Pearls and Irritations

The Government’s response to the ‘independent’ review of Infrastructure Australia involves a surprise attack on public policy which should be rebuffed.

A grim outlook?

Picture this:

• pork-barrelling encouraged while important projects languish;
• proponents assessing their own proposals;
• Premiers trashing the Commonwealth via national cabinet saying it should obey their experts;
• a Minister facing condemnation by the High Court and corruption commission.

All in the name of cleaning-up ‘Scott Morrison’s mess’.

What next for infrastructure policy after the independent review of Infrastructure Australia?

The review

The Minister set-up an ‘independent review’ to find a role for Infrastructure Australia. The stated problem: the former Government didn’t listen to it.

Implying: she didn’t intend to listen either. Evidence? Her announcing $123bn of infrastructure spending over the next decade, much derived from election promises. Another Minister who got into office and closed the door?

My previous post recommended abolition of Infrastructure Australia. Departments should advise the Government on Commonwealth responsibilities. The Productivity Commission should advise Parliament on proposals by States or other bodies. The review didn’t like that.

It finished its assay in October 2022. Recommendations included:

• the organisation should be a commission not a corporation;
• a ‘mandate’ to advise the Government;
• the Government should publicly respond to its recommendations;
• it should provide the Government with ‘statements’ for the Budget;
• ‘accredited’ proponents might assess their own proposals.

Reasons: despite being ignored by Governments, ‘the model’ remains popular among the infrastructure club – evidenced by germination of similarly named organisations in the States. And ambitions re productivity and climate change pose fresh challenges.

Felicitously phrased via ‘operating context’, ‘ecosystem’, ‘product suite’ etc. And, de rigueur, yet another interpretation of national significance.

All accepted by the Government’s 7 December response. With a surprise befitting the anniversary of the Pearl Harbour attack: since the organisation is advising the Government, its advice might be kept secret – Cabinet confidentiality etc.

As the Minister said: thank you review!

Comments

Undoing the Abbott-era stupidity of a government advisory corporation is undoubtedly right.

Beyond that the review initiated a mess which, among other things: wants a statutory authority treated like a Department; invites corruption of project assessments; and would create turmoil in national cabinet.

Without touching the real problems: Governments, probably illegally, fund infrastructure pork of all shapes and sizes. And instead of disclosing important facts – costs, benefits and reasons – about use of your money, they lie to the public.

Contrary to views of the Minister and the infrastructure club, the real criticism of Infrastructure Australia isn’t that Governments don’t listen to it. Rather, it tries too hard to accommodate their deceits. It meekly accepts what proponents tell it, refuses to seek public comment on proposals it is assessing, and doesn’t disclose enough detail for anyone to reasonably trust its assessments.

Oversights

The mess appears to be due to the review:

• interpreting terms of reference (above) in a most restrictive fashion;
• ignoring the key experience of the organisation: most proposals are rubbish;
• glossing over the key fact: increasingly Governments are supporting even worse proposals which lack any national relevance;
• ignoring the key change in the ‘operating context’ – the High Court decision in Williams (No.2) after which Infrastructure Australia’s purpose was inverted.

Better approach

Even if the review insisted on continuation of the organisation, it should have recommended the Infrastructure Australia Act be overhauled via:

• a ‘mandate’ to advise Parliament about infrastructure the Commonwealth can support only through Constitution s.96 grants – State, etc., projects;
• that advice is to promote Commonwealth (Constitutional) purposes;
• advice on project proposals must include detailed benefit: cost analyses and take account of comments from the public.

That would have scotched the Ministers idea of keeping advice secret.

The Government would be practically forced to respond to advice. Or else it would be unable to seek support for State projects.

Parliament would start to play its proper role in Federal relations. Conditions imposed on infrastructure grants would more likely reflect real Commonwealth purposes than internal Departmental procedures.

Departments would be forced into playing their roles – advising the Government on its responsibilities and insisting on proper processes for dispensing public monies which, for infrastructure, include: rigorous checks on legality; benefit: cost analyses; publication of proposals and relevant assessments.

Issues surrounding artificial definitions of national significance would disappear.

All relevant proposals – of whatever scale – would be assessable. Putting whimsical pork barrelling in the sights of the anti-corruption commission.

