Every Australian State and Territory has an ongoing roads program and a “wish list” which it brings to the Federal Government for funding. The current extent of the multi-billion dollar program can be seen on the Infrastructure Australia website. The wish list, however, is opaque but is continually promoted. The controversial cross-city tunnel in Melbourne is an example.
In Victoria, the Melbourne east-west tunnel – first proposed in 2008 – has recently been revived and prioritised by the Baillieu government.
Supporting the revival of the Melbourne cross city tunnel concept is the idea of an “infrastructure gap” so large that almost any project would seem justified. Otherwise described as a “backlog” or “wish list”, the sum of $770 billion has been proposed as the size of the “gap”.
Mike Mrdak (Secretary of the Department of Infrastructure, Transport, Regional Development & Local Government) writes:
Research conducted by Citigroup in June 2008 – just prior to the global financial crisis – estimated the national infrastructure investment task for the decade to 2018 at over $770 billion.
However, if that amount were actually spent we would have an infrastructure bubble, because there is absolutely no way that three quarters of a trillion dollars spent on “infrastructure” could ever produce anything like an economic return. Anyone fool enough to invest would lose their cash.
But, under the headline Here’s a way to get $700 billion of infrastructure we need, Tim Colebatch, economics editor of The Age writes, “It’s time for the community to debate how we finance essential transport projects”.

Well, here’s the debate. Infrastructure can refer to the buildings and physical artifacts to accommodate all society’s needs and functions: schools, universities, hospitals, recreation and sport, telecommunications, water, gas and electricity and even parks. Yet, for Mrdak (writing in 2010), “infrastructure” mostly means transport infrastructure.
Colebatch seems to agree with him. According to Mrdak, while about $360 billion of the $770 billion is expected to be raised from the private sector, that’s still leaves $410 billion to be spent by government. Colebatch – building on ideas from Infrastructure Australia and Federal Treasury – thinks governments should borrow to finance “infrastructure”. But the public will pay too. For instance, the pressure is on to raise finance for the Melbourne road tunnel by imposing tolls on existing motorways. And what’s more it’s suddenly mooted that it is OK to sacrifice Victoria’s AAA rating to borrow money for this purpose, but apparently not for other social purposes.
No doubt there is an underlying need for some transport infrastructure investment within and between Australian cities. However several features of the rush to infrastructure make me very worried.
As just about everyone in Sydney and Melbourne knows full well, the crying need is for an immensely improved public transport network. But it is almost impossible to channel private sector funds into providing it. On the other hand, by tolling roads, money can be made to flow readily into the hands of private investors. There is an inherent bias: while we all need better public transport, we will only get bigger and better roads.
The figure of $770 billion was proposed (before the global financial crisis) by a transnational banking corporation, Citigroup. Why should we trust Citigroup to know what is good for Australians? Citigroup’s business is lending money to make money.

There is a lack of transparency. Try to find out what’s in the list of 160 “critical projects” in the wish list of Infrastructure Partnerships Australia (IPA), and how that list was arrived at, and you will find it’s not publicly available.
There is a close relationship between IPA, a private sector lobby group, and Infrastructure Australia (IA) which is a government body. The former generates projects, the latter recommends which ones to fund. Two members of IPA are also on the board of IA giving them the power to influence recommendations and advance the agenda of the infrastructure industry. The question of potential conflict of interest must be considered.
Finally the modelling which is usually done to support the proposition that new road projects create economic benefits is seriously flawed. The major portion of the alleged benefit is invariably derived from the time which would be saved in each individual journey on the road network in question, expressed in money value. All the tiny amounts of time saved on the billions of trips made on the roads during the project’s lifetime, and their corresponding money values, are then added together to arrive at a total sum of money in “benefit”.
There are three major problems with this calculation. First of all, no-one can tell if a couple of minutes saved on a journey are going to be used in any sort of productive activity of benefit to the economy or society. Second building a new stretch of road brings more traffic on to the road system, so while some time may be saved in part of the road system in the short term no time at all will be saved in the longer run. Third the evidence both in Australia and internationally is that if people think they can travel a little faster, they convert that advantage into travelling further in the same time, negating time saving as a valid measure of benefit. Building roads has the effect of both sprawling the city and increasing congestion.
