Infrastructure spending is one of the core themes of Treasurer Frydenberg’s budget speech. His headline is a commitment to increase the federal infrastructure spending of ten years from the $75 billion announced last year to $100 billion.
Major projects previously announced – such as the Melbourne Airport Rail Link, the North-South Airport Rail Link in West Sydney and the Queensland Bruce Expressway upgrade – have been affirmed. The hotel has added a fast rail link from Melbourne to Geelong. A nationwide road engineering package has also been added to reduce congestion and improve regional freight corridors.
As a result, the announcement continues with the infrastructure plan detailed in the 2018-19 budget, which is regularly promoted in the government’s expensive “Building Our Future” advertising campaign, which highlights the government’s 10-year “infrastructure pipeline”. Lack of transparency is a problem
Need to say that analysts find it difficult to verify the $75 billion commitment actually involved last year. The claim is the subject of the main survey document of the Australian Parliamentary Library, and its author observes:
The Parliamentary Library was unable to find any public documents that provided a transparent overview of the [Federal Government] overall infrastructure commitments.
It is suspected that the review of the $100 billion infrastructure spending commitments in the coming weeks will be frustrated by repeated lack of transparency.
Why are infrastructure requirements so large?
The National Population Growth Story is a key framework for evaluating the Alliance’s infrastructure program. From 1901 to 1948, the country grew steadily, but the population ranged from 3.8 million to 7.7 million. Then, in the context of the post-war baby boom and immigration expansion, the population surged. From the 1950s to the 21st century, the population grew by 200 to 2.5 million per decade.
But in the past decade, the country has increased by nearly 6 million people, and the vast majority of East Coast cities are increasing. Urban infrastructure planning and spending are lagging behind. As a result, both quality of life and economic productivity have been adversely affected.
Infrastructure spending in this budget responds to community concerns about these declines.
We now know that we have failed to properly plan and fund the surge in urban growth, while urban growth is burdened with congestion. In contrast, large-scale federal government surpluses that began in the 1990s were introduced into debt returns.
A future fund has also been established to pay public service pension debt. The fund is now a custodian of more than $150 billion in assets.
Lifting pension debt is a sensible economic management. The problem in Australia is that the resolution comes at the expense of national capital expenditures. Around this time, state-owned utility companies responsible for post-war infrastructure construction – their regular, predictable annual infrastructure budgets and large internal planning and delivery offices – are in the final stages.
The loss of committed funds and the reduction in utilities have stagnated the most needed infrastructure delivery in Australia’s history. Urban infrastructure projects that are accelerating urban development are just beginning to be implemented.
New capital flows must be found, including a new round of national asset selling – especially in New South Wales – and a new model of private sector delivery, ownership and operations. Almost all of Australia’s new urban infrastructure projects are now a private public partnership.
However, as this budget demonstrates, private sector involvement in infrastructure spending and delivery needs to be supported by public funding and a range of government measures to prevent project risks. An important risk improvement measure involves decision making techniques.
Here, the growing expertise of the federal government’s Australian infrastructure sector is increasingly important. The IA was founded by the Rudd Labor Party government ten years ago and has been committed to legitimacy for many years. Now we can see the infrastructure Australia’s priority list – based on its independent assessment – leading government budget announcements. In fact, the government’s 10-year infrastructure investment pipeline is very close to that of Australia’s infrastructure. This is a good thing.
Why focus on the road?
The problem, of course, is that, as the Howard Union government has not significantly reduced the level of state capital engineering spending, infrastructure spending is now chasing urban growth, rather than infrastructure leading urban growth.
Not surprisingly, the Morrison government has adopted a package of roads as a “urban congestion” measure and acknowledged that transportation planning is inadequate.
The concentration of road spending also recognizes that the millennial growth of our cities is geographically different. Greenfield residential projects are rarely consistent with public transportation systems. Employment growth has been a mixture of CBD obsession and suburban dispersion.
The result is an outdated CBD-centric public transportation system and a suburban working model that makes transforming public transportation an impossible task.
There is no doubt that there will be criticism that this budget is obviously obsessed with road consumption. Unfortunately, most of our cities are plagued by road-based configurations that have been instilled into their DNA from the start. Roads – not railroads – are the gateway to the future transportation options of our new suburbs.
Getting used to road consumption and constructive suggestions for road use is a major challenge.