Yet, political prerogatives to legally spend on things ‘the experts’ don’t consider worthwhile would, properly, be untouched.

In summary, ideas behind creation of Infrastructure Australia would be restored.

Why?

Reasons can be seen from the intention behind the term ‘nationally significant infrastructure’ in the Infrastructure Australia Act.

The review assumed that term is and should be merely mechanical – to identify which projects should be assessed. Its suggestion to continue with a minimum spend of $250m etc. might seem reasonable and is supported by the infrastructure club.

However, that is completely wrong.

For one thing, it ignores the implication: projects seeking less than $250m need not be so assessed and would be fast-tracked to the front of any queue. Diverting Commonwealth politicians, and public monies, into widespread local pork-barrelling. As seen in recent election campaigns.

The review’s idea of salvaging such a wreck by proponents assessing their own major proposals is aberrant – not only for inviting corruption. Typically, the proponents are Premiers. Unless the Commonwealth immediately funds State proposals this will cause the type of ‘cooperation’ seen inside – and outside – national cabinet during the pandemic.

Also, contrary to popular opinion, national significance is clearly defined in the legislation – ‘materially improve national productivity’. Even if inconvenient, it is not open to interpretation by Ministers, officials or the club.

Which indicates its real purpose: to guide the Minister.

To explain: the original, 2007, reason for Infrastructure Australia: Departmental failures. Those failures resulted from the prevailing creed: Ministers set Commonwealth roles. The belief: if something is nationally significant, a Minister can spend public monies on it without further authorisation – even if it is a State responsibility.

The purpose of the definition was to enable the Minister to spend on State infrastructure projects important to the national economy. Spending on other State infrastructure – pork barrelling etc. – was thought to be Constitutionally suspect. Hence, the legislation wanted Government and public monies focused on projects significant to the national economy.

The scheme should have been revised in 2014 after the Williams (No. 2) case said the Government cannot gain unilateral authority to spend on State etc. matters even if they are nationally significant, or are deemed as such by legislation.

Rather, if such spending is desired, resort must be had to Constitution s.96 – grants to States with conditions, i.e., purposes, set by Parliament. 

As Parliament is the decision maker for the funding of State infrastructure, it needs advice. More than the Minister who is not the decision maker and, after all, has a Department to ask.

Hence the review’s idea that the organisation should advise the Government is as wrong as the Minister’s response that such advice should be secret. Shown by Infrastructure Australia’s first chair and coordinator – Sir Rod Eddington and Michael Deegan – insisting on putting its reports to the Prime Minister, Premiers and the public. And insisting on independent benefit:cost analysis for every serious proposal.

By ignoring the Williams case, the review failed to comprehend the purpose behind Infrastructure Australia, or understand the subsequent perversion of that purpose lies at the heart of the Minister’s supposed problem. The perversion: investment in State infrastructure to boost the economy is at the back of the Minister’s queue, while tosh is promoted to the front by Federal election promises. With Infrastructure Australia struggling for attention amid the odious grandstanding.

Commonwealth political promises are now routinely made for pork of all sizes. Evidenced by this Government’s near replication of Prime Minister Abbott’s lets-help-our-party’s-Victorian-Premier’s-re-election-campaign example.

The Minister’s spending splurge confirms the bi-partisan – Abbott to Albanese – reaction to the Williams ruling that national significance does not allow Ministers to spend on State matters: Ministers will commit spending to State – and local – matters whether nationally significant or not, including on better places to ‘relax’.

Instead of abetting a Government response that would entrench this travesty under a further cloak of secrecy, the review should have told the Minister, and the public, some home truths.

For Commonwealth spending, there is not any democratic, legal or logical relevance of State infrastructure being deemed nationally significant. Parliament should make every such decision, with a full public explanation.

Ministers might want to by-pass Parliament and fund things like nation-building refurbishment of ocean baths in a marginal seat. If so, we might look forward to them explaining the probity and legality of that at the corruption commission and High Court.

Conclusion

The review was superficial, inviting a day of infamy style attack on public policy. The episode provides further evidence of carelessness about the legality and policy implications of Executive Government actions, including by ‘independent reviews’.

Parliament should reject the Government’s response and ask for an overhaul of the Infrastructure Australia Act to restore its original – pre-2014 – intent: to focus Commonwealth infrastructure policy on promotion of national economic and social wellbeing.