Wayne Swan’s first budget contains a big focus on "infrastructure": the transport, utilities and essential services so vital to any economy.
A graph in section 4 of Budget Paper 1 shows why. Australia’s physical infrastructure is ageing, and over the next decade many of the roads, bridges, pipelines and ports built in the 1950s and 60s will have to be replaced or upgraded. This ageing infrastructure is causing bottlenecks that are holding back exports in areas like coal and iron ore. Transport congestion in cities also imposes big costs on business and citizens, as the millions of Australians who spend hours each day commuting to their work places well understand.
Top of Labor’s agenda is the new Building Australia Fund, funded to the tune of $20 billion out of current and future budget surpluses. Decisions on which projects to fund will be advised by one of Rudd’s new Government agencies, Infrastructure Australia, to be chaired by man-of-the-moment Rod Eddington. Melburnians will know Eddington as the author of the eponymous Eddington Report, which recommends big new road and rail projects for Melbourne’s east-west transport corridor.
As Budget Paper 1 states, "IA’s immediate priority is to complete a National Infrastructure Audit by the end of 2008, and develop an Infrastructure Priority List for COAG consideration in March 2009. It is also to develop best practice guidelines for Public Private Partnerships for COAG consideration by October 2008."
If Eddington gets all this done on time, he should throw in a set of steak knives as well. As NAB boss John Stewart pointed out to Lateline Business, getting the infrastructure actually built will take more than just improved COAG processes: it will mean cutting through the Gordian knot of red tape that bedevils major projects in States like NSW.
There’s another problem: $40 billion is actually not that much. Morris Iemma’s mooted light rail project alone is estimated to cost $12 billion; under Peter Beattie and Anna Bligh, the Queensland Government has committed to an infrastructure plan for $80 billion. ABN Amro has recently estimated the infrastructure shortfall in Australia at nearly $400 billion. Major infrastructure projects have a habit of racking up massive cost blow-outs – just ask Brisbane Lord-Mayor Campbell Newman, who is struggling to complete even one of his TransApex project’s five tunnels.
The deferment of infrastructure spending to the Building Infrastructure Fund means, as the ABC’s Tom Middleton observed last night, that only $75 million is being spent on transport infrastructure this year. The tens of billions won’t start flowing until the end of next year: in other words, just in time for the next election campaign.
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