October 2007

Thank you for the opportunity to speak with you today and join in your discussions.
 
When I was elected to Parliament in 1994, the term “infrastructure” was not in wide public usage - but today thirteen years later, everyone has occasion to talk about infrastructure. The public generally knows the term covers all aspects of our built environment from roads, rail, schools and hospitals through to critical behind the scenes infrastructure such as water and electricity networks.

The public also know that high quality, well-planned accessible infrastructure is the essential foundation of economic growth.
 
Regrettably, infrastructure is a talking point in the wider New South Wales community not because people are proud of certain infrastructure nor because Australia has been in the forefront of some aspects of financial engineering, but it's a talking point for the average punter because infrastructure failures impact their daily lives.
 
In New South Wales, the Government is frequently associated with infrastructure failures - whether it's a failure to deliver infrastructure (such as secure water supplies or rail projects long promised and never delivered or other basic infrastructure in high growth residential regions) or a failure to maintain infrastructure (schools, hospitals, roads).

Forgive me for being blunt, but this is a government of the New South Wales Labor machine – a government that believes infrastructure provision is a political and bureaucratic process to be managed primarily for electoral outcomes.
 
For the Government, it's also become a credibility issue. The fact is the Government has been long on promises and media teasing about infrastructure and short on delivery and maintenance. Yesterday’s Telegraph saw another example of Labor leaking details of a mega roads project to give the impression that highly paid bureaucrats and ministers were beavering away behind the scenes. The reality is different.
 
Last week, I was headed west out the M4 and because the M4 East remains a distant promise, as we all do I sat for a while in the traffic jam on Parramatta Road. In front of me was an empty NSW Government bus.
 
Something about this NSW Government bus caught my eye - it was this advertisement on the back of the bus.

It said "Like traffic that moves? Move to Canberra!"
 
That really does sum up the state of affairs, indeed the state of infrastructure in NSW.
 
For the last twelve years, the State Government hasn’t been investing in New South Wales. It’s been milking economic activity by starving us of world-class infrastructure.
 
I'm sure that ad on the back of buses does fire up quite a few motorists around Sydney.
 
People do get interested and often quite heated in talking about infrastructure. It's clear the community wants better and more infrastructure at lower costs and they want it better maintained.
 
They want Government to get better in responding to deficiencies, better at delivery and better at maintenance. NSW can do it – it just requires a change in government strategy.
 
With political will, NSW can improve its performance but it would require transparency, credibility and a resolution of financing debates.

Last year, I delivered a major policy speech describing how the Coalition would manage Infrastructure. I won't repeat that speech today but briefly it set out a roadmap to change the machinery of government.

The speech outlines a series of structural and administrative initiatives to kick-start infrastructure renewal in New South Wales.

The strategy included the need for a clear, transparent plan that would be driven from the top, ie with political will. The strategy must optimise the involvement of the private sector including in an Infrastructure Development Round Table and it would adopt the best of the Partnerships UK Model.

Key reform objectives included reducing bid costs and improving project flow and certainty.  The Government must lift its own performance standards with clearer objectives to avoid project delays resulting from re-bids, moving goalposts, abandonment of projects and unnecessary levels of detail required before going into a fully documented bid. We need an appropriate balance between necessary probity protections and an instructive flow of information between bidders and the Government.

We need to foster innovation with real focus on outcomes and less prescription in bid design. We need to reform procurement and asset maintenance.

And we need to acknowledge that real reforms will only come with political will. Restructure and reform are meaningless without political will.

I have brought copies of that May 2006 speech with me today and it is also available on my website - peterdebnam.com.au.

In addition, today I want to briefly talk about the dynamics of the infrastructure debate including priorities – both in terms of process and projects and I also want to talk about some funding myths.

New South Wales elections are held every four years and for the next two and a half years  we have a window of opportunity to focus on sorting out changes to process and financing and we should debate project priorities.

One of the key drivers of reform will be transparency.

