Government responds to PC inquiry

IN its long-awaited response to the Productivity Commission's mid-year Inquiry into Public Infrastructure, the Abbott government has rejected a key recommendation that all projects with budgets worth more than $50 million should be subject to rigorous and transparent cost-benefit analyses.

Staff Reporter

While the federal government generally supported the PC's mid-year report, either directly or in principle, it knocked back several recommendations including a call from the commission to look at road funding models, apprenticeship training schemes and the removal of the requirement for local content plans.

It also knocked back a suggestion to increase funding to the Australian Bureau of Statistics to revise its approach to collecting productivity and other data within the construction sector.

Assistant Infrastructure Minister Jamie Briggs said that while the Commonwealth supported rigorous cost-benefit analyses, the existing threshold of $100 million or more in Australian government funding would be maintained.

He added that all land transport infrastructure projects seeking Commonwealth funding were subject to a cost benefit analysis, while any project seeking more than $100 million in federal funds needed to submit its own analysis to Infrastructure Australia.

He said there was no net benefit to conducting a cost benefit analysis on projects below the $100 million threshold.

Briggs described the wide ranging PC inquiry as a comprehensive investigation of the assessment, selection, finance and delivery of major economic infrastructure that found the system left by Labor “was broken and in desperate need of reform”

The inquiry identified numerous examples of where inadequate project selection processes had resulted in costly outcomes for users and taxpayers, highlighting Labor's “catastrophic National Broadband Network as the most significant example”, Briggs said.

He added that poor project selection and a lack of planning was leaving Australia without the infrastructure it needed for the future, which was in turn acting as a barrier to private sector investment.

Briggs said the Abbott government will draft new arrangements under its infrastructure investment program to improve the delivery of infrastructure in Australia, generate more private sector investment and ensure value for taxpayers' money.

“The government will place an increased emphasis on early planning and encourage jurisdictions to plan for projects which align with the long term priorities identified in Infrastructure Australia's upcoming 15-year plan,” he said.

He pledged there would be increased transparency around cost benefit analyses, red tape would be cut and strict benchmarking costs and timeframes would be established for evaluating projects.

“The Australian government is undertaking these reforms in partnership with the state and territory governments, who are most directly responsible for delivering a significant amount of our public infrastructure,” Briggs said.

“The government is investing a record $50 billion in infrastructure across the country, generating $125 billion of new investments.”

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