Infrastructure. It’s not a word that rolls easily off the tongue. Nor is it a concept that excites everyone. But if you stop and think about infrastructure, if you really break down what it is and what it means; it’s pretty important.
Melbourne is currently home to nearly three quarters of the state’s population. 4.1 million people live in our city and suburbs and 1.5 million more people will call regional Victoria home.
Over the next 40 years, Victoria’s population is projected to increase by 3.2 million people to a total of 8.7 million. Victoria’s current and future population will require a range of facilities and services to meet their needs over time.
Victoria does not have a plan for infrastructure investment to meet these challenges. Victoria is growing. We need to plan for this growth and we must figure out how services will be funded and delivered. Without a program to plan, fund and deliver infrastructure, Victoria’s future is not secure.
We need an infrastructure pipeline that is solid, transparent and that transcends the short term, immediate nature of the political cycle. A plan supported by all political parties.
If Victoria is going to remain competitive in the national and global context, an infrastructure pipeline must be established that outlines government priorities, provides investor and market certainty, is updated and reviewed regularly by government and is well integrated within the entire government process so as to deliver short, medium and long term outcomes.
Members of the community and industry deserve greater transparency and certainty around government infrastructure and investment priorities. Without certainty from the public sector, the private sector is unable to operate with confidence or direct future investment toward Victoria. In an era when the resources states are booming, Victoria cannot afford to continue to deny business and the community this certainty.
New South Wales has shown courage and a clear commitment to infrastructure delivery with the establishment of Infrastructure New South Wales. The Queensland Infrastructure Plan released prior to the recent election outlined a 20 year blueprint for infrastructure delivery. The Commonwealth has delivered on its commitment to establish a National Infrastructure Construction Schedule.
It’s time for Victoria to do the same. The benefits will go further than simply providing industry and community certainty. A pipeline will ensure that Victoria is on track and stays on track to deliver the infrastructure we most need, for the areas that most need it and in time to properly service the growth we are going to continue to experience decades ahead.
No one will attest to this being an easy task. There will always be widespread and competing views about what should be prioritised. Does Melbourne need a train to take us from the city to Tullamarine Airport more than it needs more port capacity? Should a new hospital in regional Victoria be prioritised before the Regional Rail Link? The purse isn’t big enough for us to do it all at once.
Figuring out how we fund infrastructure investment will take leadership from both the public and private sectors. Infrastructure cannot be funded solely out of surpluses. If Victoria is to retain any competitive advantage, alternative funding options must be considered.
Innovative finance models such as public private partnerships (PPPs), growth area bonds, business improvement districts, government borrowings and the use of superannuation funds must be explored so that a mix of funding mechanisms can be applied to deliver infrastructure.
The public and private sectors need to better integrate themselves so that we can make progress toward maximising the use of these various finance models. We want to see more thought leadership from both sides of the equation, partnerships need to be formed and practical outcomes must be reached.
The means by which infrastructure is funded and financed has a significant impact on the dividends it will produce. The greater proportion of funding through private sources, the lower the positive economic impact. In reality, a mix of funding and finance models should be applied to infrastructure projects in order to maximise the public benefit of infrastructure investment.
As part of the report, the Property Council has established a short list of infrastructure projects that should be prioritised based on the productivity and economic dividends they would produce. We believe that these projects will deliver short, medium and long term benefits for Victoria. Not surprisingly, the two projects that top the list are Melbourne Metro and the East West Link.
Melbourne Metro is fundamental to increasing the total capacity of Melbourne’s rail network. The increase in capacity will be directed to Melbourne’s highest growing areas and remove significant capacity constraints. Melbourne Metro will increase the capacity of Melbourne’s rail network by around 12,000 passengers every hour.
The East West Link will provide an additional high capacity means of moving freight between the east and the west of the city. It will facilitate high speed passenger bus movement in and out of the city with potential connections to the airport and Doncaster.
When the Property Council met with Treasurer Wells shortly after the 2010 election, the Treasurer conveyed to us the Victorian Government’s strong desire to see productivity improvements in Victoria. In this report we have a developed a metropolitan and a regional pipeline of infrastructure projects. We have established a short list of projects based on their productivity dividends and the positive effect they will have for Victoria’s economy. And we have outlined how they should be paid for.
The time is right for Victoria and for this government to demonstrate its leadership and to secure Victoria’s future.
This is an excerpt from Jennifer Cunich’s speech at the Property Council’s launch of the Securing Victoria’s Future - A Program to Plan, Fund and Deliver Infrastructure report in May 2012.
This article was published in the Melbourne Review.