JOHN AUSTEN and LUKE FRASER. Urbane transport policy. Part 3 of 3

 

This article is the third in a series about transport. The first two dealt with topics raised by the Prime Minister; mass transit, 30-minute cities etc and noted some challenges for the Commonwealth.[i]

Urbane Transport policy. Part 1 of 3

 Urbane transport policy. Part 2 of 3

The articles draw on public information – the basis for the community trust necessary for effective democracy. Unfortunately, some information has reduced trust. Restoring that trust begins with the top tier of Australian government – the Commonwealth – and depends on how a future Government approaches land transport.

Successive Canberra Governments have taken the wrong approach – acting like children in an infrastructure toy shop. A chance to spend lots, cut project ribbons and convince themselves of usefulness. All the while avoiding durable policies – lest the fun be curtailed.

Scrutiny on such projects prior to funds being committed is scant indeed. Here is where that leads:

  • East-West Link: cancelled with compensation pay-outs over $1 billion; subject to scathing commentary and reports, such as by the National Audit Office;
  • Westconnex: Commonwealth activities now under review by the National Audit Office;
  • Western Australia’s Freight Link highway to Fremantle’s port – damned by a subsequent Senate inquiry, resisted as a $2 billion dollar white elephant by Fremantle’s local government and by many in the freight industry that it purports to service.

Better assessment?

Project assessments or reviews are not the big issue. Improvements in assessments have not dampened Canberra’s child-like enthusiasm to spend more on infrastructure projects.

In this, Canberra resembles a dog trying to take a piss on every tree in the street: witness two recent ‘Commonwealth Nation-Building Transport Projects’: a new bus shelter at Anderson Avenue, Tuross Heads; a car park resurfacing at Woolgoolga.

As evident from the start of Infrastructure Australia, the critical failure is how ideas, especially projects, are formed in the first place.[ii] The lack of clear strategy here is costing Australia billions for little if any economic gain. Today’s official ‘infrastructure lists’ are merely compilations of state spending dreams; the Commonwealth identifies very few ideas or projects. This stems from a failure to understand Australia’s federation.

We agree with Tony Sheperd’s National Commission of Audit that governments should be guided by the Constitution; were this to occur, many transport and infrastructure problems would disappear.[iii]

Up until June 2014 many, including the Commonwealth, assumed the Government could do what it liked; hence a focus on supporting states in land transport projects was considered appropriate. It was assumed the Commonwealth could not be guided by the Constitution because s.96 allowed Government grants for any purpose.

This assumption has since been decisively rebutted by the High Court. The idea of the Commonwealth playing its main land transport role as munificent benefactor of state projects has been refuted.

June 2014 watershed

The Constitutional watershed was the High Court decision in Williams (2). Shorn of legal niceties:

  • the Commonwealth can only provide funds to its responsibilities (with one exception);
  • the Constitution limits Commonwealth responsibilities;
  • the exception is: provision of funds to the states on conditions set by Parliament (s.96).

Commonwealth activities in transport are either Constitutional responsibilities or ‘extras’. The former can be undertaken by Government, the latter need to be pursued by Parliament imposing conditions on state grants.

In land transport, successive Governments and advisers focussed on extras and downplayed responsibilities. The role of Parliament in considering projects was forgotten.

Commonwealth responsibilities

The first task for the Commonwealth must be to meet responsibilities. This is more important than looking for big new projects for the infrastructure industry or seeking out an ageing bus shelter that would benefit from a Commonwealth funding sign. In responsibilities like Defence there is vigorous scrutiny of decisions such as by Jon Stanford and Michael Keating[iv]. Rightly so. This needs to occur in transport, rather than just more loose talk about the need for Commonwealth city funding and deals.

What are the Commonwealth’s responsibilities? Matters specifically allocated to the Commonwealth by the Constitution such as: defence; trade and commerce; its own assets; interoperability.

What about the buzz terms ‘major cities’, rural and regional’, ‘congestion busting’, ‘national productivity’, ‘cooperation’, ‘value capture deals’ or ‘greater financial power’? Not being mentioned in the Constitution, they are not Commonwealth responsibilities. At best they may be extras.

Post-2014, it is irresponsible for politicians and advisers to pretend extras should continue to be the Commonwealth focus in land transport, worst of all at the expense of Constitutional responsibilities.

In light of this, the several national infrastructure ‘plans’ that do not specifically deal with Commonwealth responsibilities need to be changed.

‘Extras’

Many may say: the Commonwealth may pursue matters outside its responsibilities via s.96 grants.

These must be grants to the states. Logically, they should not be the bulk of Commonwealth activities. Most importantly, the authority for such grants lies with Parliament, not the Government alone. If there was a desire for the Commonwealth to focus on particular extras like major urban transport projects, they should be turned into responsibilities by:

  • A referendum; as was done for social security in 1946; and/or
  • Canberra owning the assets it spends on.

Some may argue that a referendum has little chance of success. A lack of confidence in the Australian people cannot justify back-door arrogation or misplacement of power.

Commonwealth ownership of assets has a current precedent in the Australian Rail Track Corporation’s control of rail lines. National highways are the logical next candidate. It is not as if Canberra hasn’t paid the lion’s share for upgrades to highways such as the Hume and Pacific over several decades.

Accountability, Government and Parliament

The Commonwealth’s lack of accountability for transport ‘extras’ has also been a problem.

