Humiliating’ infrastructure cost blow-outs near $5b a year

SMH: ‘Humiliating’ infrastructure cost blow-outs near $5b a year. August 13, 2014. Jenny Wiggins

Garry Bowditch. Photo: Getty Images

Australia’s infrastructure cost blow-outs are running between $4 billion and $5 billion annually as it slips behind Singapore, Britain and Canada in delivering new projects efficiently, new research has found.

The federal government needs to “disinfect” Australia’s current infrastructure planning processes and make value for money more central to investment decisions, said Garry Bowditch, chief executive of the University of Wollongong’s SMART infrastructure research group, which has analysed the potential savings from better planning.

“Value for money has been thrown out the window a long time ago,” Mr Bowditch said, adding the cost excesses reduced Australia’s attractiveness to international investors. “In my view, it’s quite humiliating.”

Brisbane’s 2010 Gateway Bridge expansion, which cost between $1.69 billion and $1.74 billion, was almost six times more expensive than the original Gateway Bridge, which was completed in 1986 for between $273 million and $345 million, according to an analysis by SMART that will be presented at its infrastructure business and policy dialogue in Sydney on Wednesday.

Costs can rise as much as 20 per cent in Australia on large projects during periods of strong economic growth as infrastructure projects compete for labour, raw materials and equipment, while excessive “red and green tape” from onerous technical and environmental requirements also pushed up the prices, the group found.

A survey of 50 infrastructure industry leaders by Newgate Research found they ranked Singapore as the leading country globally in terms of planning and delivering infrastructure, followed by Britain and Canada.

Nearly two-thirds of those surveyed believed there had not been sufficient focus on improving existing projects in Australia or “whole of government” co-ordination and planning.

As well as timing the construction of projects better, governments needed to be more transparent about their reasons for choosing which projects to build and how much it cost to build them, including releasing cost-benefit analyses, Mr Bowditch said.

“Governments should be front-footed about explaining their decisions,” he said. “They have every right to make a decision between a desalination plant and a hospital, but the public should be brought into their confidence as to how that decision was made.”

The NSW and Victorian governments are being challenged by taxpayers to explain the business cases for big new projects, including Sydney’s $11.5 billion WestConnex motorway and Melbourne’s $8 billion East West Link motorway.

Sir John Armitt, former chairman of Britain’s Olympic Delivery Authority, who is in Sydney to speak at Wednesday’s conference, told Fairfax Media he backed calls for more transparency, arguing politicians should give the public as much information as possible.

“At the end of the day, it’s their money,” he said.

Assistant Infrastructure Minister Jamie Briggs has been holding meetings with states to find ways of reducing the cost of new infrastructure and has acknowledged taxpayers deserve more transparency.

But Mr Briggs has been reluctant to force states into releasing cost-benefit analyses, arguing they do not want to “give away the game” in terms of their deals with the private sector.

Sir John, who last year completed an independent review of Britain’s long-term infrastructure planning, cautioned that the current debate over costs in Australia should not take away the government’s “moral imperative” to consider health and safety when developing new projects, as well as the environment and good architecture and design.

Australia should also be using technology to improve existing rail, road and energy networks, such as signalling systems on railways that allow more trains to use them, and prepare for the introduction of driverless cars, he said.

“It will happen, it’s only a question of when,” he said.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.