Dec 28, 2015

Let’s return to rational infrastructure spending – Opinion – The Australia

We all know that if at first you don’t succeed, you should try again. But experience also shows us that if we continually fail, we should re-examine our methodology.

When it comes to investment in roads, rail and other important infrastructure, it is time for the Turnbull government to review its approach.

That’s because two years after the Coalition came to power promising to focus on infrastructure, its infrastructure program is in tatters.

Public infrastructure investment collapsed by 20 per cent between the June quarter of 2013 and the September quarter this year, the Australian Bureau of Statistics says.

And as 2015 winds to an end, two of the government’s three big signature road projects — the Perth Freight Link and the Melbourne’s East-West Link — have collapsed, while the budget for the third — Sydney’s WestConnex toll road — has blown out from $10 billion to $16.8bn.

Wherever you sit on the political spectrum, it can no longer be denied that the government’s infrastructure program has gone off the rails.

Just last week, the West Australian Supreme Court ruled that Environmental Protection Authority approval for the Perth Freight Link, which would have passed through an environmentally sensitive wetland, was invalid.

The East-West Link was ­cancelled months ago by the Victorian government, based partly on the fact the project was a dud that would have returned a paltry 45c in public benefit for every dollar invested.

Also last week the Australian National Office of Audit ­condemned the commonwealth government for providing $3bn for the East-West Link against the advice of its own bureaucrats and without proper assessment of its value for money.

There’s a common feature to all of these Coalition projects — each was funded in the 2014 budget without the benefit of proper cost-benefit analysis.

The government failed to take advice on whether the projects represented the best possible solutions to the problems they sought to tackle. It committed billions of dollars in public funding without reviewing the evidence.

In infrastructure, proper planning is everything.

Public dollars are scarce. Governments need to examine proposals for major projects from every angle and satisfy themselves that the projects they choose will maximise public returns on the investment.

This is not as difficult as it may sound.

In 2008, the former Labor government created Infrastructure Australia to provide impartial ­advice about the potential economic effects of projects competing for commonwealth funding.

Infrastructure Australia weighs costs against benefits, then prioritises projects that are competing for commonwealth funding according to their potential to not only deal with localised issues but to boost the entire national economy by lifting productivity.

The Coalition’s mistake has been to ignore Infrastructure Australia. It committed to the trio of toll roads without seeking the IA’s input.

And to fund these ill-conceived projects, the government cancelled a range of projects that ­Infrastructure Australia assessed and found worthwhile.

Projects cancelled when the Coalition took office in 2013 included the Melbourne Metro and M80 upgrade in Victoria, Brisbane’s Cross River Rail Link and Adelaide’s Gawler Line electrification.

In other words, the government cancelled projects that independent experts found to be worthy, so that it could reallocate the money to projects for which no case had been established.

The folly of its approach has now been exposed by the collapse of the East-West Link and Perth Freight Link, and the enormous cost blowout of the WestConnex toll road. Just days before the 2013 election, then opposition leader Tony Abbott told the National Press Club that he would not provide money to any state for an infra­structure project worth more than $100 million without a full, published cost-benefit analysis reviewed by Infrastructure Australia.

Within months, Abbott had broken this promise. And we all know how that ended up. It is notable that in defending his record as prime minister, Abbott does not mention infrastructure.

The government needs to ­return Infrastructure Australia to a central role in determining which projects receive funding. It could start by funding projects such as Cross River Rail and Melbourne Metro, which we know will produce positive economic, social and environmental returns.


Anthony Albanese is the Shadow Minister for Infrastructure, Transport and Cities.

This piece appeared in today’s edition of The Australian: