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New infrastructure body to provide greater certainty

Last week, the Victorian Government introduced legislation to parliament that would allow for the establishment of Infrastructure Victoria.

The proposed independent statutory authority would be led by a board of seven members – three from the public sector and four from the private or non-government sectors – and act to guide and support the government’s infrastructure decisions.

“Infrastructure Victoria will take short-term politics out of infrastructure planning, and keep our pipeline of major projects full to grow our economy and create jobs,” a state government press release explained. “[It] will be tasked with ensuring Victoria’s immediate and long-term infrastructure needs are identified and prioritised based on objective, transparent analysis and evidence.”

Infrastructure Victoria’s primary function would be to develop and release a 30-year strategy identifying the state’s infrastructure needs and how they could be met. The state government would then be required to respond to the strategy’s recommendations in the form of a five-year infrastructure plan, which would outline priority projects and funding commitments.

Infrastructure Victoria would additionally provide advice to the state government on infrastructure matters – including assessing business cases for major infrastructure proposals – and develop and publish research on a range of infrastructure issues, such as appropriate financing and funding models for projects.

Better long-term planning

Earlier this month, the Australian Constructors Association (ACA) warned that threats made by opposition political parties to cancel established infrastructure contracts if elected were eroding confidence in Australia’s infrastructure projects and jeopardising the country’s global competitiveness.

Megan Motto, chief executive of Consult Australia, said the establishment of Infrastructure Victoria and the development of long-term infrastructure plans would provide greater certainty for industry. “[It] allows us to plan for the future to ensure we’re best able to meet the needs of projects as they are put out to market,” she said.

She added that having an independent advisory body would also help ensure that important state infrastructure decisions would be based on expert advice rather than political considerations. “That means we can avoid repeating the mistakes of the East West Link motorway project, and that taxpayer dollars will go to developing infrastructure rather than paying out contracts,” she said.

The East West Link was a high-profile infrastructure project that was proposed by Victoria’s former government. The project was cancelled by the new state government in April this year after incurring $339 million in pre-construction costs.

Seemingly acknowledging this issue, Victoria’s Special Minister of State, Gavin Jennings, said, “Infrastructure Victoria will give the community and businesses certainty that those decisions are based on priorities – not politics. We’re putting evidence and transparency at the front and centre of Victoria’s infrastructure decisions.”

Room for improvement

ACA executive director Lindsay Le Compte also welcomed the Infrastructure Victoria initiative, but noted that the legislation could be further improved. He pointed out that the legislation did not oblige the government to refer its five-year infrastructure plan to Infrastructure Victoria, and suggested the statutory authority’s role should be further strengthened to require it to assess all government plans prior to adoption.

“This would ensure that any issues that are raised by the community, stakeholders and interest groups are able to be assessed by an independent body, thus enabling the government to avoid arguments that the plans are politically motivated,” he said. “This approach would also support business confidence and add much needed certainty to the construction industry and its supply chain that projects will proceed according to announced programs and timeframes.”

If the legislation is passed, Infrastructure Victoria will be operational in late 2015.

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Politics reducing confidence in Aussie infrastructure: ACA

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