2013_IA_COAG_Report_National_Infrastructure_Plan_LR.pdf

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NATIONALINfrAsTrucTurePLAN

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Disclaimr

Inrastructure Australia has taken due care in preparing this report. However,noting that data used or the analyses has been provided by third parties,the Commonwealth gives no warranty to the accuracy, reliability, tness orpurpose, or otherwise o the inormation. To the extent permitted by law, the

Commonwealth disclaims liability to any person or organisation in respect oanything done, or omitted to be done, in reliance upon inormation containedin this report.

Published byInrastructure AustraliaGPO Box 594, Canberra ACT 2601, AustraliaTelephone (international) +61 2 8114 1900www.inrastructureaustralia.gov.au

ISBN 978-1-921769-71-9

Commonwealth o Australia June 2013

Frot covr hoto: TheOverland between Melbourne and Adelaide.

Isid covr hoto: Brisbane City at night, Queensland.

Back covr hoto: Hobart City on a clear winter day, Tasmania.


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cONTeNTs

01 Chairmans message 2

02 aUsTraLia: geT reaDY 4

03 Big ChaLLenges neeD BOLD reFOrms 12

04 COnneCTeD gLOBaL CiTies 28

05 OUTWarD-FOCUseD naTiOnaL POrTs anD FreighT neTWOrK 42

06 an aDaPTaBLe, sUsTainaBLe WaTer sUPPLY 56

07 aDVanCing The naTiOnaL energY marKeT 64

08 PrODUCTiVe, COnneCTeD regiOns 72

09 essenTiaL inDigenOUs inFrasTrUCTUre 82

10 reFOrms anD aCTiOns aT a gLanCe 92

AppenDIx A naTiOnaL inFrasTrUCTUre PriOriTY LisT 96

AppenDIx B regiOnaL inFrasTrUCTUre FUnD 128

AppenDIx C Tax inCenTiVe FOr naTiOnaLLY signiFiCanT inFrasTrUCTUre 130

AppenDIx D reCYCLing CaPiTaL 131

AppenDIx e naTiOnaL inFrasTrUCTUre COnsTrUCTiOn sCheDULe 132

Contents


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It is my pleasure to present the national inrastructure plan.

Australia and its regions are undergoing proound change. Weace challenges not seen or contemplated by our predecessors.

By 2020, Asias economic output will be larger than Europes

and North Americas combined.1 This gives us enviable accessto dynamic emerging markets, and it will accelerate changesalready occurring in our economy, our environment and in theway we live.

A rapidly developing Asia will generate new opportunities to litour standards o living as demand grows or Australias mineraland agricultural exports.

At the same time, Australia will ace constraints on public spending,a changing climate, and a growing, ageing population. Within 50years our population will double;2 beore then, we will have halas many workers or every person over 65 years old as we do now.And there is a deep disconnect between the inrastructure we want,

and the inrastructure we are prepared to pay or.The national inrastructure plan outlines the major inrastructurereorms that are needed to lay the oundations or a moreproductive Australia over the next 50 years.

Productivity growth improves peoples lives in many ways, litingliving standards across the economy as our population ages, andcreating wealth and wellbeing. To capitalise on our productivecapacity, we must make the best use o the inrastructure wehave, and invest in the right inrastructure, at the right time.

The national inrastructure plan is not a long list outlining 50years worth o projects. It is a plan ocused on the changes weshould make to the way in which we use, invest in and delivereconomic inrastructure.

It is reorms, oten simple and sensible in their ideology butchallenging in their execution, which are our priorities in layingthe oundations or a more productive Australia over the next50 years.

Some o these reorms have been around or many years. Forexample, the idea o creating one national reight network thatwould allow reight to be transported eciently across borders andoperate to a single set o rules was rst proposed in 1898, around115 years ago. It is time we got on with delivering them.

We know that Australia cannot aord to have a short termocus. We cannot continue to operate with a business as usualmentality delivering small, incremental changes or we will missthe opportunities presented to us as we enter the Asian Century.

In doing so, there should be no place or those who resistchange out o sel-interest; we should instead look to those whowill lead Australia to greater prosperity.

Big national challenges need bold reorms. Reorm meanschange. We need to make changes in the way we approachinrastructure investment, rom our Government approvalprocesses to identiying how we pay or inrastructure.

CHAiRMAnsmessAge

Sir Rod Eddington AO, Chairman, Inrastructure Australia.


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This plan thereore is in-step with the work o other advisers suchas the Productivity Commission, the Business Council o Australia,and the Council o Australian Governments Reorm Council, whohave each called or big reorms to achieve big aspirations or ourcountry: productivity, economic growth, and social wellbeing.

Focusing on the right reorms will help us to use existinginrastructure more eciently, choose the best projects, improvethe way projects are unded and used, and involve privateplayers more in the ownership and management o traditionallypublicly owned assets by recycling capital to und newinrastructure. This will mean expanding the role o the privatesector and a more ocused role or Governments.

These reorms, however challenging, will leave Australiansbetter o with more capable Governments, better plannedinrastructure that meets their needs, and more sustainable,aordable transport options.

This national inrastructure plan sets the direction or Australias

inrastructure sector. It acknowledges that we must harness thenext wave o unding reorm, develop a national inrastructuremarket, ensure better use o existing networks, und newinvestment and improve service delivery.

It sets out our consideration o priority investment projects as wellas priority assets that could be made available to recycle capital and, noting that the value o proposed priority investments

this year is more than $80 billion,3 while the potential value oassets that can be recycled is at least $100 billion,4 it sets theagenda or a national debate on how we can meet the gap ininrastructure unding.

Over the last ve years, the quality o Australian projectproposals to address nationally signicant problems hasimproved, a national long term strategy has been developedor ports and the land reight network, work has begun onAustralias inrastructure nancing needs and Building AustraliaFund monies have gone to high value inrastructure projects.

Despite these achievements, there is a looming inrastructureunding task, a national productivity challenge, and abundantopportunities to grasp as strategic and economic weight shitstowards Australias immediate neighbourhood. It is worthrepeating a question I posed back in 2011:5

Are we prepared to pay or our inrastructure where doesAustralia stand?

As a country and a community, we:

are reluctant to increase Government debt (althoughour national debt levels are amongst the lowest o anydeveloped country);

baulk at raising taxes to pay or better inrastructureand services;

are uncomortable with the user pays concept (as seenin opposition to the use o tolls to und some roads, orincreases in utility charges to pay or necessary capitalinvestment and maintenance);

are against capital recycling...to und other inrastructure.

Yet we are concerned about congestion, we are concernedabout the health and security o our water supplies, we areconcerned about the prospect o electricity brown outs andwe recognise the need to modernise our telecommunications.

There is a proound disconnect here.

We need to turn the reorms we have long talked aboutinto actions.

I wish to thank the Australian Government or its ongoingsupport or Inrastructure Australias mandate to advocateinrastructure reorm and investment, and thank our small teamin the Inrastructure Coordinators oce or their ongoing eorts

to provoke reorm and public debate on the issues that matter.

s rod eddto aOC, ituctu autl


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Ataia Ta

Over the past decade, Australia has seen signicantinrastructure development. Most notably, transport inrastructureconstruction has increased two and a hal times, with over $22billion in engineering and construction activity occurring in2009-10.6 The national inrastructure construction scheduleshows that a large pipeline o major construction activity is

underway across Australia, with major inrastructure investmentacross the energy and water sectors also (reer Appendix E).7

Fi 1: Iatt tti atiit

Transport Energy Telecommunications Water

$

billion

0

5

10

15

20

25

30

2006201120012006199620011991199619861991

Source: Department o Inrastructure, Transport and Regional Economics 2012a,

Australian Inrastructure Statistics Yearbook 2012.

Nonetheless, we still ace a signicant inrastructure decit,estimated at around $300 billion. In the immediate uture,Government budgets are tightly constrained.

This makes the stakes much higher when it comes to selectingthe right projects or the nation, to ensure the best possible useo limited public unds, and to harness a wider range o solutionsthan just large capital construction projects.

The national response has been two-old: to drive agenuinely national ocus on long term strategic investmentin inrastructure, planning and delivery; and to push on withdicult inrastructure reorms.

A commendable number o national level reorms have beenimplemented in the transport, energy and water sectors in thelast ve years.

Likewise, a strategic approach to nationally signicant inrastructurehas been established at the national level in partnership with statesand territories, to promote inrastructure investment and reorm tomeet our long term social and economic objectives.

Inrastructure Australia was established in 2008 as part o thisnew approach, and has worked with Governments, industryand the community to apply the national reorm and investmentramework, which has been used to assess over a thousandinrastructure proposals, and to identiy more than $80 billion o

national inrastructure priorities in 2013.

To date, all o the ready to proceed projects in InrastructureAustralias rst inrastructure priority list have received undingrom Australian and State Governments. A number o otherprojects have also received construction or development unding.

New national strategies have been developed to promoteproductive inrastructure networks, with the rst ever national portsstrategy agreed to by the Council o Australian Governments in2010, and the development o the national land reight strategy.

There is evidence o more eective partnerships, and betterstrategic planning o projects. More than ever beore, evidencebased, cost-benet assessment o large inrastructure projects isbecoming commonplace, and is expected by the community.

The Inrastructure Finance Working Group a sub-committeeo the Inrastructure Australia Council was tasked in 2011with identiying barriers to private investment in inrastructureand developing options to encourage greater private sector

investment. The Working Groups report Inrastructure Financeand Funding Reorm, recommended that Governments adoptreorms to how inrastructure is unded, planned and prioritised,and to promote a more ecient capital market.8

However, it is still cause or real concern that not all majorprojects in Australia are subject to ull economic assessment.A ull economic assessment will ensure the right inrastructureprojects are delivered, and provide the best value or money.

Inrastructure users likewise do not always pay the true priceo what they use, leading to greater congestion and overuse.Much o Australias inrastructure that is owned by Governmentsstruggles with operational ineciency and underinvestment.

Whilst much progress has been made, Inrastructure Australiaswork is ar rom done.

Australia must continue to improve the way it invests ininrastructure; and it must implement the reorms that willensure this inrastructure is used as eciently as possible.

A truly long term inrastructure agenda needs genuinepartnerships between Governments and industry, and it needsto be accountable to the community.

A commendAble number oF nATIonAl levelreForms hAve been ImplemenTed In The TrAnsporT,energy And wATer secTors In The lAsT FIve yeArs.


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Ataia a t Aia paif ia a tt 50 a.

Asia our closest neighbour is rising quickly as an economicand strategic orce in the world. Its developing, urbanisingpopulation is driving demand or Australias resources and

agriculture on one hand, while supplying cheaper manuacturedgoods on the other.9

Here at home, Australias ageing population will presentchallenges or national productivity, by reducing our productivecapacity and constraining Government revenue in ways thatmake it harder or Governments to be responsive to theinrastructure needs o our changing economy.10

Climate change will impact on Australias agricultural land andproductivity, and increase the vulnerability o our agriculturalsectors to extreme weather events.11

A challenge or leadership is to ensure that Australia can makethe most o its opportunities when it chooses to do so. Huge

economic and social growth has shaped our cities and regionsin the past two centuries and our natural environment hasunderpinned economic growth.

Australias inrastructure networks need to be primed to respondto the challenges ahead. These big shits demand a ar-sightedresponse or Australia to remain competitive and to seizeopportunities in the Asian Century.

How we invest in and manage Australian inrastructure networkstoday is our response to these challenges. Inrastructure theright inrastructure, used well, and governed well enables usto compete, to trade with the world, and to build higher living

standards in a sustainable way.

Our best response is to ensure we conront the challengesholding Australia back and press ahead with the necessaryreorms and investments to deliver the inrastructure that willmake us great.

The national inrastructure plan identies the reorms and priorityinrastructure that Australia needs to ensure our inrastructurenetworks can take advantage o the opportunities ahead.

AusTrAlIAs InFrAsTrucTure neTworks need Tobe prImed To respond To The chAllenges AheAd.


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T ga ri AiaBy 2050, Asia will be the centre o global commerce, producing over hal o global output.12

The population o the Asia Pacic region will increase six-old between 2009 and 2030. It will be thelargest regional market in the world.13

Rapid urbanisation across Asia will support increasing living standards. The rate o urbanisation inChina is 100 times the size and 10 times the speed o Britains Industrial Revolution. 14 By 2050,average Asian incomes will be equal to European incomes today.15

Fi 2: gi at i Aia

NORTH AMERICA

2009: 338 million

2030: 322 million

CENTRAL AND

SOUTH AMERICA

2009: 181 million

2030: 313 million

MIDDLE EAST

AND AFRICA

2009: 137 million

2030: 341 million

ASIA PACIFIC

2009: 525 million

2030: 3228 million

EUROPE

2009: 664 million

2030: 680 million

Source: Australian Government 2012, Australia in the Asian Century White Paper.

These changes have widespread implications or the Australian economy, and represent bigopportunities or Australia to play a key role in the region. These opportunities are already uponus, with Australia chairing and hosting the Group o Twenty Finance Ministers and Central BankGovernors (G20) in 2014 and taking an active role in the Asia-Pacic Economic Cooperation(APEC), the primary organisation or promoting trade and economic cooperation within the region.

The G20 recognises the importance o inrastructure investment to help boost productivity, growthand jobs. It is considering ways to improve the international investment climate and work will likelybe developed during Australias G20 Presidency in 2014.

Strong Asian demand or our resources saw our mineral exports nearly triple in the decade to2011.16 Education service exports doubled in value every ve years to $18 billion in 2009/1017,with our largest buyers being China, India and the Republic o Korea.18 Demand or Australiasresources is expected to continue to grow.

Looking ahead to 2050, global ood imports by Asia will grow by US$470 billion, increasingAustralian agricultural exports by 140 per cent.19 Our tourism industry will benet as more andmore tourists visit rom China, South Korea, Japan, Malaysia and Singapore.20 Our serviceindustries will grow, including in construction and utilities.21

To take best advantage o opportunities arising rom the growing Asian middle class, Australia will

need to rene its approach to nancing and unding inrastructure.

Fi 3: Ataia a g dti pt a it iti

2,000

$

billion

Service (including construction and utilities)

Manufacturing

Mining

Agriculture, fishing and forestry

1,500

1,000

500

0

2010 2025

Source: Australian Government 2012, Australia in the Asian Century White Paper.

International trade will contribute to an expected doubling o the road reight task, tripling o theshipping task and quadrupling o the rail and air reight task into the uture.

lookIng AheAd To 2050, globAl Food ImporTs by AsIA wIll grow byus$470 bIllIon, IncreAsIng AusTrAlIAn AgrIculTurAl exporTs by 140 per cenT.


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A Growing, Ageing Population

As well as external drivers, signicant changeswithin Australia are shaping our uture economy.

By 2050, Australia will have 36 million people,50 per cent more than we have today. By 2063,we will have double the number we have now.22

The share o working age people will almosthalve by 2050. For each Australian aged over65, the number o working aged people willdrop rom ve (2010 levels) to 2.7 people.23In less than a century, Australia will see a three-old increase in its share o people over 65.

While policy levers such as immigration arepart o a national response, more people leadsto greater demand or goods, services andpersonal transport, and increased demand orhousing, energy and water.

Put simply, Government nances will struggleas public spending on age-related issues andhealth care grows, while tax revenues languish.

The resulting scal gap could be close to3 per cent o national output by 2050,24severely impacting how well Governmentsrespond to challenges, und inrastructureand promote higher standards o living.

Declining Productivity Growth

As our population ages and our workorceparticipation declines, productivity growth is theonly way to keep our economy growing and tosustainably lit living standards.

When productivity grows, so too do realincomes and living standards our ability to

pay or goods and services grows.

I national productivity increased by two percent a year to 2050, every Australian wouldbe $16,000 better o a year on average intodays dollars.25

Productivity growth is the rate at which outputincreases or the same level o input andeort. It measures the health o our economicundamentals how competitive the economyis, and how well we produce goods andservices to generate wealth.

The right inrastructure used in the right way

enables more ecient production. In otherwords, it ensures we have the energy, waterand telecommunications inrastructure neededor production, and the transport inrastructurerequired to move product to market.

Unortunately, productivity growth is orecastto slow to 1.4 per cent a year over the nextdecade compared to 2.1 per cent in the1990s. This means that Australias productivityperormance will be only two-thirds o what itwas over the past decade.26

Some 58 per cent o the income growthAustralians enjoyed between 2005 and 2012

was due to one-o conditions related to theresource boom. This has hidden real declinesin our productivity perormance.27

The worst perormer has been capital productivity refecting large, slow investments, higher costsand inecient capital project development.28

Well-targeted investment in physicalinrastructure can provide a range o economic,social and environmental benets. From aneconomic perspective, benets accrue romproductivity improvements. For example,eective transport systems lead to reduced

reight and business travel costs which can leadto increased trade and competition.

Further, ecient inrastructure plays a vitalrole in building social cohesion. Highquality inrastructure allows communitiesthat have a range o incomes, backgroundsand demographic characteristics to accessemployment opportunities and health and

education resources in a air and equitableway. This is important as social cohesion islinked to economic development, investmentattractiveness and business competitiveness.

Improving the way Australia both uses andprocures its inrastructure will contribute togreater economic prosperity and enhancedliving standards or all Australians.

A Changing Climate

Climate change is a long term challenge orour economy and living standards. By 2050,climate change could lower agriculturalproductivity by up to 17 per cent.29

Every Australian will have to pay more or ood,energy and water i we do not adapt to climatechange and manage its impacts.

I we are going to mitigate climate changewe will need to nd cheaper ways to diversiy

our energy mix to include renewable energyand reduce our reliance on coal. We will needto boost the resilience o our inrastructurenetworks to the eects o climate change andevery eort we make will have cost impacts but these higher costs in the short term will payo with lower costs in the long term.

ImprovIng The wAy AusTrAlIA boTh uses And procures ITsInFrAsTrucTure wIll conTrIbuTe To greATer economIc prosperITy

And enhAnced lIvIng sTAndArds For All AusTrAlIAns.


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AusTrAlIA hAs An IncredIbleopporTunITy To be A very compeTITIve,globAl leAder In The AsIAn cenTury.

gii itt iAtaia iatt

Australia has an incredible opportunity to bea very competitive, global leader in the AsianCentury. We need our inrastructure to beworking at its most ecient.

Australia needs to x the inrastructurebottlenecks that will otherwise hold it back.

We need to remove the obstacles that get in theway o planning, governing and delivering theright inrastructure when we need it.

This national inrastructure plan outlines boldreorms to address our national inrastructurebacklog. Without bold reorms today, Australiawill miss opportunities tomorrow, because weare too slow, too budget constrained, or simplynot ready.

Aiati Ou coctd, lobl ct will adapt

to and boost economic growth, be wellplanned, well designed and well governed,and have world-class transport systems.

Ou ol tuctu will meetinternational demand or Australianproducts and exports in a timely andecient way, boost regional communitiesaccess to economic opportunities and drivegrowth and productivity.

Ou utbl, tol y ktwill meet the challenge o climate change,arm our position as a net energy exporter,support economic activity and aordability,and provide condence or investment,innovation and participation.

Ou outwd-look pot d tolt twokwill provide long term

certainty or ports and reight networks in ourregions and cities and boost our competitiveglobal gateways to Asia to meet the growingdomestic and trade reight task.

Ou tl idou tuctuwill be more eectively provided as webetter coordinate planning and investmentacross Governments or remote Indigenouscommunities, benchmarking and measuringthe outcomes o investment, and using thisinormation to improve uture decisions.

Ou wt uppl will be secured byharnessing market mechanisms to driveinvestment and sustainably manage scarceresources and the impacts o climate change.We will make changes to the delivery andgovernance o water to provide watersecurity in urban and regional communities.

Ou tlcoucto twok will beworld-leading, connecting regions with citiesand with the world, and activating the digitaleconomy across the Australian continent.

Tat

National targets will guide our investmentin inrastructure, both in respect o reormand capital inrastructure investment thesetargets will help us to ensure we are spendingour resources on actions that will create, notdestroy, value or Australia.

These targets should at a minimum return us tohistorically higher average national growth andproductivity rates. With the right inrastructureand policy reorm contributing to improvedeconomic perormance, there is no reason whyAustralia cannot:

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T iatt i a

There is a strong link between good inrastructure decisions andthe long term perormance and airness o our economy andsociety. The lack o available inrastructure unding i s the majorconstraint to bridging the gap between the inrastructure we haveand the inrastructure we need.

I we invest in the inrastructure we need, we can enjoy lowertransport costs, lower congestion costs, and create morecompetitive industries. That ultimately means that we pay lessor the goods and services we value, have more recreationaland amily time, and bring about higher standards o living andthe high value jobs that a stronger economy can deliver.

Australias inrastructure will struggle to keep pace with utureexpected demand i we do not nd better ways to deliver theinrastructure we need. We are already experiencing capacityconstraints and trac congestion in some o our biggest andbusiest cities. As highlighted in the Australian GovernmentsThird Intergenerational Report, these challenges will onlycompound in the uture.

There is not an endless supply o unding or inrastructure.

To bridge the unding gap, a good starting point is tacklingtwo hurdles to getting the inrastructure we need.

The rst hurdle is accepting that Government budgets do not havesucient headroom to und all the inrastructure we require, eveni they increase their borrowings.31

The second hurdle is a undamental disconnect between theinrastructure we want and our willingness to pay or it eitherthrough higher taxes or user charges.32

Part o the answer is that Governments will need to get smarterabout spending the available unds they do have, recycling capitalon their balance sheets into new assets, and putting in place theright conditions or the private sector to nance more inrastructurethrough user charges.

It is up to governments to ensure that private capital can receivea proper rate o return, to meet their responsibilities to theirinvestors, such as superannuants.

Australia will ace a chronic undersupply o inrastructureunless Governments are innovative with using available undseectively, and the community gets used to paying or theinrastructure it wants.

s

We ace big challenges, and we need bold reorms.

The seven reorms set out in this chapter are aimed at boostingour inrastructure perormance and our capital productivity across the country.

These seven reorms sound like simple ideas. However experience

proves they are dicult to implement.

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There Is A FundAmenTAl dIsconnecT beTweenThe InFrAsTrucTure we wAnT And our

wIllIngness To pAy For IT.


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Reform 1: Establish a single nationalinfrastructure fund

Ataia at a t it i t t.Iti i iatt tat t ia ft ai t it i t iitiatt t.

While Government budgets alone will not bridge theinrastructure gap, Australian Governments do spend a signicantamount on inrastructure. Public sector construction activityrepresents around 1 per cent o Aust ralias GDP,33 representinginrastructure engineering construction activity o around $14billion in the 2011 nancial year.34

There is over a hundred billion dollars worth oCommonwealth Government investment or economicinrastructure, across the nation building program, NationalBroadband Network development, community inrastructuregrants, clean energy unding, and grant programs or water,energy and regional inrastructure.

These Commonwealth unds and investment sources haveoverlapping purposes, dierent assessment rameworks,and dierent decision making mandates.

Consolidation o Commonwealth unding sources into anational inrastructure und with a single assessment andprioritisation process would transorm the quality and eciencyo inrastructure spending and public transparency.

It would mean that across dierent types o inrastructure, onlythe best projects the ones that make a positive contribution toAustralias economy would be unded and delivered.

A single assessment and prioritisation ramework InrastructureAustralias reorm and investment ramework will ensure allmajor projects are inormed decisions, supported by a soundeconomic case, and tested with a robust, independently assessedcost-benet analysis.

It would also ensure Australia moves away rom a project-by-project view o inrastructure development and ocuses on big-picture national priorities. For example, in Singapore, every transitproject is assessed against the national goal o supporting urbandensity and contributing to a 70 per cent public transport target.35

The ultimate outcome would be much better use o availableunding, and greater benets or every dollar spent. Australiansshould expect no less.

