Speech: Infrastructure Association of Queensland

Slide 2—Introduction

  • Good morning Ladies and Gentlemen and thank you Steve for inviting me to take part in this important discussion on how we can reform infrastructure in Queensland to meet the challenges of the future.
  • It is great to be here this morning to discuss with you some of the broader infrastructure reforms that will enable Queensland to increase its economic productivity and enhance its already enviable quality of life.
  • When it comes to planning for the future, there are some challenging policy issues to deal with here in Queensland, including population growth, increasing congestion and funding constraints.
  • There is also the need to ensure equitable access to infrastructure services in the more remote parts of the state.
  • Like much of the rest of Australia, Queensland's population will grow significantly to reach 6.4 million over the next 15 years, an increase of almost two million people from 2011.
  • Most of this growth will be concentrated around the State's South-East, with regional hubs such as Townsville, Gladstone, Cairns and Mackay also likely to experience rapid growth in their populations and economies.
  • This will place increased pressure on the state's infrastructure—as will the projected growth in Queensland's mineral and gas exports, which rely heavily on road, rail and port infrastructure.
  • This will be particularly evident in Gladstone, where we are seeing unprecedented investment in LNG development.
  • Given the long lead times on major infrastructure projects, it is critical that we respond to these challenges now.
  • Our Audit showed that without action, the cost of congestion across Brisbane, the Gold Coast and the Sunshine Coast will increase from $1.9 billion in 2011 to $9.2 billion in 2031.
  • With this in mind, I'd like to talk briefly this morning about some of the key principles recommended in our 15-year Infrastructure Plan, launched in Brisbane with the Prime Minister back in February, including the importance of long-term, integrated planning and access to a diverse pool of infrastructure funding.
  • I also want to touch on the need to make value capture part of the business-as-usual approach to public infrastructure investment.
  • And discuss too, our proposal to link funding to reform, not just to concrete and steel.
  • Finally, I will talk about the role we believe the private sector can play in advocating for change.
  • But first, I'd like to tell you a bit more about Infrastructure Australia and what we are doing to ensure that Australia's infrastructure—and the planning behind it—is working in the national interest.

Slide 3—About IA

  • For those who are not familiar with our work, Infrastructure Australia is an independent body with a mandate to prioritise and progress nationally significant infrastructure.
  • We provide research and advice to governments and the community on how to address today's infrastructure gaps, and meet the challenges of the future.
  • Over the past 18 months we have been busy delivering three landmark reports:
  • The Australian Infrastructure Audit—a comprehensive review of the current state of Australia's infrastructure and our future needs across transport, water, energy and telecommunications. The Audit provides Infrastructure Australia and Australian governments with a critical evidence base for where investment and reform is required.
  • The Australian Infrastructure Plan—a reform based document, which provides a road map for governments, business and the community to address Australia's infrastructure challenges—and
  • The Infrastructure Priority List—which sits alongside the Plan and provides a prioritised list of nationally-significant investments and guidance to decision makers on where they should direct funding.

 

  • Taken together, these three reports provide a platform for better infrastructure decision-making, limiting the influence of short-term thinking by providing our leaders with a robust evidence base from which to identify future infrastructure priorities.
  • But of course, our work does not stop there.
  • Infrastructure Australia remains focused on leading ongoing public discussion about the infrastructure people need, the outcomes it should deliver and the best ways to plan and pay for it.
  • Which brings me to what we see as the key opportunities for infrastructure reform, both in Queensland and across the other States and Territories.

Slide 4—Long-term integrated planning

  • As a first step, integrating infrastructure and land-use planning across all levels of Australian Government is critical.
  • Our Audit found that as a nation, we have been slow to secure the improvements in efficiency and service delivery that are born out of strategic, long-term infrastructure planning.
  • Here in Queensland, 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.
  • It also creates investment certainty for the private sector.
  • As many of you in the audience this morning would well understand, the absence of certainty around public infrastructure spending in recent years has meant that those who deliver our infrastructure are unable to plan to ensure the capability and resources are available to build the infrastructure we need.
  • Another benefit of long term, integrated land use planning is that governments can start to identify and protect land corridors to accommodate future projects like rail lines, motorways and freight routes.
  • Knowing where the tunnels will be built is important too, so that subterranean corridors aren't lost to foundations and basements.
  • But, it is not just linear corridors—we also need to protect strategic sites for airports, ports, distribution centres and freight terminals.
  • The importance of this cannot be overstated.
  • Failure to protect infrastructure corridors can increase project costs by 8–10 times often due to the need for tunnelling.
  • To avoid this, long-term corridor protection strategies must be integrated across different infrastructure sectors and networks, and aligned with broader land use and economic development plans.

 Slide 5—Project selection

  • Long-term infrastructure planning must also go hand in hand with a robust process for selecting projects that deliver the best outcomes for the community—and this is where Building Queensland and Infrastructure Australia come in.
  • I would like to acknowledge the great work David Quinn is doing at Building Queensland and the highly collaborative relationship he and his team have developed with Infrastructure Australia.
  • I know David will talk a bit more about Building Queensland's Infrastructure Pipeline and the current priority projects, but I also wanted to offer some insight into the work we do in progressing specific projects through the Infrastructure Priority List, which is backed by our Assessment Framework.
  • Our Infrastructure Priority List reflects a consensus of submissions provided from State and Territory governments, peak bodies and the community, all of which are independently assessed by Infrastructure Australia's Board.
  • Adding a project or initiative to the List follows a rigorous process that ensures that we provide a high quality selection of nationally significant infrastructure solutions for all levels of government to pick from.
  • This means moving beyond a simple cost benefit analysis to take account of the economic, social and environmental impact of both the problem being addressed, and the solution being proposed—as well as the project's strategic fit and deliverability.
  • Our Assessment Framework assesses the individual costs and benefits of a project, challenging their veracity and subjecting them to pressure tests, allowing us to better understand the fundamentals of a project and ultimately give decision makers better information.
  • One area in which both the public and private sector can do better is in the quality of Business Cases formulated for major projects.
  • Raising the standard of infrastructure Business Cases is an important focus of ours, and something we will be speaking more about in coming months.
  • We need to see better alignment of project proposals with an identified problem, rigorous assessment of potential options and meaningful engagement with communities at each stage of the development process.
  • Important too, is active consideration of all possible funding options.

