QLD: Don’t Sweat the Budget; Sweat the Assets

Tuesday, July 21st, 2015
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The recent Queensland Government budget confirmed continued funding for committed major projects such as Moreton Bay Rail, Gateway Upgrade North and Toowoomba Second Range Crossing, as well as for the establishment of Building Queensland and a statewide Infrastructure Plan.

And while a pledge to unlock innovative funding models to ease the state’s infrastructure backlog sounds promising, it doesn’t disguise the fact that, for all the talk from the Government since unexpectedly coming to power in February, its first budget lacked any substantive new infrastructure announcements.

So, we have no surprises, and industry bodies such as the Infrastructure Association of Queensland and Infrastructure Partnerships Australia are rightly asking where such a budget leaves Queensland’s infrastructure industry.

Unless we have change in policy around State Government debt levels and asset leasing or sales, or unless the Federal Government changes its view on funding public transport infrastructure, the only potential new funding stream for infrastructure is through the private sector.

Whilst we will likely see some innovative funding models introduced by industry, it is difficult to see how these will, initially at least, bridge Queensland’s infrastructure gap.

With increased demand for services driven by population growth and demographic changes, we are going to have to do better with the infrastructure we have already – both in terms of enhancing capacity of existing assets as well as more efficiently managing their remaining life.

Taking our highway network as an example, we are going to have to squeeze more capacity from existing infrastructure. This might mean variable speed limits on our motorways to promote smoother (and higher) traffic flow, more active operational control to manage traffic intersections and signals, improved Intelligent Transport Systems and, perhaps down the track, implementation of driverless cars.

Further, we are going to have to manage the assets smarter, with a view to less new or replacement infrastructure. The Department of Transport and Main Roads is doing some groundbreaking work on managing its statewide bridge network, including developing a better understanding of the condition of these assets and increasing freight loads as trucks get larger and more efficient, while investigating innovative management methods to extend their useful life. More of this will be required into the future.

The Queensland Government seems to understand that balance is required through their new and existing infrastructure. Alongside the commitment to develop the Queensland Infrastructure Plan by early 2016, there is also a commitment to implementing the little-known Total Asset Management Plan Framework (TAMP), a recommendation of the Queensland Government Commission of Audit back in 2013.

TAMP is a whole-of-government approach to manage the assets of the Queensland Government. Agency planning requirements issued by the Department of Premier and Cabinet in May 2015 require that agencies plan for their physical non-current assets over a rolling 10-year period as part of their corporate and financial planning responsibilities. Each government department will be required to submit a TAMP as part of the budget process, with the first due in December 2015 to help inform next year’s budget preparation and to ensure alignment with the State Infrastructure Plan.

To help manage service delivery for increased demands and in the absence of significant new infrastructure, it is hoped that agency TAMPs will assist by:

  • providing a consistent and transparent whole-of-government reporting structure for asset management, allowing for comparative analysis of asset treatment;
  • encouraging the consideration of non-asset based solutions for service delivery by taking into account maintenance, operational and disposal alternatives;
  • encouraging a balanced assessment of asset life cycle management, and efficient asset utilisation, by providing a transparent insight into asset condition, capacity, useful life, maintenance issues, level of service and performance deficiencies;
  • aligning capital works programs and asset management practices with government policies by providing greater clarity of how assets facilitate the delivery of services to the community; and
  • assisting whole-of-government asset management practices by informing decision makers about the resource requirements necessary for a given service level

TAMPs are going to play a critical role in future infrastructure planning and management, and more prominence needs to be given to the TAMP initiative across industry – especially if current levels of infrastructure funding continue.

It is essential that government engage with industry in developing its total asset management plans – just as industry can bring innovation and efficiency into capital works, it can also add value through the operation and management of existing assets.

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