The impacts o these varied approaches include inecientprogram costs, less transparency over how unding is administeredand allocated, variable levels o rigour, and inconsistent value ormoney outcomes.

State Governments also have a wide range o inrastructureunding programs, with varying assessment processes.In Queensland, the Governments recent response to theIndependent Commission o Audit into Queensland Financesoutlined an intention to consolidate state inrastructure unding.Other State Governments could advance a similar approach.

A nATIonAl InFrAsTrucTure Fund wITh A sIngle AssessmenT AndprIorITIsATIon process would TrAnsForm The quAlITy AndeFFIcIency oF InFrAsTrucTure spendIng And publIc TrAnspArency.


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Reform 2: Using Government balancesheets more innovatively to spreadavailable funding

T a cat iatt i iiaia a i tat at t a .

These days, the Australian Government can and should

be more innovative with how it uses its budget capacity toget inrastructure projects o the ground, and to make itsinrastructure budget go urther.

The grant-based model or unding inrastructure projects lacksappropriate incentives to encourage private sector investmentoutside o the actual delivery o the project.36

Implementing unding reorms o this nature represents a newway o doing business. It requires a considerable change inmindset rom the current grants-based model o AustralianGovernment investment.

Moving towards more innovation in unding also representsa signicant opportunity or the Australian Government to bemore proactive in connecting with the private sector to bring newinrastructure projects to market.

The Australian Government could leverage more privateinvestment in inrastructure by structuring its contributions andunding conditions to state and territory projects dierently.

For example, it could:

Provide seed or viability gap unding to bridge the gap thatprevents an otherwise commercially attractive project withstrong economic benets rom proceeding;

Take on some project risk or provide project guarantees incertain circumstances, or example, guaranteeing patronagerisk, establishing an insurance provider, or guaranteeing aportion o private sector debt or a private public partnership;

Provide a portion o lower ranked debt to reduce the risk andcost o the remaining private debt; or

Establish an ongoing broker capability to bring togetherthe public and private sectors, as it has done with theMoorebank Intermodal terminal project.

These initiatives would promote a better developedinrastructure market, and re-imagine the role o Governmentin advancing critical inrastructure projects that otherwise wouldnot be aordable.

However, without detailed consideration o these new models,the Australian Government could be exposed to signicant

nancial risk, given the complexity o the new arrangements.Substantial investments in skills and expertise are needed tobuild the capacity o the Australian Government to eectivelydeliver such reorms according to best practice and producethe optimal nancial arrangements or each project.

Adopting a similar approach to Inrastructure UK, a specialistcommercial unit, could ensure the required due diligence isconducted that takes into account the specic circumstanceso each project on a case-by-case basis.

The AusTrAlIAn governmenT cAn And should be more InnovATIve wIThhow They use TheIr budgeT cApAcITy To geT InFrAsTrucTure projecTsoFF The ground, And To mAke ITs InFrAsTrucTure budgeT go FurTher.


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TodAy, more ThAn $100 bIllIon oF commercIAllysuITAble InFrAsTrucTure AsseTs sIT wIThIn AusTrAlIAn

governmenTs InFrAsTrucTure InvesTmenT porTFolIos.

Reform 3: Recycle capital

ma t a a t agt t fit aita i atat it , - iatt

Today, more than $100 billion o commercially suitableinrastructure assets sit within Australian Governments

inrastructure investment portolios.37 Recycled assets couldinclude airports, roads, water services, ports, reight rail andelectricity generation, transmission and distribution. Together,their value is large enough to und a signicant proportion oour most critical inrastructure priorities.38

We have the opportunity to make these assets work harder orus and to turn our national inrastructure backlog into a nationalpipeline o long term inrastructure development.

By recycling capital to new inrastructure investment, we can reeup Government nancial commitments and release unds tomake new inrastructure investment possible.

This strategy has been successully applied in Australia already,with Victoria and South Australia having led the way.

Recently, the New South Wales Government awarded a 99-yearlease on Port Botany and Port Kembla to a private consortiumvalued at over $5 billion. Much o these proceeds will be investedinto the Governments inrastructure und or new inrastructure,including new motorway inrastructure, and regional inrastructureprojects in the Illawarra.39

Likewise, the sale o Hobart Airport enabled the TasmanianGovernment to develop the Brighton Transport Hub and investin new agriculture water storage and irrigation.40

The Queensland Governments sale o a large share o QRNational reed its responsibility or an estimated $7 billion inuture capital expenditure.41

The Queensland Government also nalised the sale o the Porto Brisbane in 2010, with a consortium paying $2.1 billion ora 99-year lease on the Port, and also paying another $200million or the uture upgrade o section 3 o the Port o BrisbaneMotorway.42 The Queensland Government stated that, as aresult o the sale o the port, taxpayers would avoid expectedinrastructure expansions at the port worth up to $1 billion.

Governments at all levels need to consider how to maximisethe value o their inrastructure portolio is it by owning andoperating all o the assets currently held, or by transerringthe capital value o suitable assets to invest in new, priorityinrastructure? Many assets put under this scrutiny would nothave a strong case or continued Government ownership.

Recycling capital can improve economic eciency and reduce

the price paid by consumers by lowering operational costs,improving competition and service del ivery, and by removingconficts o interest that exist between the ownership andregulation o that asset.

Asset sales such as these help to encourage investment ininrastructure by superannuation unds, which preer to invest inestablished browneld assets such as ports and airports.

Studies have shown higher labour productivity and real alls inelectricity network prices in the privatised Victorian electricity

industry compared to its publicly held counterpart in New SouthWales.43 Similarly, evidence points to publicly owned portsdelivering lower returns than their commercial counterpartsdue to lower eciency or inadequate user charges, meaningtaxpayers are subsidising commercial reight activity.

Tendering whar access to private operators on the Manlyto Circular Quay erry route led to two new operators, grewpatronage by some 80 per cent, and transormed a loss-making

service into a protable one.44

Despite the proven benets o asset recycling, examples oGovernments in Australia selling or leasing public assets areew and ar between. I we do not make changes, individualGovernments are unlikely to act or two important reasons:

Some Government asset sales remain politically sensitive there are genuine concerns around community access andbenets where an asset is held, either by a long term leaseor sale, by a private operator.

The large transaction costs involved limit opportunities orsmaller institutional investors to participate.

Governments today have a wide range o tools they can use to

protect community benets, including regulation against unairprice increases, minimum access and service standards, andrequirements to commit to key environmental outcomes.

Using these tools and through bold reorms we can address thehistorical challenges o asset recycling to make it the logical and more attractive strategy or Governments to deliver theinrastructure Australia needs. With a national inrastructure decitand long term scal constraints, Governments will not bridge theinrastructure unding gap without divesting o mature assets.


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Reform 4: User pays user says

u a a it titi t iatt ai t, t a a t i i.

While there are dierent ways to nance projects, inrastructureis ultimately unded or paid or by user charges or taxpayers,or some combination o both.

To date, most o Australias public inrastructure has been largelyunded by Government subsidies, with insucient or no costrecovery at all rom direct users.

This needs to change: when all taxpayers pay or inrastructure,it reduces the accountability o Governments to provideinrastructure that meets the needs o direct users. Governmentsubsidies only go so ar. To get the inrastructure we want, whenwe want it, we need to pay more as users.

Private investors that nance a project will seek commercialreturns rom users that refect the investment risks they bear.

In general, the primary benet o that inrastructure is that it is

more oten developed with users in mind, at a standard andprice they are willing to pay or.

This stronger link between nanciers and customers meansthat the inrastructure is oten better suited to customersneeds, as well as helping to ree up Government capacity tound core social and economic inrastructure that would not

otherwise be developed by the private sector. Additionally, whensuperannuation unds invest, it provides an opportunity orAustralians to have ownership in the inrastructure and earn areturn on it.

The second major benet o imposing user charges is it managesdemand and better uses existing inrastructure, improving thenetworks productivity overall and reducing the need or costlynew investment. In the United States, there is an estimated 28 to

38 per cent savings potential as a result o congestion chargingon existing roads.45

Direct charging or inrastructure, such as road pricing, allocatesit to higher value uses. For example, a reight company witha tight deadline or delivery may be prepared to pay a toll toreduce journey time to avoid a nancial penalty or deliveringgoods late. A recreational driver going or a scenic drive maynot place a high value on reducing journey time and wouldthereore avoid paying the toll by taking an alternative route.

