Summary results of preliminary economic appraisal of selected projects (source Infrastructure Victoria, Preliminary demand modelling and economic appraisal)
High-level economic appraisal of big-ticket transport projects – Benefit Cost Ratio with and without Wider Economic Benefits (source Infrastructure Victoria, Preliminary demand modelling and economic appraisal)

Infrastructure Victoria’s (IV) newly released draft 30-year infrastructure strategy offers non-binding advice to government on more than the traditional urban portfolios – it deals with infrastructure in other areas too like health, education and justice – but it’s most impressive in what it says about cities policy.

It’s astounding that such a complex and sweeping cross-disciplinary vision, supported by a comprehensive set of documents (see the library here), was produced in the period since the government’s promise to establish the new statutory authority at the 29 November 2014 election. We haven’t even seen the “light refresh” of Plan Melbourne the government says it’s been developing over the same period. As it turns out that’s probably a good thing; IV’s draft 30-year infrastructure strategy is the nine tenths that will always be missing from a mostly marketing document like Plan Melbourne.

What’s good about IV’s strategy? There are specific recommendations on the particular “concrete and steel” projects that should proceed over the next 30 years and those that shouldn’t. We’re not used to this sort of frankness or to being provided with a transparent assessment methodology. Nor are we used to an economic appraisal methodology that’s applied consistently across all big-ticket projects to aid in assessing where the biggest bangs (and the smallest simpers) really are.

Unlike Plan Melbourne and its ilk, it doesn’t ignore current and anticipated technological changes that will affect the demand for infrastructure e.g. autonomous vehicles, ride sharing. And many of the recommendations are aimed at the behavioural factors that drive the demand for infrastructure in the first place and require policy and regulatory solutions rather than “concrete and steel”.

One of the key city-related ideas for the medium term (up to 15 years) is to implement a network pricing regime. This applies across all modes but the major innovation is pricing access to road space. IV says:

This reform will fundamentally change the way the transport network is used and will play an important role in preparing for the arrival of driverless vehicles and improving freight productivity.

Other medium term recommendations include:

  • Build more social housing.
  • Intensify development in established areas, particularly around activity centres and transport corridors.
  • Expand walking and cycling networks.
  • Reform the urban bus network “from a clean slate”.
  • Give public transport and active transport users higher priority on roads.
  • Improve train timetabling.

Those sorts of general propositions are hard to define and hence to pin-down with targets; all politicians will say they’re doing them. It gets more straightforward though with big projects. Bearing in mind existing commitments including Melbourne Metro, 50 level crossing removals and extending rail to Mernda, here are the main medium term recommendations (up to 15 years) for new and upgraded transport links:

  • Provide a tram link to Fishermans Bend.
  • Electrify the rail line to Melton.
  • Install high-capacity signalling on existing rail lines.
  • Build the North-East motorway connecting Eastlink and the Metropolitan Ring Road.
  • Construct bus or light rail feeder networks to service suburban employment centres.
  • Give Skybus a much higher level of on-road priority.

IV recommends the popular proposal for an airport rail line be considered in the longer term i.e. 15 – 30 years. And in a blow to rent seekers, IV recommends against proposals for building rail lines to Doncaster and Rowville, or providing another rail station at South Yarra as part of Melbourne Metro.

I agree with much of what IV says. It’s consistent with many of the things I’ve said in these pages. But inevitably the draft report has shortcomings, largely due to the epic ambition of the exercise. Many of the recommendations are so broad and general it will be impossible to get consensus on whether or not they’ve been implemented properly.

Even in the case of the big, singular projects, the high-level of the technical analysis means those who want to ignore IV’s findings and follow their own agenda will find ample pretexts on which to disagree. And at least one claim – that the cost of providing urban infrastructure on the fringe is two to four times what it is in established areas – appears to be founded on some faulty assumptions. I’ll talk about that separately.

It might be because I’m not as familiar with them, but it seems to me the discussion of health, justice and education infrastructure isn’t as compelling as the treatment of transport. That’s not to say there aren’t some sensible proposals, but it might be that the infrastructure perspective isn’t as useful a way of looking at the issues in these portfolios where projects tend to be relatively small; perhaps it requires a different approach.

It’s too early to say if IV will leave a lasting mark on the way infrastructure is planned in Victoria although there’s already cause for concern (see Can the politics be taken out of infrastructure planning? and this good oped in The Age). This is a draft report so the authority is looking for feedback before it submits the final report to the government at the end of the year. I’d like to see the recommendations made tighter where possible so they work better at holding politicians to account.

Even at this stage I think it can be safely said that the idea of setting up an arms-length authority with a board of senior business identities and bureaucrats to provide independent and expert advice has proven immensely valuable. It was never going to be the silver bullet some imagined, but the strategy shows up the lack of transparency in government and how empty of real strategic content political exercises like Plan Melbourne – and before it Melbourne 2030 – really are. IV is the modern version of the independent public service providing frank and fearless policy advice to government, but this time with an emphasis on consultation and transparency. It’s a model that could be used more widely.

Over time IV will hopefully prioritise its advice to government around key portfolios, policies and projects and develop the capability to examine them in detail. I don’t think it will be as successful if it continues with its current broad ambit though; from now on it needs to focus on areas where it can deliver most benefit. But it’s off to a good start; its draft 30-year strategy shows that infrastructure planning can be done a lot better than what governments routinely turn out. And it is far superior to the plan churned out by Infrastructure Australia earlier this year (see Is the Australian Infrastructure Plan on the money?).