There will always be wish lists for transport mega-projects and there is now a real need to find ways of evaluating them rationally and in full public scrutiny. There needs to be a full and open process of assessment with all the consequences included.
Will there be an infrastructure bubble? It will not happen if the public resists paying more tolls and persuades political leaders to start thinking about real needs instead of investment opportunities.
Joseph Bernard
Director
@Prof Low
great article thank you..
Are you aware of the work at http://smart.uow.edu.au/vision/index.html ?
Surely science and this type of research is essential to designing a great system rather than the cherry picking model that ends up costing us so much more
Comment removed by moderator.
Gavin R. Putland
logged in via Twitter
Why do we want better public transport? Largely because most of us own property, whose value will be enhanced if public transport is improved in the locality. Property investors know that they need to anticipate where the infrastructure will go. Real estate agents know that rumours of infrastructure projects cause bursts of inquiries.
The return on investment in infrastructure - including public transport - has two components: (1) what people pay for actual USE of the infrastructure (i.e. fares…
Read moreMichael James
Research scientist
A related method is the model used in Tokyo in their Metro system: retain profits from the massive shopping & entertainment complexes built above the bigger interchanges (Ikebukura, Ginza etc). Some of the Metro & train operations are now quasi-private but all were government woned/run at one point or other so the point holds. With many millions of pax passing thru each day these sites become the most valuable retail precincts in any city. In the anglo world this incredible property-based income accrues mostly to private interests (developers who in the anglo world are often the first to cry about the waste of public money spent on anything but roads).
Michael James
Research scientist
In the Australian context, in the outer exurban reaches, this would mean TODs, crucially with overall planning control limiting the usual sprawled shopping malls elsewhere. This creation of a shopping/entertainment complex at the main nodes of a serious PT network would at least partly overcome the conundrum exercised in Australia to do nothing--that rail-based PT should only be built when there are enough pax to" justify" it. So build road-based exurban sprawl so that inhabitants have no alternatives and then use that fact for the next 20-40 years to say that PT is uneconomic etc.
Jane O'Sullivan
Agricultural Scientist at University of Queensland
I agree that more, and more uniform application of, capital gains tax is needed. However, the increase in value of properties should be seen as inflation, not wealth creation. Like any form of printing money without creating any new real wealth, it enriches the person doing the printing only by reducing the relative buying power of everyone else. We are rapidly impoverishing the next generation through the inflation of housing. We're also hobbling the competitiveness of Australian businesses by increasing their property-related costs. We're creating an ever-increasing need for capital through the expansion of per capita mortgage, and so sending ever more of our total economic output overseas as interest payments. None of this enriches us. If my house doubles in value (which it has), so has any other house I might swap it for. I'm no better off. But my kids are much worse off.
Dale Bloom
Analyst
From my understanding of road building, an average road with medium traffic use has a life expectancy of about 10 years.
If $770 billion is spent, it has to be spent again in 10 years, and that is just for one road system in Melbourne, wherever that is.
Michael Shand
Michael Shand is a Friend of The Conversation.
Software Tester
you raise a great point Dale
Robert Merkel
logged in via Facebook
I've responded to this at more length at my own blog.
In short, however, the author is making a number of counterintuitive assumptions:
Read more* firstly, that people won't use extra time for "socially or economically beneficial purposes". If I spend my extra time playing video games or watching reruns of Neighbours, if I'd prefer it to commuting that's a "socially or economically beneficial purpose" in my book.
* Secondly, that if people are making journeys because the benefits to them outweigh the…
Craig Minns
Self-employed
With respect to the transport industry's use of toll roads, it is common practise for them to avoid toll roads unless explicitly instructed to do so by the client, or where there is a legal requirement to do so, such as the rules requiring trucks travelling from Gailes to the Gateway Bridge or points east to use the Logan and Gateway motorways in Brisbane.
