Josh GordonJuly 7, 2011
Victoria is asleep at the wheel on infrastructure projects.
PETER Ryan might be advised to do his homework before shooting off at the mouth.
The state government is smarting from revelations it failed to submit a single proposal to Infrastructure Australia for independent scrutiny. Since January, the federal authority has received 59 submissions from all states and territories except Victoria.
Fair or not, the news, buried in an appendix of Infrastructure Australia’s annual report to state and federal governments, seemed to reinforce claims that the Baillieu government has been asleep at the wheel for the past seven months. Defending his government against such charges, acting Premier Ryan this week suggested there was little point submitting Victoria’s policy proposals because the major projects umpire had no money. ”We haven’t snubbed the Infrastructure Australia process,” Ryan said. ”In fact, there is no money in Infrastructure Australia at the present time. They’ve run out of dough.”
Actually, Infrastructure Australia never had any ”dough” to run out of. Ryan is either poorly informed, or has deliberately misrepresented Infrastructure Australia’s role to squirm out of a tight spot. His comments certainly raised a few eyebrows in Canberra, with one senior federal source describing them as ”breathtakingly ignorant”. The statutory authority was set up not to hand out money, but to make recommendations to the federal government.
As Infrastructure Australia’s Michael Deegan notes, his organisation has no control over federal government finances. ”We advise, governments decide,” Deegan told The Age.
A generous interpretation of Ryan’s comments is that he was referring to the federal government’s Building Australia Fund, which has, indeed, dried up. State and federal budgets are under pressure and this has made funding major projects more challenging at the very time Australia badly needs to lift its flagging productivity performance, which has fallen to a level below the average for the developed world.
Depressingly true to form, Australian governments are now squabbling and pointing fingers. Infrastructure Australia chairman Sir Rod Eddington has had enough.
Eddington this week warned that infrastructure planning and delivery in Australia had been ”frustratingly slow”. The fact that there is no cash in the Building Australia Fund does not mean it is pointless handing in plans for major projects. The government is wrong to suggest the fund represents the only pool of money.
There is also something called the federal budget. In this year’s budget, for example, the federal government provided $750 million in new money to help duplicate unfinished sections of the Pacific Highway. Victoria, on the other hand, was unfairly denied previously promised funding for the regional rail project.
By extension, the state government’s logic would suggest there is no point handing in proposals for major projects for independent scrutiny until the Building Australia Fund is replenished. This could take years.
Ryan and his colleagues would be wise to remember the plight faced by the former New South Wales Labor government, which was widely criticised because its Infrastructure Australia submissions were either bad or non-existent. One would hope that the state government’s failure to respond to Infrastructure Australia’s request for submissions reflects diligence and prudence rather than inaction.
As Ryan notes, it is no good submitting major projects in a ”Mickey Mouse” fashion. Better to take the time to get them right to avoid the mistakes of the past. A decision by the Brumby government to build the Frankston bypass, also known as Peninsula Link, provides a case in point. A recent report by Auditor-General Des Pearson raises doubts about whether the project stacks up, with the benefits potentially overstated, costs ignored, and questions about the wisdom of using a public-private partnership to fund it.
Nevertheless, the Baillieu government now has just months to get its act together or Infrastructure Australia will be unable to assess its projects until 2013, by which time it really will be too late. Instead of squabbling, Australia needs to quickly reassess its approach to infrastructure funding. As Eddington points out: ”We particularly need to bridge the gap between expectations and reality … between the unrealistic notion that governments should fund more infrastructure, while at the same time cutting taxes, reducing debt, avoiding asset sales, and opposing the application of user charges.”
In other words, time for a bit of mature debate.
Josh Gordon is state political editor.