Is QLD’s Infrastructure Grants Funding System Broken?

Friday, February 5th, 2016
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As Queensland prepares to unveil the final version of its infrastructure plan, a new report has called for an overhaul with regard to the way the state’s infrastructure grants funding system operates.

Commissioned by the Property Council and prepared by infrastructure advisory group Integran, the report found that the existing environment for infrastructure related grants within the state was disorganised and lacking in strategic direction, and had resulted in programs being funded which were potentially overlapping with other programs or not adequately aligned with long-term objectives.

In particular, the report found that:

  • While the aggregated pool of grants available had doubled over the past decade and now totalled $26 billion annually including $7 billion for infrastructure related projects, a lack of coordination across funding pools and programs created potential for duplication, inefficiency and questionable efficacy.
  • There was an absence of strategic oversight with regard to the multiple funding streams and how they deliver upon overall government objectives and infrastructure priorities.
  • A lack of objective assessment with regard to the effectiveness of spending on new capital projects and the benefits which have been achieved in the process means that ‘shovel ready’ projects are better placed to receive funding even if other projects would deliver better outcomes relative to money invested over the longer term.
  • Despite the need to deliver value for money in an environment of fiscal constraint, the criteria for some programs indicated that no benefit need be realised in order for the project to be funded, while others were assessed on an ‘effort neutral’ basis and thus received funding irrespective of the approach toward financial management for the particular program in question.

An example of the type of overlaps which can occur can be seen through the roads program.

Potentially, the same road project could receive funding for the same work through the Federal Black Spot program, the Roads to Recovery program, the Safer Roads Sooner program or several other state government programs.

Around Australia, a number of states are undertaking different approaches toward infrastructure grant funding in order to strengthen the link between strategic objectives and the programs which receive funding.

Victoria, for instance, has moved away from a competitive bidding process with regard to its Regional Infrastructure Fund, which it viewed as not being effective as infrastructure needs varied widely across different parts of the state.

Instead, all funding proposals must first be identified as a priority with regard to relevant strategic plans for each region, and applicants are required to work with ‘facilitators’ in order to prepare bids which have the maximum prospects of success.

In New South Wales, meanwhile, Infrastructure NSW has adopted a three-part prioritisation process for programs based on alignment with strategic plans, project assessment and completed assurance programs.

Infrastructure NSW has also created a number of thematic clusters (such as transport or health) through which more than 100 departments, agencies and organisations with related objectives and responsibilities work together more closely to achieve strategic outcomes.

Project assessment sits within a broader framework that attempts to make visible the trade-offs between alternative solutions that are harder to cost financially.

The report also comes as Queensland is set to finalise its program of infrastructure spending and capital works over the coming weeks.

A draft plan released late last year contained a number of measures designed to beef up the capacity and resilience of transport in the South-East, improve the health care system, address issues associated with disruption of the state’s energy system, improve regional freight connectivity and better preserve public assets.

Property Council of Australia CEO (Queensland Division) Chris Mountford said problems with the grants funding had arisen where in many cases individual ‘buckets’ of money had been created with initially good reason.

Over time, however, more buckets had been added across multiple levels of government without any real strategic considerations as to which were still relevant or highest priority.

Mountford would like to see the combining and aggregating of programs and greater evaluation of whether or not programs are meeting strategic objectives.

“You have this muddled process of money and how projects are prioritised and we are not really checking to see if the money is being used wisely in the process,” he said.

“What we are saying is tidy this up, aggregate a bit of the money, get a clear view of what you are going to use it for, and then after the fact go back and make sure that the money was delivered as intended and outcomes achieved as expected.”

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