By Joe Branigan

Australia’s ongoing productivity performance and standards of living depend fundamentally on efficient and high quality infrastructure. Perhaps no other area more directly showcases the quality of current and past government administrations than decisions on public infrastructure — including how it is planned, prioritised, funded and delivered.

The Infrastructure Cost Drivers Study (ICDS) focuses on public infrastructure costs, not benefits. The goal of the project is not to undertake a series of ex-post cost benefit appraisals. Rather, the goal is to provide the three participating jurisdictions – Queensland, NSW and Victoria – with an evidence base about public infrastructure costs with which to make better-informed public infrastructure decisions in the future. It is hoped that the database might build over time with new public infrastructure projects added. These goals concord with a recommendation in the recent Productivity Commission Public Infrastructure Inquiry (PC, 2014) that:

The Australian Government should fund the development and ongoing implementation of a detailed benchmarking framework for major infrastructure projects in Australia – in transport, electricity, water, gas and social infrastructure. This would substantially assist in the future planning and evaluation of projects, and is an essential factor in the much-cited pipeline of projects.

The benchmarking should include sufficient information of a strategic nature, including on costs per major unit, using a standard cost breakdown, and average expenditures over the construction period. RECOMMENDATION 9.2

One obvious benefit of having multiple jurisdictions participating in the ICDS is that our dataset is larger and, as a result, more meaningful analysis can be undertaken. It is also beneficial to benchmark jurisdictions against each other, which may shed light on the unique challenges each jurisdiction faces.

Our initial findings show that the drivers of higher public infrastructure costs have been jurisdictions and time specific. For instance, in Queensland the rapid rise in costs in the second half of the 2000s was caused mainly by the mining boom, when increased demand for engineering, design and construction services led to significantly higher prices. In all jurisdictions the impact of increasingly onerous red and green tape has also been a factor.

This post was published in relation to a presentation by Mr Brangian as part of the SMART Seminar Series.