Pricing reorm can improve inrastructure use more widelyacross transport networks to produce sustainable networkoutcomes, manage existing inrastructure better and delay theneed or costly new investment.

There are plenty o examples where this is done eectively.Congestion pricing in London reduced trac by 21 per cent,increased average travel speeds by 37 per cent and reduced roademissions. Revenue raised was invested back into public transport,contributing to increased bus and passenger rail patronage.46

To geT The InFrAsTrucTure we wAnT, when wewAnT IT, we need To pAy more As users.


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Reform 5: Reduce layers of Governmentinvolvement in infrastructure

Ataia gt tt aiatt t a i tt Ataia iatt.

Australia has nearly 600 dierent local, state and territory

Governments that, together with the Australian Government,und and plan inrastructure.47 Through this multitude o players,our inrastructure development is slow and delivery risks arehigh, which constrains our productivity and makes our projectsless attractive or potential investors.

For example, a Productivity Commission review o the upstreampetroleum sector ound a single liqueed natural gas projectcould require up to 390 regulatory approvals. Regulatoryduplication and overlap involves higher costs, higher risks arounddeerred or cancelled projects, and lower returns. Expeditingregulatory approval or a major oil or gas project by one yearcould increase the value o its returns by up to 20 per cent.48

Australias transport, water and energy in rastructure ormcomplex webs o connected services. Projects are too otenconsidered in isolation without proper analysis o the potentialimpact on wider inrastructure networks.

Australia needs integrated inrastructure planning acrossGovernments that claries which level o Government undsand delivers which projects. Eciencies can be driven by clearaccountability between the layers o government. This wouldreduce costs and attract urther investment.

Overlapping environmental assessments and approvalsacross jurisdictions is one example o wasteul and messyduplication between levels o government. A single planningand environmental approval process is crucial or ecientlydelivering signicant projects. A single process would bring allapprovals into one entity, standardise each step o the process,clariy the timetable or assessment, and cap the cost at eachstage or applicants. It would also manage responsibly anyapproval o larger, environmentally-sensitive projects.

A streamlined approval process would also make Australianinrastructure projects more attractive or both local and globalinvestors, improving our global competitiveness and increasingthe availability o nancing to acilitate delivery o the projectswe most need.

Canada has recently done this, establishing a lead agency orall major project approvals, reducing the number o ederaldepartments undertaking environmental assessment rom 40 tothree, and implementing agreements with provincial Governmentsthat allow provincial assessments to satisy ederal requirements.

The Productivity Commission is examining this issue in its inquiryinto major project development assessment processes.49

However, in the long term, we need to think about whether threelevels o Government deliver the best planning, unding anddelivery outcomes or nationally signicant inrastructure.

AusTrAlIA needs InTegrATed InFrAsTrucTureplAnnIng Across governmenTs.


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Reform 6: Be world leaders inproject governance

r t i Ataia a a 40 t i ta i t uit stat, a i30 t 35 t a it.50

Another recent comparison shows per kilometre costs or

Australian road, heavy and light rail projects toward the upperend o similar projects in developed countries around the world.51

Poor project governance in Australia is one major reasonwhy projects ail to meet their timerames, budgets andquality objectives.52

The delivery o major projects is challenging, with long planninghorizons and complex interaces, multiple stakeholders and thepotential or signicant scope changes to occur over time.

Weak project governance is one o the major causes oproject ailure.53 It translates into higher costs, poor riskmanagement and inadequate scrutiny o overruns, delaysand other problems.54

Common ailings include inadequate governance or projectassurance plans, a ailure to measure the perormance o theproject team and sponsors, gaps in project governance skills,and a lack o independence between the project governanceand project delivery.

Best practice project governance is something Australia mustactively aspire to. Billions o dollars can be saved where thetiming, cost and quality o projects are intensively managed.55

A study o 23 major resource projects in Australia ound thatstrong perormance management o major capital projects,best practice management rom concept and design throughto contracting, and a project team with superior execution skills,could yield cost savings between 20 and 50 per cent. 56

Against Australias signicant investment pipeline, best practiceacross the resources sector alone would translate to 0.6 to 2.3per cent o additional GDP.57

The Victorian Government introduced an assessment rameworkor high value high risk projects in 2010. The rameworkimposes a higher degree o scrutiny and approval hurdles(or example, the need to obtain the Treasurers approval okey project documentation) or high risk projects. Gatewayreviews are mandatory or all high value high risk projects.

poor projecT governAnce In AusTrAlIA Is AmAjor reAson why projecTs FAIl To meeT TheIr

TImeFrAmes, budgeTs And quAlITy objecTIves.


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Reform 7: Smarter, leanerinfrastructure procurement

Ataia gt t i ti tt t aa ii ttt, t t iaiit a attatiat t itt.

Bidding or major inrastructure projects in Australia is morecostly than it should be or bidders and or government. 58Costly and oten long bidding processes deter new entrantsand reduce the competitiveness o the bids we receive.Rising costs and inrastructure delays severely impact Australiaseconomic potential.

In 2012, project contractors, nanciers, Government inrastructureagencies and treasuries rom around Australia agreed on bestpractice benchmarks or the procurement o major inrastructure.59Quantitative and qualitative benchmarks were set or PublicPrivate Partnerships, and design and construct and alliancecontracts. More consistent achievement o these benchmarkswill bring about signicant eciencies or all involved.

There is more that can be done by Governments to make majorproject procurement more ecient:

acquire specic knowledge, and expert resources orprocurement;

design procurement to align with market capability,capacity and appetite;

undertake comprehensive procurement planning, in

consultation with the market, and communication oaccurate and sucient project and procurement details;

provide early resolution o approval processes,Government/Agency issues and project interaces;

minimise requirements or non-material documentation;

provide early resolution o risks and minimise delays andchanges during the procurement process; and

establish appropriate time metrics or procurement processes.60

Government procurement and commitment to Government-ledprojects have a big role in providing clarity and certainty to theprivate sector.

In 2010 the North Queensland Bulk Ports invited the privatesector to develop our new coal terminals at the Abbot PointCoal Terminal to support Galilee Coal basin development.

While the expression o interest process garnered over 30responses rom both miners and inrastructure developers,

the process slowed due to a lack o unding certainty aroundcommon user assets, no provision or integrated design andenvironment approvals and the lack o an overall rail strategyto support supply chain capaci ty.

As a result, North Queensland Bulk Ports was unable to executeramework agreements with any o the shortlisted entities by thetarget date. A key participant withdrew citing uncertainty overcosts and approval processes. The entire process was halted bythe new Queensland Government in January 2013.

bIddIng For mAjor InFrAsTrucTure projecTsIn AusTrAlIA Is more cosTly ThAn IT should be For bIdders And For governmenT.


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Today, Australias capital cities consistently rank among the worlds most liveable cities.61 The job oGovernments is to plan or the uture, to make sure our cities stay on top.

Australia is an urban nation with our-ths o our population and economic activity occurring in cities and these intense population and economic centres are a major driver o national productivity.

Density is an economic virtue in our cities.

The closer businesses are to each other, and to a deep pool o skilled labour, the higher theirproductivity, with greater specialisation, more intensive knowledge transer, and employees who

are better suited to their organisation. For individuals, this proximity means lower search costswhen looking or a job.62

Likewise, higher density residential areas can oer more aordable housing options with betteraccess to services and employment, and support more liveable, vibrant communities.

Success in our cities is also a virtuous cycle, where higher living standards draw global talent,attract global businesses and investment, and boost trade opportunities.

This phenomenon in cities is called agglomeration where clusters o economic activity producebigger eects than the sum o their parts.

Urban density has a multiplier eect on economic growth, with businesses and employees thrivingwhen located close to one another. For every doubling o job density, there is up to a 13 per centincrease in labour productivity.63

So the economic perormance o our cities will make or break national productivity in the decades ahead.Our cities ace big growth challenges in the next 50 years. Each o our ve biggest capital cities willnearly double their population by 2056.