The reason is simple: the truck is hired on a time basis, so there's no net cost to the operator in using the longer route, while tolls are…
Read moreSimon Arthur
Reader
Why is this article only looking at public transport as an alternative? It's been clearly shown that the most cost effective method of travel is bicycle, and with the advent of electric e-bikes it's clearly a realistic option for most people:
“Eight out of ten Australian adults still use a private motor vehicle to travel to work or full-time study, just 14% take public transport, 4% walk and a mere 2% cycle, with 30% of these trips in the cities under 3km”
http://www.bicyclenetwork.com.au/general/change-the-world/93269
I'm regularly cycling 15km to work and arrive in a similar time to car. Why? Because cars are continually stopping at lights, so their average speed is actually very low. I arrive healthier, happier, and wealthier than I did when I was an unfit and overweight car-bound commuter a couple of years ago.
Bruce Moon
Bystander!
Nick, G'day.
I suggest there are deeper issues in this subject than you have here raised.
You suggest the current allocational model is flawed. I don't disagree, but it is an entrenched model across most (if not all) our federal administrative sectors.
You cite the relationship between 'Infrastructure Australia' (the gov't agency) and 'Infrastructure Partnerships Australia' (the business sector agency) as an entrenched relationship delivering 'product' that serves their collective interest…
Read moreMichael Shand
Michael Shand is a Friend of The Conversation.
Software Tester
Great Article,
I have only seen that roads leads to more cars on the roads which requires more roads which introduce more cars on the roads, ad nuasiam
Hell, play Sim City for a weekend and you will notice that more roads only removes congestion for a short period of time and in the end you need to plan enough space between zones for rail, subway and bus stations....I know a video game from the 90's probably isnt the best evidence but it is pretty intuitive that more roads is not the correct answer to congestion
Adrian Barnett
Associate Professor of Public Health at Queensland University of Technology
Roads and congestion also have a cost to health because of traffic pollution. In Australia traffic pollution kills as many people each year as traffic accidents. Traffic pollution is also associated with hospitalisations, negative birth outcomes, asthma and restricted lung function growth. These large costs are never properly considered in the costs of new or expanded roads. The people who make the new roads and the people who make money from new roads don't pay for the health costs, and so there's market system to control the continuing expansion of traffic. Instead society and the healthcare system ends up paying. A detailed US study estimated that every full tank of petrol cost $20 to health and society: http://www.lung.org/associations/states/california/assets/pdfs/advocacy/clean-cars-campaign/road-to-clean-air-fact-sheet.pdf.
Jenny Goldie
editor
Despite the US enjoying a temporary mini-boom in natural gas and oil at the moment, production of cheap, conventional oil globally started to plateau around 2005. Now increasingly, oil is coming from expensive unconventional sources like tar sands, ultra-deep water and 'tight' oil that needs fracking. A number of commentators have predicted the price of oil will have doubled by 2020. Now it may be that we'll all convert to electric cars with electricity supplied by renewables, but it takes time to change a whole fleet over. So the reality will be that people will simply not be driving their cars as much and looking for other ways to get to work. It might free up a bit of space on the roads but any government putting excessive amounts of money into highways and byways, rather than electrified public transport, will be deemed irresponsible. Decisions have to be made now so that alternatives are in place within a few short years. Business as usual is simply not an option.
Carolyn van Langenberg
Retired
There are a surprising number of people who seem to be knowledgable about transport who believe people living in large compact old cities would prefer to use cars than bikes, public transport and walking. I don't know who these experts consulted. I know well paid residents of Manhatten who love the care-free life-style they enjoy. Those with no personal ties in Australia won 't return, especially to Sydney, more especially since Barry O'Farrell as wasted so much money choking Sydney with even more reports that avoid trams and trains.
Carolyn van Langenberg
Retired
I meant car free, not care free as the iPad would have it. Also see The Economist sept 22 on the beginning of the decline in a car dependent lifestyle.
