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Standing Committee on Infrastructure and Communications
Infrastructure planning and procurement
House of Reps
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Standing Committee on Infrastructure and Communications
Thistlethwaite, Matt, MP
Pitt, Keith, MP
Price, Melissa, MP
Rowland, Michelle, MP
Wicks, Lucy, MP
Giles, Andrew, MP
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Standing Committee on Infrastructure and Communications
(House of Reps-Thursday, 7 August 2014)
Content WindowStanding Committee on Infrastructure and Communications - 07/08/2014 - Infrastructure planning and procurement
CARTLEDGE, Mr Jonathan, Chair, Cities and Regions Task Group, Australian Sustainable Built Environment Council; and Director, Policy and Government Relations, Consult Australia
SCHUCK, Mr Robin, Senior Adviser, Policy and Government Relations, Consult Australia
CHAIR: I welcome representatives of Consult Australia and the Australian Sustainable Built Environment Council. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the House. I invite you to make a brief opening statement if you wish before we proceed to discussion.
Mr Cartledge : It is an absolute pleasure. Thank you very much. I am pleased to give a brief introduction to both the organisations I am representing today and a further overview of some of the priority issues as they pertain to your terms of reference. Consult Australia is the industry association representing consulting firms servicing the built and natural environment. So we are an industry association. The services our members provide across Australia include design, engineering, architecture, quantity surveying and project management, with both private and public sector stakeholders across all spheres of government. Our industry is a large industry. We represent some 46,000 firms across Australia, ranging from sole practitioners and very small firms right through to some of Australia's top 500 firms. The combined revenue of all of those firms exceeds some $40 billion a year.
The Australian Sustainable Built Environment Council is the peak body of key organisations committed to a productive and sustainable built environment. Its membership consists of over 30 industry and professional associations, of which Consult Australia is one. It also includes non-government organisations and government observer members. All of those have involvement in the planning, design, delivery and operation of built environment assets across Australia and are concerned with the social and environmental aspects in particular of that sector.
ASBEC's membership has direct reach to over 200,000 professionals in the built environment sector, representing an industry estimated to be worth more than $600 billion in value. Within ASBEC, the group that I chair is the Cities and Regions Policy Task Group, and its aim is to develop, support and advocate for policy that improves the long-term productivity, sustainability and livability of regions and cities across Australia.
On behalf of both those organisations, ASBEC and Consult Australia, I thank the committee for initiating this inquiry into infrastructure planning and procurement. The issues flagged in your terms of reference relating to the adequacy of governments' assessment of the infrastructure challenges they face, their ability to respond to these challenges, the role of regulatory and other costs in delivering projects and the support for competitive markets to effectively fund and deliver infrastructure are of particular interest.
Both Consult Australia's and ASBEC's submissions to this inquiry reiterate key themes raised substantially during the Productivity Commission inquiry into public infrastructure. We were really pleased to see those issues meaningfully addressed by the commission and look forward to the government's response to the commission's recommendations. These recommendations, we feel, should be considered in significant detail as part of your consideration of related policy.
In that context, the issues of principal concern to us in the context of this inquiry, as detailed in both the submissions, relate to funding, governance and procurement of infrastructure and the opportunities we think exist to improve policy across governments and deliver better value-for-money outcomes for the taxpayer. I would highlight a few points of particular relevance today.
In relation to funding and financing, we know that there is no silver bullet for infrastructure investment. I think that has been highlighted in the debate to date. We have long maintained that what is required is a suite of complementary policy levers to maximise all available funds. To maximise the benefits of each of these levers we believe requires significant policy leadership, whether we are talking about user charging, asset sales, value capture or debt financing. Each of these has significant benefits. All will be necessary, but they also demand very careful management to cultivate the broader community support that is needed to achieve buy-in and implementation.
