Home' Future Building: The Australian Infrastructure Review : December 2010 Contents Shadow Minister for Finance, Andrew Robb, is scathing about
Labor's infrastructure record, and sceptical of its ability to deliver
projects. 'The Finance Department's incoming brief for the Gillard
Government highlighted a signifcant gap between community
expectations regarding infrastructure and the funding currently
allocated in the Budget to meet these needs,' Robb told Future
Building. 'For example, Infrastructure Australia identifed in its
latest report $82.8 billion worth of projects with real or potential
merit. Of these, about 12 projects, worth $22 billion, are either
ready or almost ready to proceed; however, the government has
committed to support just four.'
The size of the infrastructure challenge is enormous. Federal
Treasury Secretary Ken Henry, in his speech this year to the
Conference on The Economics of Infrastructure in a Globalised
World, quoted private sector estimates suggesting an infrastructure
defcit in Australia of between $445 billion and more than
$770 billion. '... If we doubled the annual investment typically
undertaken in economic and social infrastructure, it would still
take over eight years to close these suggested infrastructure gaps.'
Rigorous project selection will be more important than ever,
given the experience in other jurisdictions where hung parliaments
have sometimes seen infrastructure programs bend to minority
interests to preserve the political status quo.
Fiscal discipline that reduces public sector debt and restores
the Budget surplus is equally vital, as are improved funding
mechanisms that ensure greater private sector involvement in
infrastructure funding. Most of all, the federal government must
work closely with state and local governments to identify, fund
and deliver key projects.
Another key issue is resolution of the form and timing of the
proposed mining tax; the government says the funding of many
infrastructure projects relies on this new revenue.
Of course, the best will in the world will come to little unless a
sustainable funding mechanism is found to bring projects forward.
The Coalition and Labor have both considered various models
to stimulate project bond markets -- with the Coalition outlining
a policy for a limited round of tax advantaged infrastructure
bonds. While these smaller schemes have merit, there needs to be
bigger thinking about how private and public investment can be
The consideration of superannuation reforms has not yet
reached its logical conclusion and will be a matter that receives
further consideration. Whatever happens, with the Building
Australia Fund depleted, there is a strong expectation on the
Federal Parliament to fnd additional funds to bring forward the
next round of major projects.
After all, better project selection will mean little if infrastructure
projects are not delivered. For that to happen, federal, state and
local governments need to work together closely, because the
scale of investment required is too costly and complex for one
level of government to tackle alone.
That integration will not be easy. Unpopular governments in
some states, such as New South Wales, which badly need new
infrastructure to deal with urban congestion, have hampered
federal government efforts; while local governments face their
Rigorous project selection
will be more important than
ever, given the experience
in other jurisdictions
where hung parliaments
have sometimes seen
bend to a minority
interests to preserve the
political status quo.
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