source: business news
Infrastructure spend under fire
A rail tunnel under the Swan River is a key element of the Forrestfield Airport Link
The state government's infrastructure spending priorities have been
called into question, with a new report showing its new big ticket
transport items – the $1.6 billion Perth Freight Link and the $2 billion
Forrestfield Airport Link – do not stack up economically when compared
to other potential projects.
The findings are part of an
Urbis-produced report commissioned by the
Property Council of Australia,
which evaluated the economic impact and potential private sector spend
which would be produced by a range of new infrastructure projects needed
in Western Australia.
Consultation with industry groups identified a list of ten projects
which would provide the most benefit to the state, a list which did not
include the rail line to the airport or the Perth Freight Link.
Criteria under which the projects were assessed included the
development of new markets, new businesses or industries, improving the
supply chain, productivity enhancement and improvements in economies of
scale.
The ten projects identified to provide the most benefit were the MAX
Light Rail network, the Western Trade Coast, the Peel Economic and
Environmental Initiative, the Breton Bay Deep Water Port, the Bunbury
Very Fast Train, the Perth to Darwin Highway, the extension of the
Mitchell Freeway, the Ellenbrook Rail Project and the Mundaring Infill
Sewer Project.
Property Council of Australia WA executive director
Joe Lenzo
said the omission of the Perth Freight Link in particular was an
illustration that the project simply did not stack up in the eyes of
industry.
Mr Lenzo said the report's findings clearly showed the need for an
independent infrastructure body to be established in WA, in order for
the state government to get the most bang for its buck and remove
politics from the decision making process.
"If you have that sort of body, these are the sorts of criteria that
they would take into consideration to build a pipeline of infrastructure
projects that would actually bring some private sector investment," Mr
Lenzo told
Business News.
"That's what we haven't got and this actually demonstrates that if
you put it through an expert, independent lens you are going to do a lot
better for the Western Australian community than the current process
that we go through."
Mr Lenzo said there also needed to be a new evaluation of how
infrastructure projects were funded in Western Australia, urging the
state government to embrace private sector involvement instead of
shouldering all the responsibility itself.
"In my opinion, it's inevitable that we move into that area where
there is going to be private sector investment in infrastructure
development," Mr Lenzo said.
"The private sector will invest as long as they see there is some
returns for them and they see some economic benefit coming out for
them."
Mr Lenzo said alternative funding methodologies should be considered, such as toll roads to fund major transport links.
"There seems to be a mindset that we're not allowed to talk about
things like that, that infrastructure needs to be funded by a very
old-fashioned and unsustainable way of increasing taxes, getting some
money and doing it, and if we haven't got the money, we won't do it," he
said.
"That is a pretty old fashioned and blinkered view of how infrastructure is funded and developed."
Urbis director of economics and market research,
David Cresp,
said the aim of the report, which he described as a high-level
evaluation based on publicly available information, was to provide some
clarity to the public around why governments should commit to certain
infrastructure projects over others.
"What we're really advocating is there should be a process that these types of projects are put through," Mr Cresp said.
"There should be some availability to public scrutiny, and if you're
coming out and announcing that you're building a train to the airport
for example, tell us what benefits is it providing, how does it compare
to other projects that you looked at to decide it was the project that
you are going to spend in excess of $2 billion on and why is it the
project that it's being spent on?"
Of the ten projects identified in the report, it was the
highly-debated and delayed MAX Light Rail that was touted as potentially
producing the most benefit for the state.
The report showed for the $2.1 billion estimate capital cost of a
light rail network, $960 million in property development would be
unlocked, and $5.5 billion in economic activity would be enabled over
the next 20 years.
Productivity gains would also be provided from reduced congestion,
with traffic issues expected to cost Perth industry $16 billion in 2031
if there is no additional transport capacity added to the network, while
land values would be uplifted at an average rate of 9.5 per cent.
Mr Cresp said it was important that the project was not assessed and
discussed in the public arena as simply a means of transporting
commuters from the suburbs to the city.
"It's an enabling infrastructure, and if you get it right, you can
have transport oriented development around the stops," he said.
"We need to think less about what's going to be the cheapest and have
a look at what is going to be the solution that is going to enable that
private sector expenditure and best enable the infrastructure to be
built around the stops.
"If you look at the totality of the picture, the question of what is the cheapest way to do it becomes less important.
"We're also not saying a really well thought out bus rapid transit system couldn't deliver those benefits
"It certainly could, but you have to think about he totality of the
picture, which is not just moving people from A to B, it's about being
an enabler of development around stops and its about assisting with the
city providing density and achieving our targets for Perth and Peel @
3.5 million."
Urbis director of economics
Nicki Hutley
said the second phase of the light rail network, the 'Knowledge Arc' to
connect the city's universities and hospitals, would also provide
significant benefits outside of more efficient transport.
Ms Hutley said one of the strongest growth areas in the Australian
and WA economies was what she described as the knowledge economy –
education and health.
"That is where we still have a comparative advantage, and if we get
the capital funding right for that, it would be a huge growth area for
the state," Ms Hutley told
Business News.
"Being able to connect and promote the connectivity of
Curtin University, UWA and the hospitals makes a huge amount of sense.
"We're seeing this unfolding economic activity in health and education, where we should have significant export potential.
"It provides a nice balance to the economy and supports that
knowledge and health economy, which is two areas that are growing quite
significantly."
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