The state of priorities: On Queensland’s infrastructure mess

Scott Prasser

What infrastructure problem?

After a long period of neglect, infrastructure is back in the headlines. It is now widely accepted that Australia is facing an infrastructure deficit or even crisis (AusCID 2004; CEDA 2005). The ports cannot cope with the current volume of exports and our bridges, sewerage systems and railways are in various states of disrepair. Australia’s infrastructure problems have been highlighted in the past but, with Australia’s major export—coal—held up by inadequate ports, these problems have finally got the attention of the newspapers, politicians, and policy makers.

Why has Australia’s infrastructure problem come about? Certainly, one reason is the confused place of infrastructure provision in the web of Australian politics and intergovernmental relations. The States have accused the Howard government of under-funding infrastructure; but the federal government insists that the States have not allocated GST revenues to what are essentially state infrastructure responsibilities (Steketee 2004). The funding problem is not only about finances and government responsibility, but about what funding is given priority. Speaking of the Howard government, federal Opposition leader Kim Beazley (2005) has argued that, ‘Despite the Treasury coffers being flush with funds … the Howard Government has wasted the chance of using this period of prosperity to make lasting improvements to the nation’s infrastructure.’

Whatever the cause, overall spending on infrastructure is not keeping up with needs. While nation-building governments after the Second World War spent generously on infrastructure, governments after the mid-1970s have diverted funds from infrastructure to social services (EPAC 1985; EPAC 1990; Saunders 1987). Recent trends have only reinforced this. As a proportion of GDP, government capital expenditure has halved, declining from 7.2 per cent in the 1970s to just 3.6 per cent in 2003–4 (CEDA 2005). Both state and federal governments have pursued debt reduction strategies and budget surpluses ahead of financing infrastructure for the long haul, as once was the case (Allen Consulting 2003).

Australia's ports cannot cope with the volume of exports, and our bridges, sewerage systems, and railways are all in disrepair.

Although infrastructure spending is declining, some see the problem as one of the allocation of existing spending as well. The priority has been for ill-chosen ‘megaprojects’—large-scale infrastructure, too often built without forethought, independent analysis or open scrutiny. Both here and internationally, these megaprojects are often driven by grandiose visions, rent seeking interests, short-term politics, and weak institutions that too easily enable such projects to become reality (Flyvbjerg et al 2003).

The result is expensive white elephants that fail to deliver. There are plenty of recent examples around the country. Melbourne’s Federation Square was $340 million more costly than original estimates and the resulting amenities did not match the original tender brief (Victorian Auditor General 2003; Bachelard 2004). The new Alice Springs to Darwin railway is failing to meet its original financial targets (Bockman 2005). The synchrotron project in Victoria—a project that Premier Bracks unnecessarily gazumped from Queensland at considerable expense—has failed to meet targets or gain private sector support, and will never pay its way (Baker 2003). The failed magnesium plant in Rockhampton, jointly funded by federal and the Queensland governments has cost $250 million (Fraser 2004). One can add to this list the lacklustre performance of new museums in Canberra, Melbourne and Townsville (Cummins 2001; Insight 2001), empty technology parks, and under-used football stadiums in Brisbane and South Australia.

Despite such a bad record, poorly conceived and performing projects continue to find support. Only recently, Deputy Prime Minister John Anderson announced funding for a feasibility study on an inland railway line, the so-called, ‘steel Snowy,’ to run between Brisbane and Melbourne. This idea was first proposed about ten years ago, attracting similar hopes as the very fast train proposal to link Sydney and Melbourne had in the 1980s. Similarly, the Queensland government has suggested it may pursue the 2024 Olympics—another diversion from the main focus of serious government.

Why Queensland’s infrastructure matters to Australia

In Queensland, the infrastructure crisis is particularly serious. Queensland’s population is growing faster than most other states, with big growth in its already populous south-eastern corner. Although Queensland has historically provided more money for infrastructure than the other states, funding has not kept up with the needs of the State’s above average growth. As a proportion of Gross State Product, Queensland capital spending is now in decline; from 5.4 per cent in 1999–2000 to 4.2 per cent in 2002–03 (Allen Consulting 2003).

Queensland’s problems are, again, of overall resources and the rationality of government planning. Some of the problems stem directly from the growing population. Roads and schools are not being built fast enough to meet the influx of people. On the fast growing Sunshine Coast, these problems are now acute (PCA 2004). With their new concentrations of young families and senior citizens, areas like the Sunshine Coast face challenging infrastructure needs.

Other problems are to do with the priorities of the Queensland government. In the south-east, there’s still a lot of focus on megaprojects—the Suncorp stadium, redevelopment of Southbank, the modern art gallery are examples—which have not delivered on promises. Meanwhile, regions outside the south-east are not receiving enough infrastructure support. And this has implications for both the national and Queensland economies. Queensland is largely responsible for Australia’s most successful exports such as primary products like coal, bauxite, beef, sugar, and wheat. So infrastructure problems in Queensland have national consequences, as Federal treasurer Peter Costello acknowledged in his recent attack on the inadequacy of coal port loading capabilities in Queensland.

