Speech: ANZSOG Infrastructure Research Workshop—How to deliver better infrastructure planning—Philip Davies, CEO, Infrastructure Australia
Many thanks to Marion from the Grattan Institute for her reflections on transport planning. I would also like to thank Professor Gary Banks from ANZSOG and Dr Gary Dolman from BITRE for inviting me here today and for hosting such an important infrastructure forum.
I think everyone here would agree that the public discussion on infrastructure is too often dominated by debates about single projects—and not enough about strategy or long term policy.
We have some challenging policy issues to deal with: growing population levels, increasing congestion, budget constraints, and long-term environmental concerns. Continued levels of economic growth are also increasing the demand for infrastructure services.
The challenges we face are mostly because of our success—we are growing as a country in terms of our population and our economy.
But, unless we engage with these challenges now, we could wake up in the future in an Australia with a quality of life that is vastly different than the one we enjoy today.
The sessions today deal with some of the most important infrastructure strategy and policy challenges that we face:
- Firstly, the importance of long-term integrated planning—particularly integrated transport and land-use planning.
- Secondly—reforming the funding model of the transport sector to make it more efficient, competitive and self-sustaining.
- Finally—taking the community on the journey… explaining the challenges, the options and why changes have to be made… and the consequences if we don't take action.
I'll be talking to you today about the first of these—how to deliver better infrastructure project planning.
But first, I think a little scene setting is important.
Infrastructure Australia's role is to provide independent expert advice to all governments, and investors and owners of infrastructure on infrastructure policy and planning.
Some of you may know that in mid-2014, with bi-partisan support, the Federal Parliament agreed to amend the Infrastructure Australia Act to create an independent board, with the right to appoint its own CEO.
I started as CEO in April. And we quickly launched the Northern Australia Audit on 8 May, and the Australian Infrastructure Audit on 22 May.
The Australian Infrastructure Audit took a long term view—(out to 2031)—of the key drivers of our infrastructure demand and identified the challenges we could face in the future, if we don't plan and act now.
The Audit is the evidence base that we have drawn from when we are developing the solutions in the Australian Infrastructure Plan due for completion later this year.
One of our major findings from the Audit is that in the next 15 years, Australia's population is projected to grow by almost 40 per cent—to be around 30.5 million people.
Right now our population is the fastest growing of any OECD country.
Most of this will happen in Australia's four largest cities—Sydney, Melbourne, Brisbane and Perth.
In total, over the next 15 years, these four cities are expected to grow by 46 per cent… by 2061, they will become as big as major global cities like London, Paris and New York are today.
One of our longer term planning questions for this might be seeing what steps could be taken to foster greater long-term growth in our smaller cities, to moderate the consequential infrastructure challenges in the larger cities.
Importance of planning
It is crucial that we embrace this population growth opportunity and start to integrate the planning of our cities, and the nation's future infrastructure needs.
I recognise that this isn't always easy… we have moved away from longer term planning in recent years and become very short term and project focussed.
We need to get back to strategic planning thinking at a region, city and national level.
More so than in the past, we are also dealing with issues of demographic change with an ageing population, shifts in patterns of demand, technological disruption (and opportunities), global economic shifts and changes in the work we do and the way we work.
Unfortunately, despite its importance, we found in the Audit that long term infrastructure planning and project pipeline selection processes were lacking across most jurisdictions.
We identified several trends, including that governments were:
- Moving away from planning and feasibility studies.
- Committing early funding before the problems and infrastructure solutions were fully developed.
- Insufficiently focusing on the better use of existing infrastructure.
- Not consulting with the community effectively and often late in the process; and
- Completing a limited amount of ex post reviews resulting in missed opportunities to learn from project outcomes.
Benefits of long term planning
A return to long term planning will address many of these issues.
Infrastructure projects generally cannot be delivered overnight. They take years of planning before the green light is given to proceed.
A return to long term planning at the state and federal level means that there will be an observable long-term pipeline of up-coming projects.
