Road to managing infrastructure

This opinion article by Business Council Infrastructure Committee Chair and WSP CEO Guy Templeton was published in the Australian on Wednesday September 11 2019 

Why is it that we commonly refer to the health system, the education system and the justice system but never the infrastructure system?

With more than $300 billion of infrastructure spending committed by commonwealth and state governments, we are selling ourselves short if we don’t manage infrastructure as a well-functioning system, and not a collection of projects.

This means infrastructure is well-planned and integrated and that the projects prioritised for public funding are independently assessed to provide the highest value for the community. It also means lifting the capacity of the infrastructure sector to deliver new projects efficiently and overcome bottlenecks in skilled labour and materials supply.

The infrastructure system doesn’t operate in isolation. It needs to interact seamlessly with the planning system and with systems for skills development, skilled migration, materials supply, security, and so on. It also competes for resources with other large private capital projects.

The Prime Minister last week highlighted the increasing costs of some projects due to cost pressures and concerns we are starting to hit our head on the ceiling in terms of getting infrastructure work under way. Every part of the system must be in sync if we are to maximise infrastructure’s contribution to the economy and get better value for taxpayers’ dollars.

This will provide the best hope for communities suffering congestion-fatigue and businesses struggling to serve their customers due to inadequate infrastructure.

So what do we need to do?

  • Stable long-term infrastructure funding. We expect budget outlays for health, education and defence to be relatively stable. Yet in infrastructure we fall into a boom/bust cycle, which can lead to higher costs and unproductive delays as parts of the system ramp up, then restructure as budget allocations surge, then recede.
  • Target incremental spending in parts of the market that have the capacity to respond. This includes accelerating maintenance spending, and bringing forward smaller capital projects where capacity exists, including social infrastructure projects.
  • Ramping up skills. The vocational education system needs to produce the skills required to deliver planned infrastructure investment. Skilled migration settings need to more dynamically address critical skill shortages.
  • Smarter procurement. Procurement processes should be reviewed to seek procedural simplicity and greater transparency for bidders. Risk allocation between parties delivering infrastructure needs to be more thoughtfully addressed.
  • Removing bottlenecks in materials supply. Unblocking approvals for new or expanded quarries is needed to ensure enough concrete in the right places at the right price. A more balanced stance on steel supply between domestic and imported materials would improve availability and pricing.
  • Robust and efficient project approvals. Asking all jurisdictions to report immediately on development approval times and identify opportunities to speed up processes would reduce red tape and wasted time and resources. The Business Council of Australia’s best practice model for project approvals is a useful guide.

Also, fully implement the one-stop-shop model to remove duplication between the common­wealth and states, without lessen­ing environmental standards.

  • Better enabling the private sector to invest. Canadian teachers, via their pension funds, own more of Australian infrastructure than Australian teachers. What are we missing? We need to set up our infrastructure system with an objective of unlocking Australia’s vast pools of investable funds.

It is in all our interests to have a high-performing infrastructure system that improves our communities and creates economic growth. Doing so requires stable budgets and better integration and performance of all elements across the system.

Guy Templeton chairs the Business Council of Australia’s Infrastructure and Growth Committee and is CEO of WSP in Australia and New Zealand