In parallel with that, decision making supporting infrastructure prioritisation and selection must be strengthened across all spheres of government. We welcomed the passage of the Infrastructure Australia Amendment Bill, noting the significant changes introduced in the Senate, and we believe that Infrastructure Australia will now be better positioned to provide the independent, expert and transparent advice critically needed not just nationally but across jurisdictions. We believe this type of advice is essential to ensure informed, long-term decision making that delivers certainty for business. In the absence of this certainty, businesses—our member firms—find it difficult to forecast, recruit or plan for major projects, and ultimately this is reflected in increasing costs for governments further down the line.
The third point I would make is in relation to procurement. The procurement processes currently employed to deliver projects present huge opportunities for reform across governments. Consult Australia's members work across spheres of government at the earliest stages of the infrastructure supply chain, from the first cost-benefit analyses to feasibility studies to major design work and right through to delivery. This gives our members unique insight into opportunities for governments to drive better value-for-money outcomes for their infrastructure spend.
Our members routinely highlight to us the inefficiencies that multiply costs through infrastructure development as a consequence of poorly scoped briefs, confusion about cost versus value, poor quality tender and project documentation, ineffective risk management and adversarial terms and conditions in contracts. We often hear reports of a culture of risk aversion overriding good risk management, with the party best able to manage risk often inappropriately passing that risk down the supply chain. Ultimately this results in reduced competition, higher costs and poorer project outcomes at the end of the chain.
These issues are not easily resolved—we know this well—but must be a focus for all those involved in infrastructure delivery. Consult Australia and ASBEC's recommendation for a procurement centre of excellence is one idea to deal with this issue across jurisdictions. But what is really required is a broader shift in the culture and capability within agencies procuring services to deliver infrastructure across all spheres of government.
In closing, with infrastructure increasingly entering the policy mainstream there is a great opportunity for governments to deal substantially with all these issues. The greater awareness within the general community of the potential for infrastructure to meaningfully improve the productivity, sustainability and livability of cities and towns presents a really powerful motivator to plan, design and build infrastructure that will deliver for the taxpayer in the broadest possible sense. A focus by governments on these policies that can deliver new funding and ensure the right projects are prioritised and that these projects are procured intelligently will provide benefits well beyond those of any individual asset. Thank you. I am pleased to take any questions.
Mr THISTLETHWAITE: In your submission you talk about the role of Infrastructure Australia and Infrastructure New South Wales. Do you believe that the way that those organisations work can be improved in any way?
Mr Cartledge : I think that many of the opportunities for improvement with Infrastructure Australia were dealt with as that bill was passed through the Senate. I think a greater focus on the role of cost-benefit analyses in the selection and prioritisation of projects is highly appropriate. Preserving the ability of Infrastructure Australia to publish in its own right, independently, its assessment of projects is critical. Where these organisations are able to maximise the provision of independent, expert and transparent advice in the fullest sense of those three terms, they will deliver a great addition to both the broader public policy debate and also business certainty for the pipeline of projects going forward.
We highlight Infrastructure New South Wales and Infrastructure Australia as strong examples of infrastructure governance and decision making. We do that because when you look across jurisdictions there remain enormous opportunities across all jurisdictions to put in place equivalent mechanisms at a state level. When you look at a lot of the debates that are happening, whether they are about user charging or asset sales, I think what is highlighted is the urgent need for strong, independent, accountable, well-regarded advice at a state level around project selection and prioritisation. Those bodies will always be able to be improved and an approach to governance that reflects continuous improvement is desirable, and I think we have seen that with Infrastructure Australia. That is what we would like to see across all spheres of government.
CHAIR: Following on from that, I note in your submission you talk about delivering an integrated, strategic approach to infrastructure planning and prioritisation. Do you see that as the role of Infrastructure Australia, COAG or another body?
Mr Cartledge : I think infrastructure agencies like Infrastructure Australia and Infrastructure New South Wales are part of that. They can deliver and identify long-term plans for infrastructure project selection and prioritisation, and we see the shift to Infrastructure Australia delivering those over a 15-year cycle.
There is an argument that it could be even longer—moving out to a 30-year cycle. When you look at the life of some of these assets that is absolutely appropriate. But I think you need to understand the role of these agencies, the role of local government, the relationship between agencies that exist at a state level, and agencies like Infrastructure Australia at a national level, and see it as a system in terms of delivering that integrated strategic approach. I think that is really crucial. You cannot separate infrastructure decision-making from the planning system, for example. And the planning system obviously exists at a state and local level. So it has to be a system based approach.
