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Queensland's infrastructure squeeze

By Mark Christensen - posted Friday, 13 May 2005


Premier Peter Beattie is getting squeezed on infrastructure from all directions. The Commonwealth from above, Campbell Newman below, private sector investors at one side and an anxious public on the other.

The new South East Queensland Infrastructure Plan announced recently is definitely a good move, but it’s unlikely to ease the burden longer-term. While a compilation of high-profile projects and soothing commitments to greater private sector investment are needed, they are not sufficient.

What the plan lacks is an acknowledgement of the difficulties in mustering the in-house capabilities required to make it all happen. The public service has not developed the expertise necessary to fulfil the co-ordinating role within a dynamic economy that demands commercial acumen and an ability to do deals.

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The lapse in the skills base has occurred because successive governments, dating back to Wayne Goss, have failed to resolve exactly what role it has in the bigger scheme of things. Both Labor and Borbidge couldn’t come to a landing on infrastructure - their hearts told them it’s a truly “public” issue requiring direct government involvement, while their heads said it was vital the private sector also get involved.

In the ensuring lack of clarity, those advising ministers have been left with mixed messages and poorly defined roles.

An unwillingness to sell off infrastructure-based Government Owned Corporations (GOCs) suggests a strong mistrust of private investors. At the same time, however, all recent administrations have been keen to promote private sector participation, with Peter Beattie putting forward a Public Private Partnership model for future infrastructure needs.

No one can articulate how the obvious tension between public and private interests is, or will be, managed. Where is the line between public and private sector roles, and how far should it be pushed back? What risks should the government take? And how does the Queensland Government align the short-term imperatives of immoderate investment banks with broader community needs and the political pressures exerted by Canberra?

In the old days, these questions didn’t arise, as electricity, rail and most roads were under the day-to-day responsibility of the state. Sir Joh Bjelke-Petersen and his ministers had complete control over all key decisions - investment, employment levels and prices. The private sector had a minimal role. Likewise, the federal government took little interest, knowing anger over blackouts and water restrictions would be levelled at state ministers.

This all changed in the 1990s with the onset of micro-economic reform and competition policy. The focus of infrastructure shifted from public sector monopolies to a national market with significant private sector investment.

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State governments have had to cope with the massive cultural change. SEQEB suddenly became Energex and started sponsoring the Wallabies. Queensland Rail runs trains to Melbourne. And bankers knock on the Premier’s door every day claiming they can build roads and TAFEs cheaper than the Government.

Queensland has tried to secure a role for itself in infrastructure by retaining ownership of various rail, electricity and port assets. As seen with Energex, however, this tactic has also proved problematic. Competition policy requires government do deal with its GOCs at arm’s length, as if they were effectively privatised.

Of course, if they do actually treat them this way - which they don’t - you are left with the unavoidable question: “What is the point of keeping them in public ownership if you can’t make them behave differently?”

On the other hand, ministers interfering in their commercial operations - for example, requesting they employ extra staff - place GOCs at a disadvantage compared with their competitors. QR has already lost business in Queensland and will lose more if it cannot match Pacific National’s cost structure and national presence in the rail market. Of course, all this brings the Government back to tough philosophical questions regarding their responsibilities.

Clearly, there is still a role for Peter Beattie in getting needed infrastructure to the people of Queensland. Being a lot different to the days before competition and the market, it requires new expertise from his ministers and the public service. This involves a lot more than producing glossy plans for the future.

Rather than dictate what happens in a nuts-and-bolts way, they must steer the process. To do this successfully, the Queensland Government should leave the private sector to what it does best, subject to commercially savvy government officials keeping an eye on that delicate balance between making a fair return and providing infrastructure for us all.

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First published in The Courier-Mail on April 28, 2005, under the title 'Expertise lacking to steer course'.



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About the Author

Mark is a social and political commentator, with a background in economics. He also has an abiding interest in philosophy and theology, and is trying to write a book on the nature of reality. He blogs here.

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All articles by Mark Christensen

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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