Infrastructure

Australia’s infrastructure ranks relatively well internationally, but there is much to be done before the nation can count itself among the global top ten.

Australia ranks 35th for overall infrastructure, 41st for roads, 34th for rail, and 32nd for air transport.

Infrastructure is a significant part of Australia’s economy, generating 13.3 per cent of national GDP. However, Australia’s current stock of infrastructure is projected to fall well short of meeting our future needs, according to Infrastructure Australia. 1

Demand on the nation’s infrastructure will increase because of increased urbanisation and population growth. This will manifest in greater congestion costs and lower productivity. Australia’s population will increase by about eight million, to reach 30.5 million by 2031 and modelling suggests congestion costs to
the economy will top $53 billion a year.2 Usage will double in key areas like road and rail freight, airports and public transport.

It is an ideal time to invest in infrastructure. Funding costs are at record lows and governments should actively encourage increased involvement by the private sector in infrastructure design, development, operation, maintenance and financing.

However, to fill the growing infrastructure gap we need careful, evidence-based investment that delivers value-for-money and properly leverages private sector funding. The Productivity Commission has found that poor project selection – including political decisions - has an economic cost in the billions.3

We need to take politics out of the infrastructure debate, and focus on boosting productivity and living standards by endorsing Infrastructure Australia’s plan.
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Value for money must be delivered for the taxpayer. A focus on best practice procurement will generate new efficiencies, reduce risk and create better project outcomes.

In some cases, creative application of new technology may allow existing infrastructure to last longer or be used more effectively. More innovative financing solutions, including value capture and continued incentives for asset recycling, should also be used to help bring private investors to the table.

Many infrastructure projects are conceived and funded by state and territories. As such, the Federal Government should encourage states that have not already done so, to establish their own genuinely independent infrastructure bodies.

Recommendations:
7.1 Build the transport, communications and energy facilities we need by backing the ​​​​
independent plan of Infrastructure Australia.
 
7.2 Subject all new infrastructure proposals to a rigorous cost-benefit analysis, including the full range of social and economic benefits.
 
7.3 Focus on delivering best practice procurement to ensure value for money in projects.
 
7.4 Encourage greater private sector involvement in infrastructure investment and service delivery.
 
7.5 Push states that have not already done so to establish their own independent infrastructure bodies.

 
References
3 Productivity Commission (2014), Public Infrastructure, Inquiry Report No. 71 http://www.pc.gov.au/__data/assets/pdf_file/0003/137280/infrastructure-volume1.pdf#page=95
 

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