Australia has a pressing need for substantial infrastructure investment to support the nation’s long-term growth. With Australia's economic and social aspirations, it is evident that dramatic modifications to the current infrastructure short-term approach need to be made.
Under current arrangements, the Australian government does not have sufficient headroom on their budgets to fund the level of infrastructure required in the country. Addressing the constraints on the capacity of the government to invest in infrastructure is particularly important given that the demand for infrastructure is projected to increase significantly in the coming years.
Infrastructure planning requires a long term vision, much longer than the election cycle, to deliver quality outcomes that will support Australia’s social and economic development. Governments should move beyond the current four-year approach to budgeting to strengthen the current Infrastructure investment pipeline. I believe that the Australian government should strive for a long-term approach. Instead of fulfilling short term promises, they should plan and present projects with 10-year budgets and estimates of their prospective infrastructure outlays.
Additionally, we need to question why so many infrastructure projects have grossly incorrect forecasts? Whether it be, under-estimating the cost of major infrastructure projects or over-estimating the demand. Australians have plenty of experience with under-performing infrastructure projects. For starters, just in transport alone, there’s Sydney’s Lane Cove and Cross City tunnels that took its 'toll'. The real question behind these errors, is who's responsible?
Research explains that these errors are mainly due to promoters, investors and politicians deliberately under-estimating costs and over-estimating benefits. These parties have the motivation to do so, to obtain approval and funding for their projects. In turn, it's a case of not the best projects being implemented but the ones that look best on paper. This type of strategic misinterpretation should be reprimanded. On the brighter side, one way to address this problem is implementing a reference class forecasting approach - predicting the future, through looking at similar past situations and their outcomes.
Australian roads are becoming more congested everyday. Of course the community wants and expects high quality transport infrastructure though it is clear that the current road funding/taxing arrangements will struggle to meet Australia’s future transport challenges. This is why Australia must embrace bold reforms to find new opportunities to fund projects. Such as for the community to pay higher taxes to fund a higher spend by governments. Alternatively, the private sector could play a greater role in directly providing road services, although this would necessarily involve an expanded role for direct user charges. This is not an unfamiliar concept as many Australian drivers in Sydney, Melbourne and Brisbane are already being tolled. This method could promote the use of carpooling or public transport.
It is important to recognise that if the infrastructure shortfall is not addressed, it will have an adverse impact on Australia’s competitiveness. For example, the increasing costs of transport and logistics, utilities and social infrastructure services point to a shortfall in capacity. This will continue to impart the cost of living pressure on households and erode the competitiveness of Australian businesses.
Communication is key if Australia wants to move forward.
Sources:
Infrastructure Finance and Funding Reform Report
Changes Needed To Australia’s Infrastructure Approach
Why do the worst infrastructure projects get built?
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Under current arrangements, the Australian government does not have sufficient headroom on their budgets to fund the level of infrastructure required in the country. Addressing the constraints on the capacity of the government to invest in infrastructure is particularly important given that the demand for infrastructure is projected to increase significantly in the coming years.
Infrastructure planning requires a long term vision, much longer than the election cycle, to deliver quality outcomes that will support Australia’s social and economic development. Governments should move beyond the current four-year approach to budgeting to strengthen the current Infrastructure investment pipeline. I believe that the Australian government should strive for a long-term approach. Instead of fulfilling short term promises, they should plan and present projects with 10-year budgets and estimates of their prospective infrastructure outlays.
Additionally, we need to question why so many infrastructure projects have grossly incorrect forecasts? Whether it be, under-estimating the cost of major infrastructure projects or over-estimating the demand. Australians have plenty of experience with under-performing infrastructure projects. For starters, just in transport alone, there’s Sydney’s Lane Cove and Cross City tunnels that took its 'toll'. The real question behind these errors, is who's responsible?
Research explains that these errors are mainly due to promoters, investors and politicians deliberately under-estimating costs and over-estimating benefits. These parties have the motivation to do so, to obtain approval and funding for their projects. In turn, it's a case of not the best projects being implemented but the ones that look best on paper. This type of strategic misinterpretation should be reprimanded. On the brighter side, one way to address this problem is implementing a reference class forecasting approach - predicting the future, through looking at similar past situations and their outcomes.
Australian roads are becoming more congested everyday. Of course the community wants and expects high quality transport infrastructure though it is clear that the current road funding/taxing arrangements will struggle to meet Australia’s future transport challenges. This is why Australia must embrace bold reforms to find new opportunities to fund projects. Such as for the community to pay higher taxes to fund a higher spend by governments. Alternatively, the private sector could play a greater role in directly providing road services, although this would necessarily involve an expanded role for direct user charges. This is not an unfamiliar concept as many Australian drivers in Sydney, Melbourne and Brisbane are already being tolled. This method could promote the use of carpooling or public transport.
It is important to recognise that if the infrastructure shortfall is not addressed, it will have an adverse impact on Australia’s competitiveness. For example, the increasing costs of transport and logistics, utilities and social infrastructure services point to a shortfall in capacity. This will continue to impart the cost of living pressure on households and erode the competitiveness of Australian businesses.
Communication is key if Australia wants to move forward.
Sources:
Infrastructure Finance and Funding Reform Report
Changes Needed To Australia’s Infrastructure Approach
Why do the worst infrastructure projects get built?