Remember, governments don't like transparency because it leads to accountability and ministers and bureaucrats may then be under some pressure to justify poor performance versus generous salaries.
 
But if we are to get the world-class infrastructure we need, priorities need to change and transparency and accountability need to become primary objectives in our system. It must also become outcome oriented not process paralysed as it is today.

Instead of publishing a pre-election glossy brochure in the style of last year’s State Infrastructure Plan, let’s put properly sourced and detailed information about infrastructure deficiencies and projects on a website as I first proposed in the run-up to the 1999 state election. NSW didn’t do it, but Queensland partly picked up the idea.
 
Embracing transparency and shifting the information out of the bureaucracy and into the public domain, via a website, will be the mother of all power shifts and will engage the public in an ongoing debate about priorities.

Because the infrastructure debate is a big one and changes will take years to improve results, it is important New South Wales uses the current between elections window of opportunity to act. While the community isn’t going to scream about the need for process changes, they will continue to get angry about infrastructure failures.

Just to put my comments in context, let’s remember Australians don't sit around waiting for Government to improve their lifestyle or infrastructure.  Infrastructure is critical to the economy but, with a few exceptions, not necessarily critical to individuals.

To the extent they can, Australians work AROUND governments. Our citizens tend to structure their lives to minimise interaction with the public sector because they have learnt to avoid disappointment.

However, some people do very much depend on public services and infrastructure and it is those families I feel for when I watch the incompetence of Government.
 
My view is that the public sector can excel, but history suggests most governments, and the New South Wales Government in particular, are not efficient nor are they very effective in what they do.
 
In contrast, Australia and other free enterprise, western democracies are very successful. It’s the successful dynamics of that free enterprise system we want to import into the infrastructure process.

And in those successful western democracies, people take control of their own lives, look beyond governments and take measures to minimise their dependence on or interaction with governments whenever possible - private schools instead of public, private hospitals instead of public, security guards instead of police, cars instead of public transport for example.
 
People actively seek to insulate themselves from government failure.  But there will always be people who are in real need - families coping with disabilities, families needing crisis accommodation, families suffering extraordinary crime and threats. These people need good government services and usually they don’t get them.
 
To go back to basics for a minute, there are several public sector functions where everyone agrees government is required - the administration of the taxation system, the justice system, national defence, customs and trade are all obvious.

In state matters, the provision of world-class emergency services is critical as is the provision of infrastructure. And three areas of state services and infrastructure are raw nerves with the community and failure in these functions produces a prompt backlash.

The three raw nerves are emergency services, passenger rail and roads.
 
The current focus on emergency services in hospitals is an example of community dependence colliding with poor government priorities. We all depend on emergency departments responding perfectly when we need them in an emergency. All of us know that at some stage, we will have to take our kids, our parents or a family member to a hospital emergency department and we want it to work perfectly first time.

We get angry when we see other families, and potentially our own, suffering as a result of government incompetence.
 
Similarly, each day hundreds of thousands of people depend on Sydney’s rail system to get to and from work. Because the infrastructure is a spaghetti network, one problem will cause other problems and quickly affect and anger huge numbers of people in a short time.

The other area of state government delivery on which the population depend is the provision of road infrastructure. Because of poor planning decisions, incompetent delivery of infrastructure, union control and lousy management of public transport services, most people in New South Wales are addicted to cars instead of public transport. When the Government screws up roads, the community gets angry.

These examples (emergency departments, rail and roads) will usually be the concerns that focus media interest and community concern and be the reason governments make changes to their systems and strategies.  If we get changes to infrastructure planning, process and delivery it will probably be thanks to media exposure of crisis after crisis in those three areas of responsibility.

The infrastructure debate also needs to be considered in terms of maintenance, expansion and what is often called nation-building projects.

Maintenance
Maintenance is not media sexy and governments notoriously avoid investing sufficient resources in maintenance.

