by Steve Abson, Chief Executive Officer, Infrastructure Association of Queensland
The current state of inertia on funding reforms and asset recycling is placing Queensland at grave risk of a return to eras past that saw unacceptable and ever-increasing backlogs in major infrastructure delivery.
September saw the release of a BIS Shrapnel report and of Australian Bureau of Statistics figures highlighting the state’s dramatic decline in major project activity: a 52 per cent decrease in 2015/16 over the previous 12-month period.
Investment in infrastructure, as a percentage of general government expenditure, has now declined to its lowest levels in more than a decade.
And it’s set to remain there for at least the next four years.
This serves to argue against the State Treasurer’s claim of the impressive nature of the 2016-2017 $10.7 billion capital program.
This is a figure that can’t be taken at face value: the reality is that, with the exception of a handful of transport-related projects and the completion of the Sunshine Coast University Hospital committed to under the previous government, the majority of this year’s program is more accurately classifiable as sustaining capital, upgrades, minor works, maintenance and planning works.
The inclusion in this $10.7 billion figure of significant amounts of sustaining capital for energy and water sector government-owned corporations (plus $1.032 billion in finance PPP payments and $1.370 billion in capital grants) further masks the actual portion of funding available for new, private sector-delivered infrastructure.
In short, only a modest amount has been earmarked for the capital works needed to satisfy the state populace’s continuing demand for new priority infrastructure.
A vote-sensitive topic
The need for reforms remains central to the generation of greater revenue to invest back into infrastructure. Unfortunately, it’s a complex and vote-sensitive subject that governments and political parties are persistent in shying away from.
A visit to the website of the Council of Australian Governments (COAG) – the organisation where the three levels of the country’s governmental picture come together – is telling.
The council’s “Infrastructure & Transport” page acknowledges the criticality of infrastructure investment in improving national productivity, referencing Productivity Commission estimates (from 2006) of the benefits of funding base reforms.
As of 2016, however, words have been slow to find themselves translated into any real and measurable action.
Glaringly omitted from the COAG commentary is one particularly important – and very fresh – document: the Australian Infrastructure Plan, released in February this year.
This plan is the result of an exhaustive, two-year, national audit of Australian infrastructure.
The Infrastructure Plan constitutes a deeply-researched, well thought-out and comprehensive series of recommendations for reforming the funding and operation of transport infrastructure, for completing the national electricity market, for improving the quality and competitiveness of the water sector, and for delivering a telecommunications market that responds to user demand.
Indeed, Infrastructure Australia – some eight months after the document’s release – is still waiting for anything other than a bald acknowledgement of receipt by the Federal Government.
One would have to ask if COAG and its representative governments:
- Are committed to the reformation of current infrastructure funding arrangements, adequately evidenced as not only necessary but overdue?
- Are even on the same page as the infrastructure investment and delivery sector/s?
- Are capable of having the conversations (including with the public) that are essential to determine the most effective way to approach funding reform?
Time for bipartisan, long-range thinking
Underpinning this problem is, in turn, the persistent misalignment between Commonwealth, state and local governments in terms of the recognition for, and willingness to adopt, a productively bipartisan, long-range approach towards infrastructure funding.
That is, one less concerned with the loss of votes and consequences upon the next election cycle, and more concerned with addressing a growing problem that will be bequeathed to forthcoming generations of Queenslanders if not addressed very soon.
Currently, it appears governments are simply not sufficiently sophisticated and citizen-focused enough to work together in tackling a challenging issue – albeit one which is not insurmountable with the community properly informed and, to the degree that is realistic to expect, on side.
Nothing illustrates this better than the agony of continued delay to Queensland’s number one infrastructure priority, the $5.4 billion Cross River Rail project, due to insufficient funding (arguably solvable by the sale of a less critical state asset).
Now languishing in its third incarnation in seven years, a materially scaled-down version awaits funding, which the Federal Government stipulates must come at least partially from application of the value capture concept.
At the same time, however, this concept has met with accusations, from the Queensland opposition of “secret reports” and underhanded plans to slug developers and the public with additional taxes.
It’s little wonder then, with this degree of misalignment within the same political party, that the public wallows in the depths of confusion over the options being debated by the powers that be for the future funding of their assets.
Clear, contextual communication critical
Aside from the necessity for political alignment and consistency, there is a basic need to communicate with the public in a manner it can understand.
Reforms of this nature are sensitive matters; they have consequences, one way or another, to people’s everyday lives. At face value, the introduction of a new levy, tax or user charge doesn’t ring with resounding appeal to Joe or Jane Public.
Thus, the conversation is one that must be had in terms to which the average citizen can relate. To the public, it’s a conversation about queuing for the bus, getting stuck for an hour in traffic, and the ability to pay utility bills. Not GDP and macroeconomics.
If the public’s support is required – and it is – then the public needs to understand the issues, as do the many and varied interest groups that can stand in the way of progress if they’re not on side or at least responsibly informed.
Experience from relevant Australian jurisdictions indicates that when the public has the matter explained in terms it can relate to, vast numbers of the citizenry not only support this type of reform, they often demand an explanation as to why sluggish politicians have sat on their hands for so long.
The asset recycling, debt reduction and reinvestment program in New South Wales is a case in point.
Authorities and political parties can’t, however, initiate this type of productive communication in the absence of leadership alignment and mature, solutions-based communication between the levels of government, supported by a coherent and consistent policy.
Without this, the status quo will persist: poor public consultation, a head-in-the-sand mentality and/or Mexican stand-offs between the Commonwealth and state governments (based on ill-thought-out election promises), emotive grandstanding by politicians – and near total inertia on reform.