Chairman's newsletter—May 2015
I am pleased to send you my first quarterly newsletter.
In this issue I focus on two major public reports released by Infrastructure Australia, both produced as part of the new mandate we have to audit and prepare 15-year plans for our nation's infrastructure. I also canvass the key deliverables for IA this year, and introduce our inaugural CEO, Philip Davies.
The Australian Infrastructure Audit Report, and the Northern Australia Infrastructure Audit Report find that, unless action is taken, shortcomings in our Infrastructure networks look set to constrain our productivity and our quality of life. Please give us any feedback once you have had time to read through our findings.
Click on the links below to find out more:
Australian Infrastructure Audit Report released
On 22 May, Prime Minister Tony Abbott publicly launched Infrastructure Australia's first root and branch review of the key drivers of our infrastructure needs across the nation. The report takes a strategic view of what Australia will look like in 2031 and where the pressures on our infrastructure networks will be felt hardest.
The 320 page report provides governments and industry with evidence based information to support improved decision-making in the future.
The report finds that Australia's productivity and quality of life will be tested, with population and economic growth set to cause increasing congestion and bottlenecks.
The Audit strategically identifies the drivers of infrastructure demand and the impact they are having. It also outlines the policy, funding and delivery challenges Australia must face.
Experiences of transport networks failing to keep pace with demand, water quality standards being uneven, energy costs being too high, telecommunication services being outdated, or freight corridors being neglected are now so common that they necessitate a strategic response.
Australia has handled growth and demands like this before and I am optimistic that we can do so again. The challenge is managing our success so that infrastructure delivers the economic benefits and living standards Australians expect.
Key findings from the report:
- Australia's population is expected to grow from 22.3 million in 2011 to 30.5 million in 2031—in the majority of our capital cities.
- The expected population growth reinforces the importance of our capital cities. They contributed $854 billion to our economy in 2011 and are projected to contribute $1,621 billion in 2031.
- Congestion threatens economic growth and living standards and could cost Australia $53 billion by 2031.
- Without action, road travel times in Perth, Melbourne, Sydney, Adelaide, Brisbane and Canberra are expected to increase by at least 20 per cent in the most congested corridors by 2031.
- On average, demand for public transport in our capital cities is set to almost double over the next 20 years.
- Hot spots such as the Pilbara and Gladstone are growing at a rapid rate. Today they contribute $44 billion to the national economy. By 2031 this is projected to more than double to $110 billion.
- The national land freight task is expected to grow by 80 per cent between by 2031, with a large component expected to be handled by road freight vehicles.
- The current funding system in transport is unsustainable and will require reform.
- Maintaining and maximising the efficiency of existing infrastructure will be critical, and in many cases will be of equal or greater importance than developing new infrastructure.
The report also finds that without a total increase in both public and private funding of infrastructure, and market reforms to strengthen the transport and water sectors, we won't have the infrastructure that a growing population and our globally-focussed economy deserve.
The telecommunications and energy sectors highlight how well-structured reforms can lead to positive outcomes for consumers. However, these reforms need to be deepened and applied across other sectors, as markets can drive higher standards of service delivery.
The Audit canvasses a number of major changes to the way we plan new infrastructure, especially:
- improving governance and modernising regulatory settings so we get the best out of our infrastructure;
- boosting transparency and project assessment processes to enable informed choices; and
- greater sharing of information on infrastructure performance and outcomes to improve long-term decision making.
Infrastructure Australia will be consulting with the public, governments, business and peak bodies on the Audit as it prepares the Australian Infrastructure Plan.
The 15 year Plan will make recommendations on project investment priorities, with a reinvigorated Infrastructure Priority List, and specific areas for policy reform. The Plan will be submitted to government in late 2015. Public submissions are welcomed.
The report and information on the submission process is available at www.infrastructureaustralia.gov.au
Northern Australia Infrastructure Audit Report
Infrastructure Australia recently released the special audit of Northern Australia's infrastructure, identifying key challenges, and opportunities to support the region's projected growth over the next 15 years. This research was commissioned by the Deputy Prime Minister, Warren Truss, to inform the Australian Government's upcoming Northern Australia White Paper.
Northern Australia is blessed with a wealth of natural resources, a strong agricultural sector, and world-renowned tourism attractions. There is enormous potential to further capitalise on existing economic assets, and for the region to contribute even more to Australia's development.
Infrastructure Australia's audit has identified the critical infrastructure requirements for the region across the transport, water, energy and communications sectors through to 2031. Key audit findings include that:
- backlogs in maintaining existing assets must be a priority to fund and resolve
- communities and the private sector need to drive decisions to ensure infrastructure meets the needs of users.
- current evaluation processes and policies need to improve to ensure the region gets the best value for its infrastructure dollars.
The audit found that maximising the efficiency of existing infrastructure will be critical to the development of Northern Australia. It highlights that there are gains to be made in addressing maintenance backlogs in the roads sector and introducing more cost-reflective pricing where possible, particularly in the water sector.
The Northern Australia Audit Report is available for download at www.infrastructureaustralia.gov.au.
Our first CEO
In March, the Infrastructure Australia Board appointed Mr Philip Davies as its inaugural Chief Executive Officer. Phil has been busily finalising some of Infrastructure Australia's key outputs this year, and has advanced our work in producing the upcoming Australian Infrastructure Plan. He is also now guiding the organisation through an extensive public consultation on the audit's findings that will feed into the delivery of the 15 year Plan.
Phil previously led AECOM's Infrastructure Advisory practice for Asia Pacific and was an executive at Transport for London earlier in his career. He has advised the Commonwealth Government on High Speed Rail and state governments on transformational transport projects. His experience includes being a Board member of Infrastructure Partnerships Australia and of the Committee for Sydney (roles from which he has now retired).
He is a highly qualified engineer and infrastructure expert and has valuable experience in both the public and private sectors.
The path forward for Infrastructure Australia
Engineers Australia recently featured a thought leadership piece, in its magazine where I was asked to discuss the role of the newly established IA Board, and outline some of the issues that Australia faces in planning and assessing infrastructure.
The article, titled ‘The path forward for Infrastructure Australia’ can be read here.