Delivering Resilient Infrastructure for Northern Australia

Introduction

Good morning ladies and gentlemen. It's wonderful to be here in Cairns for the annual Developing Northern Australia Conference.

As we have already heard at the conference, Northern Australia is blessed with a wealth of natural resources, a strong agricultural sector, and world-renowned tourist attractions.

Bernard Salt reminded us yesterday of the great opportunities we have with China and South East Asia to our North.

North Australia is an integral and growing part of the Australian economy, offering major development and employment opportunities for the nation.

The right infrastructure in the right place at the right time will be key in realising this potential.

So I'm very pleased to have an opportunity to speak to you this morning about the importance of delivering resilient infrastructure and how my organisation, Infrastructure Australia, supports this.

Firstly, for those who are not familiar with Infrastructure Australia, I'll start by quickly explaining who we are and what we do.

Infrastructure Australia is the nation's independent infrastructure advisor. We're the ones behind the scenes looking at the evidence, doing the research and determining which projects are in our national interest.

Infrastructure Australia assesses nationally significant projects with a Commonwealth investment value over $100 million. However, we don't play a role in making funding decisions; that's the responsibility of the Federal and State Governments.

We are responsible for providing the evidence base to guide nationally-significant infrastructure investment and reform, and developing 15-year rolling infrastructure plans that specify national, state and territory level priorities.

Having this evidence base has been a game-changer in our engagement with all levels of Government and the private sector.

Northern Australia Infrastructure Audit

One of the other key pieces of work we've produced in recent years was the Northern Australia Infrastructure Audit.

This was requested by the Federal Government as an input into the Northern Australia White Paper and was the first ever audit of Northern Australia's infrastructure.

It identified the key challenges and critical infrastructure requirements for the region across the transport, water, energy and communications sectors through to 2031.

Overall, the Audit found that the region's economic development really hinges on developing better connections with export markets to Australia's north.

Six of Australia's top 10 largest export markets are in Asia—Japan, the Republic of Korea, Singapore, Malaysia, Thailand and China.

Already 75% of our goods exports, minerals, resources and agricultural products, are going to Asian countries.

And projections by the OECD suggest that Asia's share of the global middle class will grow from around 35% in 2015 to 80% by 2050.

Northern Australia's close proximity to Asia, combined with its reputation for high quality goods, has the potential to be a strong driver of economic growth. Indeed, yesterday we heard first-hand the opportunity for beef exports to Asia.

Better linkages to the markets and population centres of both northern and southern Australia will help industry reduce costs and increase economies of scale, which will ultimately drive improvements in infrastructure service delivery and boost productivity.  

An integral part of this is the development of resilient infrastructure networks.

Resilient infrastructure minimises the social, economic and environmental impacts of unforeseen events, such as extended periods of high temperatures, cyclones, floods, droughts and bushfires—as well as incidents.

As everyone here today would well know, these kinds of events not only impose repair and replacement costs on affected communities and industries, but they can also cause widespread losses of productivity when essential infrastructure is unavailable.

Resilience should not then be seen as a fringe concept in infrastructure planning, but it must be a central part of the infrastructure reform and investment agenda for Northern Australia.

Australian Infrastructure Plan and Infrastructure Priority List

We took these considerations into account when developing the 15-year Australian Infrastructure Plan and the Infrastructure Priority List, two landmark documents which we released close to 18 months ago.

The Plan contains 78 recommendations on the longer-term reforms we need to ensure all Australians have access to world-class infrastructure, while the Priority List identifies the specific investments we need to address current infrastructure gaps and meet the challenges of the future.

The Priority List contains two broad groupings: Projects and Initiatives. Projects are advanced proposals that have undergone a full business case assessment by the independent Infrastructure Australia board, while initiatives are proposals that have been identified to potentially address a nationally-significant problem, but require further development.

The 2017 Infrastructure Priority List includes a number of key infrastructure proposals for Northern Australia as Priority Initiatives. For example, rail upgrades along the north coast rail line and Mount Isa to Townsville corridors in Queensland, and the upgrade of Tanami Road in the Northern Territory.

In the NT, the Priority List also highlights the provision of enabling infrastructure and essential services for remote communities as a Priority Initiative, while upgrading Darwin's water supply infrastructure is also identified as a national priority.

The Priority List therefore recognises the importance of efficient infrastructure services to Northern Australia's future growth and prosperity.

But while there is a need to invest in these kinds of large scale, transformational projects, significant service improvements can also be achieved for Northern Australia by changing the way we plan, operate and deliver infrastructure.

In the remainder of my presentation this morning, I will therefore outline some of the opportunities for reform that should be pursued in the short, medium and long-term to enhance the resilience of Northern Australia's infrastructure.

This includes: strengthening network planning, design and maintenance; establishing a robust, evidence-based process for prioritising investment and making better use of existing infrastructure.

Long-term planning

Delivering resilient infrastructure for Northern Australia begins with getting the long-term planning and project selection right.

This is a key point of emphasis of the 15-year Australian Infrastructure Plan, and something that really underpins every aspect of our ongoing investment and reform agenda.