Lorna Jarrett
PhD candidate, science education; Physics teacher
I thought "care free" was pretty good actually. When someone suggests drinks after work it's nice to be able to take public transport home, for example.
Jane O'Sullivan
Agricultural Scientist at University of Queensland
At the centre of this debate is a misconception about the word 'investment'. Building more roads in order to keep up with the demands of a growing population is not investment, it is recurrent cost. It is the 'maintenance' needed to prevent per capita utility declining. It is treading water at best. There is no return on this 'investment', in terms of per capita productivity or per capita enjoyment of services, amenity or free time. (Why do the people who add up the 'benefit' of all that time saved…
Read moreCarolyn van Langenberg
Retired
Are you able to be more specific about what infrastructure will meet investment ather than current needs?
The compact city of Portland, Oregan, USA, is a case that shows restricting city growth is economically sensible because arable land was saved from concrete thus remaininng productive. As a green compact city, asthma rates are lower than in those cities laced with freeways, meaning less money has to be allocated to the Heath care budget.
Australia needs to invest in quantity, but in nsw links between towns and cities are being and have been destroyed , reducing quality (convivial communication, health and education services) that once existed, the worst example being rail in western nsw.
Jane O'Sullivan
Agricultural Scientist at University of Queensland
If it's improving amenity over and above any level that existed before, you might call it an investment. High speed rail might be called an investment. The broadband network conceivably is. A new road, that allows commuters to travel from a more distant suburb in no more time than they did from a nearer suburb before the more distant one was needed, is not an improvement.
Counting the non-destruction of farmland as an economic benefit is surely a fine example of creative accounting. The developers of sprawl would claim it's fully captured in the purchase price of the land - but the undervaluing of our food system is another story. Including benefits that can't be captured in a monetary return doesn't help make the option more viable, although it might convince government to subsidize it. Portland boasts of many 'green' initiatives, but its environmental impact is still growing along with its population.
Craig Minns
Self-employed
The new road doesn't just make the commute easier, it provides access to the suburb for deliveries, including the delivery of construction materials to build the homes that people live in.
Here in Brisbane there is a large-scale development called Springfield, which is one of the decentralised hubs that are planned over the next 20-30 years to the southwest of the city. Part of the brief was incorporating a rail link, but because of several factors, including a lack of potential consumers of…
Read moreLorna Jarrett
PhD candidate, science education; Physics teacher
Oh dear, current Australian "transport" (ie: roads) policy sounds just like Maggie Thatcher's "roads to prosperity" in the 1980s.
Retro, much?
There's a simple reason that more / wider roads don't relieve congestion: there's a dynamic equilibrium between lone drivers and other modes of transport (public transport / sharing a car / cycling etc.) - in terms of time and convenience. If you make the car journey less "crappy" (technical term well-understood by commuters) while leaving the other…
Read moreCraig Minns
Self-employed
Surely there's a feminist explanation. After all, male drivers spend much more time on the road that female ones do. Are you sure it's not simply an expression of male privilege oppressing women? All those unreconstructed truck-drivers...
Seems about as relevant as the stuff above...
Lorna Jarrett
PhD candidate, science education; Physics teacher
Actually dynamic equilibrium comes from thermodynamics, not sociology. It ain't socially-constructed it's immutable reality and it doesn't give a monkey's for your convenience, ego or whatever.
Craig Minns
Self-employed
Except you're not describing a dynamic equilibrium, you're changing the conditions in the hope of inducing a respondent change in the behaviour of the system.
The system has proven to possess a very high latency wit respect to the use of cars. It can absorb a very large amount of input with very little change in output.
Any equilibrium in this system is principally an expression of that latency's effects.
And that latency is largely socially-constructed, not thermodynamic.
George Naumovski
Online Political Activist
The Liberal/Howard era had 11 years to fix the problem. They had no GFC to deal with and had a surplus due to seeling our assets off. The current government ALP had to deal with all the problems from the Howard destruction and then the GFC and now the Liberal states want the federal ALP to give them money but then cry about government spending money. Talk about the Liberals being hypocrites!