Infrastructure funding must stack up: Rudd

By: Jason Whittaker


New criteria for funding nation-building infrastructure projects will ask "does it stack up", Prime Minister Kevin Rudd declares. Rudd has used

New criteria for funding nation-building infrastructure projects will ask "does it stack up", Prime Minister Kevin Rudd declares.

Rudd has used an address to an infrastructure summit in Brisbane today to announce future federal funding must pass through a new National Prioritisation Methodology that will see a cost-benefit analysis applied to each project based on the projected benefits to the economy, the environment and urban development and lifestyle.

The Government's arms-length assessment body, Infrastructure Australia, will use the criteria to develop its priority list to be delivered next year. The Government has fast-tracked an interim report to accelerate the agenda.

Rudd says the process is "truly transparent".

"While no one but an elected government can decide how to invest $20 billion of taxpayer funds, it must receive strong and independent recommendations," he says.

Key assessment criteria will include how the project: expands productivity capacity; builds national global competitive advantages; develops cities and regions; reduces greenhouse gas emissions; and improves quality of life.

"Infrastructure Australia will then apply a tough, clear-eyed assessment of the intrinsic value of each project," Rudd says.

"In short it will ask: 'does it stack up?'"

Rudd says the process will monetise economic, social and environmental costs and benefits. Where a figure can't be put on costs and benefits the same factors will be rated for a fair comparison.

Appraisals will typically have to be assessed over a 30-year timeframe.

Rudd says Infrastructure Australia will examine all infrastructure costs, including the initial capital as well as operating and maintenance spending. Issues like the cost rise in materials and the impact of any construction delays will also be factored in.

"Serious ‘sensitivity tests’ of the cost-benefit ratio under different circumstances add to the robustness of this appraisal methodology and will give certainty to the Government’s decision making," he says.

"It is critically important that our infrastructure decisions are based on objective analysis of projects and needs."

Rudd says Infrastructure Australia's recommendations will highlight which projects are top priorities and which "might either belong further down the track or simply might not stack up at all".

The Federal Government is committed to an ambitious nation-building agenda, he says, through a "transformational vision" of infrastructure for the 21st century.

But state and territory governments must play their part, Rudd says.

The Prime Minister has also highlighted the importance of public-private partnerships, which he is a "strong believer" in.

Last week governments endorsed a report on new national PPP guidelines for Infrastructure Australia in funding decisions.

"This is an example of what cooperative federalism can achieve," Rudd told the summitt.

"To put this into perspective, for the first time jurisdictions have come to the table willing to work together to change something as fundamental as how they invest their infrastructure dollars for the benefit of the nation.

"It is time for the Commonwealth, states, territories and infrastructure companies to roll up our sleeves and get on with the job of nation-building."

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