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Swan’s splurge alone can’t fix the cracks in Infrastructure Australia

Fixing Australia’s infrastructure policy regime will be a long, bumpy road. AAP

Australia’s ability to provide appropriate infrastructure for the future remains under question, despite changes to Infrastructure Australia’s role announced in the 2011 Federal Budget.

The budget has increased Infrastructure Australia’s budget by some 40% to $36 million over four years.

However, Treasurer Wayne Swan’s starting premise for his budget speech, that the opportunities for strong growth be shared among all Australians, is not supported by the shift in Infrastructure Australia’s role.

Its ability to deliver fair and sustainable infrastructure projects remains unclear.

Finding funding

The mechanisms for gathering and distributing infrastructure funds are currently disjointed between federal and state agencies, and the process for deciding which projects to build continues to be fragmented and political.

Certainly the post-budget analysis of funds allocation between states continues the traditional inter-state rivalries.

South Australia got money for its desalination plant and rail improvements. New South Wales didn’t get money for the F2 to M3 link. Victoria is disappointed it didn’t get its regional rail funded, and so forth.

The budget has set out new mechanisms to encourage private sector investment in infrastructure, but this seems to further distance government from its role in channelling funding to the correct places and projects.

Australia has weathered the global financial crisis better than most. But despite general support for the tough decisions in the budget, a failure to meaningfully invest in major infrastructure will shortchange future productivity, and undermine social and environmental standards.

Opportunities such as the resources boom represent a chance for government to capture and redistribute benefits to all Australians.

However, analysis by the Australia Institute’s David Richardson suggests that so far the benefits of the boom went mainly back to the mining industry or those with investments in mining, whether or not they are Australian.

The missing part of this puzzle seems to be a mechanism for gathering funds and then ensuring fair and sustainable government infrastructure investment across Australia.

Instead, Infrastructure Australia’s role, while bolstered by increased operating funds, will be now reduced to analysing the costs and benefits of projects put to it, under the continued influence of federal politics.

Strikingly, the $6 billion regional infrastructure fund drawn from mining tax will be reallocated back to the mining states Western Australia and Queensland, separate from Infrastructure Australia’s functions, rather than investing in places left behind by the resources boom.

Australia’s relative success has depended on an extensive and very costly patchwork of underlying infrastructure services that facilitate transport and communications, ensuring we have water, telecommunications and energy for our needs.

Whether or not you have a high speed internet connection, whether the goods in the supermarket arrived by road or rail, the water came from a catchment or desalination plant, where major ports are, or how you travelled to work or school, all depend to a large extent upon decisions made about what infrastructure to provide, and how to fund it.

Dealing with reality

Infrastructure Australia was established in 2008 to provide an overarching framework to coordinate the provision of infrastructure.

The approach received broad support, particularly since it was based on a body of impartial, scientific experts.

Unfortunately, the coordinating and long term aims of Infrastructure Australia contrast with the reality of many large infrastructure decisions made since its establishment.

It was not involved in the decision to go ahead with the National Broadband Network (NBN), the biggest infrastructure project in our history, although it eventually indicated its support in February 2011.

Examining the 2008 Act reveals the source of the problems in Infrastructure Australia.

Essentially, it is an advisory board with no real powers. Its objectives are broad, but are oriented to promoting economic prosperity and efficiency.

It seems unlikely that the changes announced in the budget will make the Federal Government start taking notice of what Infrastructure Australia recommends.

Previously, Minister for Infrastructure and Transport Anthony Albanese endorsed funding for the Commonwealth contribution to the construction of Epping-Parramatta Rail Link in August 2010 without Infrastructure Australia appraisal.

This project of $2.6 billion is to be 80% funded by the Commonwealth. The project was rushed through, apparently seeking votes in federal and the then-NSW Labor government’s political campaigns.

There are more examples of Infrastructure Australia being ignored by federal government, such as Labor’s allocation $742 million for a railway to Brisbane’s Redcliffe.

Enough transparency?

The Australian National Audit Office’s July 2010 assessment of Infrastructure Australia processes questioned the rigor and quality of documentation included in making recommendations.

These are reasonable teething problems for a new agency, and Infrastructure Australia has indicated that it will improve transparency.

However, the report also found on page 37 that in May 2010, before Infrastructure Australia made its recommendations, Commonwealth money was promised by government for 10 large infrastructure proposals including rail, road and port projects.

Putting aside the difficulties of influencing Commonwealth funding, the omission of ecological and social equity goals from Infrastructure Australia’s primary functions is of serious concern.

Commentators, such as Clive Forster at Flinders University in his book, Australian Cities: Continuation and Change, argue Australia has become more divided by income, access to services and jobs, health and education over the last 30 or so years.

This is borne out by Australian Bureau of Statistics using tools such as the Socio-economic Indexes for Areas (SEIFA).

Where someone lives has a strong and increasing impact on their life outcomes. Evidence of deepening levels of social disadvantage is not matched by government action to address this such as redistributing infrastructure investment.

Further, Australia is facing a range of ecological threats that are closely linked to the choices represented in major infrastructure projects.

An “additional function” in Infrastructure Australia’s Act is “advice on infrastructure policy issues arising from climate change”. Despite this, the organisation’s role is largely focussed upon assessing competing projects, rather than considering the implications of continuing to fund additional freeways, road tunnels and desalination plants.

For Infrastructure Australia to be effective, and as appropriate for a commonwealth agency, it must be able to take a wide view of sustainable and equitable infrastructure investment.

This must include more transparent assessment processes and prevention of political manipulation.

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