Count me as a big sceptic when it comes to infrastructure investment. The whole Private Public Partnership experiments carried out since the mid 1990s has turned out to have been a crock as many infrastructure projects ended up being more tollways that weren't needed. in the mean time the various governments have failed to deliver the kind of infrastructure that is actually needed. Nothing that puts Australian infrastructure on par with other countries gets made, and there never seems to be any will power at any level of government to reduce our reliance on cars.
Still, one has to worry when one reads articles like these.
As motorists in the major cities sit in cars gridlocked on highways and commuters stew in packed trains, they cannot help but contemplate a sense of Australia falling behind. Doing nothing about traffic congestion in the capital cities is costing the economy $12.9 billion a year, according to the Bureau of Infrastructure, Transport and Regional Economics. With the population growing rapidly, this cost is set to rise to $20 billion a year by 2020.
Penny Bingham-Hall, a former strategy boss at the construction company Leighton, says Australia is lagging behind other nations in infrastructure construction because of its ''chronic lack of investment and the short-termism of our political thinking''.
''Australians like to think of their country as a modern developed nation and think of Asia as Third-World. But the world is changing,'' she says. ''When I first started travelling to Asia 20 years ago that thinking may have been accurate but now Asia is boasting some of the best infrastructure in the world.''
Japan has great infrastructure to be sure, but it also has it in excess. How much so? Well, as I covered this a few days ago, they're going to borrow 50trillion yen to top up their 47trillion yen or so tax revenue to service a 220trilion yen budget and debt burden. The missing bit is going to be filled by more government debt. The only reason the Japanese have great infrastructure is because of all the corruption from general construction companies that had politicians in their pockets, and the politicians who green-lit a whole bunch of infrastructure projects as a jobs-for-the-boys routine for well over 60years under a mostly Liberal-Democrat dominated agenda.
I guess it's a case of damned if you do, damned if you don't. In Japan, they went ahead and made the infrastructure while racking up a colossal debt, while in Australia, we're refusing to build the infrastructure because we desperately want our government to stay in surplus. You'd think then that when they put together the Private Public Partnerships in the 1990s, they would have done a better job of picking exactly the kind of infrastructure that was needed, but no they didn't because there was corruption between the NSW government and the boffins at Macquarie Bank that came up with this stuff. That's a lot of Beth Morgans that got laid, so to speak. The point is, as a society we got off relatively light in that only 'the hot money' got burnt:
The recent failures mean governments are under greater pressure to meet the huge shortfall in funding as investors run scared from piling equity into so-called ''greenfield'' infrastructure projects. Leighton has made clear its appetite for investing in such projects has been ''very much reduced''.
''The government does need to bare a big chunk of the responsibility for those failures. After all, it was their tenders which created a model that attracted a lot of hot money,'' says Andrew Chambers, an infrastructure analyst at Austock. ''If the government was going to tender something like that today, the hot money wouldn't be there. The sensible money was never there.''
It's a very strange thing. The future over in Japan is that the Japanese people are going to have to pay for it through increased taxes, or lose their savings through hyper-inflation. In Australia, we're being asked to lose this money in infrastructure through the private sector ripping off investors with inflated traffic forecasts, or by losing it in lost productivity as we all sit in grid-locked traffic. There actually is no "making money" in infrastructure but everybody keeps deluding themselves that infrastructure ought to be this great money-spinner for investors or governments. Maybe everybody needs to go back to the drawing board and re-define how infrastructure actually functions in our society.
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