The general absence of such a reliable pipeline of infrastructure projects in the last decade has meant that the supply chain—those who fund and build our infrastructure—are unable to plan to ensure the capability and resources are available to build the infrastructure we need.
For employers they are unsure how to make decisions about recruiting, retaining and training staff, especially in specialised, technologically-focused occupations.
And for the investors of infrastructure, the lack of a pipeline can make Australia an increasingly difficult place to invest and schedule work.
And these issues don't just affect those in the infrastructure sector. Ultimately we all lose out… we don't get the infrastructure built that we need, the economy doesn't grow as much as it could, and we pay more for the infrastructure we do get.
I'd like to focus on a few of the key areas around long term planning that I see that would make the most practical difference to the way infrastructure is planned, funded and delivered.
These are the need for:
- The continued development of high quality data to underpin infrastructure decision making
- Integrated transport and land use planning,
- A protection regime for corridors
- Transparent and rigorous project selection and
- An increase in the use of ex-post reviews—so we learn from what he have done in the past.
Continued development of high quality data
The first of these is the continued development of high quality data.
We found in creating the Audit that there was a lack of data across most sector.In particular, there was not enough data on how a piece of infrastructure is performing once its built, or how well it is maintained.
We need to think at a systems level. We need a better understanding of how the infrastructure we fund functions within broader networks..
We must find ways to more accurately forecast the impact of potential projects, and use data to make decisions on where public capital will be most productively employed.
For the Audit, IA commissioned modelling work on corridors in each capital city as well as a broad range of other economic analysis.
This provided evidence to guide development of future initiatives and projects.
In the interests of helping to build the evidence base, we have provided this work publically on our website for any interested parties to use as they see fit.
IA will play a lead role in maintaining as well as developing that evidence base over the coming years, providing a basis for bench marking, ongoing advice and sharing of best practice.
Integrated transport and land use planning
We also need to get back to integrated transport and land use planning.
It's not just about moving people but also goods. The Audit predicted a doubling in the land freight task. We are approaching circumstances similar to those I experienced in the late 90s in Tokyo
What we find today is that the planning and provision of infrastructure and land use development across Australia's cities too often occurs in silos.
Various government departments have responsibility for different parts of an infrastructure network and the planning, development and delivery process. As a result, the delivery of infrastructure projects can happen without consideration of how each project interacts with each other as part of a system.
This makes the planning of our cities challenging and dysfunctional.
Poorly planned cities affect the quality of our everyday lives, and business productivity.
As a first step, the delivery of long-term integrated land use and infrastructure plans by all state and territory governments is critical. Each jurisdiction should understand the particular connectivity challenges they face and be able to chart a credible pathway for addressing these challenges.
Protection of corridors
One of the benefits of doing the long term, integrated planning is that you can start to identify and protect land corridors to accommodate future projects like rail lines, motorways and freight routes. But, its not just road corridors—we also need to protect strategic sites for things like airports,ports, distribution centres and freight terminals.
We have done it well in the past. Between the 1950s and 1980s a number of state governments had well-developed and successful corridor protection policies in place. Many of the projects successfully developed over the last 10–20 years have been built on corridors protected in the mid-twentieth century such as the Westlink M7 in NSW and East Link in Victoria. Similarly Badgery's Creek has been protected and reserved as a possible airport site for years.
But it appears that this has become less of a focus in recent times. We need to start viewing funding for corridor preservation as an important part of long-term project planning and delivery rather than a sunk cost.
Failure to protect corridors can increase project costs by 8–10 times often due to the need for tunnelling
To be effective, a corridor protection regime must include:
- governance arrangements to ensure that governments implement protection initiatives; and most importantly
- the establishment of corridor protection funds and stable corridor protection budgets.
Transparent, rigorous project selection
Once we've done our long term integrated planning we need to transparently and rigorously select projects.
The projects must solve clearly identified problems.
These may be deficiencies in infrastructure services that are likely to emerge as a result of population growth, changing patterns of demand or the ageing of existing infrastructure.