Mr PITT: You have suggested in your submission that there has been an erosion in the government's skills base relating to project management and procurement. And you have certainly added to that in your submission this morning. Are you aware of any assessment anywhere on recent major infrastructure projects so that we might be able to align what that cost is—where the lack of a well developed scope of works, a well developed, documented system for delivery of infrastructure has cost x amount of money? If you would like to comment on that, that would be great.
Mr Cartledge : The Scope for Improvement series of reports is a very good contribution to the understanding of the costs of some of these issues. I also draw your attention to the substantial Senate inquiry into the engineering skills shortage from 2012. That was a very strong piece of work in exploring, to the fullest degree, the intersection between the broader engineering skills shortage that Australia faces—the systemic skills shortage—and the procurement and public sector skills available in agencies, because those things are deeply related, and the impact of that on project delivery.
Mr Schuck : Can I just add to Jonathan's response. Often we come up against an individual agency which is a client of our industry. They want us to place a particular dollar figure on one of their procurement or contracting practices. In some cases that is possible but generally it is very difficult to quantify with reference to a specific project. Typically, if there is something that causes our firms to bid a higher price, that will happen over the longer term because for business reasons they will try to absorb that cost as much as they can to keep getting the work. But in the longer term obviously they have to turn a profit to remain viable. That is when it becomes a real factor.
Mr PITT: Are we suggesting that it is five per cent overrun or 10 or 20 per cent of costs? Is there any broad range?
Mr Schuck : At the moment we are busy doing a piece of work that is trying to answer that exact question. There are probably two responses that happen from these practices. A firm will either, over the long term, charge a higher price or will decide not to bid for work, and reduce the competitive pressure. That could result in either a greater-cost bid being selected or a lesser-quality bid being selected. That is obviously more difficult to quantify.
In terms of the research that we are doing we are not really in a position to announce anything just yet. Certainly, when that it is completed we would be happy to share it with this committee if the inquiry is still going then.
Mr PITT: Is that missing link across all three levels of government or is it predominantly the state government, the federal government or local government?
Mr Cartledge : The missing link?
Mr PITT: In terms of your skills shortage, engineers and procurement contracts.
Mr Cartledge : It is across all three spheres, absolutely. I think it is also important to note that when you start looking at the percentages in terms of what this costs for projects, even if you are only looking at single-digit percentages what that actually translates to, when you look at the level of government spend, is quite enormous. A two per cent saving achieved across a particular problem in the procurement process will deliver enormous benefits. So government's capacity to invest in the capability of those procuring the services of our members and related organisations in infrastructure delivery can achieve huge benefits in terms of value for money.
CHAIR: Jonathan, while we are on procurement, there are two different schools of thought. One is that we are better off not finetuning the big projects when we go to tender because it is so expensive responding to an incredibly detailed tender—that we get better innovation by saying, 'This is what we want to achieve,' and letting the market come up with new and innovative solutions to achieve that. Yet we have also had submissions saying that that is incredibly expensive because they have not got any certainty and they do not know how we can assess them properly against each other. Do you have a view on which is the better way to go?
And, while we are on procurement, one of the areas that we are also interested in is this. Quite often you get down to a final four which are quite different in innovation, and one might have a very innovative solution to one part of a bigger project. Do we look at models where we pay the last three so that the government or the project owner then owns the IP for that so that we can actually end up with the best solution, as opposed to the better solution?
Mr Cartledge : When you are looking at method selection, the most important thing to preserve is flexibility, and I think we need to recognise that, when you are dealing with infrastructure, you are dealing with a whole range of very different projects and they each need to be considered on their merits, and the methodology that is put in place to procure services to deliver those projects needs to be tailored to the project at hand. So I think there will be cases where the lack of procurement capability is reflected in the alignment between the project and the methodology that is selected and, potentially, a misalignment there, and I think that is often the issue—rather than the issue being with the methodology itself, it is the connection between the methodology and the project at hand. I think that is where you will often see less capability or poorer procurement expertise in terms of those identifying the best methodology.
