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Standing Committee on Infrastructure and Communications - 29/08/2014 - Infrastructure planning and procurement

ELFORD, Mr Mark, Acting Group Executive Director, Infrastructure Division, Department of Planning, Transport and Infrastructure

[11:21]

Evidence was taken via teleconference—

CHAIR: I welcome the Department of Planning, Transport and Infrastructure from South Australia via teleconference. Mr Elford, are we coming in?

Mr Elford : Yes, I can hear you.

CHAIR: Thank you for changing your time to suit us; we appreciate that. I welcome Mark Elford as a representative of the South Australian government to provide evidence today. 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 would like the committee to introduce themselves so you know who is here. My name is Jane Prentice and I represent the seat of Ryan in Brisbane.

Mr THISTLETHWAITE: Matt Thistlethwaite, the member for Kingsford Smith in Sydney.

Ms MARINO: Nola Marino, the member for Forrest in Western Australia.

Mrs WICKS: Lucy Wicks, the member for Robertson, New South Wales Central Coast.

Mr PITT: Keith Pitt, the member for Hinkler in Central Queensland.

CHAIR: I am sorry; we do not have a South Australian representative on the committee, but I am sure you will make up for that! I invite you to make a brief opening statement, if you wish, before we proceed to discussion.

Mr Elford : We provided a submission in April called 'Overview of infrastructure planning and delivery in South Australia', which I am assuming the members have.

CHAIR: Yes, we have it in front of us.

Mr Elford : Essentially, I would have to say that we think we have a pretty robust planning and delivery framework in SA. We have done quite a bit of work on that in recent years. I think the submission is pretty clear, but I am happy to take any questions from the committee.

CHAIR: Thank you, Mark. We will kick off with the deputy chair, Matt Thistlethwaite.

Mr THISTLETHWAITE: Can I firstly thank you for your submission and appearing. You are one of the very few state governments that have actually taken the time to consult with the committee, so that is appreciated. In your submission you say that in January this year you closed submissions for the state's first integrated transport and land use plan. Can you just give us an update on where that is up? Have there been any recommendations or findings out of that?

Mr Elford : As you mentioned, our consultation period closed at the end of January. We had a very significant number of responses. We had over 1,500 submissions. I think we had 2½ thousand people attend various events that we put on as part of our very intentional consultation process. It is fair to say that overwhelmingly it was a very positive response from the people who have made submissions and attended events. This ranged from private individuals through to industry groups, local governments and other government agencies. And, essentially, we are in the final throes now of finalising the final version of the integrated transport and land-use plan.We expect that it will be released fairly soon.

Ms MARINO: One of the previous witnesses we heard from was from the telecommunications industry, and basically they were referring to New South Wales and Western Australia assisting to lower the cost of planning approvals and reduce the time frames for the delivery of projects. Given the work you have done, where are you in that space with telecommunications?

Mr Elford : Certainly in terms of the reforms that we have undertaken for a number of years, we think we have got a very efficient planning system.

In terms of telecommunications, I have to confess that that is not my key area. One of the initiatives that we have underway right at the moment—on page 5 of our submission we talk down the bottom about it—is that we have established an independent expert panel to review our planning legislation, and they have delivered an interim report that will be finalised by the end of the year, which we think might result in even further reform around planning approvals.

But specifically regarding telecommunications, I am afraid I am probably not really in a position to give you any more information than that.

Ms MARINO: That is fine. If there is any information that you have within any of your departments that would be useful to this inquiry in that regard, I certainly would appreciate the committee having access to it.

Mr Elford : I will follow that up.

Mrs WICKS: We have heard from other witnesses some comments about—and I guess endorsement for—the UK city deals. I am just wondering if you know about this, and if you have any comment.

Mr Elford : No, sorry, not specifically on the UK city deals, no.

Mr PITT: We had a submission from a witness this morning suggesting that the committee should consider three-dimensional mapping of all infrastructure in Australia. There seems to be technology available which would do that with depth and scalability to an accuracy of about 15 millimetres. I guess, from a personal view, that seems to be something that would provide significant savings to most levels of government. I would be interested if you have any comments, particularly if you have seen the possibility of these before.

