Official Summit Report Proposes Novel Solutions to Australia’s $150 Billion Infrastructure Hole
ISCA Chairman, David Singleton, is one of the lead authors of the book entitled Infrastructure for 21st Century Australian Cities launched on Monday.
Mum and Dad investors, superannuation policy changes and even crowdfunding are among the solutions proposed by an esteemed and independent group of 43 analysts who authored the official report of the National Infrastructure and Cities Summit, a 243-page book entitled Infrastructure for 21st Century Australian Cities, launched by the Federal Environment Minister, The Hon Greg Hunt at RMIT's Storey Hall on Monday.
Mega-projects are often on the nose, with experts saying they are costly and political grandstanding exercises that too often fail to match their promises in terms of real community needs. The report covers detailed analyses of Australia's current and future positions in terms of water, transport, freight and liveability, through social and community infrastructure, to governance and funding.
The surprise elements in the report suggest an integrated raft of changes supporting the following initiatives:
- Increased investment opportunities in local infrastructure by people through means such as superannuation, including changes to policies so that self-managed funds can be invested in local projects
- Supporting the process of credit enhancement of major infrastructure projects through schemes like the United States' Transportation Infrastructure Finance and Innovation Act (TIFIA), which essentially provides a federal loan guarantee fund to protect investors.
- The establishment of Metropolitan Planning Organisations, similar to those common in the United States; the MPOs would include local and Federal Government representatives, in partnership with the state government and the wider community, to drive priorities and make submissions for federal financial assistance.
The launch of the report is being hosted by Prof Paul Gough, Pro Vice-Chancellor and Vice President of RMIT University's College of Design and Social Context, with presentations by Prof John Stanley, Institute of Transport & Logistics Studies, University of Sydney and Chairman, ADC Forum, Mr Robert Nicholson, Partner at Herbert Smith Freehills, and Mr David Singleton, former head of ARUP and Chairman of the Infrastructure Sustainability Council of Australia.
Findings from the book detail how Australia's $150 billion shortfall in infrastructure spending over successive governments is now dragging the national economy by about 0.3% per annum, and impacting not just on productivity but on social inclusion and community. The impacts of inadequate infrastructure investment can be seen in congested public transport services and roads, lagged provision of social infrastructure and services in our fast growing outer suburbs, housing supply problems linked to poor accessibility and deteriorating roads in regional and rural areas.
Spending on essential infrastructure up to 2025 will have to double against the comparable period to 2013, says the report.
In Australia, the big question is how to fund it, and here the report diverges from traditional sources to offer a novel solution that focuses on opening up localised infrastructure investment opportunities, through people investing their own super in projects and areas of their own choosing, including their local community.
Mr David Singleton, one of the lead authors, says the time is ripe to develop new thinking about infrastructure projects that invokes community consultation processes to identify potential projects, to minimise political risk (through increased acceptance) and to maximise the chance of successful financing (due to lower risk around usage).
Mr Singleton says "We need to redevelop financing structures designed to achieve an efficient cost of capital through maximising community participation and broadening sources of funding, and there is no reason why this can't be sourced from the direct needs and wants of local communities and local investors, extending to self-managed super funds and even crowdfunding. We need governments at all levels to help local investors drive their own local agendas. We need to facilitate community engagement with infrastructure provision by building a culture - and a reality - of community ownership."
In support of this, the report also looks at how to improve the treatment of risk in infrastructure financing. Mr Robert Nicholson, partner at Herbert Smith Freehills focuses on the capital enhancement issues at stake.
"Everyone understands the level of funds available to invest in infrastructure but what isn't understood is the fact that conventional third party revenue streams won't support the capital costs of the projects we need, requiring government support," Mr Nicholson said.
"The challenge for government is to consider new revenue sources (some of which are unpopular) but there is also a big opportunity to help reduce finance costs. Debt financing of Greenfield projects is very costly and there are number of ways in which governments can help reduce financing costs thereby driving their funding dollar further. We need to move in this direction. Other countries have been doing it for years."
Professor John Stanley, Chair of ADC Forum, said the report underlines the national significance of our cities and the need for improved city planning.
"Our long term city plans seldom run long term because they lack bipartisan support," said Professor Stanley. "It is time to open up our planning processes to greater community engagement, and for local government to be an equal partner with the state in planning and infrastructure priority setting. Canberra also needs to be at the table, because of the economic significance of our cities. Metropolitan Planning Organisations can be the way to drive this change," said Professor Stanley.