A better Australia
07 October 2014
Productive infrastructure is the foundation of a strong economy and an efficient community. Already, congestion is costing the Australian economy $15 billion a year, putting the brakes on economic growth.
The Australian Government is investing a record $50 billion to reduce congestion and build infrastructure for the 21st century.
However, our investment alone will not be enough to address Australia’s infrastructure backlog. We need to be innovative in our policy settings to unlock private sector investment and to increase contributions from the state and territory governments.
That is why the Australian Government has proposed the $5 billion Asset Recycling Initiative. Under this program, the government will provide incentive payments of 15 per cent of the sale price of privatised assets sold to state and territory governments, on the condition that the proceeds of such sales are reinvested in new productivity-enhancing infrastructure.
We expect this initiative, along with our record investment, to generate $126 billion of investment
in productivity-enhancing infrastructure across the country, adding about 1 per cent to GDP once the projects are completed.
Investing in vital infrastructure and unlocking private sector funds is only part of the Australian Government’s infrastructure program, however. Australia needs to improve future project planning, not only to ensure we invest in the right projects but so that we preserve vital transport corridors, minimising disruption (and costs) in the future.
Upon coming to government, we believed that Infrastructure Australia could play a greater role in addressing these shortfalls.
That is why we have tasked Infrastructure Australia with undertaking a full audit of Australia’s infrastructure needs and developing a 15-year priority list, to be revised every five years, in collaboration with the state and territory governments.
Importantly, the priority list will provide investors and the construction industry with a higher degree of transparency and certainty about what, where and when infrastructure projects will come to market.
Better planning and project selection will ensure Australia has the right infrastructure base for the future, making it an even better place to live.
In addition to implementing important reforms to Infrastructure Australia, we also tasked the Productivity Commission with undertaking a comprehensive review of infrastructure delivery and financing. The Commission completed its work recently.
Simply, it found that the system is broken and in desperate need of reform.
The Commission found that a do-nothing approach will “simply increase the cost to users, taxpayers and the community generally and lead to more wasteful infrastructure”.
The Commission’s findings show that no single reform will address the infrastructure challenges facing Australia but, rather, comprehensive reforms to project financing, selection, governance and planning will be required.
The majority of the reforms recommended by the Commission relate directly to state and territory governments. In the coming months, I will be leading discussions with my state and territory counterparts about the implementation of the recommendations. They will be critical to building a strong infrastructure base, and we will respond to the Commission’s recommendations later this year.
If we can make the right infrastructure choices today, we can build a better Australia for tomorrow.