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Restoring Australia’s productivity
growth – panel discussion
As part of that prioritisation, we’re having discussions about
the use of freight performance indicators. This would be a way
of measuring whether our performance in freight supply chains
is meeting certain standards, and whether you could benchmark
BL: So cost, time and reliability, those sorts of things?
MC: Those sorts of things. You could do that end-to-end
through the supply chain. This would give us a way of actually
measuring whether an infrastructure investment was effective,
and to what extent it has been effective.
There are some complications though, particularly in relation
to data availability.
I am not sure what the plan is in terms of actually developing
the strategy. Investment decisions can’t really wait for that. But
it is very important that prioritisation is part of the thinking in
terms of funding allocation. Inland Rail is an example where you
should ask, ‘Is this actually the highest priority in terms of the
outcome you are trying to achieve?’
If Inland Rail is premised on improving freight efficiency,
reducing the cost of freight and improving the speed of transport
of goods, is investing $8.4 billion into Inland Rail the best way to
achieve those freight productivity outcomes? Especially when
there are a few unknowns in there, such as industry saying that
it needs a connection to the Port of Brisbane and the Port of
Melbourne? It needs connectivity into the New South Wales
network, as well. These do not form part of the Inland Rail
project, and would double the cost of the project.
The discussion around pricing and a user-pays systems is also
very important. If Inland Rail is going to be an equity investment,
then it has to recover its costs, and a bit more presumably. Will the
price charged actually move freight from road to rail and in a freight
route where volumes are not substantially growing? Presumably,
you wouldn’t be trying to cross-subsidise the recovery of that cost
across other aspects of rail. Rail is vital to our imports and exports,
and it has the challenge of competing against road, which doesn’t
have a user-pays pricing arrangement.
BL: Thank you. Stephanie, your job is to bring money and
skills into Australia. There’s obviously a little bit of turbulence at
the moment. What keeps you up at night about infrastructure?
SF: Austrade has 83 points of presence globally, and our
job is to gather intelligence around what’s happening in all of
those markets, for both our exports overseas and investment
back into Australia.
What we see at the moment is major disruption to the
infrastructure sector, with the way it’s being intercepted with
government, with pricing and how revenue is collected. For
example, we look at driverless cars, driverless buses, the share
economy and the old way of collecting revenue by government.
We see all these changes taking place globally, then we bring
our view back to Australia, and we’ve got to get ready for the
day when these changes come to Australia.
So, what keeps me awake at night is whether the planning
that we’re currently doing is flexible enough for the disruption
that’s occurring globally, particularly within mobility. But we also
need to ensure that the public sector – more specifically, the
public – and the private sector are working closely together so
we’re able to keep in front of this curve. If we fall behind that
curve, it’s going to create big problems for the business that
we’re doing here in Australia.
BL: You’re still seeing a lot of interest in Australia, even with
SF: There’s a huge amount of interest in Australia. I mean,
you just have to listen to the Treasurer of New South Wales,
and he does create excitement globally. But we do face some
challenges in Australia. We need to project Australia as being
a very safe place to invest. If you compare Australia to other
global investment opportunities, Australia stacks up well even
though we tend to beat up on ourselves. But if you look at
the investment environment here, investors are guaranteed
ownership of their assets. You might think that the domestic
political situation is a little bit rocky at the moment, but it doesn’t
actually change what’s happening on the ground in terms of
Australia is still a very attractive place to invest, and we’ve
got a huge amount of interest. A core part of Austrade’s role is
to encourage that investment, and if it does incur any bumps
in the road, we’ve got the specialists within Austrade whose
job it is to talk to government, and to get them to try to iron out
BL: They sound like they’ll be busy.
SF: They are busy.
BL: Peter, I just wanted to turn to a point that Marika made
about the Inland Rail project and the accounting model, and
the fact that we will have to recover its cost to remain on the
balance sheet. A theme that we’re seeing increasingly in public
infrastructure is ‘innovative finance’ or off-budget accounting.
Unless I missed it, you declined to recommend that as a
breakthrough in your study. What do you think policymakers
and Treasury departments should be conscious of when they’re
taking equity risks in this way?
PH: The Productivity Commission was approached in
submissions to recommend a new infrastructure bank. We
were approached to recommend that governments change
their attitude to innovative financing. We did actually find some
innovative financing options that governments could use –
unsolicited project proposals are a very good example. I think
that’s very wise, because not having that is just suppressing ideas,
which is just anti-intellectual, anti-productivity, anti-everything;
another horrible thought. But innovative financing in the sense of
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