Road to ruin warning from Sir Rod Eddington

Sir Rod Eddington may warn against “bridges over puddles and roads to nowhere” in the Herald Sun article but his recommendations on further “regulatory reform” to facilitate PPP’s and ease in tendering is a major concern.

Of specific concerns are his comments on PPPs, Federal and State duplication, environmental regulation and the high cost of bidding.

It would appear that deregulation is an important platform in the Transport Lobby’s agenda and as the Victorian Government is already introducing legislation to further deregulate access codes for land developers – we need to be vigilant and active in opposition – a pattern is clearly emerging.

Herald Sun:  Road to ruin warning from Sir Rod Eddington

The Federal Government’s leading adviser on roads, rail and ports has warned against a Greek-style binge on “bridges over puddles and roads to nowhere”.

Sir Rod Eddington, who chairs the government body that reviews proposes big-ticket infrastructure projects, said the nation’s arteries were under stress after two decades of underinvestment.

But he underlined the need to bring in private funding for vital projects and warned against simply funding them without undertaking rigorous studies into costs and benefits.

“If you build bridges over puddles and roads to nowhere, you do nothing for productivity,” Sir Rod said, addressing the Australian British Chamber of Commerce in Melbourne yesterday.

“When Greece joined the euro and the (European Union) there was an enormous inflow of money into Greece for capital projects.
“They built a new airport, they built a huge facility for the Olympic games in 2004, they built a substantial new rail link.  As I understands it, the stadium used for the Olympics stands empty and derelict … the rail link runs at an operating loss of over 1 billion euros a year. It just did nothing for productivity and efficiency really.”

“Japan is similar – they have big airports with runways that take 747s that are only used for model aeroplane clubs on the weekend.”
Sir Rod also criticised the use of “strategic” rationales, rather than business cases, for major projects to be funded.

“If someone says a project is strategically important it usually means the business case doesn’t stack up,” he said.
And with the long timeframe required for important public projects, he said the Government needed to spur economic growth now with an aggressive reform program.

Sir Rod said business leaders were expressing fears about changes in industrial relations laws that threatened to hit productivity.
He said other key concerns included the duplication of red tape – particularly environmental regulation – between the Federal and state governments and the high cost of bidding for projects.

“If you want to see real productivity improvements it is through regulatory reform,” Sir Rod said.

“If you go back to the early ’80s, when Bob Hawke became prime minister in ’83 … (key initiatives included) the floating of the Australian dollar, the setting free of the Reserve Bank, the lowering of tariff barriers.

“All these things were painful, difficult, much debated issues. I would argue they sowed the seeds of the productivity enhancements of the next 20 years.”