The $120 billion federal program for infrastructure investment over the next decade will be subject to an independent review to examine if planned projects can match the government’s capacity to spend using the metric of ‘national significance’.
The need for a comprehensive review was spurred by the number of pipeline projects, which jumped from 150 to 800 under the former Coalition government.
Now, Labor says many of those 800 projects do not have adequate funding or resources to be delivered. About 160 projects were only allocated a commitment of $5 million or less, and many projects were not started.
In a statement, minister for infrastructure, transport, regional development and local government Catherine King assured industry stakeholders that any existing projects that were under construction would proceed for the “medium term”.
“This review will put confidence back into the investment pipeline, benefitting the states and territories and the communities we all serve,” King said.
“A properly functioning infrastructure investment pipeline means projects can be delivered with more confidence about timeframes and budgets.”
The 90-day review was endorsed by state and territory governments at National Cabinet last week, with consultation of local governments also committed to as part of the process.
It will be led by land and transport infrastructure experts Reece Waldock, Clare Gardiner-Barnes and former mandarin Mike Mrdak.
The minister stressed that the objective of the national infrastructure investment program was to have a pipeline of works that were capable of being built and delivering a ‘lasting benefit’ to Australia.
But the Australian Constructors Association has raised concerns that the revision could lead to “significant cancellations and deferrals” of state infrastructure projects.
Association CEO Jon Davies warned infrastructure delivery was not like a tap, and unwinding projects would come at a cost.
“It can’t simply be turned on and off,” Davies said.
“Developing teams and capabilities that are equipped to bid and deliver large projects can take years, and once assembled, it is difficult to reallocate them, particularly if there is a widespread deferral of projects.”
According to Davies, with construction accounting for 26% of all business insolvencies in Australia, it was critical for the review to consult closely with industry to avoid further pain to rising costs for material and workforce labour.
“The implications of these failures on the wider economy are huge,” Davies said.
“As contractors mitigate risk by subcontracting works, any relief provided at a head contract level will similarly flow through the supply chain feeding into areas of the market beyond government infrastructure that have no other opportunity for support,” he said.
Meanwhile, Engineers Australia’s Romilly Madew welcomed the opportunity to ensure Australia’s infrastructure investment was targeted to ensure the best value for money. She called for relocation of government money aligned to policy priorities such as sustainability and emissions reductions.
“Over the past two years, engineering vacancies have grown by 80% nationally. A significant contributor to this increase is infrastructure projects,” Madew said.
“When reviewing the pipeline, it will be important to give due consideration to changing consumer behaviour and economic priorities.
“Fiscal policy needs to balance tackling the cost-of-living crisis currently being experienced with investment targeted to support changing societal needs,” she said.
Madew also pointed to other policy considerations that would impact national transport infrastructure including natural disasters, population growth, space limitations, as well as national net zero emissions targets.
“Collaborative, long-term planning of infrastructure is vital to economic prosperity and the wellbeing of the community,” she said.
The new approach to Australia’s infrastructure planning will be to give all levels of government time to consider whether projects align with national priorities, as well as have a say in cost and deliverability assessments.
King added that the new government planned to spend taxpayer funds in accordance with APS values and longer-term sustainable spending based on the national interest.
“Easing the pressure on the construction sector will help drive inflation lower and deliver more predictable investment and delivery outcomes from governments,” King said.
“Communities will benefit from national significant infrastructure with shorter and safer travel, more liveable cities, suburbs and regions, while the economy benefits from the certainty brought by a smoother delivery of investment matched to project timelines.”
The government has described hundreds of unsustainable pipeline infrastructure projects as “fiscal time bombs” that it claims undermines economic and social productivity and prosperity. Failing to revise the pipeline would be irresponsible, the minister said.
“It is time to clean up the mess left by the Liberals and Nationals clogging the pipeline with ‘press release projects’ — announced but unable to be delivered,” King added.
:
‘Measuring success differently’: New Zealand budget’s shift in economic thinking
