Crane at dysj

The future of infrastructure in Australia

In Australia, we don’t have a big picture view about how we are going to create our future.

There are a number of government bodies providing metropolitan strategies and infrastructure plans, but there isn’t an integrated comprehensive vision with a clear implementation process.

As Australians, that’s a problem for all of us.  As investors and developers, that’s a very specific problem for us.

This is because there is no clear timing and there are no plans which are actually in place to provide the levels of certainty which the development industry needs to create pipelines of business.  Until we begin to see much better infrastructure planning and integration of infrastructure including transport with town planning, developers will continue to be in a high risk industry and will still demand high returns on property for the risks that they take.

Infrastructure is a hot topic in Australia, but unfortunately, it is one that is spoken about more than actioned.  The federal government and the various state governments have prepared their own infrastructure plans, but these plans don’t all focus on the same projects and, in fact, don’t even agree on what these projects may or may not be.

An example would be the East West Link for Melbourne which features in the federal government’s plans, but actually goes against the wishes of the Victorian state government!

Each of the government agencies tasked with infrastructure planning only have an advisory role to their various governments and do not have budgets themselves.  What we’ve seen at Macroplan is that infrastructure expenditure is tightly controlled by state treasuries.  So the agencies develop a shopping list of aspirational infrastructure, such as a new rail line or road, or a water pipe in a new sub divisional area.

Ultimately, however, the decision to go ahead with any piece of infrastructure will be made by treasury.  And the treasuries around the country don’t take the infrastructure bodies very seriously at all.  That’s because very few of the projects proposed have tight business cases made for them.

So what we see happening is that the state bids for infrastructure but not necessarily on solid grounds and with solid data.

Without the money behind them and without strong economic knowledge, you might wonder why these infrastructure bodies have been created.  It is because capital cities each have serious looming infrastructure problems.

The state infrastructure planning agencies are relatively new bodies and still learning how they can make an impact.  Infrastructure NSW is the first one to include a treasury representative on its board.  But they all need to learn more quickly about how we are going to be able to deliver infrastructure, not just by the public sector but by the private sector as well, because one thing is clear:  the public sector can’t afford to build all the infrastructure we need.

One of the big issues in Australia is we tend to look at infrastructure on a project by project basis, nibbling away at the problem, whereas some countries go in and tackle the whole system.  An example of this is England’s huge Crossrail project which is truly transformational, creating new stations, connecting existing stations, and ultimately providing quicker and more direct travel across London.

Maybe England can do this because it is a single state.  We are a federation of states, and each one wants what it thinks is its fair share of the pie.

In terms of infrastructure, we also suffer from being such a vast country.  But for my money, that just means we’ve got to be even better at it!


About the author: 

Brian Haratsis is MacroPlan’s Founder and Executive Chairman. Brian is an economist and future strategist with over 30 years experience as an advisor to governments and major corporate clients throughout Australia and New Zealand. For more information or to discuss your property research requirements, please contact Amy Williams on 02 9221 5211 or amy.williams@macroplan.com.au.

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