We Can Avert a Crisis and Seize Opportunities

17 November 2005

By Rod Pearse
Chief Executive, Boral
Chairman, BCA Sustainable Growth Task Force

MUCH has been said recently about how Australia can lock in its economic success. The country's outstanding economic performance during the past decade has delivered enormous benefits. Substantial improvements in average incomes, high employment, low interest rates, low inflation and record highs in consumer and business confidence are just some of the tangible benefits.

But we have to make sure we have the basic tools to do the job of securing our economic future. Water. Power. Transport. These things shape our everyday lives and support our long-term economic growth.

So let's face facts. Unless we act now, in 20 years our main cities will not have enough water to meet population requirements, making the present water restrictions seem mild in comparison. Sydney, for example, will have, by 2025, close to a 40per cent gap between the volume of water it needs and the amount of water available. For Brisbane, the gap will be 33per cent and for the Gold Coast 23per cent. We won't be generating enough electricity to meet demand.

Unless we can invest up to $35billion in new energy supplies by 2020 and start to make that investment now, energy shortages will become commonplace, affecting our lifestyles as well as business. There will be double the number of trucks on our roads while our railways remain underused.

All our main urban areas are suffering from rapidly increasing road congestion and lost travel time. Without a significant shift in policy, total traffic congestion costs across the nation are estimated to rise to $30billion a year by 2020.

All this means less economic growth, which in turn means an inevitable depreciation of our high standards of living. Nobody wants a future like this.

Adequate water, electricity, roads, railways and other elements of economic infrastructure are fundamental to our future prosperity and to our quality of life. They can't be taken for granted. That's why Australians, and particularly federal and state governments, have to assess what we need for the future and decide how we are going to get it.

There is at present no overarching stocktake, vision or strategy that enables governments to quantify, prioritise and deliver Australia's future infrastructure needs. There's no co-ordination between federal, state and local governments, business and the wider community.

You may be surprised to learn that no uniform database exists to keep track of the state of Australia's $300billion infrastructure asset base. Infrastructure bottlenecks at our ports and rail links that are curtailing our export capacity are only one manifestation of the problem. The bottlenecks exist throughout our economy, in our ageing and inadequate water supplies, our stressed energy system and our transport networks.

The infrastructure designed and built to service a 1980s economy cannot keep up with 21st-century levels of supply and demand.

We need a new approach. Through the Business Council of Australia, Australia's biggest companies are suggesting solutions that aim to put planning and funding of infrastructure on a sustainable footing. The work that the BCA has released on the infrastructure issue demonstrates that the problems are not the result of high economic growth. Nor are they necessarily the consequence of a lack of investment.

The fundamental problem is the lack of frameworks and policies by governments and other decision-makers to plan for and co-ordinate future infrastructure needs. Many of our basic infrastructure assets cross state boundaries, and therefore require a national approach, or are interdependent on the policies and practices of other jurisdictions. By getting consistent policies and signals in place, the required investment in our infrastructure will be encouraged and better financed.

The council is calling on all levels of government in Australia -- federal, state and local -- to work together in a new way towards a national integrated infrastructure reform agenda covering urban and rural water, energy and greenhouse issues, freight and urban transport.

It is also calling for a reinvigorated Council of Australian Governments structure to develop such a plan, outlining clearly articulated principles, objectives and timetables.

Australians are tired of blame shifting between different levels of government. That's why the BCA is suggesting that through the COAG process, the infrastructure roles and responsibilities for each tier of government should be clearly defined and tracked. Progress should be measured by a comprehensive annual state-of-the-nation infrastructure report.

The dividend from such a reform is potentially huge. The initial estimate by Port Jackson Partners, the infrastructure analysts the BCA commissioned to examine the issue, is that co-ordinated infrastructure policies that sustain growth can lift Australia's economic output by about $16billion a year.

No doubt, reasons will be put forward why federal and state governments can't come together on this issue. But the opportunity (and danger) for our economy is too great for the issue to continue to be dominated by the failed approaches of the past.

Rod Pearse is chairman of the Business Council of Australia's Sustainable Growth Taskforce and chief executive of Boral Limited.




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