Fi 4: pati t i aita iti t 2056

9,000,000

8,000,000

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0

1963

2013

2056

DarwinCanberra AdelaideHobart Sydney Brisbane Melbourne Perth

Source: Australian Bureau o Statistics 2008, Population Projections, Australia 2006 to 2101, cat. no. 3222.0.

eAch oF our FIve bIggesT cApITAl cITIes wIllneArly double TheIr populATIon by 2056.


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The reight task in our cities will signicantly increase by 2030, with goods making their way to androm our international gateways through what may become increasingly congested urban transportnetworks. Increasing congestion costs will erode national productivity and competitiveness.

Fi 5: ra it ta aita it, 1972-2030

0

10

20

Sydney

Roadfreight(billiontkm)

Estimates Forecasts

1972 2007 2030

Melbourne Brisbane Adelaide Perth

Source: Department o Inrastructure, Transport and Regional Economics 2010, Road Freight Estimates and Forecasts in Australia:

interstate, capital cities and rest o state.

The right inrastructure will make it easier or businesses and skilled employees to access oneanother, reducing transport costs or businesses and enabling national industries to get theirproduct and services to market eciently. And it will support density, manage congestion andimprove liveability and sustainability in our cities.

Australias cities will perorm better i they are aordable, sustainable, compact, innovative andwell-designed places that oer high living standards.

In 2009, the Council o Australian Governments broke new ground. They agreed to an overhaulo strategic planning in our capital cities.

This agreement set in place national objectives and criteria aimed at eective partnershipsacross governments on investment priorities and inrastructure and land use policy, to meet theuture demands o population and economic growth, climate change, housing aordability andurban congestion.

This new inrastructure agenda in our cities cannot aord to lose steam.

It will need a continued ocus over the long term. Transormational city planning needs genuineinvestment partnerships across Government and across the public and private sectors.


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Action 1: Better Use o Urban Networks

Capital cities across Australia struggle with underperorming, legacy transport and inrastructurenetworks, many o which were not designed with the needs o a 21st century population andeconomy in mind.

Better use o urban networks will be critical to liting inrastructure productivity, optimising networkperormance, managing limited capital budgets, and deerring costly new investment inmega projects.

The United Kingdoms 2006 Eddington Transport Study ound that small scale projects and better usestrategies in general can oer higher economic benets, and are quicker and easier to implement.64

There is a wide range o better use strategies that can be applied to urban networks. These include:

Re-pricing o transport to manage transport demand by location or to spread demand acrossdierent times o day.

Smart inrastructure to manage real-time inrastructure per ormance. For example, retrottingtechnology such as ramp signalling, intelligent transport systems and variable speed limits ontoexisting motorways in Melbourne, Sydney, Brisbane and Perth have the potential to improvecongestion, lower emissions, and expand the eective capacity o these road networks.

More intensive or ecient service provision, such as through public transport timetabling,coordination o bus and rail services, interchange upgrades, and rolling stock replacement.

Transit oriented development to densiy residential housing around existing transport corridors.

Improved maintenance o existing assets to ensure these maintain their level o service over time.

Fi 6: ei t a itt a itt

0

5

10

15

20

25

30

Schemes costing 1 billion

1 10 100 1,000 10,000 100,000

WiderBen

efitCostRatio

Cost of scheme (m)

Source: Eddington, Sir Rod 2006, The Eddingto n Transport Study - The case or action Sir Rod Eddingtons advice to Government.

* Costs are in a log scale.

smAll scAle projecTs And beTTer use sTrATegIesIn generAl cAn oFFer hIgher economIc beneFITs,

And Are quIcker And eAsIer To ImplemenT.


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merged locAl governmenTs would supporT susTAInAble TAxbAses And more subsTAnTIAl InFrAsTrucTure InvesTmenTs.

Action 2: Provide incentives to buildhigher residential densities and densecommercial centres in our cities

While greeneld development has the immediate appeal omore aordable housing, it imposes more than double thedevelopment and transport costs o inll development.65The costs o ringe expansion, which are borne by Governmentsand residents, are unsustainable and will reduce economicperormance and liveability into the uture.66

Despite this, current metropolitan plans still envisage signicantgreeneld growth, and standalone houses continue to dominatenew housing stock. Attached dwellings make up only 28 per cento the existing housing stock across our major cities.67

The Grattan Institute report the housing wed choose showsthat people want to live in accessible locations and recognisethat higher density options enable this.68

Higher dwelling densities around existing and prospectivepublic transport corridors and interchanges will provide a morecompact, less expensive and aordable city design, improvecommunities access to economic and social opportunities, andmake much better use o existing inrastructure. As a guide, weshould aim or at least our to six storey developments alongroads and routes that are well serviced by public transport, andor higher dwelling densities in larger centres.

To achieve this, incentives should be placed on Governmentunding or new inrastructure to provide higher dwelling densitiesthat match the scale and associated costs o the project.

Redevelopment in established areas must go hand in handwith a ocus on urban renewal measures to saeguard a highstandard o living or communities and attract people to acompact living liestyle.

Solutions will vary across cities, and may include planning andproviding or more open spaces as existing areas are redeveloped,raising architectural standards to make high-density living asattractive as possible and increasing public transport capacity.

In addition, establishing dense centres o employment acrosscities, not just in the central business districts, will encourageagglomeration to occur in more accessible locations.

Action 3: Consolidate local governments

In all our cities, metropolitan planning needs radical improvement.Part o the answer is to consolidate local governments.

Fragmentation prevents metropolitan local governments rombeing eective inrastructure partners, and weakens strategicplanning o city networks.

Brisbane has ve local governments or its metropolitan area,while Sydney has 38.69

Merged local governments would minimise complexityand support sustainable tax bases and more substantialinrastructure investments.

Options to strengthen metropolitan planning and inrastructureuse and delivery should consider the basis or local governmentboundaries and their potential to better refect local transportnetworks and economic regions.


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Case Study Brisbane CrossRiver Rail

The Brisbane Cross River Rail project aims to betterconnect the inner metropolitan area o Brisbane andaddress the strong orecast growth in the citys population.

Ten kilometres o two running tunnels will be constructedbetween Yeerongpilly in the south to Victoria Park in the

north, with the construction o our new undergroundstations. This will increase public transport capacity byaround 30 per cent to inner Brisbane.

It means 96 more trains arriving into the city in the twohour morning peak period, adding additional transportcapacity o 120,000 people rom the north and south.By 2021, it is expected that rail patronage will be morethan 12 per cent higher with the project compared towithout, alleviating congestion on the citys road network.

In addition to providing a sustainable public transportnetwork in Brisbane, the project will transorm themetropolitan area by supporting higher density

living in inner areas such as Woolloongabba andBowen Hills, and supporting the citys sustainability,productivity and employment access.

Co rv rl pojct, cocptul o gbb tto,Quld.

48 See Division o Local Government website, Department o Premier and Cabinet, March 2013. ABS, Local Government Areas in Inner and Outer Sydney; ABS


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Action 4: User pays, user says charging orurban transport

Governments alone cannot deliver the truly competitive inrastructurewe demand in our cities. User charging or urban transport shouldbe the norm but it requires courage by Governments.

Ecient road pricing or major city roads creates sustainablerevenue sources or new inrastructure and makes muchbetter use o congested road assets. Road charging also hasthe benet o improving use on surrounding public transportnetworks. The recent New South Wales nancial audit suggestedthat ecient congestion pricing could raise up to $5 billion ingross revenue per annum.70

A move to congestion charging will be needed i we are to reducethe growing economic burden o congestion and make best use oexisting network inrastructure. The alternative would be to increaseregistration ees, uel excises or taxes to und new inrastructure aswe try to keep pace with unmanaged demand growth.

New approaches to network-wide pricing are one way to achievethis. Dierent types o charging are available, ones that vary usercharges by time o day, by network location or by distance travelled.

