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Standing Committee on Infrastructure and Communications - 07/08/2014 - Infrastructure planning and procurement

SPIELMAN, Ms Ruth, Executive Officer, National Growth Areas Alliance

Evidence was taken via teleconference—

Committee met at 09:46

CHAIR ( Mrs Prentice ): I formally declare open the committee's sixth public hearing for the inquiry into infrastructure planning and procurement. Today's public hearing in Sydney will provide the committee with an opportunity to hear from a number of witnesses as part of the inquiry. I welcome your presence today by teleconference from the National Growth Areas Alliance to provide evidence. Although the committee does not require you to give evidence under oath, I 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 and questions.

Ms Spielman : Thank you again for the opportunity to be heard today. No level of government is keeping up with the infrastructure that is required as a result of population growth. This has a number of consequences, including poorer education and employment outcomes, high car dependence and road congestion and consequent vulnerability to oil price rises. The outer growth suburbs are growing at double the national rate, absorbing twice their proportionate share of Australia's growth. In recent years many of the municipalities we represent have seen average annual growth of between 4,000 and 11,000 additional people. The task of servicing that has become unmanageable. Immigration is a significant driver of the growth and one in five permanent migrants in the period 2006 to 2011 settled in areas represented by our alliance. So, while these areas are taking more than their share of people, they are not receiving commensurate assistance for the infrastructure to support them. Planning is part of the issue, with there being no agreed levels of provision for most types of infrastructure, but planning is not the main culprit. Failing to allocate funds to implement the plans is the more serious concern.

In our view, two things need to happen: the infrastructure pie needs to grow along with population increases and the outer growth suburbs need to get their fair share. Interestingly, the Business Council of Australia in their reports talk about there needing to be at least four per cent of GDP continued to be spent on infrastructure, and they are just talking about the big-ticket infrastructure. It is not just a one-way street in terms of funding though, and our research demonstrates the payback via increased jobs, increased tax revenues and a permanent boost to GDP that would result from investment.

Big-ticket items like rail and major roads tend to take up the lion's share of available funds, but if you added up all the health, education, recreation and community facilities that need to be built, the task is immense. Local government only raises about four per cent of taxes, so they are not in a position to tackle the issue on their own. The extent of growth that has been occurring has meant that the states are not keeping up either. A partnership across all levels of government is required. The process where states put their priorities to the Commonwealth government and projects get assessed on a project-by-project basis is not working for outer growth areas, nor is a change of priorities each time a government changes.

The UK's City Deals approach is one we think has promise. Its features are that it is focused on collaboration across an economic catchment or region; the infrastructure that will drive economic growth and other public policy goals is identified; the focus is on the package of projects across a region, not on individual projects; targets are agreed and, if exceeded, bonuses apply, much like our previous competition policy; and there is national government funding as a base and private sources are leveraged. This gets away from the more parochial vying for individual projects and is able to encompass both big-ticket infrastructure projects and smaller scale projects and the South-East Queensland mayors have been investigating its applicability to Australia. The approach to Western Sydney, while driven by the second airport development, is a positive step and could be a benchmark for how we approach infrastructure planning and provision. Some RDAs are also on the front foot, developing strategic regional plans and associated infrastructure requirements. Encouraging this would be a step in the right direction. Thank you.

CHAIR: Thank you, Ruth. I will now invite the committee to ask questions.

Mr PITT: I would be interested in your thoughts around the interaction between the three levels of government for infrastructure delivery and how we might do that better. One of the things that has come up many times in our previous deliberations is around the actual spend of infrastructure money and getting benefit or value for that expenditure. I would be interested in your comments on that.

Ms Spielman : In terms of the three levels of government collaborating?

Mr PITT: Yes.

Ms Spielman : Are you asking me what has happened or what needs to happen?

Mr PITT: A little bit of both would be great.

