After the East West Link, infrastructure PM Tony Abbott is all talk no work

The release last week of Infrastructure Australia’s audit report revealed that the cost of congestion on Australia’s roads and the economic value infrastructure adds to our economy. Despite providing detailed information about costs of delays on roads around Australia’s capital cities, and the likely congestion by 2031, the audit report will do little to take the political heat out of arguments over what should be built.

Oh infrastructure. Is there any word more pleasing to the ears of a politician? Other than replying “nope” when asked about taking in asylum seekers, it appears infrastructure is Tony Abbott’s favourite word.

Last week, while releasing Infrastructure Australia’s audit report, Abbott certainly was at pains to let everyone know his love for infrastructure. He began by telling the audience, “You have got a prime minister for infrastructure here today, you have got a deputy prime minister for infrastructure, and you have got minister Briggs as well.”

It’s all a bit silly, really. Abbott is no more an infrastructure prime minister than Julia Gillard or Kevin Rudd. A self-described moniker that sounds good in the focus group doesn’t actually confer any extra importance to issues.

Indeed if we look at the amount of infrastructure built for the public sector in the past two years, there has been a fall in the amount spent on roads, railways, bridges and harbours:

And if we look at the value of work in the future, there doesn’t appear to be a lot coming down the pipeline:

No doubt being the infrastructure prime minister will lead to some work soon, but given the government put a lot of their infrastructure eggs in the Melbourne East West Link basket, for now there’s more talk than work.

The audit report, however, is just a step along the road towards building more infrastructure. All it does is highlight where issues exist in a pretty general sense, rather than providing advice on what should be done.

The report clearly highlights that the big issue with infrastructure in Australia is urban transport, followed by other transport such as airports, ports, and national highways, and then telecommunications.

The audit found that the direct economic contribution of urban transport infrastructure to Australia’s economy is about $79bn, compared with $21bn for telecommunications.

One of the problems with infrastructure spending in Australia is that because politicians love to announce huge spends and talk up economic benefits, it quickly becomes a syllogism: infrastructure is important to build, this is infrastructure, therefore we must build it.

Last year the Grattan Institute’s report on the budget pressures faced by governments noted that “infrastructure is important for economic growth if it is the right infrastructure in the right place at the right time for the right price”.

It also suggested that “governments may not be getting particularly good value from the significant increase in infrastructure spending” due to a lack of cost-benefit analysis and greater store being placed on the politics of the project.

It’s worth remembering that the cost-benefit analysis done for the East West Link showed a return of just 45c in the dollar. The only way the former Liberal Victorian government was able to suggest the project would produce a return, $1.40 for each dollar spent, was to include “wider economic benefits” (which pretty much all projects have) and a range of “complementary projects” that were actually not all that complimentary.

And this was the project that at the last election Abbott told voters: “There are lots of things that I haven’t seen but I know, and I know that there is a business case for the East West Link. It says there is $1.40 worth of benefit for every $1 of spending. That’s why the East West Link will go ahead under the Coalition.”

When releasing this audit, Abbott said: “The commonwealth will keep our $3bn commitment to the East West Link in a locked box to be made available to the first Victorian government that wants to build it.”

So no, the bar has not been set that high for infrastructure.

But it is clear there is a lot of congestion on our urban roads – and most of the worst is in Sydney. For example, the Pennant Hills Road – Parramatta to Hornsby corridor has delays that according to Infrastructure Australia cost $3.53m each lane a kilometre:

But while urban road congestion gets all the headlines and also provides by far and away the biggest amount of economic value add, the report also considers our infrastructure gaps in other sectors.

With respect to broadband it notes that we have the highest penetration of wireless broadband in the OECD, but a below average penetration of fixed line broadband.

And for those who grumble at our internet speeds, the report notes that Australia ranks 44th out of 120 countries in the worlds for average download speed for fixed line broadband.

Our average mobile broadband speed is also half that of the UK and Canada and a third slower than the US.

The report found that “across various sectors, gaps in service quality already exist and will grow. These gaps are particularly evident in urban transport. Gaps in the quality and reliability of water services in some rural towns are also evident.”

But the report, as good and detailed as it is, does not provide much direction for what to do next. It’s why politicians on all sides have claimed that the report vindicated their position.

The report does not consider individual projects, and thus the Victorian premier, Daniel Andrews, said: “I think it pretty well confirms the priorities that our government laid out before the election.” The Victorian opposition spokesman on roads and infrastructure, Ryan Smith, on the other hand responded that “the East West Link was the project to deal with much of the congestion issues that we’re seeing on our roads today”.

The report, however, also notes that just looking at the economic cost and contribution of areas of infrastructure was not enough. It noted that “other tools, such as cost-benefit analysis, are particularly important for detailed, project-level decision making”.

And for this we must wait. The next step by Infrastructure Australia is to use this audit to develop a plan which will “identify a portfolio of reforms and initiatives that are most likely to support the achievement of Australians’ aspirations”.

At that point the real political bunfight will be on in earnest – especially as the audit report suggests that the method of public spending funding most transport infrastructure is “unsustainable” and that there is a “necessary shift to greater application of user charging”.

Infrastructure might not be as pleasing for politicians to announce to voters, when it is accompanied with a toll.