Australian Federal Budget’s record infrastructure investment underscores shared delivery concerns

Late last month, the Australian Federal Government announced its pre-election Budget. It contains record investment for infrastructure.

The Budget is highly focused on stability and economic recovery. Central to the announced investments were an acknowledgement of the cost-of-living pressures – including a halving of the fuel excise tax for six months (worth 22 cents a litre), tax relief and direct payments to welfare recipients.

Planned infrastructure spend has increased by A$17.9 billion as part of the Government’s 10-year infrastructure investment pipeline, with a concentration on rail and roading, as well as an at least A$11 billion regional investment package. This represents a 16% increase on last year’s Federal Budget allocation to infrastructure – which was already at a historic high, and comes alongside a record A$248 billion in country-wide general government sector infrastructure spend between now and 2023-24.

Major projects include A$3.1 billion for the Melbourne Intermodal Terminals, A$2.7 billion for faster rail projects from Brisbane to the Sunshine Coast and Brisbane to the Gold Coast, A$2.3 billion for the North-South Corridor in South Australia and A$441.2 million for the METRONET in Western Australia.

Delivery of that investment, however, is likely to highlight the constraints the New Zealand infrastructure industry shares with its equivalent across the Tasman.

The focus on rail is intended to help support Australia’s import and export markets, particularly as offshore supply chain pressures continue. However, in reviewing the planned allocations, Infrastructure Partnerships Australia emphasised there ‘is still taxpayer money chasing sub-economic projects’ which have limited taxpayer value, and less-than-ideal planning is in place.

The challenges our Australian counterparts face are similar in many ways to those we contend with. Lagging construction sector productivity growth, siloed approaches to sector management, low uptake of digital innovations, a lowest-price orientation limiting outcomes delivery and a skills shortage (among others) are far from unfamiliar to leaders across our industry.

Infrastructure Australia’s (IA) recently released report Delivering Outcomes: A roadmap to improve infrastructure industry productivity and innovation highlights that delivering this record pipeline of investment will require substantial change to how infrastructure is planned, procured, delivered and managed. Constraints on the sector in Australia, as here, are only likely to continue to grow.

IA suggests that a paradigm shift is needed to overcome the planning and delivery challenges the sector faces. Their key recommendations include:

• A focus on people and place outcomes as central to the role of infrastructure as a means, rather than an end in itself.
• Shifting the focus from manual on-site work, to off-site digitally enabled, prefabricated production processes, in line with international best practice.
• The development and publication of jurisdiction-wide, cross-sectoral infrastructure investment pipelines that outline current, funded, committed and planned public and private infrastructure activity over a ten-year horizon.
• Shifting from current contracting models to longer-term focussed, collaborative models that integrate supply chain considerations. This includes a focus on Should Cost Models and greater use of standardised contracts.
• Establishing and embedding equality, diversity and inclusion objectives through each infrastructure investment.

Time will tell whether Australian voters are satisfied with this cash injection in an election year. Whatever the outcome, there is much we can learn from our neighbours across the Tasman, with IA’s recommended changes – which are similar to what we have been hearing from the New Zealand Infrastructure Commission: Te Waihanga – providing much to reflect upon.

Ahead of our own Budget, to be delivered on 20 May, the Australian example serves as a timely reminder that addressing our substantial national infrastructure deficit depends not just on increased allocations for infrastructure but also on a collaborative, outcomes-focused delivery, and robust monitoring and evaluation frameworks.