Key regional drivers of economic development are feeling the infrastructure pinch.

Key regional drivers of economic development, like energy supplies, are feeling the pinch of poor infrastructure as well. The 2004 report on Energex, Queensland’s government owned energy supplier, highlights the failure of infrastructure to keep up with demand, and suggests that successive governments have transferred Energex’s surpluses to pay for recurrent expenditure and produce surplus budgets.

The Queensland government has acknowledged the infrastructure problem, for instance, in its Draft South East Regional Plan released in September 2004—the first attempt by the State government to develop a regional statutory planning system. It is to be underpinned shortly by an infrastructure plan, but the Queensland government has refused to involve any of the eighteen local government authorities in the decision-making process.

Beyond megaprojects

When the Queensland treasurer announced a budget surplus $1 billion for the 2004–5 financial year—considerably more than expected—it was followed by calls to spend the surplus on new megaprojects or a raft of new proposals emanating from the government itself. But couldn’t these funds be better used for more libraries, computers for schools and the regeneration of Queensland’s natural environment for its own sake, and for the income produced by tourism over the long term?

Lop-sided priorities underscore one problem of governing Queensland—the lack of well-institutionalised means for setting rational priorities for state development. It is also a problem facing other jurisdictions. As one commentator observed, the NSW government would done well to work out how Sydney’s working harbour area would be best used before proceeding to redevelop it (Perinotto 2005).

Queensland’s problems come in part from the fact the government knows surprisingly little about the state of infrastructure. The Queensland Department of State Development and Innovation does produce a report on infrastructure needs, but it’s more like a list of wants, plans, and projects in waiting than a priority setting mechanism. The same complaint about the lack of data and priority setting in the area of infrastructure has been made at a national level (Taylor 2005).

But Queensland also shares problems common with other states. State governments have less open systems of government than the federal government. In Queensland, this problem is further compounded—there’s no upper house of parliament to exert scrutiny on executive government. Moreover, all state bureaucracies have become politicised in recent years, reducing the amount of independent advice flowing to government. The trend to politicisation has usually occurred alongside administrative reforms that have increased staff turnover and increased the steering role of managers with little ‘content’ knowledge. The result, in Queensland and elsewhere, is a decline in policy making capacity; the so-called ‘hollowing out’ of government (Rhodes 1994) and loss of organisational memory (Pollitt 2000).

Queensland’s own reform experience illustrates these trends, especially the demise of the Co-ordinator General’s Office (COG) which had its functions channelled out to different departments under the Goss Labor Government. During the 1960s and 1970s, the COG planned Queensland’s major infrastructure projects and, in doing so, developed real expertise. It was seen as a unique and effective Queensland institution (Minnery 1988). Today, the old COG function resides with the head of the Department of State Development, but really exists in name only.

Renovating Queensland’s house

Before the Beattie Government rushes to spend the surplus, new institutions need to be established to prioritise how to spend the money. Commerce Queensland—the State’s main employer group—has suggested some sort of infrastructure council, which would have key business representatives meeting government representatives to discuss infrastructure needs. This approach, however, wouldn’t incorporate the need for hard-headed, independent analysis and public involvement. It would certainly smack of ‘deals made behind closed doors’, which many see as a problem intrinsic to modern business-government relations.

An independent Commission would help set Queensland's infrastructure priorities.

Nationally, business groups have suggested an infrastructure summit—reminiscent of the Hawke-Keating tax summit of the 1980s. But the same problems with current business proposals for Queensland would apply. Federal Labor has also proposed a National Infrastructure Advisory Council, but the details are still unclear and the proposal focuses on facilitating more joint public-private spending initiatives (Beazley 2005).

An alternative, and one proposed here for Queensland, is an expert, statutory authority, which might be called the State Priorities Commission. It would determine the state’s infrastructure priorities, openly evaluate infrastructure proposals, and consult with business and the community. The commission would also audit Queensland’s present infrastructure, identify gaps, and make public recommendations for improvement. Done annually, this would provide a report card on Queensland’s infrastructure and improve long-term expertise.

The Commission could serve one other useful function. The government could send any new major infrastructure proposal to the Commission for independent evaluation, and thereby provide elected officials with a convenient ‘post box’ to which complex proposals and problems could be despatched. The government could use the Commission’s governing legislation to establish its priority areas, required timeframes for reporting, and assessment criteria for evaluation.

Of course, elected officials would still have the final say over infrastructure decisions. Nevertheless, the work of the Commission would offer governments better information to make decisions that would produce maximum benefit. It would certainly improve public participation in decision-making, improve accountability and assist in the efficient allocation of taxpayers’ funds on big projects.

