The Good Oil by Rod Brown*
The Government’s announcement on 3 February of an additional $500 million to expand the Regional and Local Community Infrastructure Program was a welcome surprise. It was especially so for those councils that had made submissions on 23 December for the $50 million then on offer, because they are first in the queue. The rest of you are likely to miss out.
But the main game has not been in the news. It involves Infrastructure Australia, headed by Sir Rod Eddington. It has completed its audit of the nation’s economic assets, together with 94 priority infrastructure proposals. The final list is supposedly being signed off in March, although Rudd’s $42 billion expenditure package has now complicated things.
The key point is that Infrastructure Minister Anthony Albanese says it’s ‘an historic opportunity for the Australian Government to play a much more hands on role in infrastructure investment’. Never a truer word – but the process is going to be bumpy.
First, some State Governments have put forward some real try-ons. I estimate that one third of the projects would fail any financial viability test, however you want to measure it. For example, the Very Fast Train (Sydney–Canberra–Melbourne) has been dusted off again. Wise heads in Canberra say this project is at least 30 years away.
Secondly, the recession means that most of the cost benefit analyses supporting the 94 projects are already out of date.
Thirdly, the projects involving big expenditure raise tricky policy issues. For example, where would you start in evaluating the Pilbara Housing and Indigenous Infrastructure ($2.1 billion) and Broadband for Remote Communities
($200 million) projects?
Similarly the Oakagee Port, WA ($3.5 billion) is a public private partnership (PPP) doozie, calling on the Western Australian Government and the Feds to each chip in
$339 million at a time of plummeting iron ore sales and doubts about the miners’ finances. And a road tunnel alternative to Melbourne’s West Gate Bridge ($3.5 billion) – what ever happened to rail transport? And Canberra’s light rail ($2.95 billion) – a sheer waste unless the Stanhope Government agrees to some serious in-fill and urban consolidation.
Sir Rod and his team face monumental challenges in fairly assessing these projects. The best approach would probably be to firstly run with those projects where there are demonstrable public benefits – such as the Pacific Highway upgrades (although
$6.67 billion is a lot!) and the F3-M2 ring road link in Sydney ($4.75 billion).
But the overhanging issue of Sydney’s rail bottlenecks must be addressed too. And let’s not forget Greater Brisbane. Gee it’s a tough set of issues.
A critical step is to develop a better way of measuring public benefits, so that PPPs have a sounder future. Then the fanciful and overtly political projects can be weeded out.
Councillors and staff need to be across this subject.
I therefore recommend you read the report because it’s a first rate overview of all the issues, and it provides the intellectual framework for many of the upcoming issues facing the Rudd Government. Go to www.infrastructureaustralia.gov.au/publications.aspx
Nationals
heading south
The Nationals are in disarray at the Federal level. Before Christmas there was the dust up over whether the
$2 billion worth of Regional Communications Infrastructure funding should be merged into a bigger pot.
Then outspoken Liberal senator Bill Heffernan was also saying the Nationals and the Liberals are good mates and should therefore merge. He says it’s a ‘very strategic thing to do’.
Indeed, that is the Nationals’ problem – no strategy, no brand. Peter McGauran and Mark Vaile have dropped off, and John Cobb and Barnaby Joyce are sitting in the bleachers.
The Nationals must find some new directions very quickly. What is really striking is the lack of any research being commissioned by the Nats. Surely there are enough
regional universities or think tanks that could be working up policy papers on regional telecoms, rural medical services and so forth.
Nothing but silence. Regional Australia needs a strong voice.
Looking for US investors?
Our Cockatoo Network continues to explore joint venture investment opportunities with US agencies. The change of governments in the USA, Australia and NZ opens up exciting new opportunities to facilitate foreign investment and alliances at the local level.
First, Rudd has a more enlightened view of aid-trade-investment than his predecessor, and we hope Obama tracks the same way. Secondly, NZ’s John Key has a strong background in investment, and interestingly Merrill Lynch figures on his CV. Thirdly, the USA has a lot of fence building to do, and facilitating international investment alliances would be a good sign. Fourthly, Obama has a strong attachment to Indonesia and Africa, Rudd has likewise with the South Pacific, China, Vietnam and so forth, and Key has likewise with Singapore, USA and UK. The core ingredients are in place.
Watch this space.
Creative industries boilover
The QUT–VUT joint bid, the hot favourite to win the tender for the Feds’ $17 million Creative Industries Innovation Centre, has missed out.
The winner is University of Technology, Sydney. This hotly contested centre is very important in view of the rising importance of the creative industries in the 21st century. We understand that the success factors were a group of like minded ex European academics at UTS with very strong credentials and links to the UK scene in particular. The fact that 60 per cent of Australia’s creative industry is within one kilometre of UTS was also a factor.
The launch of the centre is on 17 February at UTS in the Sydney CBD. Ministers Carr and Garrett are featuring. We have been advised that UTS wants to collaborate with other agencies. We can make some enquiries on your behalf.
For the record
Mackay ‘won’ the $14 million Mining Technology Innovation Centre (election promise), Geelong ‘won’ the $20 million Innovative Regions Centre (election promise) and Alice Springs ‘won’ the $10 million Remote Enterprise Centre (a nod and a wink).
The two that went to tender were the $17 million Creative Industries Centre as above, and the $20 million Clean Energy Innovation Centre, which is still unannounced.
We have just learned of a new one – a $20 million Defence Industry Innovation Centre. Details are scarce, although Adelaide would surely start favourite.
But as my old boss used to say, “Don’t back odds-on favourites, and don’t run up stairs”.
*Rod Brown is a Canberra-based consultant specialising in industry/regional development, investment attraction, clusters and accessing Federal grants. He can be contacted at apd@orac.net.au or phone (02) 6231 7261. Go to our blog at www.investmentinnovation.wordpress.com for 400+ articles on issues relevant to Local Government.