To go to your second point: absolutely; I think all of those types of more innovative approaches to tendering need to be on the table to make sure that governments have the ability to select the best value for money outcome and to have the opportunity to consider the most innovative proposals that come to market. What we see is that, where there are far more narrow requirements in terms of the tender process, often that will exclude participants from the market or reduce competition or encourage bids that are less innovative and not necessarily going to generate the best value for money outcomes at the end of the day.
Mr Schuck : One potential solution which I think is also worth considering is the concept of a nonconforming bid. Bidders for work are only able to give an answer as good as the question they are asked, and if a client asks for the wrong thing they are going to bid within the narrow confines of that question. When we have had conversations with our members, they very often come back saying that it is a frustration of theirs that the client asked for X but they really wanted Y, and asking whether they should have bid something that was a nonconforming bid but would have given a better and more innovative solution or whether they should have stuck to the conforming bid, or whether there is some means through which they could lodge two bids, one of which meets that requirement and one of which actually answers the project brief. So I think that opening the project brief for contestability even, and certainly investing more time, more resources and more care into putting a project brief together—
CHAIR: I am sorry for the interruption; those are division bells. I don't like your chances, but keep going.
Mr Schuck : Putting more time, care and resources into putting a project brief together may overcome those issues, but certainly leaving it open—
CHAIR: They are getting their exercise this morning! Sorry about that.
Mr Schuck : I think I had just about finished that answer.
Ms PRICE: While we are talking about procurement, I would like to talk about risk. As an ex-construction lawyer, I have a particular interest in the way we are dealing with risk in contracts. I know you deal with it a little in your submission and you did mention it earlier. Because we are talking about value for money for the federal government and it is obviously key to a part of this inquiry, could you talk more about it. It is a subject that people do not often understand—all of a sudden you have a contract that the government feels comfortable with and it has pushed all the risk onto contractors. As you already mentioned, it ensures that only certain parties with deep enough pockets are able to take on that risk, whereas in some circumstances the government itself is better to take on that risk thereby reducing the contract and they can manage it a bit more. Could you talk more about that, because I think it is an issue that people do not really understand in terms of how it increase the costs. And of course that dovetails into this lack of procurement skills in government departments to be able to manage; therefore, it is left with cost overruns and often the government does not have a fixed-cost contract necessarily. All these things are just adding to the cost and obviously adding to the cost of using building infrastructure. Could you comment on that.
Mr Schuck : It is a bit of a mantra at the moment that, in terms of best practice risk management, a risk should be allocated to the party best able to manage that risk. That is a fairly widely understood concept and it is fairly widely spread in the public service, certainly at state and federal level and probably even at local government level. But from our perspective, and as Jonathan alluded to earlier, it is much more common to simply offload the risk rather than to actually manage it. The metaphor I like is that it is a hot potato, which is thrown to the next party rather than putting on a pair of oven mitts to actually to deal with it. Inevitably, the risk ends up with the party that has the least bargaining power rather than the party that is best able to manage that risk. Our membership certainly feel that overwhelmingly that is them.
There are two main implications of managing risk this way. The first is insurance. Professional indemnity insurance is the only significant asset that our firms have if they are sued. They are quite an asset poor class of organisations. Typically, professional indemnity insurance policies do not cover assumed risk. Those are the risks that you take on beyond what you are actually in a position to influence and control. They will cover you for your own negligence, your own omissions and your own mistakes; they will not cover you if you take on the risk borne out by someone else's mistake. So that is a significant issue because if a professional indemnity policy will not respond to a claim that leaves the firm's balance sheet to cover any liability. Their balance sheet may well be unable to do so, and if that is the case, the firm goes bust and it winds up on the government's balance sheet anyway with other consequences as well.
The next aspect of poor risk management is in terms of project outcomes. By allocating risk that way, you are providing incentives for the party who has passed off the risk to wash their hands of involvement in managing that risk. We know from our industry's experience that the best outcomes in terms of risk management come about when the different parties work together collaboratively to address the various risks, to allocate them to the parties who are in a position to do so. Certainly that is a major factor.
