is long term infrastructure planning too radical a ... · transport & utilities investment is...
TRANSCRIPT
![Page 1: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/1.jpg)
Infrastructure Productivity
Garry BowditchChief Executive
Presentation to Warren Centre for Advanced Engineering, Sydney June 2015
![Page 2: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/2.jpg)
![Page 3: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/3.jpg)
![Page 4: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/4.jpg)
4
What is happening to infrastructure investment?
![Page 5: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/5.jpg)
Public Corporations (utilities) investment trends have reflected policy and governance reforms and asset renewal cycles
5
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$, real per capita
Source: ABS National Accounts, Table 54.
Real Public Corporations Investment per capita (1984-2014)
Public ownership of Utilities
Corporatisation/Privatisation
Major asset renewals (electricity/water)
Mining Boom/GFC response
Fiscal constraints/consolidation
![Page 6: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/6.jpg)
Transport & Utilities investment is growing strongly
6
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000$, real per capita Net Capital Stock per capita, EGWWS and Transport
EGWWS K per capita ($,real)
Transport K per capita ($,real)
Linear (EGWWS K per capita ($,real))
Linear (Transport K per capita ($,real))
- Investment in Electricity, Gas, Water and Transport remains above trend, reflecting cyclical catch-up (hence strongly growing net capital stock).
- But questions remain about the wisdom of some investments as productivity has fallen in both industries.
![Page 7: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/7.jpg)
High input growth not matched by growth in output
• Productivity has declined since 2003-04
– Ramp-up in mining boom investment without corresponding increase in output, but benefits from production boom now
– Very poor performance in EGWWS, mothballed desal plants, over-spec NEM.
7
![Page 8: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/8.jpg)
Source: AER November 2014, Annual Benchmarking Electricity
Productivity Comparisons for Electricity Distribution
![Page 9: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/9.jpg)
But it is clear that major pressures remain
9
![Page 10: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/10.jpg)
Infrastructure costs & efficiency considerations?
![Page 11: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/11.jpg)
• Does history repeat?
TransportEnergy
Planning Assumptions
![Page 12: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/12.jpg)
Asset Renewal Cycle
12
![Page 13: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/13.jpg)
Overall result - rapidly rising infrastructure costs
13
![Page 14: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/14.jpg)
Mega-Project or just Mega-Expensive-Project?Gateway Bridge – 1 v 2
14
![Page 15: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/15.jpg)
Cost Inefficiencies
driving up investment risk
• Environmental Management
– EPBC Act, Fisheries Act, Environmental Protection Act, Vegetation Management Act, Water Act
• Planning
– Sustainable Planning Act
• Technical standards
– Many instances of more onerous standards; questionable whether benefits exceeds costs
• Health and Safety standards
$4 -$5 billion pa is
lost to inefficiencies
& wastage
![Page 16: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/16.jpg)
What can be done to improve efficiencies?
16
![Page 17: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/17.jpg)
Infrastructure ≠ Innovation
31 31 3028
25 2522 22
19 18
1412 11 11 11 11 10
2024
30
19 1814
1715 16
20 1815
25
12
16 16
10
0
10
20
30
40
Agr
icu
ltu
re
Ele
ctr
icity,
Gas &
Wate
r serv
ices
Tran
spo
rt &
W
are
housin
g
Co
nst
ruct
ion
Rea
l Est
ate
serv
ices
Ad
min
istr
ativ
eserv
ices
Fin
anci
all
serv
ices
Ho
spit
alit
y
Hea
lth
car
e
Rec
reat
ion
serv
ices
Oth
er s
ervi
ces
Pro
fess
ion
alserv
ices
Med
ia &
Tele
co
Wh
ole
sale
Man
ufa
ctu
rin
g
Ret
ail
Min
ing
Source: ABS, Summary of IT Use and Innovation in Australian Business, 2012-13
![Page 18: Is long term infrastructure planning too radical a ... · Transport & Utilities investment is growing strongly 6 $-$2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000](https://reader034.vdocuments.us/reader034/viewer/2022042109/5e8a35e0f77bf411497516d4/html5/thumbnails/18.jpg)
Better priority setting
Better incentives
Better governance
• Less focus on major ribbon cutting
• More use of well-targeted ‘pinch point’ interventions
• Improved life cycle management
• Ensure assets have ‘owners’ whose returns depend on life-cycle performance
• Improve contracts to better align risk, effort and reward
• Use prices or shadow prices to signal costs
• Benchmark service performance, reward for outcomes
• Clarify roles of Commonwealth/ State bodies
• Better align analysis methodologies
• Greater transparency at all stages
• Improve public/private balance
18