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Infrastructure Problems Costing WA Growth New Research

  • November 03, 2014

Infrastructure Problems Costing WA Growth: New Research

New research demonstrates how WA’s poor infrastructure provisioning system is holding back State growth and future prosperity.

The Property Council of Australia’s Mind the Gap: The Costs of WA’s Infrastructure Provisioning Framework report demonstrates how the gaps in Western Australia’s provision framework negatively impact on the property and the general community.

Public investment on infrastructure in WA averaged 1.5% of GSP, which is below the international infrastructure investment norm of 3.8%, leading to an investment shortfall of $59.2 billion.

The Mind the Gap report reveals that if Western Australia is to meet global benchmarks for infrastructure stock relative to GDP by 2040, approximately $22.1 billion in infrastructure expenditure per annum will be required.

The lack of status and accountability attached to the State’s Infrastructure Coordinating Committee limits its effectiveness as an organisation that plans and prioritises infrastructure delivery.

“This research demonstrates that WA needs an independent infrastructure body that takes responsibility for its planning, prioritisation and delivery,” said Joe Lenzo, Property Council Executive Director.

“Poor infrastructure provisioning adds unnecessary risk to projects, making it difficult to secure debt financing and attract capital.”

“Business-as-usual is not an option if we want to provide the infrastructure necessary to support WA’s growth.”

“Implementing a strong infrastructure provisioning process will ensure that scarce infrastructure dollars are directed where they are most needed and where the best value for money can be realised.”

“The process needs to be independent, transparent and accountable. Infrastructure should not be a political football nor should projects simply be dropped because something else attracts the government’s attention.”

 

Key Findings

  • There has been a considerable underinvestment in Western Australian infrastructure over the past 40 years, with the value of WA’s current infrastructure stock more than $59.2 billion below the accepted global average.
  • For Western Australia to meet global benchmarks for infrastructure stock relative to GDP by 2040, approximately $22.1 billion in infrastructure expenditure per annum will be required.
  • The lack of status and accountability attached to the Infrastructure Coordinating Committee limits its effectiveness as an organisation that plans and prioritises infrastructure delivery.
  • If 10% of property development projects are delayed as a result of poor infrastructure provision over the course of a year, the value deferred for the economy would be $1,216.27 million.
  • Poor infrastructure provisioning adds unnecessary risk to property development projects, which makes it more difficult for property developers to secure debt financing and to attract capital.

 

Key Recommendations

  • Establish an independent infrastructure body based on identified best practice principles, with the responsibility of planning, prioritising and delivering infrastructure.
  • Task the independent infrastructure body with developing a long-term, 20 year infrastructure strategy, that delivers cross-portfolio assessments based on objective and quantitative evidence analysis.
  • Implement a transparent approach to decision making and evaluation that reports on project performance relative to the project deliverables and outcomes.