Firms will decide not to bid for the work and increase their price, so obviously there is a cost impact there and you may not get the best quality. You have increased the likelihood of a risk being realised and then you have an increased delay in dispute both at the contract negotiation stage but also should a risk be realised and come to fruition. Then you are in a world of deep pockets, where the plaintiff is trying to get maximum dollars out of the defendant, whereas if risk is better managed that is less of an incentive to go to litigation and to work together towards settlement but also to stop the risk happening in the first place.
As a final thought, government agencies who are known for having owner-risk risk allocation in their contracts are more and more finding themselves on—I would not want to call it a hit list, but a number of our firms have agencies they will not bid for work for. There is a significant reputational hit to government resulting out of that.
CHAIR: Just pursuing that, there was a sensitive project, or several, in Brisbane, where the parties formed an alliance so they shared the risk, including with the government body. Does your organisation promote that? I know some people get a bit nervous about their partners in that situation, but what it meant was that, when one of the partners did have difficulty in one aspect of the project, there was a genuine feeling from everyone to help them resolve it.
Mr Schuck : We encourage alliances where they are appropriate for the project, but also noting that they are not appropriate in every situation. Alliancing has been very popular in recent times throughout Australia. That popularity has also led to problems in that it is being used for inappropriate projects. But where it is used for an appropriate project, certainly there is potential to overcome that.
In terms of what would be an appropriate project, the project would be one where the risks might not be known at the start but also where you have a large-scale body of work which could be time critical. That is a good project that would be appropriate for an alliance.
CHAIR: What would be an inappropriate one?
Mr Schuck : I think something which has been very standard in the past. You certainly would not use an alliance to upgrade a local road. It would lead to all sorts of complications unnecessarily.
CHAIR: You would probably only have one party to the contract?
Mr Schuck : Yes, that would typically be designed only as far as our industry is concerned and then handed over to a constructor.
Mr Cartledge : I think is important to note when you are looking at alliance contracting the benefit of the behaviours that are demonstrated through the type of contracting. What you see is a far more collaborative approach to the contract and to the project from the outset that achieves benefits—many of the benefits that have been proven through successful alliance contracts around the country. I think what we would like to see is more of that collaborative approach to contracting reflected in more traditional approaches like design and construct. So, yes, a greater awareness of shared risk across the project, so that when you are negotiating contracts at the outset in a design and construct contract it is not this adversarial approach that tries to shift risk to different parties through the project but acknowledges who is best placed to manage the risk and will achieve the best outcome for the project overall. That is very difficult to achieve if you are going into it with what are clearly unfair contract terms from the start. So I think there is a lot that can be learned from alliance contracting for a whole range of different contracting methodologies.
Ms ROWLAND: Robin, you have almost answered my question—the one before last. In a past life just recalling 10 years ago or even less the number of times you were handed the Commonwealth contract and the first thing they would say is, 'We are not negotiating the liability or insurance clauses.' There appears to been a shift, at least with some departments, albeit in a disparate way, on that. From my experience there was a serious problem with dishonest risk allocation, really—disingenuous risk allocation. My question is: what can the Commonwealth do better? I know you are saying that this is occurring between some departments. But should the Commonwealth have, for example, a clear state procurement statement on this matter? Would that give comfort to potential contractors? It appears there has obviously been a shift, which is welcome. But, still, if that is happening in a disparate way surely it would be beneficial to have a consistent policy in this area?
Mr Schuck : I would certainly agree that there would be better outcomes if there was a consistent policy. I would add to that also that they have got to want to learn. We have found that where the relevant procurement officials in an agency are interested in learning how they can do things better there typically are better outcomes down the track—they are willing to listen to various stakeholders, including ourselves, explain particular risk allocation. It is not just about our member firm suffering a loss which allows them to save costs; it is actually about project outcomes that hit them as well is us. So moving away from zero-sum game towards best outcome for everyone is definitely a possibility, and it is a cultural issue.
