Heavy criticism of Qld’s infrastructure deficit at IAQ Infrastructure Summit

Government ministers should accept speaking invitations at important conferences so they can communicate with industry and the public, and, also, so they can deny Opposition members 20 minute speaking slots in which they can criticise the Government’s performance. That is what happened yesterday at the Infrastructure Association of Queensland’s Infrastructure Summit held at the Brisbane Convention and Exhibition Centre, which featured Deputy Opposition Leader Deb Frecklington as keynote speaker.

The Deputy Opposition Leader heavily criticised the Queensland Government’s record on infrastructure, noting that, at 1.3 percent of GSP, general government infrastructure spending was at a record low in 2015-16. She also criticised the Government for failing to fully deliver its infrastructure program in 2015-16, with a shortfall of some $2 billion. This appears to be based on a comparison of budgeted and estimated actual expenditure figures for non-financial asset purchases across the whole of Queensland Government for 2015-16, which reveals a shortfall of $1.7 billion (see chart below based on data from the 2016-17 Budget papers, specifically Tables 9.1 and 9.2 of Budget Paper no. 2).

infrastructure_1516

The Deputy Opposition Leader also said the Government has yet to make a convincing case for Cross River Rail, and called on the Government to release the full business case. She asked what “secret taxes” are being planned by the Government to pay for the project. This is obviously a reference to value capture proposals, which could include a betterment levy on property owners benefiting from increases in property values. An increase in car registration, which was apparently advanced as an option in the business case, has been ruled out by the Government. I hope the Opposition’s rhetoric about secret and sneaky taxes does not preclude it from using value capture to pay for future projects when in Government, as value capture can be a legitimate source of project funding and can promote a fairer sharing of the costs.

The Deputy Opposition Leader would have been very pleased if she had stayed at the Summit, because the next speaker, the Deputy Director-General of Queensland’s Infrastructure Department Darren Crombie, said he supported a lot of what the Deputy Opposition Leader said, and he noted she was correct about the infrastructure shortfall. It appears that public servants, too, and not just industry players, are disappointed with the relatively low level of infrastructure spending in Queensland. As I have noted on this blog, however, government infrastructure spending has started to increase recently, and it is very important to make sure we are spending money on projects that deliver net benefits to the community.

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2 Responses to Heavy criticism of Qld’s infrastructure deficit at IAQ Infrastructure Summit

  1. robsonap0 says:

    I’d add heavy criticism too. As I’ve said before I do agree any spending needs to be mindful of the cost and benefits that accrue to the community. However, I’ve also said that the techniques used to measure these are deficient, particularly for very long term infrastructure spending which spans generations (such as motorways, heavy rail, and ports). The benefits are particularly difficult as they are uncertain. We simply do not know how many people will use a motorway or railway line in 50 years. Typically if we don’t know we tend to make it up by using comparative numbers from other similar infrastructure projects. But this again introduces inaccuracies. Potentially the most damaging is not including an uncertain benefit at all. There are some techniques which try to address the uncertainty such a Monte Carlo simulation. But irrespective of which technique the benefits are only as good as the initial conditions you base any technique on. Demographic initial conditions are often used. The problem with those is population can change quickly, just witness the population boom in central Sydney over the past five years and the lack of school infrastructure in those regions. Which brings you back to the same problem of guessing. Using “reliable” measures in measuring the costs and benefits of infrastructure has led to too little infrastructure being built. It is now obvious to the general public. I don’t know the answer but I do know Economists may have unwittingly contributed to the lack of infrastructure spending by trying to be magicians and assume we can know the future. The obvious candidates for infrastructure spending in my mind are heavy rail down to the border (and crossing into tweed heads) and widening the M1, M5 and M7. Follow Sydney’s lead and just start the infrastructure building for the sake of our future economy.

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