Ms Spielman : Okay, sure. One of the issues for us in terms of how projects get prioritised is—if we take Infrastructure Australia, for example, they rely on the states to prioritise projects and put those projects up. From a local government perspective, the first hurdle is to convince the state government that it is a project that needs to go onto their priority list. Some of our priorities would also be their priorities, but there are many other worthy infrastructure projects that do not necessarily make that cut. That is an issue.

The other is local and state governments getting, first of all, the needed infrastructure into plans, and as I indicated that is somewhat of an issue but not the major issue. Really it is about how the expenditure is allocated and how those plans get implemented. The way it happens is not as collaborative as it could be. Where it works better, as I indicated, are in examples like the coming together over all the infrastructure that is going to be required surrounding the second airport in Western Sydney. Those kinds of approaches—even the discussions currently around northern Australia, where all levels of government really are involved and engaged.

With the model that I was talking about, UK's City Deals, there are only two levels of government there. I understand Scotland, where there are three levels of government, have been looking at a similar approach where there is an agreement and contracts for those, as per the UK's City Deals, and each level of government is engaged. In the UK's City Deals—you may be familiar with this; stop me if you are—greater Manchester is the key example where there are 10 local governments who have come together as a corporation and they have entered into a contract with the central government.

CHAIR: Ruth, just following on from that: coming into the last federal election the Council of Mayors in Queensland put together a project package that they wanted as a priority, and I think the state government had a list of 12 top projects. Is that the thing you are thinking of or, I did hear you say, more around the second airport for Sydney, where you were talking about one major project with other infrastructure coming off it so that it was all interconnected?

Ms Spielman : The ideal is for a regional approach where economic catchments or other sensible catchments are identified, that there is a plan that is prepared that has buy-in from all levels, that is strategic and that also identifies the sort of infrastructure that is needed to drive economic growth and to also address social issues and environmental issues. There is then a mechanism whereby funding can come forward. In the UK deals model, there is some government funding. There is also private sector funding involved in it.

Mr GILES: Your submission highlights the present infrastructure deficit, particularly in relation to outer suburban communities. Obviously there has been some work that you would be aware of, but maybe other committee members are not, touching on this issue specifically in relation to Melbourne. It was publicised yesterday. I was just wondering what you would say, and what the NGAA would say, about current pipelines' impact on this infrastructure deficit at large and in relation to growth areas?

Ms Spielman : Yes, I am aware of the Melbourne Interface Councils' report that was launched yesterday about fairer state government funding. The pipeline of projects I think covers some of the needs, but their infrastructure task is much bigger. So I think what is needed in some areas—and, Andrew, the northern Melbourne RDA is a case in point—is heading down the path of getting an agreed strategy across the region with a commensurate list of infrastructure projects. It is that sort of approach, more focused on that, and then agreements with other levels of government involved in that to get to where we need to go. The identification of the infrastructure needs to link with the strategic approach for the area—that is in part local government plans, it is in part state government plans and it is also federal government in terms of some of the big ticket infrastructure. Bringing it back to that spatial approach is the key and then agreement on the package of infrastructure that is going to drive economic growth as well as address social and other public policy goals. Did that answer you, Andrew?

Mr GILES: Yes, I think that is a elaborated no. Is that a fair characterisation of the answer?

Ms Spielman : That is right.

Mr GILES: Thanks.

Mrs WICKS: I want to come back to something you mentioned in an answer. You talked a couple of times about collaboration, which is something I am quite interested in. You mentioned as part of that some barriers to collaboration in relation to state, local and federal government working together in the delivery of infrastructure. There are a couple of prongs to this question. Could you identify some of those barriers, particularly with reference to how you feel local government can be more involved in some of the strategic outlines that you referred to in your previous answer and, also, whether you feel there is identification of a feedback process for you or for local government in terms of the delivery of infrastructure projects at every layer of the delivery process.

Ms Spielman : Sorry, I missed the last part of your question.

Mrs WICKS: It was quite convoluted, I think. I will start again. I am interested in what you referred to as the barriers to collaboration. You talked about delivering some of these major infrastructure projects. You talked about the importance of local government being involved in the strategy overview. What are your thoughts on how we could do that better moving forward.

Ms Spielman : Sure. First of all, on barriers to collaboration, what tends to happen at the moment is that state governments have their view of what needs to happen, individual councils have their list of projects, that federal government via Infrastructure Australia or via other departments has lists of projects and what is missing is the spatial overlay. If, for example, the federal government wants to invest in facilities, whether it be Medicare offices, whatever it is, is there a spatial impact analysis of where is the best place to put those resources. The other barriers are around the extent to which local governments can engage with state and federal governments in a whole of place approach.

As I mentioned, I think the RDAs are a good step in that direction and some of them we acknowledge are working better than others. For outer growth areas in some states it is more difficult because an RDA covers an entire metropolitan area—and we acknowledge the current government is reviewing RDAs at the moment—but those start to get to the range of players and the cross-governmental engagement that we are talking about. The next step with that is further towards the UK city deals model that I was talking about. Does that answer your question?

Mrs WICKS: Yes. I might come back to it a little bit later but thank you.

Ms ROWLAND: You mentioned a few times you thought Sydney's second airport is a good example of the type of infrastructure collaboration that we should see. I fundamentally disagree with that on a couple of points. I want to say why and then maybe give you a chance to respond so you can fill in on that. I have a fundamental issue with all of the money, some 3.5 billion, plus about 200 million for local roads, being spent purely on road infrastructure. When asked about whether there would be rail or other forms of public transport, the federal government's comment was, 'This is a matter for the states.' I think that that creates a gap between different levels of government. I come from a local government background so I am well aware of the cost-shifting that occurs here as well, as does Mrs Prentice, I am sure. I have an issue where we have so-called 'collaboration' between different levels of government but one of them, which should be picking up the bulk of this, defers to another level of government. That is my first point.

My second is the fact that this money is going into local roads and other infrastructure. I am sure you are well aware of the growth areas in Sydney's south-west and north-west. These upgrades will barely keep pace with the normal rate of housing and other employment land growth that is going on in Sydney's south-west and north-west. There is no doubt that this will be good for the time being but if all other things stayed constant, it would provide relief to many of those commuters but it is not the type of infrastructure that is designed to keep pace with what will essentially be a full-blown second airport.

The third is I have a fundamental problem with this notion of linking funds—or at least $5 billion, as I understand it—to asset recycling where federal funding is contingent on states selling assets. I have a fundamental problem with thinking that that is an optimum outcome.

The fourth is that I keep hearing many other of my colleagues locally, proponents of the airport, talking about the local jobs that will be created. Some figures I have seen vary from, say, 50,000 or more jobs. As you would well be aware, the issue of local employment opportunities is critical because we have situations where in the outer metropolitan areas of Sydney, the vast majority of people commute to a CBD, be it Parramatta to a limited extent, Liverpool again to a limited extent, but predominantly to the Sydney CBD.

In the absence of any skills audit being done up-front now—and I reiterate that I attended a briefing a few months ago in Parliament House with members of Minister Truss's department and I asked whether there is going to be a skills audit, what sorts of linkages there are going to be with local institutions, such as the institutes of TAFE, the University of Western Sydney, and so forth. No planning had been done and there was no foreseeable planning that would be done to include those linkages to ensure that apprentices and other jobs that would be created would be kept local. So I take your point that it is good to have federal money towards roads and towards these big ticket items but I want to break that down a bit because I disagree that this in itself is a good example of cooperation between different levels of government. I would like your views on some of that. I raised that to get your views on them, to explore precisely why you think this is a good example.

Ms Spielman : The reason I highlighted that as an example was that it is one of the few examples where there has been a focus on a region where each level of government is engaged, although I take your point that there may well be shortcomings in regards to how it is occurring. That was the reason I raised it. Also, there appeared to be something starting to happen that was not happening previously. I take your point that there may be a number of things and in talking about an ideal approach that is not the be all and end all. I would characterise it as a starting point. I do not know if you want me to comment on each of the issues that you raised in what you were saying—

Ms ROWLAND: No, I understand your point—you are saying it is a starting point.

Ms PRICE: I am interested in whether members of your body have issues with respect to land availability from a local government perspective. I know in Durack we often talk about how when we say, 'We would like to do this or that,' local governments say, 'Unfortunately, even though we might have the funds to create infrastructure, we do not have the land.' That is the local government land that is owned by and bequeathed to them. I am just interested in whether you are seeing that as a block at a local level as well.

Ms Spielman : For the outer growth areas it is not so much the availability of land as the process by which that land is allocated. In our submission we talked about the issue of corridor reservations and how that happens. If we are talking about land from our perspective, the issue is that, for example, you might get a state government plan signalling in its documents that certain land is strategically important for future requirements but not always being able to go in a timely manner to the next step of committing, via a public acquisition overlay, to purchasing it down the track and then, following that, actually getting the infrastructure that was envisaged there. That can be decades. Land can be identified but without the next steps necessarily occurring. That is one issue. The availability of land itself is not as big an issue for us.

Mr PITT: Firstly I will make a brief comment and then I will have a question. In regards to the skills audit that was brought up before, my understanding was that RDA had done a significant number of those reviews. They certainly did in my electorate. I have copies of those reports sitting on my desk now. So I think a lot of that work has been done. Secondly, my question would be whether you have looked at the Productivity Commission report into public infrastructure that was recently released. If so, are there any recommendations in there that you would support strongly or disagree with strongly?

Ms Spielman : Thank you for that question. Yes, I am familiar with it. We did make a submission. We responded to the draft report and we have since commented via media release on the final report. The latter highlighted that the final report of the commission mentioned our response to the draft report where we were talking about the fact that people in the outer suburbs spend a long time in cars getting to jobs and that it is important to have a transport solution but also to focus on jobs and services closer to home. The commission report said that we were a bit misguided—those are my words, not the report's words—and indicated that if road user charges were high enough outer suburban residents might be encouraged to shift closer to jobs further in towards the centre of cities. We strongly disagree with that. We think it does not understand what the situation is in the outer suburbs for many people. We think that a lot of people, even if they wanted to shift, would not necessarily be able to afford the housing. There is a legitimate task to look at jobs and services that are able to be brought closer to or created in those areas.

Mr PITT: Just to add on to that a little bit briefly, my seat is in Central Queensland and so I am fairly separated from the major cities. Our population growth is not jumping out of the ground, by any means. So what is it that is driving people into these areas? Is it simply the cost of housing?

Ms Spielman : That is one of the major drivers. It is not the only one. As always with these sorts of human decisions, it is more complex than that. Some people will go because they prefer the environment, more open space et cetera. Some people will go because they prefer to have a new house. But one of the major drivers is affordability.

Mr GILES: I was interested in your contribution to an earlier question where you touched on the importance of having an effective spatial overlay to close infrastructure deficits. Who do you think would be best placed to conduct that spatial overlay or to oversight it?

Ms Spielman : My view is that that spatial consideration is needed whenever infrastructure decisions are being contemplated by whichever level of government. If there is a decision to be made about where a university campus or a hospital and so on is to go, there should be consideration and a proper analysis of the needs, the added value et cetera. I think that should be mandated to all levels of government that are considering infrastructure investment.

CHAIR: On a slightly different note, is the alliance able to identify model projects in its member community that demonstrate what you have identified as effective and efficient planning or procurement methodology?

Ms Spielman : Yes, probably. I will take that on notice and provide you with that detail subsequently.

CHAIR: That would be great.

Mr PITT: You suggested a number of four per cent of GDP for infrastructure spending; is that right?

