Politicians Fiddle Over Ports, Roads, Rail, Power and Gas

17 November 2005

By Rod Sims
Director, Port Jackson Partners Limited
Author, Reforming and Restoring Australia’s Infrastructure for the Business Council of Australia

The infrastructure debate started in promising fashion. Pushed along by the queues of ships waiting to load coal at Queensland’s Dalrymple Bay port, the debate sought to address two questions.

First, is Australia’s existing infrastructure – ports, roads, rail, electricity and gas facilities and rivers and dams – capable of coping with high economic growth without running into bottlenecks?

Second, and most important, would further reform of the policy and planning processes for infrastructure boost the nation’s productivity?

They remain the right questions.

In the past few months, however, the debate has become sidetracked by two issues.

First, various governments have maintained that our infrastructure has not reached a crisis point. It is as if we can pay serious attention to the nation’s infrastructure only if it stumbles on this high hurdle. Many of our cities are imposing water restrictions to conserve limited water supplies.

Most of our cities face growing traffic jams. Many of our rail lines, so important to moving freight, are in poor condition. Our rivers and groundwater systems are under great stress. And official reports have identified many impediments to investment in our electricity and gas sectors.

We can all have views on this state of affairs which, if not a crisis, at least should be a source of serious concern. Many Australians, including former NSW Premier Bob Carr, believe these problems require us to limit Australia’s population and economic growth.

Second, the debate is being increasingly dominated by the voices of government regulators and those infrastructure providers that they regulate. The regulators and the owners of powerlines and gas pipelines and even Telstra have much to dispute. Regulatory rulings can determine what profits are made from the businesses and what customers pay. The regulators and the regulated would not be doing their job if they did not argue strongly and loudly.

However, there are many more issues than the debate over how to set the regulated prices that infrastructure owners can charge. The serious risk is that the infrastructure debate will be left to the regulators and those they regulate. If this happens, the infrastructure problems facing Australia will not be fixed.

Indeed, the problems facing our land transport and electricity sectors, and in our urban and rural water supplies need to be addressed through the actions of the Council of Australian Governments.

In land transport, governments need to stop favouring large trucks over trains to carry freight and get rid of state differences that get in the way of a national freight market. Only governments can create the environment in which we can improve public transport. And only governments can tackle urban road congestion by charging for using the city roads rather than relying on motorists to vary their travel plans to avoid traffic jams.

In electricity, we need action from governments to overcome the impediments that are discouraging the investment needed in our transmission system and to encourage a well-functioning financial market for inter-state trading. And only governments can rationalise their own disparate and confusing policies for curbing greenhouse gas emissions.

For water, it is governments that must provide the environment to facilitate the investment needed to make sure our cities continue to be supplied. It is governments that can see to it that urban water prices reflect the scarcity value of water. And, outside the cities, only governments can set and meet clear targets for high reliability in all of our irrigation areas.

Across all sectors, various government planning processes need to become better integrated. Commonwealth and state funding and other responsibilities overlap in ways that can inhibit sound urban and broader infrastructure development.

COAG is the natural forum for these issues. They cross state boundaries or are problems common to all of our cities. In our federated system of multiple decision-makers, these issues will not be advanced unless they are dealt with and monitored at the highest level.

Governments should not wait to be confronted by a crisis before they act on issues that otherwise limit Australia’s growth. And they should not be too distracted by the fallout from the determinations of regulators that affect the profits of specific companies.

The wider Australian community has a key stake in this debate. While its voice may not be as strident on any particular issue, it should be what governments respond to.



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