I think where an agency is willing to sit down and actually listen in good faith, good things can be realised. But certainly, yes, I agree that a whole-of-government approach is needed. I understand that there is a role that the Department of Finance takes in coordinating procurement policy. We have argued for the creation of a procurement centre of excellence, as a mechanism or a body to develop procurement skills and to address these issues—something that can be independent from any one agency and therefore give comfort to a particular agency, that it is not just simply an engineering or the construction firm arguing in their own interests but it is something that is actually in the interests of the taxpayer.
Mr PITT: We would that live?
Mr Schuck : To be honest I am not especially fussed about that. I think it would probably work best as one of these government type agencies but that is independent within government. At present you have got the Australasian Procurement and Construction Council, who I think do very good work on a shoestring budget. It may well be that establishing such a centre could simply be an expansion of that organisation.
Mr PITT: Just a brief comment around risk shifting, which has been around for a very long time. It is not just governments to contractors; it is substantially contractors to subcontractors, who end up carrying the can. They have houses and all sorts of things that they put up. It is across the board and it is certainly something that we need to address. It does increase the costs substantially.
Mr Cartledge : I think in that context what we are looking for from government is a model client, because that helps when we encounter the same challenges in the private sector.
Mr THISTLETHWAITE: Does your organisation benchmark Australia's performance against other nations in terms of procurement, infrastructure, financing—those sorts of issues?
Mr Cartledge : No, we don't. We receive ad hoc feedback through our membership that we are absolutely one of the more adversarial cultures in terms of contracting when compared with, say, the UK or even the US, which does not bode well. But we do not do any systemic benchmarking across the country, no.
Mr THISTLETHWAITE: I was interested in your comments in your submission about debt financing and the aversion to debt financing and the whole political argument associated with that. Is that something that this committee should be making recommendations about?
Mr Cartledge : Yes, we would welcome that. I think what we have seen is an unnecessarily politicised environment in terms of the approach taken to debt funding infrastructure by governments at all levels. I think the example given in our submission of some of the flak copped in Queensland for dropping their credit rating based on what was a very large infrastructure spend at the time was disappointing. I think while you want responsible fiscal management, absolutely, you need to be careful, our members would argue, that that does not come at the expense of long-term substantive investment in the infrastructure pipeline that will ultimately contribute to productivity at a local, state and national level. That is our concern—that the infrastructure deficit is so large that it is having a detrimental impact on long-term productivity. That is the issue that needs to be addressed.
Mr THISTLETHWAITE: When do think all this started? If you look back, even in the 1980s, most infrastructure was being financed by debt. Very few Australian governments were influenced by credit ratings. There was no issue in the wider community about it. People saw the benefits of the long-term investment. When you think that that all changed?
Mr Cartledge : I do not know. I am no historian, but it has definitely become more acute in recent years—the idea, the simplistic headline, that debt is bad and surplus is good. The correct scrutiny of infrastructure projects in making a valid contribution to productivity is absolutely right—that is what we want to see—but perhaps that focus is a little out of whack in terms of the simplicity of that debt debate in general public discourse.
Mrs WICKS: I just want to follow on from that question. Given that there has been such a large amount of funding allocated at both the state and the Commonwealth level recently, how do you see that that funding will help to alleviate that so-called infrastructure deficit you spoke of in your last answer?
Mr Cartledge : We absolutely welcome increased funding for infrastructure. After what in many jurisdictions has been a sustained period of some level of inactivity on that front, we really do welcome some of the major projects now coming through that are providing a great base for our firms to plan for the future. So it is certainly a step in the right direction, but there is much more work to be done. I think the most important thing is that we work towards the development of a long-term infrastructure plan that will exist across electoral cycles and provide businesses with the certainty that they need to plan and recruit for their businesses to deliver that pipeline. To have projects change across governments at both a state and a federal level is hugely problematic when you are attempting to recruit the skills and plan a business to deliver those projects and bid for them, and that is the principal concern for our firms. So the longer the infrastructure planning time frames and the more certainty can be attached to that pipeline and the depoliticisation of the pipeline, the better our firms will be able to deliver it.
