Home' Future Building: The Australian Infrastructure Review : Volume 4 Number 1 Contents futurebuilding 55
Volume 4 Number 1
Peter Harris AO
Peter Harris AO, Chairman, Productivity Commission
Peter Harris is Chairman of the Productivity Commission. Peter has previously served as Secretary
of the Commonwealth Department of Broadband, Communications and the Digital Economy, and
the Victorian Government agencies responsible for Sustainability and the Environmen, Primary
Industries, and Public Transport.
Peter has worked for the Ansett-Air New Zealand aviation group and as a consultant on transport
policy. He has also worked in Canada on exchange with the Privy Council Of ce (1993--1994). His
career with the government started in 1976 with the Department of Overseas Trade and included
periods with the Treasury, Finance, the Prime Minister's department and Transport, and he worked
for two years in the Prime Minister's Of ce on secondment from the Prime Minister's department as
a member of then Prime Minister Bob Hawke's personal staff.
In 2013, Peter was made an Of cer of the Order of Australia 'for distinguished service to public
administration through leadership and policy reform roles in the areas of telecommunications, the
environment, primary industry and transport'.
PPPs require a payment stream, but here the
outcome is a lot less clear. PPP payment systems
often aren't anything like the sort of pricing systems
that I've been talking about today. They are not
necessarily directly linked to willingness to pay.
They may even come straight out of state
treasuries, or they may come through regulated
pricing outcomes. These are not necessarily
demonstrating willingness to pay, and therefore they
are leaving you exposed to demand risk.
It will be of signi cant value, therefore, in the
future, if increased use of PPPs improves the linkage
to consumers and their willingness to pay -- and
perhaps creates incentives to review this whole area.
History will tell you that the development of such
reforms generally requires a comprehensive public
And if pricing policies are effectively reviewed
and reformed, projects -- regardless of who nances
them -- will be demonstrably more sustainable and,
as a result, will put less pressure on public sector
balance sheets, which is a primary theme for why
governments are looking at PPPs.
Also with effective pricing systems, we might see
prices emerge that will differentiate between users
for different level of use, that will allow people
to propose alterations to services, and that will
innovate rather than simply have one price for all.
These are things that we should all want to see in
our future infrastructure.
In conclusion, I posed the infrastructure
conundrum as being about why we seem to
continually under-invest in infrastructure. And I know
I haven't solved that, but I do think the absence of
effective pricing systems is a signi cant element of
Introducing private investment, including super
funds, either directly or via participation in PPPs, will
be a useful tool, particularly for the sort of concepts I
But this alone will not solve the conundrum. A
key reason that we under-invest is almost certainly
that we limit both planning and investment to
what the cost recovery or the general budget
system will bear, rather than encouraging it via
better pricing models.
We have improved pricing systems before, in
interstate freight rail and in airport privatisations, and
I think we can do it again.
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