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Illustrative cash flow for Building Australia Fund[/caption]
Guest writer and transport consultant, Dr Garry Glazebrook, makes the case for establishing a Building Australia Fund (BAF) to drive $200 billion investment in infrastructure:
Recent events including Brexit and the election of Donald Trump have highlighted some of the challenges currently facing the world, including spreading the benefits of economic growth more widely; avoiding a slide back to protectionism and potentially war; and addressing climate change.
Australia is not immune from these challenges. This proposal therefore suggests establishing a “Building Australia Fund” to help identify and finance some $200 billion of major projects in Australia over the next thirty years. The suggested projects cover transport, energy, urban renewal and other areas and are specifically designed to help address these challenges simultaneously. Much of the investment would occur in outer suburban and regional areas. The fund would provide grants and low cost loans totaling $80 billion with remaining funds to come from the private sector and State Governments.
The specific projects suggested include:
- The Inland Freight Rail Project between Melbourne and Brisbane. The project has been approved and is currently undergoing public consultation, but needs to be accelerated.
- A National Electricity Grid, including additional high voltage DC connectors between SA, NSW, Qld and Victoria, and a link across the Great Australian Bight to WA. Together with new low cost storage technologies these links could enhance the reliability of the grid, and enable new wind, solar and geothermal resources to be tapped economically.
- Parramatta Fast Metro and Light Rail, linking Sydney CBD, Parramatta and Badgery’s Creek airport. An integrated approach can open up additional land for housing some 350,000 people, and transform Sydney’s urban geography, particularly benefiting the two million people living in Western Sydney.
- Major Urban Growth Projects, especially in outer suburban areas and regional cities. These would use similar approaches to the highly successful East Perth Redevelopment Project, which transformed disused industrial land into high quality residential, commercial, educational and other uses, and helped change attitudes to medium density living.
- Melbourne Ring Metro. Several cities, including Paris, are building ring metros and light rail routes to widen the accessibility benefits of public transport and reduce pressure on overcrowded city centres. Melbourne is a good candidate for such a system, which would need to be grade-separated from both roads and existing transit systems. New automated light metro systems appear to be the most appropriate in the case of Melbourne.
- Intelligent Transit. “Autonomous” or “Driverless” vehicles are coming. But while they may reduce road crashes, they won’t solve traffic congestion, pollution or parking problems unless a planned approach is adopted, using electrically powered autonomous vehicles in a multi-hire mode to feed passengers to mass transit interchanges for longer trips. Adelaide would make an ideal city to trial a truly “intelligent transport” system.
- East Coast High Speed Rail Corridor. Previous approaches to high-speed rail in Australia have failed due to the need for substantial government funding. However, a combination of long-term low cost finance, mechanisms to capture land value, staging of construction and realigning the route through Sydney could make this project viable.
- Other Projects. There are many other opportunities, including projects in Northern Australia to improve water security; the development of advanced technology parks in conjunction with major universities and research facilities; or the development of new health research facilities, for example focusing on mitigating the impacts of climate change, such as heat stress, which is set to become a major issue in much of Australia.
Many of these projects have been discussed for some time, and some are ready for immediate implementation. Others are new projects and would need further investigation. Availability of low-cost finance, together with national leadership, could see these and other suitable projects proceed much more rapidly.
There is now some urgency to act because:
- Interest rates, currently close to historic lows, are expected to increase over coming months and years, implying more expensive financing costs in future.
- Australia is a trading nation, and one quarter of our exports go to China. We therefore need a pipeline of major projects with real long-term benefits for the nation and which can be rapidly ramped up, to counteract any downturn in the economy, especially if tensions between the US and China develop into a trade war.
- Global warming is continuing and any further delays in implementing measures to address climate change could prove very costly in future.
The proposed Building Australia Fund is critical to help leverage additional private sector finance. However, Australia also needs to accelerate the process of identification, evaluation and approval of major infrastructure projects. Current processes fail to address strategic issues, do not properly incorporate externalities, discount the future inappropriately and are often subject to political “pork barreling”. Urgent reform of these processes is also needed to ensure Australia can address these key emerging challenges.
Future articles will detail some of the projects listed above, illustrating how they can address the key issues identified earlier and help transform Australia’s future. This is article is based on the report, Building Australia Fund. Anyone wanting a full copy of the report should contact Dr Glazebrook ([email protected]