Inrastructure Australias 2012 report to the Council o AustralianGovernments highlighted the potential to establish a commoncharge or Sydneys motorway network.71

In Sydney, Melbourne and Brisbane, users are already benetingrom additional inrastructure paid, in ull or in part, romdirect charging. In other cities, trials or innovative chargingarrangements will be required to nd politically durablesolutions. For example, the Gold Coast City Council applies atransport levy to rate payers to und the costs o the new lightrail project. The scal circumstances acing all Governments aresuch that tolling or other types o charges can and should ormpart o the solution or inrastructure unding.

Importantly, once revenue streams and their volatility isestablished, tolled roads become attractive to private sectorinvestors, and may oer additional opportunities or governmentsto divest o road assets to und new inrastructure investment.

There are currently 15 tolled roads in Australias majorcapital cities.

The Australian Government may need to reprioritise transportinvestment programs to provide incentive unding orjurisdictions that are prepared to pursue reorm. Essential toits success is that it has to be done in partnership with StateGovernments and the community.

user chArgIng For urbAn TrAnsporT should be Thenorm buT IT requIres courAge by governmenTs.


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Melbourne

rl d t dvlopt:Melbourne should continueto expand existing heavy rail and tram networks whenviable. Melbourne Metro will provide a 30 per cent increasein capacity on its passenger rail networks.74 MelbournesTram Route 86 project is a good demonstration o arelatively low cost means o accommodating growing publictransport demand, addressing congestion, and integratingthe tram services with surrounding redevelopment.

Adelaide

ec publc tpot u: A priority onintegrated public transport links over road expansion shouldbe the ocus or South Australias growing transport task.

The East West bus link, submitted to Inrastructure Australiain 2012, prioritises road space to bus users during peaktimes, making public transport a aster and more attractiveoption or regular commuters. Improved rail services northand south, including the electrication o the Gawler line,are still necessary to meet the needs o the current and

growing population.

Brisbane and south east Queensland

Co rv rl:The river rail crossing eatures a10 kilometre tunnel and the development o our newunderground stations in the rst stage. The project hasthe potential to enhance Brisbanes role as a competitivecity by expanding the coverage o inner city rail to cateror rapid employment and population growth.

Bu l:Bus lanes can provide better, aordablepublic transport access or outer suburbs o theGold Coast, Sunshine Coast and Brisbane, buildingon the successul inner city bus network. Bus lanes providelower-cost public transport solutions or low density areaswhile increasing connectivity and access to services andemployment opportunities.

gold Cot rl:Upgrades o the urban rail link betweenBrisbane and the Gold Coast in the medium to long termwould provide greater connectivity and enable people livingon the Gold Coast to easily access jobs and services in theBrisbane area.

Planning or uture growth will require investment in railline inrastructure, including in the Sunshine Coast andperhaps more importantly, west Brisbane and Ipswich,where there is projected to be signicant population growthin coming years. The Queensland Government is currentlyprogressing plans or new line capacity in both regions.

Action 5: Invest in public transportand high value vehicle links

Our cities must have greater public transport capacity to meetthe growing transport task.

Population and economic growth around Australias city centreshas increased the urban transport task to more than 180 billionpassenger kilometres per annum.72 Cars dominate urban travel

and accounted or 81 per cent o all urban passenger transportin 2011, with buses accounting or less than ve per cent o alltransport use.73

Although cars are presently the dominant orm o private travel,we need to shit the balance o investment and regulation toprioritise higher volume or higher value transport options. Thiscould involve priority or buses, commercial and reight vehicles atpeak times and improving the eciency and convenience o ourtransport network.

The smarter solutions to our urban transport needs ocus onreight, commercial and public transport, and or local trips,cycling and walking.

Public investment in urban transport should ocus on publictransport, with expansions to the urban road network unded byusers, not all taxpayers.

Australias cities are growing at dierent rates. Appropriatepublic transport solutions depend on the size o our cities.

The national priority list has identied well developed proposalsthat would support liveability in our cities and benet growingurban areas.

our cITIes musT hAve greATer publIc TrAnsporTcApAcITy To meeT The growIng TrAnsporT TAsk.


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Perth

Publc tpot cc to t ctl bu dtct dt pot:Planning or cost-eective and ecient publictransport links to key inner and middle suburb areas, andPerth Airport. Work is underway to identiy the best way oachieving this including analysis o the Perth Rapid Transitand Perth Airport Link proposals.

Hobart

Bu l: In the short to medium term, improved busservices, including priority bus lanes, will be neededto provide public transport links between Hobart andGlenorchy. Bus lanes provide low-cost public transportsolutions or low density areas while increasing connectivityand access to services and employment opportunities.Recent plans or Hobart emphasise the potential orredevelopment in this corridor to provide additionalhousing and to broaden the mix o housing.

Sydney

mto yt:An ecient metro style public transport systemacross the metropolitan area is needed to provide masstransit between high density population centres and economicactivity centres, alleviate congestion, reduce dependencyon motorways and avoid car parking short-alls. As Sydneygrows rom around 4.5 million people at present to around7 million by 2050 and even more later in the century, metro

lines serving higher density development will need to be parto the citys uture. There should be a greater ocus on publictransport measures, especially to high-growth populationcentres such as western Sydney and within western Sydneyitsel. This will improve access to jobs and services andincrease connectivity between business centres.

sydy hbou cod co:Population andemployment patterns mean that Sydney needs a secondcrossing o Sydney Harbour. A second crossing will addressa major pinch point in the network and ensure that innerSydney remains accessible to everyone, regardless o wherepeople live. In planning or the project, thought will needto be given to whether and how such a link might alsoconnect with Kingsord Smith Airport, the largest airportin Australia. Projections suggest a doubling o passengerspassing through the airport within 20 years. Many o thosepassengers will be travelling to and rom locations inSydneys global arc extending rom the central businessdistrict, through North Sydney and Chatswood to thebusiness parks in Sydneys north-west.

sydy cod pot:A second airport in Sydney willincrease access and connectivity between cities and with therest o the world. This has the potential to drive economicand employment growth, especially in western Sydney, andincrease living standards.

Darwin

Low-cot publc tpot u d cooldtd

ub dvlopt:Low-cost public transport optionssuch as bus transit lanes to outer regions accompanied byconsolidated urban development and land-use decisions tocontrol urban sprawl.

Canberra

Bu l o notbou avu:Low-cost publictransport measures such as bus transit lanes alongNorthbourne Avenue connecting the high-growth area oGungahlin with the Canberra central business district. Thiswill provide greater access and connectivity to activity centresand support the Australian Capital Territory Governmentsplans or redevelopment along Northbourne Avenue.

The project needs to be accompanied by a change in thepricing o parking in Civic and other centres in Canberra.This is also in line with the Australian Capital TerritoryGovernments existing plans.


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al vw o Pot hdld, Wt autl.


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AND freIghTNeTwOrk


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In the next 50 years, the global centre o commerce will move intoAustralias vicinity and demand or Australian goods will grow.With a connected and integrated national reight network, we canmove goods to and rom local and overseas markets aster andsaer. This will lower the cost o transport, and enable us to exploitour close proximity to Asia to our competitive advantage.

The reight task in Australia quadrupled over the past 40 years,and will almost double again in the next 20 years. 75 In 2009-10, Australia moved around 520 billion tonne kilometres oreight.76 Freight accounts or an estimated 9 per cent o GDP77and supports employment in around a quarter o a millionAustralian businesses.

And yet, in most peoples daily experience, reight makes up asmall proportion o trac on roads and rail lines. For examplereight makes up less than 9 per cent o trac on the StirlingHighway in Perth and makes up around 10 per cent on most oour metropolitan arterial roads.78

Freight activities should be less visible and intrusive to thecommunity and reight must be seen as a positive contributor tothe community, providing us with the goods we need, while alsosupporting prosperity and jobs.

Australia needs a reight network that is seamless across stateand territory borders. Since beore Australias ederation, ourpoliticians have talked o an idea to link all our major industrialareas in a single national network o ports, roads and rail.

While signicant steps towards interoperability have includedthe one nation inrastructure program, the national rail summit,the creation o the Australian Rail Track Corporation, theestablishment o single national regulators in rail saety, heavyvehicles and maritime and the national ports strategy, a singlenational reight network remains elusive.