Mr Elford : As a state government, we certainly use geographic information systems in a big way for a lot of our spatial planning, and we have quite an integrated system. But in terms of three-dimensional mapping, my only comment on that is that I think it would have to have a really good business case. You would have to really be sure that the benefits of doing it actually outweighed the costs, because to provide three-dimensional mapping of infrastructure across the whole nation would, I imagine, be a very expensive proposition.

I would have thought that perhaps it might be more appropriate to have a more targeted approach, maybe focusing in on specific areas where you are expecting infrastructure demand to increase. I have not seen that particular example that you are talking about, but I personally am certainly a great advocate for good information systems, including mapping, because invariably with infrastructure it is all about the spatial location. In cities, one of the key challenges, particularly for transport infrastructure—and we are involved in a number of transport projects in SA—is understanding where underground services are and understanding land boundaries. So good mapping is really important. I guess the question is: is it cost-effective to go to a three-dimensional scale?

Mrs WICKS: Just picking up on a comment that you made about benefits versus costs, I am interested in this whole concept of cost-benefit analysis. Coming back to my question before, the Property Council submission talks about the UK city deals, with particular reference to what they call measuring cost-benefit, including the gross value added for a region or for a local GDP. Looking at a regional approach is, I guess, where they are coming from—and I notice that you have 'South Australian regions planning'. Do you have any comments on whether jobs, improved productivity and GDP for the local region ought to be included as part of a cost-benefit analysis for planning projects and major infrastructure?

Mr Elford : I am probably best placed to talk about transport projects. I have had quite a bit of involvement with that—in particular, providing business cases to Infrastructure Australia and to the Commonwealth Department of Infrastructure and Regional Development. There is a very structured process for determining a cost-benefit analysis for a particular project. Transport economists in governments in Australia have collaborated to have a common approach. I think it is good to value the broader issues such as job creation and a project's contribution to gross state product. But it is a murky area when you start to calculate the benefit-cost for a project if you start to bring in those things because there is a high risk of double counting. You can quantify benefits as much as you can—or 'monetise' them, as transport economists say—but it needs to be done in a pretty structured way in terms of what you include and what you do not include. Certainly in the case of transport, that is well established and well agreed. But then I think it is very relevant to be able to identify non-monetised benefits and also broader implications such as job creation. But to be able to compare projects it is very important to have a common methodology. Certainly in the transport area, ministers have worked quite hard. In fact, they are still looking at this in terms of making sure that there is an agreed common methodology so that you are comparing apples with apples when it comes to projects.

I should point out that the wider economic benefit of a project is an emerging area within the economic analysis of projects. People sometimes think that that includes things like job creation. But it is actually a very technical and specific area around the agglomeration benefits that you get when, for example, you have lots of industries together. So there is a very specific way that you can analyse the wider economic benefits. The Transport and Infrastructure Council of Australia, which is a ministerial council, is looking at this at the moment. So the wider economic benefit, in that technical sense, is a very specific way of quantifying benefits. It is not to be confused with some of those broader benefits that you were describing in terms of contribution to GSP and job creation.

Mr THISTLETHWAITE: Can you outline how your integrated assessment process is different from other states? Are there any efficiencies in your system that you think make it better than other state or federal processes?

Mr Elford : I cannot give a state-by-state comparison. I do not want to sound parochial but, as I understand it, our system in SA is right up there with the best, particularly around timeliness. The Productivity Commission did a report—I think it was last year—looking at major project development assessment processes. That report would probably contain in more detail a bit of a comparison between the states. With our major projects, we have provisions under the Development Act which are pretty streamlined, and the feedback I am getting from industry is that they seem to work quite well. But certainly, as I mentioned before, there is the review of our planning legislation underway at the moment, which will be handing down its final report by the end of the year for government and there may be some further streamlining. But our approach, from my understanding, is very streamlined and does seem to operate very well.

Mr THISTLETHWAITE: I must say that I have never seen statutory time frames for the completion of stages and an overall assessment time frame of three months. That is something I have never seen before. Does it work?

CHAIR: Ambitious.

Mr Elford : When you refer to the three months—

Mr THISTLETHWAITE: It is on page 24 of your submission—Major Infrastructure Projects, second paragraph—

Mr Elford : Yes. I think that generally it does work. I am happy to come back perhaps to the committee to verify that.

