May 21, 2014

Data a key driver of road infrastructure strategy- Opinion- The Australian

Before making important decisions about spending money, most Australians are smart enough to do their research.

When you decide, for example, that you want to buy a new house, you check out the market to make sure you get the best value for money.

Evidence is everything.

The same rigour should apply to governments as they assess their spending priorities.

However, many Australians would be surprised to know that when it comes to literally billions of dollars spent a year on local roads, evidence to guide decision-making is scarce.

Australians have no way of knowing whether the road outside their home is being resealed to deliver productivity gains or whether it just happens to run past the house of the local mayor.

We can do better. And the good news is that we have a template for reform that could significantly improve the quality of decision-making and the productivity of local communities, particularly those in rural and regional areas.

In 2008, the former Labor government created Infrastructure Australia to work with states to audit and rank major infrastructure projects according to their ability to contribute to productivity gains and jobs growth.

Based on its recommendations, Labor funded 15 out of 15 of the IA’s most highly rated projects as part of an investment program that is boosting national productivity.

This nation-building program propelled Australia from 20th to first among OECD nations when it comes to infrastructure spending as a proportion of gross domestic product.

But while the big-ticket investments gained most of the public attention, IA was also fulfilling its task of driving policy reform.

Last year IA conducted a trial project that has proven that the same evidence-based decision making was possible with regard to local roads.

IA worked with eight local councils clustered around the Queensland-NSW border and assessed their importance to economic activity, amenity and safety.

These councils, including Bal­onne, Goondiwindi, Moree Plains and Narrabri, produce more than $2 billion in agricultural production.

Despite warnings from bur­eaucrats that such an approach was impossible, it took council inspectors and workers only three months to assemble reliable comparative data on the condition of more than 2200 local roads covering more than 13,000km.

Under the Bingara Accord, the member councils agreed to use this information to focus their road-funding decisions on driving economic prosperity, adopting the same evidence-based approach to roads as to every other class of infrastructure investment.

This makes sense. It is an approach that could be further developed across the nation.

Achieving value for the expenditure of public money must continue to be a core policy objective, especially when you consider that collectively the governments in this country spend $20bn a year on building and maintaining roads.

The Bingara approach, championed by more than 100 rural and regional councils that are part of the Australian Rural Road Group, equips councils to invest in projects that will have the greatest potential to boost economic prosperity in their region.

The ARRG believes the data can open the door to harnessing private capital to help fund road works, just as IA developed innovative new private funding models for big national infrastructure projects.

For example, if several dozen grain producers living along a pothole-ridden country road all contributed to upgrading the roads, it is possible the productivity gains delivered by upgrading the road would boost their profits by an amount greater than they contributed to its repair.

But to make such judgments, you need data, data that should always be made public to give citizens the ability to assess the quality of decision-making.

Regrettably, legislative changes before the Senate would allow the commonwealth government the discretion to ban the publication of IA research.

That’s a backward step and hopefully not an indication that the government does not believe in evidence-based decision-making.

In any event, there’s a genuine appetite for reform within Australia’s local government community. The ARRG remains an enthusiastic supporter of the Bingara approach.

Its chairman, Gwydir Shire mayor John Coulton, said earlier this year that better decision-making would allow councils to lift the productivity of the agricultural sector.

“A greater efficiency return of 5 per cent to 10 per cent on the national road expenditure of $19bn annually will give a performance improvement of around $1.9bn,’’ Coulton told the Moree Champion earlier this year.

He went on to urge decision makers to ignore “nay-sayers’’ and commit to an evidence-based policy approach.

Under the IA approach, Australians can have greater confidence than ever that investment is being directed to projects that add to amenity but also boost economic productivity.

Applying the same model to local road funding should be seen as unfinished business that will secure real productivity gains for the entire nation.

This piece was published today in The Australian: