Many public infrastructure projects have shown successive governments to have a reckless indifference to the economic justification and ultimate cost of such projects. In other words, they have a reckless indifference to the use of your money today and well into the future. Every dollar wasted is a dollar that could have done something that improves our lives.
Time and time again, projects are of questionable economic merit at commencement (e.g. Victoria’s Suburban Rail Loop) or the ultimate cost is significantly higher than the expected cost when the project was given the go-ahead. A project that may have been economically viable at a cost of $2 billion is highly unlikely to still be viable at a cost of $42 billion (Snowy Hydro).
It has also become apparent that politicians have preferred certain projects over others, not because they were more economically viable, but because the project may be a vote winner in a marginal seat. That needs to be stopped. Public infrastructure projects should not be politically motivated.
Another problem we have is that once projects have commenced, they get completed regardless of the ultimate cost. That needs to change. We cannot allow those making decisions to face no downside for making wrong decisions, and we cannot give anyone a blank cheque.
To solve these problems, a CLA government will do the following:
- Politicians may decide on the total funding to be allocated to public infrastructure projects.
- A public sector body – such as a “public infrastructure department” – will decide what projects will be given the go-ahead. Decisions by that body must be transparent and include their economic justification and the core assumptions on which such justifications are based. The management of that department will be held to account – will be replaced if there are significant cost overruns.
- Private sector investment in projects will be encouraged and will be preferred, because it provides rigorous private sector assessment and management;
- An independent expert, a professional services firm, will provide an opinion on the economic viability of the project, which report will be transparent – available for public review; and
- Projects will be reviewed every year to ensure they remain economically justifiable, those no longer economically viable will be terminated.