Mr THISTLETHWAITE: Okay.

Mr Elford : The feedback that I get from industry is that the process does work well in South Australia.

Mr THISTLETHWAITE: Finally, have you reviewed the Productivity Commission's report into public infrastructure, the recent one that they released? Are you generally supportive of their recommendations or are there particular recommendations that stood out for you?

Mr Elford : That was a very extensive report, as you know—600 pages. The state government of South Australia participates in some national processes so the Minister's Council on Transport Infrastructure is considering that report as well. Our state minister is a member of the national council on transport and infrastructure but I think that most jurisdictions would agree with a lot of the recommendations in that report particularly around assessment of projects and the rigour required around assessment of projects and having a pipeline and streamlining processes.

There are some specific recommendations in the Productivity Commission report regarding user-charging and in particular a road fund, and that requires a lot more work. In fact the Productivity Commission recommended that they be asked to do more work around that. I think that it is a very long-term proposition to go down more direct user-charging for all road users. Technically, I think it is feasible but there are a lot of issues to be worked through and I think that the state government and the Department of Planning and Transport and Infrastructure's position is that that really requires a lot more consideration.

I should also point out that we are not convinced that some of the procurement recommendations in the Productivity Commission report were perhaps subjected to the same rigour as some of their other recommendations. We think that better practice procurement for infrastructure was not necessarily picked up as well as it could have been in that report. We think there are various different types of procurement that jurisdictions use depending upon the complexity of the project. So I think that some of the procurement recommendations were not necessarily as rigorous as they could have been. But other than that, I think that most states, and certainly South Australia, would be supportive of the general thrust of the report.

Mr PITT: This is probably a question on notice. Would you be able to make some recommendations to the committee around what those more preferred options would be?

Mr Elford : In terms of procurement?

Mr PI TT: Yes.

Mr Elford : We could. Of course the Commonwealth government has not actually released its response yet to the Productivity Commission report. The Commonwealth government is working up some of its response in conjunction with the states so there will also be a response, I guess, coming from the Commonwealth which might be of interest to the committee.

CHAIR: Yes, but we would be interested in yours as well, thank you.

Mr Elford : I hear that, okay.

CHAIR: That is great. One of our witnesses earlier today commented on the problems experienced with the privatisation of infrastructure assets, in particular railway lines and ports and in relation to third-party access. I have a memory that that happened in South Australia a few years ago.

Mr Elford : Yes, a number of the infrastructure assets have been privatised here, including the rail assets and the power assets, in particular.

CHAIR: With the rail—do you have any particular regulations in place to look after the interests of third parties?

Mr Elford : Yes. We have a number of different access regimes for ports. There is legislation in South Australia that I must admit I am not sure the exact title of, off the top of my head—the maritime something—

CHAIR: If you could take that on notice, that would be great.

Mr Elford : But certainly there is an access regime for ports and there is one for rail. There is also one for electricity and there is one for gas pipelines. So there are a number of different access regimes that operate in South Australia. They are administered, depending on the nature of the act, in different ways. But, certainly, for ports and for rail—and when I say 'rail' it is not so much the interstate rail but the intrastate rail—

CHAIR: Yes—rail to the port, normally.

Mr Elford : The Essential Services Commission in South Australia—ESCOSA—has a role in overseeing those access regimes in those particular cases. There are a number of different access regimes and I am happy to provide the committee with more information about that. Coincidentally, we just had a workshop on that last week where we looked at a number of these different access regimes, so we have some quite current information.

CHAIR: We would really appreciate that. Thank you, Mark.

Mr Elford : Sure.

CHAIR: We are coming to the end of questions, so thank you very much for joining us today and thank you for participating in our public hearing. The secretariat will send you a draft transcript of proceedings so requests can be made to correct any errors of transcription, and there are quite a few items which you have kindly offered to take on notice and provide. We would appreciate that material. The secretariat will liaise with your office to get access to that.

Thank you very much. We really appreciate your contribution and your taking the time to speak to us today.

Mr Elford : That is fine, thank you Jane.

Committee adjourned at 11:42