Options to solve those problems need to be identified and scoped to determine those which appear to have the greatest promise.
The option should not always be new infrastructure either—it may be better to focus on upgrading or improving the use of existing infrastructure.
One part of what Infrastructure Australia does is assess projects where over $100 million of Commonwealth funding is being sought.
IA does not develop its own business cases, nor make decisions regarding the funding of projects. We independently assess initiatives and projects that are submitted to us by public and private sector proponents. We then publically release a brief of our findings.
Infrastructure Australia's method for assessing initiatives and projects rests on three discrete components:
- The initiative's strategic fit and profiling—the extent to which the proposal addresses national infrastructure problems and priorities and is supported by evidence;
- Economic viability—the proposal's lifetime benefits versus its lifetime costs to society; and
- Deliverability—the proposal must have a clear and robust delivery plan to ensure its successful realisation
Once we have completed our assessment, a summary brief is published on our website.
Making the assessment public greatly increases transparency.
As I am focusing on planning today—I won't address the delivery phase of an infrastructure project.
That is, what happens after you've done your integrated long term planning and then selected the right project solution.
Let's assume the proponent has delivered the project on time, on budget and the ribbon has been cut on a vital piece of infrastructure.
Once all that work has been done we must conduct ex-post reviews. We need to know how the infrastructure is performing in its operational phase, and how it compares with what was in the original business case. Did we get the outcomes we sought for the community?
This helps to inform future infrastructure decision making—and should serve to continually refine and improve project assessment and prioritisation.
IA's role going forward
So, that's my overview of what I see as most important to improve infrastructure planning in Australia:
- We must build and maintain an evidence base of high quality data.
- We must return to long term integrated planning.
- We must ensure that corridors are protected in our cities.
- We must ensure that there is transparent, rigorous project selection that is solving a clearly defined problem, and
- We must conduct ex-post reviews to ensure that we learn from past projects.
IA is focusing on all of these issues and many others in our forthcoming Australian Infrastructure Plan—a strategic approach for long term infrastructure decision making for our country.
The Australian Infrastructure Plan will outline our proposed policy and governance solutions to the challenges that we raised in the Audit.
These challenges were grouped into a list of 10, which now form the chapters for the Australian Infrastructure Plan. They are:
- Competitive markets
- Sustainability and resilience
- Best practice.
It's a long list, but at a high level it's really focusing on ensuring that we have productive cities and regions, national connectivity, efficient infrastructure markets, better decision making and delivery, and sustainable and equitable infrastructure.
IA is also focusing heavily on working with our colleagues in the infrastructure agencies and organisations across Australia, along with governments and industry bodies about setting a long term agenda.
Over the past six months –IA has held briefing events in every capital city across Australia to discuss the Audit findings and inform the development of the Plan. In total, approximately 500 representatives of government and the private sector attended the briefings.
We have also been separately meeting with representatives from all levels of government, as well as business, industry, peak bodies and the wider community, encouraging feedback on the Audit and seeking public submissions on how to solve the issues and challenges raised by the Audit.
Public submissions on the Audit closed on 14 August 2015. We have received over 850 and we are now using the submissions to help inform the Plan.
The Priority List
In terms of the long term pipeline, we are also refreshing the current IA Infrastructure Assessment Framework and Priority List—the Assessment Framework will look at a broad range of strategic context in addition to the usual ‘Cost Benefit Analysis.’ This will include considering how initiatives fit into a wider network, system, or corridor solution.
We've been working closely with States and Territories and private proponents to get a broad list of initiatives and projects together for us to assess. The assessed projects and initiatives will be published as part of the Plan.
As I said before, the scale of population change that we will see to 2031 and beyond is going to profoundly change this country, and presents an exciting future.
However, if we get our infrastructure planning right, we can be sure to protect and enhance our quality of life going forward.
IA must play a key role in supporting that long term planning into the future.
The Australian Infrastructure Plan due for completion at the end of the year will be a major step forward in doing so.
Thankyou for the opportunity to address you today.