As the Commonwealth is unable to identify state needs, it cannot be accountable for gaps in urban transport. Similarly, as it must rely on information from states, it is difficult for a Commonwealth government to detect whether it is being misled for so long as it merely ‘cooperates’ with states and hands over money to their project wish lists.

In both identification and assessment of infrastructure needs, the Commonwealth’s Parliament is in a much better position than its Government.   A much larger formal role for Parliament in decisions about Commonwealth support for state proposals, city deals or reform payments is desirable.

How might this work? The recent (and excellent) Senate Committee report on WA Freight Link gives a clue. This inquiry scrutinised Freight Link with the depth and detail befitting public expenditures of over a billion dollars: it used a broad range of criteria, took public evidence, and invited witnesses.

The Committee recommended withdrawal of Commonwealth funding from Freight Link, contrary to Infrastructure Australia’s view (in its 5-page published assessment). How can we minimise the potential for opinions so different they may reduce public confidence? Simply: Infrastructure Australia should report to a Senate Committee, under parameters and against criteria set by that Committee. Infrastructure Australia should advise the Parliament via the Senate, not merely advise the Minister. This would be closer to being guided by the Constitution than present arrangements.

Two recent examples show how this idea might overcome conundrums for the Commonwealth:

  • East-West Link: the problem was the Victorian government withholding information. Commonwealth Parliament should have been so advised and then convened an inquiry calling relevant witnesses. The project’s benefit-cost ratio should have been assumed zero until sureties were received. Specific legislation should have debarred Commonwealth spending on the project until all matters were addressed;
  • Sydney metro: among the questions about this project is the decision to engineer a permanent ‘break of gauge’(ie the new metro trains and route are dimensionally smaller than the existing Cityrail network, which means the two networks may not be fully interoperable). Canberra’s financial support for this critical design decision runs contrary to usual Commonwealth directions on rail interoperability. The proponents and others should have been given an opportunity to explain their case and concerns before a Senate Committee prior to legislation being drafted to permit the Commonwealth to provide funding to the project.

Finally

The law of entropy means that renewal and refocus is needed from time to time – this is as true for public administration as for nature.

The modern Commonwealth role in transport, said to have started with Whitlam, has drifted in recent years. Whitlam’s Government had a vision that could be seen; there was no doubt about it wanting more responsibility in transport rather than playing second fiddle to the states.

Recent Commonwealth ‘visions’ cannot be seen. But if they were visible – and honest – they would confirm a widespread community view of the Commonwealth as a directionless respondent to mendicant state funding pleas for transport projects. Harsh comment? Then why such widespread urging of Commonwealth funding for virtually every known human activity?

A Government cannot ask for community trust or expect reasonable support from the transport bureaucracy unless it says what responsibility the Commonwealth should have.

Recovery

How to start a recovery of the Commonwealth into a purposeful transport role?

  1. The Commonwealth Government should get its house in order. Establish a proper national transport network, clear policy around making international gateways efficient; interoperability principles to minimise waste and disruption nationwide.
  2. The Prime Minister should lift attention above hand-outs for projects de jour and assert a role in transport that the Government is prepared to back-up by ownership of assets and/or referendum.
  1. Commonwealth Parliament should demand its formal role in all projects where its funding support is sought. There should be a separate Parliamentary inquiry for each major (ie $1 billion-plus) project relevant to the Commonwealth, as well as legislation for each outlay (the United Kingdom has been drafting project specific legislation for Westminster’s scrutiny since at least the Victorian era railways boom).
  1. Infrastructure Australia should advise the Parliament via the Senate, not the Minister.

Until such things are done:

  • voters cannot be confident their money is wisely spent;
  • the Commonwealth will be unable to harness its bureaucracy and address the advisory deficit therein;
  • more major project failures and scandals will further erode community and market support for Australian transport projects;
  • our confused infrastructure policy and performance will continue its lamentable contribution to our descent through the international league tables.

As pointed out in the first article in this series, the best and easiest place to make early positive effort is in second-tier Australian cities – simpler places in which to get things right.

Any urbane Prime Minister who leads the recovery from there will establish a real and worthwhile legacy.

John Austen is a happily retired former official. He was Director of Economic Policy for Infrastructure Australia from its inception in 2008 to his retirement in 2014. Further background is at: thejadebeagle.com.

Luke Fraser is the founder and principal of a transport policy and investment advisory. In 2012 he was appointed to the board of the Prime Minister and Premiers Road Reform Project. Prior to this he was a national freight industry chief executive and provided advisory services to Infrastructure Australia. He recently authored a tax-rebate-based road pricing reform model for the SA government. The views expressed here are his own.

 

[i] See http://johnmenadue.com/blog/?p=6374 and http://johnmenadue.com/blog/?p=6441

[ii] The initial infrastructure audit / priority list in 2007-08 recommended 7 out of over 1000 project suggestions. The second audit / list recommended 2 out of 91 proposals. If there is a large infrastructure deficit, as many would have us believe, the problem is not so much dud projects being weeded out by assessments, but the failure to identify on the lists the many ideas which would bridge the deficit.

[iii] The National Commission of Audit argued that the Commonwealth should be guided by the Constitution, rather than follow by challenge a legalistic interpretation. In our view the Constitution does provide guidance as to what are Commonwealth responsibilities (powers)and the remaining Commonwealth activities are ‘extras’ which if pursued, need authority from eg s.96 conditional grants.   It is true that s.96 grants can have any condition, including one not related to Commonwealth responsibilities, but this means that s.96 cannot provide a guide as to what the Commonwealth should do.

[iv] http://johnmenadue.com/blog/?p=6280

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