What’s happened to Albanese’s infrastructure agenda? SMH - Anthony Galloway - May 14, 2023
Anthony Albanese is fond of telling people he is an infrastructure nerd.
So much so that ahead of the last election, he singled out infrastructure when talking about his five key priorities for growing the economy.
“The fifth pillar of Labor’s platform for growth is one that is close to my heart: infrastructure,” the then-opposition leader said in a speech on March 9 last year. “Anyone who knows me, knows I am an infrastructure nerd.”
For Anthony Albanese and Infrastructure Minister Catherine King, the times
haven’t suited a big infrastructure agenda
Almost 12 months and two budgets into the life of the Albanese
government, transport infrastructure has not been a big theme for the prime
minister. In fact, he rarely talked about it in the lead-up to last week’s
budget.
Albanese, who served six years as infrastructure minister in the Rudd and Gillard governments, has spent his political career championing projects such as Sydney’s second airport and a high-speed rail network between Brisbane and Melbourne.
The budget shows infrastructure funding remaining
about $16 billion over the next two years but -
1. capacity constraints,
2. the rising cost of building projects; and
3. the debt bill facing Commonwealth and state governments,
have resulted in a planning pause.
Victorian Premier Daniel Andrews has delayed two of his state’s most high-profile transport projects – Melbourne Airport Rail and Geelong Fast Rail – while the NSW government last year mothballed several big projects including the Beaches Link and the second stage of the Parramatta light rail.
The uncertainty sparked federal Infrastructure Minister Catherine King to this month order a snap 90-day review of $120 billion worth of projects over the next 10 years.
She promised the $120 billion would be kept on a rolling 10-year basis, but said each project would be assessed to determine whether it was “fit for purpose”.
The government quickly came under criticism from the opposition for excluding “election commitments” – such as the Commonwealth’s $2.2 billion commitment for Victoria’s Suburban Rail Loop – from the review. This is despite the project not yet receiving approval from Infrastructure Australia.
Melbourne Airport Rail will be put under the microscope, despite being backed up by a business case and early construction works already beginning.
Grattan Institute transport and cities program director Marion Terrill says all election promises should be subject to the review.
“It’s quite common for politicians to make promises in the heat of an election campaign,” she says, adding that there should be some kind of process that then assesses whether the projects are viable.
Terrill says the review – which will be carried out by former public servants and infrastructure experts Reece Waldock, Clare Gardiner-Barnes and Mike Mrdak – is worthwhile because of the capacity constraints in the industry and the rising cost of building the projects.
“Now is not a great time to be adding to the pipeline because there’s these terrible capacity constraints in the market,” she says.
Infrastructure Federal funding for every Victorian infrastructure project - bar Rail Loop - in doubt
The opposition’s infrastructure spokeswoman Bridget McKenzie says there are now questions about the independence of the review because of the decision to exempt election promises.
“By excluding election commitments from the review, the assumption from the government would be that they are, by definition, meritorious. The facts would suggest otherwise,” she says. “When a premier has a pet project, that gets preference over projects that have been funded, requested and needed in communities and suburbs right around the country.”
A spokeswoman for King says it is important that the industry has confidence and certainty that the nation’s infrastructure projects have been “more robustly costed and based on realistic delivery time frames”.
“This is critical in helping industry plan appropriately for projects across the nation,” she says.
“Projects under construction and those that were Commonwealth election commitments will not be part of the review.”
‘No more roundabouts’
Labor repeatedly criticised the former Coalition government for spending money on areas which should have been the purview of local and state governments, such as new car parks at railway stations in marginal seats.
Terrill says there needs to be a more rigorous approval process that restricts Commonwealth spending to nationally significant infrastructure. “No more roundabouts, overpasses and car parks.”
Adrian Dwyer, the chief executive of Infrastructure Partnerships Australia, an industry think tank, says the Commonwealth needs to focus on the “bigger things that move the national economy”.
The 2023-24 federal budget has delivered the first surplus in 15 years, with a focus on cost-of-living measures.
“Major connections – be they energy, telecommunications, water transport,” he says.
He says he wants the Commonwealth review to lead to certainty about what projects are getting built over the next 10 years.
“If there are reallocations or a change in timing, that’s fine ... let’s just then make sure we get on with delivering,” Dwyer says. “Because this is in the context of a really big energy transition, some pretty substantial migration numbers in the budget – for which there’s going to have to be housing, social infrastructure, delivered to support a growing population.”
Back to normal
Some commentators suggested amid the COVID-19 pandemic that transport infrastructure would need a total rethink because of a lower population growth and the death of the daily commute.
Since then, many workers are returning to the office and a record 400,000 migrants will enter the country this year.
“The death of freeways and the death of offices was a bit premature,” Dwyer says. “We’re reverting to mean and in some instances, we now have infrastructure that is at certain times operating above its pre-COVID capacity.”
Dwyer says he hopes infrastructure spending isn’t being reduced on the basis that demand went away during the pandemic.
“This is the problem with looking at too small of a sample of data over too short of time,” he says.
“It would be it would be pretty short-sighted to respond to COVID by having major diversions in the big infrastructure we need. There’s no evidence for that.”
Where to now?
Companies in the transport and construction sector are in a holding pattern until the review reports back to the government in August.
Adding to the pressures is the need to rewire the energy grid, which will suck even more workers out of transport projects.
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At the same time, the government has a bill before parliament to reorganise Infrastructure Australia – the at-arms-length body that Albanese created as infrastructure minister – to make it concentrate more on what major projects are required for the nation.
In the longer term, the government is still committed to high-speed rail, and will soon select board members for its new High Speed Rail Authority. It has already allocated $500 million for planning, early works and corridor acquisition for the Sydney-Newcastle section of the mammoth project.
There are mixed views among infrastructure experts on whether a national bullet train will ever be viable in Australia, considering how spread out the populations are between Brisbane, Sydney and Melbourne.
A 2013 business case, commissioned by Albanese when he was infrastructure minister, found the railway would take 45 years to complete and cost $130 billion, but that it would return more than $2 for every $1 of investment.
Terrill says that study drastically overstated the benefits of the project by using a 4 per cent discount rate – instead of the 7 per cent rate recommended by Infrastructure Australia.
A discount rate is used to put present and future costs and benefits on an equal footing, and choosing a lower rate has a significant impact on the cost-benefit analysis of a project.
Dwyer says he would love to see high-speed rail, but it is difficult to see how it could be built in the context of the soaring cost of the National Disability Insurance Scheme, aged care, health and nuclear submarines.
“In the near term, it’s pretty hard to see how a multi-hundred-billion dollar investment in high-speed rail can make its way to the top of that investment priority list.”