Mr GILES: Just going to the ASBEC submission, obviously one of the platforms that you set out is calling for a coordinated and accountable approach to cities. How do you think that should be delivered or overseen?
Mr Cartledge : We were very pleased with the previous federal government's focus on national urban policy. ASBEC considered that the capability that was developed within the federal government to focus on urban issues was an important step towards delivering more productive, sustainable and livable cities, regions and towns across Australia, and we have urged that that continue. I think there are a number of aspects to that. For example, I would draw your attention to the National Urban Design Protocol, which was hosted by the Australian government up until recently. It was an important reference point for all spheres of government and the private sector to look towards to understand what constitutes good urban planning principles that help inform delivery and developments at a local level. ASBEC has consistently advocated for the development of national indicators to measure the performance of major cities across Australia. If you do not have in place clear indicators and tools to measure how our cities are performing, how can we ever hold that performance to account and actually measure progress? So that is a really fundamental way that, at a national level, we can support the delivery of better cities and towns around Australia. When talking about major cities, we are talking about cities with a population over 100,000, so we are not necessarily talking just about the capital cities; we are talking about regional hubs and regional communities that have significant flow-on benefits to the broader regions that surround them. But we absolutely need to be measuring their performance in a really clear way, and that is best done and delivered at a national level. So the continuation of that would be fantastic.
CHAIR: You mention, under the broader, stronger cost-benefit analysis in your submission, the approach taken by London in the delivery of the Crossrail project. You mention that that attracted significant new private sector investment, which obviously we are interested in. So what did they do differently or particularly well so that you want to highlight that as an example and that attracted that private sector investment?
Mr Cartledge : The methodology that they used was a wider economic benefits model to calculate the cost-benefit ratio for that project, which in a very simple way—I will not pretend that I am an expert on it—really looked at the jobs growth across the corridor in the regions that are impacted by the delivery of that asset. What that did was push the ratio into a space that attracted more private sector investment. That is a very simple view of it, and I would be pleased to take that on notice and provide you with more information about that project in particular from our members.
CHAIR: Yes, I would be interested in whether the investors were local or whether they were international as well.
Mr Cartledge : Absolutely, I can provide that.
CHAIR: Thank you. The previous presenters to this inquiry, from the National Growth Areas Alliance, mentioned the need for a strategic package of projects to be effective and that they wanted regions or states to develop that to get funding. You mentioned Queensland as an example of a good package of projects. Can you elaborate on what sort of combination of package of projects you thought was good?
Mr Cartledge : In the Queensland example I was really talking about the very large infrastructure spend over that period, where there was some debate around the merits of that versus their credit rating. In terms of the broader point around packages of projects to support funding, we are absolutely in alignment with the National Growth Areas Alliance and are working very closely with them to support advocacy towards, for example, a UK City Deals model and the implications that might have or the lessons that can be learnt from that type of model in Australia. The fundamentals of that are that the benefits you might have by packaging together projects in a local geographic area may far outweigh the benefits of any individual project. That in itself will attract new investment to that package. I think that is somewhat reflected in the Infrastructure Australia Act, to the extent that Infrastructure Australia will now have a greater emphasis on complementary projects that sit against each other in terms of weighing up the productivity benefits of complementary groups of projects. We are suggesting that there may be scope to take that one step further in terms of looking at the capacity for local areas, be they RDAs or other groups of councils, to come together to package projects with identified net benefits for their local geographic area that attract private sector investment, with the support of state and federal funding. We are hopeful to have more information about how we consider that model being applicable in Australia in the months ahead.
CHAIR: Mr Cartledge and Mr Schuck, thank you very much for attending the public hearing today. The secretariat will send you a draft transcript of proceedings so that requests can be made to correct any errors of transcription.
You kindly offered to provide more information on Crossrail. I note in your submission that you are also about to finalise a thought leadership document. If that is not far away, we would love a copy of that as well. It would be helpful if you could send the secretariat any additional material that you have undertaken to provide.
Mr Cartledge : Absolutely. Thank you very much.
Pro ceedings suspended from 11:13 to 11:27