. If we forget about that side of the story,
then we will have bigger problems than what we anticipate.
BL: Peter, you professionally worry about all of these things.
What’s worrying you about the economic and social state of
Peter Harris AO (PH): I think that it was in the job description.
‘Are you a born worrier? Yes? Excellent, you can go to the
There are people in Canberra who call me a professional
optimist because I keep pressing the Government to do
things, so that requires some degree of optimism. The thing
that bothers me most about the infrastructure debate is the
continuing participation of politicians in characterising the other
side’s infrastructure as being ‘bad infrastructure’, and theirs as
being ‘good infrastructure’. This is an appalling way to conduct a
discussion about something that genuinely matters to the future
of the nation.
No wonder the public is confused about whether a project is
‘good’ or ‘bad’. They see both sides agreeing and disagreeing,
and the next thing they see is an impediment to walking along
Circular Quay or getting down George Street in Sydney, or
getting across a railway crossing in Melbourne. No wonder the
public is very doubtful about the nature of these projects. I could
say that this is true of the current energy debate, as well.
The New South Wales Treasurer was dead right when he
said, ‘The road to hell is paved with government interventions’.
On interventions, it’s a question of what kind of interventions,
and the quality of the interventions. The appalling thing here is
seeing politicians spending no time at all on actually assessing
whether a project is well planned and has positive objectives, or
whether it is capable of delivering the project within the intended
timeframe, at roughly the intended price. They seem to spend
no time at all on good planning, but a lot of time saying, ‘It’s my
project. It must be good. It’s your project, so it must be a dud’.
No wonder the public is confused.
BL: Peter, the Productivity Commission undertook quite a
big study into public infrastructure a couple of years ago. What
are you seeing in the national infrastructure debate? Could you
provide us with a distillation of what your report said, and also
what you are and aren’t seeing in the national debate?
PH: The obvious bits of the report show that infrastructure
is expensive. Of course it’s expensive – it’s being built in urban
areas where land is expensive. That occupied about half the
report, because that’s what the Government was primarily
interested in. But at the same time, we gave them advice that
said big unilateral interventions by government and the planning
processes of infrastructure are quite often appalling. Where this
is the case, it usually involves the press release first, followed
by 18 months of analysis, then suppression of the analysis
because it didn’t tell them what they wanted to know, then
the budget allocation, then the subsequent budget allocation
because that original number was ‘x’ and no-one understands
the difference between that and ‘y’. But it’s a ‘budget blowout’,
according to the media.
For something that is so important – something that is such
an enabler of productivity in this country – we do construct and
run these things quite badly. We didn’t just spend the rest of
the report telling the Government that this is what you’re doing
badly; rather, we put forward quite detailed propositions for
them on how to do it better. The particular area that stuck out,
because it is unlike almost every other part of infrastructure, was
roads. When you are talking about electricity, water, airports, or
even rail, consumers in some way pay towards the project cost
directly. Therefore, there is some link between the user and the
project selection. In roads, that is not the case. Apart from a
small number of toll roads, we have a tax and a set of fees.
Because of this, there is a lack of user connection to planning
and project selection.
The Productivity Commission’s strong advice to
Government is, if users were more heavily involved, you’d get
better planning. Now, those people are not going to pay for the
whole project, but if they can’t see the planning upfront, they
will not see the value in it. This model is going to come, not
because of what the Productivity Commission recommended or
the fact that technology will enable it, it’s going to come because
governments are going to run out of revenue to meet our
expectations, because urban infrastructure is really expensive
and we don’t have enough of it. What we’re not doing enough
of is planning for that day. That’s in our report – three chapters
were written entirely on how we should plan for that day.
BL: Thank you. Marika, you’re sitting over the National
Freight Report Strategy. What’s it going to be? What’s it going
to do? Do you think that it’s a little pre-emptive to be locking in
on things like Inland Rail if we’re about to go through a strategic
MC: The National Freight and Supply Chain Strategy is
the next phase in the work; the current phase is an inquiry into
the National Freight and Supply Chain Strategy priorities. This
phase won’t come out with a strategy – it is the intention, and my
hope, that the next phase will move into a strategy piece. What
the inquiry is now looking at are the priorities that should be
dealt with in that strategy in terms of infrastructure, regulation,
technology and productivity. This inquiry is also looking across
different supply chains: import–export, interstate, domestic
supply chains and different commodities, as well.
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