Long-term planning must remain a priority so that governments can better prepare for changes in infrastructure demand, identify emerging issues and construct the right projects at the right time, for the right price.

Long term planning should involve all levels of Government, Business and the community and look at the whole asset life cycle.

In summary we need to move beyond piecemeal projects and begin developing a more sophisticated and holistic approach to planning.

National Freight and Supply Chain Strategy

Nowhere is this more important for Northern Australia than in moving goods to market.

This lead to one of the important reforms recommended in our Australian Infrastructure Plan that is now being progressed by the Australian Government - the development of a National Freight and Supply Chain Strategy.

Currently, freight planning is being undertaken by all levels of Australia government, but it is usually not well-integrated with other land-use, transport and strategic planning frameworks.

Many of these strategies lack a wider national and international, freight and supply market perspective and they tend to have a short to medium-term focus.

They don't reflect how we fit into global markets and importantly how those markets are changing.

Given that many of the freight challenges we face are nationally-significant, for example—responding to increasing demand from our trade partners in Asia—we believe the responses to these challenges need to be considered nationally.

It's pleasing then to see the Australian Government appoint a national panel of industry experts to assist with the development of a National Freight and Supply Chain Strategy.

Having a national strategy in place will ensure our freight and supply chain networks are better equipped to respond to a range of different scenarios that may impact future demand.

Importantly too, it will strengthen the ability of Infrastructure Australia to assess the strategic context for investment proposals and advice Governments towards national network improvements where they are needed most.

This brings me to the matter of improving infrastructure project selection.

Project selection

Long-term infrastructure planning should be accompanied by a robust process for prioritising investment towards projects that deliver the best outcomes for the community. It should also reflect the best economic, social and environmental outcomes

This is particularly important for developing Northern Australia.

Australian governments at all levels must therefore remain committed to an evidence-based process for prioritising investment to ensure that infrastructure funding for Northern Australia is directed towards projects that deliver the most benefit.

This includes looking at options to improve the resilience and reliability of existing assets.

For this reason, a key recommendation in the Northern Australia Infrastructure Audit is that project evaluation and prioritisation processes need to be underpinned by thorough cost benefit analysis.

This allows governments to make appropriate comparisons of where to direct limited infrastructure funds, and ultimately supports a culture of evidence-based decision making and investment in projects with proven economic benefits.

Infrastructure Australia's assessment process

For our part, Infrastructure Australia has a key role to play in driving a culture of evidence-based decision making for nationally-significant infrastructure investments.

A core part of our work is assessing business cases for major infrastructure proposals, which are considered by our board for inclusion on the Infrastructure Priority List as a High Priority or Priority Project.

Our assessment framework aims to stimulate and support high quality proposal development and decision making.

We ‘pressure test’ the business cases that are submitted to us, including the assumptions inherent in the cost benefit analysis, to ensure that it represents a productive use of public infrastructure funding.

In doing so, we aim to ensure that the business case has a good definition of the problem it is seeking to solve, a thorough analysis of potential solutions to the problem and an appropriate calculation of the relevant costs and benefits of the chosen solution.

Importantly, this process enables governments, industry and the community to better understand a project's potential costs and benefits, and have confidence in its ability to meet an identified infrastructure needs.

Please engage with us early, 80% of our time is giving advice, 20% assessing.

We want to work with you to identify initiatives and support your project development to get those proposals Northern Australia needs on this list.

Better use of existing infrastructure

Of course, driving the economic development of Northern Australia is not just about building new infrastructure.

Maximising the efficiency of existing infrastructure will be just as critical in improving infrastructure resilience and service quality in the north.

One way this can be achieved is to pool essential infrastructure to improve service quality, particularly in remote regions. Another is to direct investment towards initiatives that make better use of what we already have by for example, ensuring that existing assets are well-maintained.

The Northern Australia Infrastructure Audit made a point of highlighting the urgent need to fund and resolve backlogs in maintaining existing assets.

In fact, it found that maintenance backlogs are a feature of the Northern Australia road system in particular, bringing with it risks of load restrictions and road closures, particularly during high rainfall periods.

This poses a significant risk to export-related industries and ultimately acts as a handbrake on economic growth.

Addressing maintenance backlogs therefore needs to be a priority to build resilience in Northern Australia's infrastructure and support the region's continued development and economic growth.  

Concluding remarks

In summary, it is clear there is enormous potential to capitalise on Northern Australia's existing economic assets, and deliver more efficient transport, water, energy and communications services to support the region's future growth and prosperity.

We need a long term, joined up approach—working across all levels of Government and across all infrastructure services.

We shouldn't just be focusing on investing in large, transformational projects.

Significant infrastructure improvements can also be achieved through smaller scale investments and reforms to the way we plan, operate and deliver infrastructure.

This morning I have canvassed just some of the opportunities to improve infrastructure resilience—including by improving planning, project selection and maintenance.

Some of the opportunities for reform are challenging, but the reward will be resilient, world-class infrastructure and a prosperous, thriving Northern Australia. And this will benefit both local communities and the nation for generations to come.

In closing, we are here to work with you and the community to provide advice, identify opportunities and bring forward the long term opportunities we need to support development in Northern Australia.

Thank you.