Some would now see such an idea as out of fashion or difficult to implement. It would cut across the prerogatives of elected and executive government. But our present system of government abounds with successful models of this kind, especially at the federal level. The Commonwealth Grants Commission has successfully assessed state shares of federal grants, and in the past, determined the financial situation of ‘claimant’ states for additional federal funds. It has a public consultation as well as an investigatory and research function.

Perhaps a more pertinent example is the Industries Assistance Commission (IAC), first established by Whitlam in 1974. The IAC and its contemporary, the Productivity Commission, have provided independent analysis on the appropriate level of government assistance for all industry sectors. Its open public hearings, draft reporting processes and opportunities for consultation have promoted public participation, improved the quality of information about industry, and made governments more accountable (Rattigan 1986; Warhurst 1982). It’s an interesting aside that the National Party leader Doug Anthony at the time (whose party opposed the establishment of the Commission) observed that ‘when there is a body of prestige and authority it is very hard for a vested interest or a minority interest to change the decision of that body’ (1973, p. 2354). This, of course, is the reason why such bodies are so necessary.

Infrastructure and the states

State governments have largely eschewed open processes found at the federal level—state government assistance to industry has long been fraught with special concessions and deals. Despite revelations of widespread corruption in several states during the 1980s—the most spectacular of which was WA Inc—the same loosely governed practices continue.

If a state like Queensland, which is important to Australia’s population and economic development as a whole, is to deal with increasingly important infrastructure priorities, there will need to be an independent body capable of assisting with the process. This will help prevent short-term politics, vested interests and inadequate evaluation from dominating the development of infrastructure into the future.

References

Allen Consulting Group 2003, Financing Public Infrastructure in Queensland, December, Melbourne.

Anthony, D. 1973, Australia, House of Representatives 22 October, Commonwealth Parliamentary Debates, pp. 2352–55.

AusCID 2004, Modelling the Economic Effects of Overcoming Underinvestment in Australian Infrastructure, Australian Council for Infrastructure Development, Sydney.

Bachelard, M. 2004, ‘Capital projects hit a brick wall’, The Australian, 10 July.

Baker, R. 2003, ‘Labor “lying” over synchrotron plan’, The Age, 26 August.

Beazley, K. M.P, 2005, Transcript, ABC Radio AM, 2 March.

Bockman, M. 2005, ‘Train fails trade test’, The Australian, 26 February.

Committee for Economic Development of Australia (CEDA) 2005, Infrastructure: Getting on with the Job, Discussion paper, April.

Cummins, C. 2001, ‘Museums now look to the bottom line’, Sydney Morning Herald, 13 April.

Economic Planning Advisory Committee (EPAC) 1985, Public Sector Expenditure in Australia, AGPS, Canberra.

EPAC 1990, The Size and Efficiency of the Public Sector, AGPS, Canberra.

Flyvbjerg, B. Bruzelius, N., & Rothengatter, W. 2003, Megaprojects and Risk: An Anatomy of Ambition, Cambridge University Press, Cambridge.

Fraser, A. 2004, ‘Mag deal cost the taxpayers $240m’, The Australian, 26 March.

Insight SBS 2001, Transcript, ‘Museums: Relevant or Relic’, 22 November.

Minnery, J. 1988, ‘Coordination and the Queensland Co-ordinator-General’, Master of Public Administration dissertation, Department of Government, University of Queensland.

Perinotto, T. 2005, ‘Another Opera House is out, so what do we want?’ Australian Financial Review, 10 February.

Pollitt, C. 2000, ‘Institutional Amnesia: A Paradox of the “Information Age”?’ Prometheus, vol. 18, no. 1, pp. 5–16.

Property Council of Australia (Queensland Division) 2004, Initiatives for the Sunshine Coast: Issues, Opportunities and Actions, Brisbane.

Rattigan, A. 1986, Industry Assistance: The Inside Story, Melbourne University Press, Melbourne.

Rhodes, R.A.W. 1994, ‘The hollowing out of the state: The changing nature of the state in Britain’, Political Quarterly, vol. 65, no. 2, pp. 138–151.

Saunders, P. 1987, ‘Measuring the Size and Growth of the Public Sector in Australia’, in Restraining Leviathan, ed. M. James, CIS, St Leonards.

Steketee, M. 2004, ‘Tax boom wasted by states’, The Australian, 13 November.

Taylor, L. 2005, ‘National plan seems a bridge too far’, Australian Financial Review, 7 March.

Victorian Auditor General 2003, Report on Public Sector Agencies: Part 2 – Special Reviews, Status of the Federation Square Development, Victorian Government, Melbourne.

Warhurst, J. 1982, Jobs or Dogma? The Industries Assistance Commission and Australian Politics, University of Queensland Press, St Lucia.

Dr Scott Prasser has worked in federal and state government in policy advisory roles. He presently lectures in project and event management in the Faculty of Business at the University of the Sunshine Coast and is also Director of the Sunshine Coast Research Institute for Business Enterprise (SCRIBE).