Ms Spielman : That was quoting the Business Council of Australia, who indicated that expenditure had been recently at that level and that into the future it would need to be at least at that level of GDP. They were talking about the higher level economic infrastructure. Over the next 10 years that equates to about $760 billion. I am getting that from their report.

Mr PITT: What you think would be the most effective or most appropriate way to fund that amount of infrastructure spend?

Ms Spielman : I think it has to come from a number of sources. All levels of government need to be engaged in providing funding, as does the private sector. I come back to the UK City Deals model, where there is central-government base funding, there are bonuses available if targets are exceeded and the regional grouping, in this case of local governments, is also expected to raise private finance.

Ms ROWLAND: Your submission suggests that outer growth areas do worse on education, unemployment, jobs, self-sufficiency and access to services than those in more inner metropolitan areas. Can you tell us two things: what deficiencies in key infrastructure contribute to such outcomes and how can outer growth areas improve their standing on these factors?

Ms Spielman : Again, the answer will be complex, but I think that contributing to it from an infrastructure perspective starts with some of the basic infrastructure, including schools. A number of the growth areas are not getting the number of schools that are required in a timely manner—that is No. 1. It probably comes back even earlier than that with the availability of family support services when families are young, youth services and then on to tertiary education facilities and their availability. Transport comes into the picture in terms of people's access to those things. The picture is not simple, but it is very clear and stark when you map those vulnerabilities about where they are actually occurring.

Mrs WICKS: Following on from Ms Rowland's question, I was interested in how your members—by that I am also interested for my own community on the Central Coast—and local government can become more involved in long-term infrastructure planning that affects their local communities?

Ms Spielman : There are probably various ways. Each local government does its own planning. Coming back to the regional approach that I am advocating, via RDAs is one avenue. If RDAs were all regionally based and not entire metropolitan areas, had a strategic focus and expertise and were developing the sorts of plans I have talked about then I think local governments could engage that way. There are also already mechanisms that local councils are engaged in. The South-East Queensland mayors group is one of those examples that do very strong work in planning, including infrastructure planning. There are various groupings that I think local governments could be engaged through.

Ms ROWLAND: Local government has a seat at the COAG table. In light of the discussion we have been having this morning, how effective have we—I mean we who advocate for local government—been in that role? What do you think could be improved to ensure that some of these deficits and some of the examples that you mentioned in response to my last question go across the whole range of the three levels of government? How effective do you think we have been and how can we make that voice better at the COAG table?

Ms Spielman : I think that it is hard to get the nuances we have been talking about when the representation at that level is by the organisation that is the peak for all local governments. I think that to better understand the issues and get the cooperation across governments further discussion with a range of groups would be beneficial—so not relying just on the Australian Local Government Association's voice at the COAG table but actually inviting people in to be heard. I think those sorts of conversations would assist the level of understanding and possible cooperation.

Mr GILES: Further to that answer, Ruth, in your view, both in relation to Ms Rowland's question and to the prospect of something like a city deals program boosting infrastructure effectively, is the role of the RDAs critical in this?

Ms Spielman : I think it could be—again, acknowledging that at the moment some RDAs work better than others and in some RDAs local governments are more engaged than in others. Premised on the fact that if you had RDAs that all had catchments that made sense from a regional perspective and they were all strategically focused and so forth, then I think they could have a significant role—if local governments were integrally involved in them.

CHAIR: Thank you, very much, Ruth for participating in the public hearing today. Did you want to add anything more before we conclude?

Ms Spielman : Thanks, Jane. No, I think we have covered quite a lot of ground.

CHAIR: We certainly have, yes.

Ms Spielman : I appreciate being heard. Thank you, very much.

CHAIR: The secretariat will send you a draft transcript so requests can be made to correct any errors of transcription. You kindly offered to provide that additional information that we requested. If there is anything else that you can think of that you think would be of benefit to the inquiry, please do not hesitate to send it in.