Infrastructure Australia has been all but derailed

Bookmark and Share Governance & Service Provision | Richard Allsop
The Australian 22nd February, 2011

The Gillard government's confirmation that it will contribute $2.1 billion to building the Epping-Parramatta railway line in suburban Sydney will probably not help Labor in NSW, but it has delivered a fatal blow to the credibility of Infrastructure Australia.

Set up, with great fanfare, to "develop a strategic blueprint for our nation's infrastructure needs", the whole rationale of Infrastructure Australia was that it would be national, scientific and impartial. A body of experts would weigh the merits of competing infrastructure proposals from across the nation and pick those that would deliver the greatest benefit for the taxpayer dollar.

Yet, less than three years after its establishment, a combination of irrelevance and incompetence has Infrastructure Australia on the verge of joining the growing list of reforms Kevin Rudd failed to deliver.

By signing off on the commonwealth contribution to the construction of Epping-Parramatta, federal Infrastructure and Transport Minister Anthony Albanese has removed any pretext of national infrastructure funding decisions being taken on the basis of economic analysis.

When Julia Gillard made the original announcement about funding the project in the federal campaign, not only had Infrastructure Australia not recommended spending even one cent on this project, it had not even been considered a strong enough proposal to form part of the NSW government submission seeking federal largesse.

The best that Albanese could come up with, when queried as to why he was ignoring his own process, was the lame declaration that he had been discussing the proposal with chairman Rod Eddington for a "long period of time".

Last August, the obvious motivation for pursuing the project was an attempt by federal Labor to save Bennelong; now it is to save a couple of seats at next month's state poll. Just as it did not work then, it probably won't work now.

However, the commitment of the funds does present a potential conundrum for the next NSW government.

Barry O'Farrell may have a difficult job negotiating with the commonwealth to divert the funding to a more worthy project.

A similar issue has arisen in Victoria although, in this instance, Infrastructure Australia itself, not its political masters, needs to cop much of the blame for the problem the Baillieu government has inherited.

Based on Infrastructure Australia advice, the Rudd government committed $3.2bn, the largest chunk of its initial round of funding from the Building Australia Fund, to Melbourne's regional rail link. This project will see new track built from Werribee in the city's outer southwest to the edge of the CBD, thus removing regional rail services from crowded suburban tracks.

Victoria's new Liberal Transport Minister, Terry Mulder, recently revealed the true cost of the project was actually $880 million more than the previous Labor government, or Infrastructure Australia, had calculated. Somehow, the original costing had overlooked items, including a couple of rail overpasses, and underestimated the cost of signalling works by $400m.

At the same time that Mulder made these facts public, Albanese announced that he needed to defer $500m in expenditure on the project, mainly because of the need for post-flood re-prioritisation. This might sound reasonable if Albanese had not already clawed back $400m last November, well before the flood rationale was available.

In Victoria, Mulder has explained that his newly inherited bureaucrats were not at fault because they had been given insufficient time to cost the plan accurately, before the previous government went public with it.

While the Brumby government is rightly being held to account for this shemozzle, it also casts significant doubt on the ability of Infrastructure Australia to scrutinise state governments' plans rigorously before cheerfully doling out the commonwealth cash.

When this project was originally assessed against competitors, there were grumbles in other states that Victoria was always likely to have the inside running at Infrastructure Australia, as its $38bn transport plan was based on a report undertaken by Eddington before he became the chairman of Infrastructure Australia.

There also have been concerns expressed that the body was focusing too much on urban public transport, traditionally a state responsibility, and not enough on funding projects that were designed to boost the nation's export performance.

The fact Infrastructure Australia did not spot the holes in the Victorian plan certainly raises question about how rigorous its assessments were.

Maybe, like its Victorian counterparts, it was given insufficient time by its political masters to do a proper analysis.

And certainly, under Gillard's prime ministership, it is the politicians who have to take the lion's share of the responsibility for undermining Kevin Rudd's Infrastructure Australia.

As well as Epping-Parramatta, also in the federal election campaign, Labor pledged $742m to build a railway to the Brisbane bayside suburb of Redcliffe, a project neither recommended by Infrastructure Australia nor on the Queensland government's priority list.

In fact, even while Rudd was still prime minister, the government had begun ignoring Infrastructure Australia.

Last year, the Australian National Audit Office released a damning report on the allocation of infrastructure spending, pointing out that six rail, road and port infrastructure projects announced in the 2009-10 budget, as well as two rail projects funded in the 2010-11 budget, had not made Infrastructure Australia's short list of priority projects.

Four of the projects had been evaluated and found "not sufficiently developed to meet the criteria for recommendation as ready to proceed".

That capricious record, and the lack of transparency, creates serious problems for incoming state governments as they try to assess the real infrastructure priorities in their jurisdictions. They can only guess what type of projects may gain, or retain, commonwealth funding.

It is a long way from the promised "strategic blueprint", and can lead to only more questioning of whether it is worth the government persevering with Infrastructure Australia.