Let the whole o the paying and non-paying railways o allthe colonies, together with the public debt, be taken overby the ederal authority, and they will prove instrumentalin building up the prosperity o the people. But they mustbe under the control o one power. I they are under six or

seven authorities, instead o being instrumental in creatingprosperity, they will be weapons or destroying the bestinuences upon national lie in the uture

22 February 1898, The Hon. Mr. J.H Carruthers

The national reight network which should have been done atFederation is an idea long overdue.

The national reight network will need the right inrastructure tomeet the growing reight task, and the right policies to ensurewell-planned, well-unded, seamless transport connections.

Why has such a simple idea been so impossible to deliver?

The FreIghT TAsk In AusTrAlIA quAdrupledover The pAsT 40 yeArs, And wIll AlmosTdouble AgAIn In The nexT 20 yeArs.


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T sdt Flyov nwctlpov cc to t Pot o Koo,

nw sout Wl.


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a od t autl not Ttoy.


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Fragmentation Galore

There are too many levels o Government involved in reightinrastructure planning and delivery, too many distractions aboutshort term local issues, and not enough consideration givento the importance o reight to our economy when planningAustralias inrastructure.

All levels o Government have dierent planning responsibilitiesand mechanisms or reight the Australian Government nancesthe national rail network, and provides some unds or majorinterstate road routes; State Governments and private operatorsown and manage metropolitan rail networks and state roads;Local Governments control local road access and can imposerestrictions on operating hours.

Despite all this planning, some in the reight industry say no-oneis listening about the inrastructure they need to be competitivelocally and globally.

Attempts to address the myriad o localised issues is cloudingthe bigger picture, resulting in a lack o perspective aboutwhat reight and the economy needs. There has been a ailureto recognise a hierarchy o places or reight, and a ailure to

protect and plan or the most important reight inrastructure.

It seems sel-evident that some places are more important orreight than others. Not everywhere should be on a nationalreight network, but all nationally signicant places should be.The networks identied by Governments today are not adequateor reight; some are ill-dened, others too broad, some do notallow seamless vehicle movement and others omit some o themost important reight acilities such as the Port o Newcastle,the worlds largest coal port acility. These existing networks allshort o what we need rom a national reight network.

Policy makers continue to value the movement o goods lessthan the movement o people when planning inrastructure.Freight vehicles have a higher value o time than private vehicles.Thereore, more ecient reight movements and aster reighttravel times have a bigger impact on productivity.

Freight eciency also has real impacts on Australian households.The harder it is to move reight around the higher the costs weeventually pay or everyday goods and services, and the moreexpensive and less competitive our products are on global markets.

The community and policy makers need to understand that reightoperators apply a simple rule when deciding whether they travelby road or rail, or by state or local road. They will seek the lowest

cost transport pathway.

Where reight routes are not clearly dened, or access is restricted,reight will ollow the next lowest cost route they can, with reighttrips spilling onto local and community roads.

Freight and the community need to reach an understanding onethat balances community need by consolidating routes wherereight can travel, with the economic importance o reight activity,by providing highly ecient inrastructure links between our mostimportant reight locations.

The national reight network is a lasting solution that will addressthe systemic and long term challenges acing reight.

Short term actions will not deliver the policy mechanisms to identiy,plan and deliver the port, railway and motorway inrastructure thatcan support a prosperous outward looking economy.

Australias major reight generators should be connected bya national network irrespective o who might own segments.

This is not a national takeover o reight inrastructure, but anapproach that ensures interoperability, with national specicationsor rail, roads, communications, corridors and shipping.

The nATIonAl FreIghT neTwork Is A lAsTIngsoluTIon ThAT wIll Address The sysTemIc And

long Term chAllenges FAcIng FreIghT.


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MELBOURNE

Mildura

Shepparton

SaleGeelong

CANBERRA

WollongongPort BortanySYDNEY

Parkes

Broken Hill

Newcastle

Toowoomba

Gladstone

Townsville

Mount Isa

Longreach

Ceduna

Thevenard

ADELAIDE

Burnie

HOBART

Katherine

DARWIN

Tennant Creek

Alice Springs

PERTHFremantleKwinanaBunbury

Meekatharra

Eucla

Newman

Port Hedland

Broome

Fitzroy CrossingHalls Creek

Kununurra

Bell BayDevonport

Bendigo

Road Links

Major Ports

Rail Links

Proposed Inland Railway

Hastings

DampierPort Walcott

Oakajee

Rockhampton

Gold Coast

Albury

Wodonga

Onslow

Port Kembla

Abbot Pt

Hay PtDalrymple Bay

Esperance

Albany

Portland

Geraldton

Launceston

Ballarat

GoulburnCootamundra

Moree

KalgoorlieWhyalla

Narrandera

Tamworth

Cairns

NarromineDubbo

BRISBANE

Port Augusta

Port Lincoln Port Adelaide

Port PirieWallaroo

Klein PointPort Giles

Source: Inrastructure Australia 2012, National Land Freight Strategy, update.

Fi 7: Iiati a atia it t


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Action 6: Create a complete nationalreight network

A national reight network should identiy and link places orreight and set the groundwork to plan or and deliver reightinrastructure over the next 50 years. It needs to ocus on limitedset routes as places or reight to reduce business costs.

A national reight network requires a long term direction towards:

availability o a standard gauge reight priority rail line romprincipal reight nodes to the designated interstate network;

standard gauge rail tracks/reight priority routings in capitalcities, the Inland Rail Route and urther rail standardisation inQueensland, Victoria and Western Australia;

a single rail control system or seamless interace with citytrain control systems;

use o smart technology in inrastructure and operations;

greater intermodal terminal capacity in the capital cities,in major cities and at strategic interchange points;

a high productivity/perormance based standards road

network or certain national highways, including the Newell,Hume, Pacic, and Bruce Highways, supported by townbypasses and grade easing works;

introduction o dedicated road reight inrastructure wheretrac density permits, between capital city ports andintermodal terminal/reight cluster sites;

a second tier o designated reight roads removed romlocal jurisdiction to support strategic reight clusters on thenational network; and

connection rom the designated National Land TransportNetwork by road to all nationally signicant container andbulk reight ports, including Newcastle, Port Kembla, andpreerred truck routes to Melbourne and Fremantle ports.

Governments recently released a reight strategy drated by

ocials. This is a start to the reorm journey that is needed toensure Australias competitiveness, however, more needs to bedone to create a true national reight network. Matters needingurther attention include:

industry involvement, including signing-o on anynational strategy;

a long term program o priority investment on the network;

a transition program rom the current situation oGovernment-only identication and unding o projects toa much more active role or industry and the private sector;

inrastructure governance more generally, including theownership, control and economic regulation o publicly

owned acilities; and

long term planning based on a much more rigorousanalytical approach.

Without these measures, Australia will not see the benets oa unctioning, ecient reight network.

A nATIonAl FreIghT neTwork should IdenTIFy And lInkplAces For FreIghT And seT The groundwork To plAn For

And delIver FreIghT InFrAsTrucTure over The nexT 50 yeArs.


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Action 7: Deliver 30 year plans orAustralias major ports

Asias demand or Australian minerals and resources is havinga dramatic eect on the national economy and on ourinrastructure needs.

Existing ports and rail systems are approaching capacity andincreased production rom regions will attract signicantinvestment in inrastructure in the coming decades.

Despite the national ports strategy being in place sinceDecember 2010, only the Port o Gladstone has a long termplan in place. This is a signicant national problem. Three yearssince it was rst released, it is time our ports and governmentscommitted to the development o long term plans or Australiasmajor ports. We need:

Thirty year plans or every major port including its channel,the port itsel and its hinterland road and rail connections; and

Regular reporting by every port against a series o agreednational perormance indicators.

Australias major ports sit within each o our major cities, largelyas container ports, and as key economic centres in our regionsas bulk commodity ports. They are large, immovable nodesthat are the import and export hubs or Australias tradeableresources. The need or long term planning o thi

Documents

2013_IA_COAG_Report_National_Infrastructure_Plan_LR.pdf