Is the Australian Infrastructure Plan on the money?

Cost recovery of public transport across global cities (source: Australian Infrastructure Plan)

Contrary to what most would expect, the Australian Infrastructure Plan released last week by Infrastructure Australia isn’t a guide to which particular infrastructure projects should proceed with the aid of Federal funding and which should not.

It isn’t even about specific projects; it’s actually a high level policy document with a long list of mostly quite general recommendations.

The recommendations relating to cities are mostly worthy ones and generally consistent with the views I’ve espoused in these pages e.g. moving to congestion charging, using existing infrastructure better, greater public transport cost recovery, more attention for the suburbs, local government consolidation.

There are some recommendations I’m less convinced by e.g. privatisation of water authorities; some of questionable feasibility e.g. higher population growth in smaller capital cities; and some where the evidence provided is very poor e.g. development costs in inner vs outer areas.

This is a pretty “thin” report in the sense there’s not much in the way of supporting argument for the numerous recommendations. If you don’t already know where you personally stand on a particular issue this report won’t provide you with the information to convince you either way.

The value of the report is that it provides a statement of Infrastructure Australia’s position on most of the key issues. That’s useful; we need to know how the organisation, which was established in 2008 by the Rudd Government, is thinking.

It’s inevitable that such a sweeping document won’t satisfy everyone. I expect some will find recommendations like this one far too weak:

The Australian Government should initiate a public inquiry…into the existing funding framework for roads and development of a road user charging reform pathway.

Adjunct Professor John Stanley from Sydney University thinks the Plan “has some way to go to give our cities what they need”. He thinks it should’ve taken a stronger line in a number of areas, including urban governance, integration of land use and transport, and transport externalities.

I also think there are some important weaknesses in the Plan. In particular, I’m amazed it doesn’t discuss at length the high cost of constructing infrastructure in Australia. That’s an extraordinary omission; it’s like the Australian cricket team going into bat without bats.

It recommends more investment in both public transport and roads but doesn’t give much in the way of guidance on the appropriate balance between the two or even if that’s a sensible approach. The choice of a 15-year framework is useful but a high level document should also be looking at a longer time frame consistent with the long life of most infrastructure.

Some of the back-up argument is weak too. For example, the discussion of development costs in inner and outer areas is premised on doubtful data (it warrants a separate discussion another time). There are also surprising inaccuracies, like the claim that London’s £14.8 Billion Crossrail project is a 42 km tunnel (the tunneled sections total 21 km).

But its importance shouldn’t be overstated. It’s one of many reports from government, lobby groups and firms – one seems to appear every month – that set out long lists of what particular organisations think should be done at a broad policy level.

The most important issues don’t relate directly to the new document but to Infrastructure Australia’s longstanding Infrastructure Priority List. That’s where the blowtorch starts really burning the belly.

The List currently has 93 projects submitted by States and Territories but only two of them are approved by Infrastructure Australia and are ready to start. The organisation only evaluated (not the same as approved) two proposals in 2014 and nine in 2015. I expect that’s got a lot to do with the tardiness of the State’s and Territories but it suggests the process needs improvement.

The various projects listed for each city don’t give a strong sense they’re part of a rational, comprehensive long-term plan that takes full account of all modes and alternative non-physical solutions like pricing. The problem is they’ve been put up by the States and Territories who in many cases are responding to local political pressures.

Infrastructure Australia recognises there’s a serious planning and prioritising problem at the local level and the Plan recommends the States and Territories should prepare 15-year Infrastructure Plans. That’s not a silver bullet but it’s a start on a very difficult problem. It seems obvious that needs to happen fast (although this airy “principles” strategy document from Infrastructure Victoria doesn’t suggest speed is of the essence in Melbourne).