Business groups must be losing patience with the Abbott government’s failure to pursue an evidence-based approach to the delivery of roads and other pieces of new infrastructure.
Prior to the 2013 election, Tony Abbott solemnly promised not to invest in major infrastructure projects without clear, published evidence that they represented value for public money.
Just days before the 2013 election Mr Abbott told the National Press Club: “I have given a commitment that we won’t spend more than $100 million on any single infrastructure projects without a published cost-benefit analysis.’’
Eighteen months later, Mr Abbott has committed billions of dollars to infrastructure projects without publishing cost-benefit analyses.
On any honest analysis, his multi-billion-dollar commitments to projects like Melbourne’s East-West Link and the Perth Freight Link represent breaches of his election promise.
The unfortunate consequences of this reckless approach are now unfolding.
In April, the Andrews Labor government in Victoria was forced to spend public money to extract his government from the previous Napthine government’s contractual commitment to the East-West Link project.
In dumping the project, Premier Andrews was simply honouring his own election promise in an election that Mr Abbott had described on its eve as a referendum on the East-West Link.
However, Mr Andrews’ case was bolstered soon after he took office last year when it was found that the Napthine government had concealed research showing the toll road would return only 45 cents in public benefit for every dollar invested.
That’s an appalling return — one that falls well short of the level of return on investment taxpayers deserve given that one of the aims of infrastructure is to boost economic productivity.
The East-West affair must be galling to the many reputable business groups that welcomed the Coalition’s 2013 commitment to an evidence-based approach to infrastructure investment.
For example, in 2011, Business Council of Australia chief executive Jennifer Westacott released a statement welcoming Mr Abbott’s release of a policy of pursuing an evidence-based approach.
“The use of independent, transparent cost-benefit analysis of major infrastructure projects is important for ensuring the prioritisation of projects is driven by the national interest and not political motivation,’’ Ms Westacott said.
“The costs of poor infrastructure decisions are not always immediately apparent but become evident over time.
“Projects with low or negative economic and social returns effectively hold back the growth of the economy and ultimately act to lower living standards.’’
By September 2012, the BCA had published a policy document produced by Deloitte which explained the benefit of rigorous research to ensure money was spent on productivity-driving projects, rather than what it described as “poor decisions that appeal to a narrow interest base’’.
In December 2013 the Urban Development Institute said the government should commit to “rigorous and comprehensive cost-benefit analysis to ensure the greatest value for money on new infrastructure projects’’.
The Council of Capital City Lord Mayors has urged the government to invest in a “strong evidence-based knowledge about Australia’s cities to improve the effectiveness and efficiency of infrastructure investment’’.
Mr Abbott’s own Commission of Audit, chaired by former BCA president Tony Shepherd, recommended the Commonwealth only invest in projects “where a rigorous and transparent cost-benefit analysis indicates substantial benefits to the community’’.
And the Productivity Commission’s report on infrastructure delivery, published in May last year, called for “effective processes, procedures and policy guidelines for planning and selecting public infrastructure projects, including rigorous and transparent use of cost-benefit analysis and evaluations, public consultation, and public reporting of the decision’’.
So far, Mr Abbott has failed to deliver on these widely accepted principles of basing investment decisions on independent evidence.
As been shown by the East-West Link example, a lack of transparent information about infrastructure proposals means the debate surrounding them becomes mired in politics.
Without concrete facts about the economic potential of big spending proposals, our society will never advance beyond the old system under which politicians invested on gut feel or, far worse, political considerations.
That is why the former Labor government created Infrastructure Australia (IA).
It is independent of government and its job is to provide information to governments and the community about the facts concerning infrastructure proposals.
Of course, the politicians don’t have to take that advice.
But if the advice is published, people can make their own judgments about the quality of investment decisions, rather than being confounded by the vaudeville of political posturing.
The IA national infrastructure priority list, which appears on the organisation’s website, rates the East-West Link as a project with “real potential’’ — the third highest classification in its four-level rating scheme.
The list rates the Melbourne Metro public transport project, which Premier Andrews will now pursue, as a “threshold’’ project — number two on its list of classifications.
Mr Abbott’s government has presided over the collapse of proper process surrounding infrastructure decisions.
That’s why Bill Shorten, in his budget reply speech, committed to returning Infrastructure Australia to the centre of government, where it belongs.
Anthony Albanese is the Shadow Minister for Infrastructure, Transport, Cities and Tourism.