The key challenge in continuing economic growth is how we manage the transition from the peak of the resources boom, and pulling out all stops to deliver on the investment pipeline is critical to this task.
Managing the economic transition
In August 2013 the Business Council of Australia released a report, Securing Investment in Australia’s Future: Managing the Economic Transition, which assessed the economic implications of a declining investment pipeline and pointed to the things governments and companies need to do to secure both current and prospective investment opportunities.
Securing Investment in Australia’s Future: Report of the BCA Project Costs Task Force, which was released concurrently, presented the findings of an internal BCA task force that was established to undertake a detailed investigation into the drivers of the costs of Australian investment projects. following the BCA’s 2012 Pipeline or Pipe Dream study.
Together, these reports found that three key challenges lie ahead:
we must secure investment projects already underway at lower costs
we should aim to secure the commencement of viable prospective projects in the pipeline that are not yet committed
we should facilitate new sources of growth and bring on the next wave of investment, including high-quality public infrastructure projects.
To do this we need to improve the competitive environment in Australia and reduce project costs by ensuring access to skilled labour and improving project management skills and the capacity of managers to make productivity enhancing decisions; improving the efficiency of Australia’s project approvals processes; and implementing a better workplace relations system more conducive to good project performance and productivity growth. These were the main findings of the BCA Project Costs Task Force.
Infrastructure funding and financing
In November 2013 the BCA released the third in the Securing Investment in Australia’s Future series, which was a report outlining eight areas for reform of funding and financing to secure future investment in roads, railways, ports, airports, water, communications and energy services.
The report calls for a range of policies to be adopted, including:
- bringing forward a rolling pipeline of more public infrastructure projects which are attractive for the private sector to invest in
- for public projects, new funding streams to be tapped by growing the application of user charges and by selling mature public assets and recycling the proceeds
- governments to work together and with the private sector to design public infrastructure projects with private sector investment in mind, by sharing the risk of regulatory approvals and financial returns
- continuing the shift from government provision of infrastructure to a market-based approach where infrastructure businesses decide the planning and provision of infrastructure services within supportive policy frameworks.