Improving our Infrastructure
Government Investment in Civil Works
It is no wonder then, that “Investment in major infrastructure projects was a significant theme of the 2012-13 Federal Budget,” reports Hawker Britton, a leading government lobbying firm. “Investment in these nationally significant projects is designed to expand Australia’s productive capacity, relieve congestion and improve road safety.”
Of course, roads, sewer systems, ports, railroads, bridges, and dams don’t come cheaply. In fact, the Minister for Infrastructure and Transport reports that Government has put an unprecedented sum – $36 billion – into road and rail infrastructure over the six year period from 2008-09 to 2013-14. This funding comes via the Nation Building Program, which was launched to aid national, regional, economic and social development through the improvement of land transport infrastructure. Overall, the Federal Labor Government has raised Federal infrastructure spending from $141.00 to $269.00 per Australian.
Taxes are, of course, a primary means of funding public infrastructure. Over the past several years, many national infrastructure projects have been funded in cooperation with managed investment trusts (MIT). To bankroll current and planned projects, the federal government made the move last year to raise the concessional MIT withholding tax rate from 7.5 per cent to 15 per cent.
Private investment through public-private partnerships (PPPs) have also become an increasingly attractive option for funding. In this model, government obtains needed support from the private sector for developing, operating, and financing public infrastructure. PPPs have become more and more common in recent years, both in Australia and abroad, and there is substantial evidence that these partnerships encourage innovation and increase efficiency. However, some argue that PPPs actually come at a higher cost to the public than the traditional government-owned asset model. Another infrastructure funding option is to require the motorists who actually use a road or bridge to help cover the cost through tolls.
2012-2013 Infrastructure Budget
The 2012–2013 infrastructure budget, as reported by Hawker Britton in May 2012, pours an additional $3.56 billion into the Nation Building Program and covers a variety of initiatives designed to improve road quality and safety. A portion of this money is being given to existing programs to ensure that current projects are continued. $300 million dollars will be used to extend the Back Spot Program for an additional five years. Hawker Britton reports that the investment may prevent more than 2,000 accidents and save as many as 14 lives every year. The Heavy Vehicle Safety and Productivity Package is getting $140 million for the continued provision of roadside facilities, including safe, updated rest stops. $1.75 billion has been set aside to fund the Roads to Recovery Program through 2019. This money will supplement funding from the Financial Assistance Grants Scheme to help shires and councils maintain and improve local roads.
Seventy five per cent of the Federal roads budget is set aside for projects in regional and rural Australia. The 2012-2013 budget also allows for the possibility of a full duplication of the Pacific Highway by the end of 2016 if funding is matched by the NSW government; completing the project will require an estimated $7.1 billion. In addition, a $28 billion road construction program will improve selected sections of the Bruce, Warrego, Newell, Stuart, Princes, Colder, Dukes, Midland, Great Eastern and Great Northern highways.
Railroads are also on the agenda. The 2012-2013 budget includes significant funding toward the modernisation of the Interstate Rail Freight Network. Government will partner with the private sector to design, build, and operate the $1.6 billion Moorebank Intermodal located in south west Sydney. Hawker Britton reports that, upon completion in 2017, the initiative will remove 1.2 million trucks from Sydney’s roads and drastically reduce congestion around Port Botany. In fact, Hawker Britton’s budget report insists that the project will “ultimately transform the movement of freight across the entire eastern seaboard.” The Federal Government is also allocating $232 million to Adelaide’s suburban rail network.
The 2012-2013 budget also provides funding for communications infrastructure. According to the Department of Broadband, Communications, and the Digital Economy, investing in the National Broadband Network (NBN) is absolutely essential. “The NBN represents a significant leap in the quality and speed of broadband access currently available to most Australians, and is part of a comprehensive plan to prepare Australia’s telecommunications infrastructure for the future,” the department’s website states. In fact, Hawker Britton reports that NBN Co. will begin work in over 1,500 communities and 3.5 million properties around the country over the next three years.
The Australian Automobile Association (AAA) insists that road improvement is an urgent issue that will require even more funding and attention in the near future. In an April 2013 press release, AAA president Ross Herron stated that, “It is becoming increasingly clear that many of our roads are not coping. We need stronger investment and new approaches to funding for roads and other crucial land transport infrastructure to combat growing congestion in our cities and to provide safer roads in the regions.” He also pointed out that projects of this scale will require cooperation and leadership as well as money. “We will need strong leadership and an effective long-term plan. Given the size of this investment, it is going to require a significant contribution from all levels of government and a more effective approach to attract other sources of funding.”
There is little argument that Australia’s infrastructure is in dire need of attention and an ongoing investment is essential. In February 2012, Leighton Holdings released an infrastructure report stating that, “Australia’s productivity is being constrained by a lack of infrastructure. Poor roads choke our cities; half completed networks restrict our ports; and people and goods can’t get where they need to, when they need to, because our infrastructure can’t deliver. Australia is a gateway to the world’s fastest growing economies yet we are squandering our opportunities because of a lack of investment in the productive capacity of our nation.”
The report also takes government to task for failing to meet the nation’s infrastructure needs. “Governments of all persuasions recognise the infrastructure deficit yet, year after year, key projects remain half done or not started. Too often priority is decided by electorate and delivery is captive to the political cycle,” the document points out.
Leighton Holdings’ politically neutral report goes on to identify several key factors that should be taken into consideration when determining which future projects should take precedence. First, government should consider projects that will facilitate the creation of new technologies and businesses, leading to a positive economic impact over the long run. Government should also consider projects that improve liveability in heavily populated areas, particularly by targeting chokepoints that currently suffer the greatest congestion. Projects with “the potential to change the shape of our environment,” should also be strongly considered. Lastly, public infrastructure projects that stimulate commerce between Australia and Asia and foster private sector investment should be given priority.
Perhaps if these factors are taken into consideration – and Government rises to the occasion – we may see a marked improvement of our nation’s infrastructure in the near future.