Slide 6—Funding

  • There are ultimately two ways that public infrastructure can be paid for: either by taxpayers with an allocation of government spending, or directly by the user through for example, electricity bills or road tolls.
  • No longer can states and territories, rely on taxpayer funds alone to meet infrastructure needs, particularly in the face of increasing budget pressures to fund welfare and health services.
  • This is why diversifying the pool of funding available for public infrastructure investment must be a major priority.
  • One of the major opportunities to do this, as identified in the Plan, is changing our approach to how we pay for roads.
  • Currently the taxpayer is directly involved in funding road infrastructure across its planning, delivery and operation.
  • This approach is problematic as it means road funding is at the mercy of the annual budget cycles of governments, and exposed to a variable policy landscape.
  • It is also problematic as this system is fundamentally unfair as taxpayers subsidise allroad users, while those who use the network less are in effect paying a subsidy to support those who use it most.
  • Moving to a more sustainable model of charging for road use will be complex—and will involve bringing the community on the journey to understand what needs to change, what the problem is we need to solve, and most importantly why.
  • That's why we have recommended that the Australian Government should initiate a public inquiry, to be led by a body like Infrastructure Australia, to assess the existing funding framework for roads and develop a pathway to road user charging reform.

Slide 7—Value capture

  • Another way in which Queensland can improve the way it funds and delivers infrastructure is by considering value capture opportunities as part of the business-as-usual approach to public infrastructure projects.
  • As a potential means of funding major infrastructure projects, value capture has generated significant media interest as of late.
  • While it is not a silver bullet, capturing some of the windfall gains from those who directly benefit from major infrastructure investment can be a useful source of incremental funding alongside user charges and taxpayer allocations.
  • Our Plan recommends that the Australian Government impose a mandatory requirement for initiatives and projects seeking federal funding to demonstrate they have considered opportunities for value capture and if appropriate, have a plan to implement it.
  • Importantly, opportunities for value capture should be identified and implemented early in planning processes to maximise benefits to taxpayers.
  • This needs to be done before specific options are developed.
  • You can't do value capture when there are workers on the ground wearing high vis and hard hats.
  • Undoubtedly, a major challenge for governments is to identify the specific beneficiaries of infrastructure investments or renewal projects.
  • This again underlines the importance of long-term, strategic land use planning.
  • This would make it easier to identify those most likely to benefit from value uplifts, and enable governments to access additional funds to build and operate the infrastructure the community needs.

Slide 8—Infrastructure reform incentives

  • Another opportunity for reform outlined in our Plan which has significant potential to help meet Queensland's future infrastructure needs, is our proposal to link Commonwealth funding to reform outcomes.
  • Building on the targeted success of the asset recycling initiative and the broader success of the National Competition Policy Payments, our proposed Infrastructure Reform Incentives would see additional Commonwealth investment linked to specified market reform outcomes.
  • This would enable the Australian Government to use its funding to drive broad reforms aimed at improving the quality of planning, construction, operation and governance of infrastructure in our cities—with a view to meeting the long-term needs of the community.
  • Importantly, this model acknowledges that the political and administrative costs of reform are often borne by the states, while the lion's share of ongoing fiscal benefits are enjoyed by the Commonwealth.
  • Infrastructure Reform Incentives would redress that balance for the national good.
  • There are definitely echoes here of the United Kingdom's City Deals model.
  • Translating City Deals to the Australian context is really about getting States and Territories to make the most of the local economic development opportunities enabled by infrastructure projects.
  • We would like to see this idea developed further and extended to Infrastructure Reform Incentivesto encourage governments to undertake the more structural reforms they wouldn't normally have an appetite for—thereby improving the quality of the planning and investment undertaken by the States and Territories.

Slide 9—Role of the private sector & conclusion

  • The private sector must play a pivotal role in meeting Queensland's infrastructure needs over the long term.
  • Greater private sector engagement in the infrastructure sector is in Queensland's best interest, as it brings with it commercial rigor and a powerful incentive for efficient delivery.
  • The challenge for governments is to structure projects such that they provide confidence to the private sector.
  • This is why it is vital that government infrastructure decisions are guided by long-term planning, rigorous evidence and transparent engagement with the community.
  • But the infrastructure sector, the people in this room, also have a key role to play in advocating for reform.
  • As leaders in this area, you should demand a higher standard when it comes to the planning, delivery and operation of major public infrastructure.
  • At Infrastructure Australia, we will also continue to play a role in supporting long term planning and infrastructure reform.
  • We are currently awaiting the Government's response to our Infrastructure Plan, but in the meantime we are progressing our policy and research program to support the implementation of the Plan's key recommendations.
  • We will continue working with our counterparts in the States and Territories, such as Building Queensland, to lead this process through research, engagement and advocacy.
  • There are genuine opportunities for all Australian governments and the private sector to work together to achieve better outcomes for our growing communities.
  • If we seize on some of the opportunities for reform I've outlined here today, we will be well placed to meet the challenges of tomorrow.

Thank you. I look forward to expanding on these ideas further in the forthcoming panel discussion.