Abbott Overhauls Rules for $50 Billion Infrastructure Splurge

Monday, September 15th, 2014
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Wider economic and productivity benefits associated with infrastructure spending are set to be given greater weight in terms of cost and benefit considerations under a fundamental overhaul of the way public sector projects are assessed for approval, as the government embarkes on its program to fork out more than $50 billion on infrastructure developments over the next six years.

Unveiling a 19-page discussion paper on Friday, Federal Assistant Minister for Infrastructure and Regional Development Jamie Briggs said the framework would place greater emphasis on the contribution of particular infrastructure projects to broader economic benefits such as improved productivity through reduced travel times and costs for freight and business passengers.

According to a recent News Corporation report, one example of developments which could benefit from the changes include tunnelling projects, which would receive greater recognition with regard to how they save urban neighbourhoods from congestion and widespread demolition compared with projects built above the ground. This is the case despite the fact that tunnelling involves greater construction cost.

Under another example, The Australian newspaper reported that the final stage of making the Pacific Highway a duel carriageway in difficult terrain around Ballina on the Northern New South Wales coast may not meet cost benefit assessment guidelines on its own but would satisfy the criteria in the context of having duel carriageway extending from Melbourne to Brisbane.

Briggs said the Australian Bureau of Statistics was working on ways to improve the estimation of these types of benefits so they can be incorporated into project appraisal where necessary.

Release of the paper comes as the Abbott government tries to fulfil its program of improving national infrastructure, which include splurging more than $50 billion in new public asset developments over the next six years as well as overhauling the governance structure of Infrastructure Australia – which was re-born from a legal perspective on September 1 as a separate, independent body with a new board.

In a statement, Briggs said the guidelines would lead to a more holistic approach to development assessment.

“This framework will lead to more transparent decision making with major projects selected based on a broader range of factors that better reflect community expectations and achieve value for taxpayer’s money,” he said.

Feedback on the proposed framework can be submitted up until October 3.

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