For example, last year the NSW Auditor-General highlighted the Government’s failure to provide adequate road maintenance funding.  He noted State Roads’ replacement value is $69 billion but the NSW Government “is rebuilding at less than half its long term target, and has not met this target at any time this decade.” And he said the Government’s own plans acknowledge “it is not doing enough rebuilding to ensure the long term viability of the network, thereby presenting a risk to safety and reliability, and of higher repair costs.”

In another maintenance embarrassment, hospital and school maintenance in this state is under-funded. In any region across the state, you can walk into many hospitals and schools and see for yourself their sad rundown state.

Maintenance may not be sexy but it is critical and better transparency must force more resources.

Expansion
As our population and economy grow, existing infrastructure will need to be expanded and there is demand for road network expansion both in terms of capacity on certain routes and in terms of missing links ie the M4 East and upgrade of the Pacific Highway.

Rail links to the NW, SW, Illawarra, Central Coast and Hunter need investment. Schools and hospitals also demand additional resources.

What is missing is action. Changes to process and funding may finally deliver the action so long overdue.
 
Nation-building / landmark projects
The third category I’d like to mention and I look forward to discussing goes beyond maintenance and expansion to nation-building or landmark projects.

Instead of tolerating mediocrity in this state, we should remember the fundamentals.

Infrastructure is the essential foundation for economic growth and we need to properly maintain it, expand it and also invest in nation-building projects to provide quantum leaps.

I believe each four year term of State Parliament, we should as a community commit to at least one new landmark project – the type of nation-building project which so readily inspires Australians.

There are several obvious candidates screaming out for recognition and approval.

Roads
In relation to roads, I’ve mentioned a number of network expansions such as the M4 East and upgrade of the Pacific and Princes Highways. Beyond those expansions, there is one  road project  which will do more than anything else for the economic future of the western half of the state. It will also result in significant improvement in road safety as well as increased amenity for everyone living or working in the Blue Mountains.

Let’s finally get behind the construction of the Bells Line expressway over the mountains.

My former colleague Ian Armstrong has been a relentless champion for this project and despite Labor’s refusal to embrace the project, I believe its time has come.

Light Rail
In terms of public transport, it really is time we joined the rest of the world and embraced light rail in the Sydney CBD with lines into regional areas of the city. The dollars involved are not large but because the project needs to break the logjam of prejudice against light rail in government ranks and in the bureaucracy, I put it in the category of a landmark project.

Water
There is no more critical infrastructure issue than drought-proofing our state. With that in mind, remember that every day, even on a dry day with no rain, one billion litres of water are poured into the Pacific Ocean through Sydney’s three major Ocean Outfalls. We must recycle that water.

On a dry continent, with a much debated water crisis, it defies commonsense that the state Government refuses point blank to put major recycling on the infrastructure agenda.

While on water, combined with recycling the ocean outfalls, we must incease the size of Warragamba Dam. Increasing the height of the Warragamba Dam wall will effectively double the volume of the dam.

The fact is it is still raining over the dam and at least once a decade rain events will fill the dam.

Let’s commit to doubling the size of the dam AND recycling the ocean outfalls. The combination of the two will secure Sydney’s water supplies for the rest of the century.

Electricity
Another key piece of infrastructure is the electricity network. The Iemma Government is about to privatise the retail and generator sectors of our electricity network although they will hide behind long-term leasing of the generators.

There will be vigorous debate about the sale but I want that debate to also focus on the use of the proceeds and on the need for renewable energy infrastructure.

Labor will use much of the funds to shore up the budget’s structural problems. But instead of feeding the bureaucratic juggernaut, any funds released by the sales should be strictly used for infrastructure.

The Government also can’t back out of its responsibility to stimulate the construction of wind and solar energy generators in this state.

The State Government is stumbling towards approving another dirty coal generator when it should be showing leadership with large scale renewable energy backed up by gas peaking plants.

The last point I want to mention is financing. Let’s have a good debate about money and explode a few myths.

Firstly, the myth that New South Wales is poor and cannot act without Federal funds.

This state is a rich state and NSW Treasury has never had so much access to so many dollars. The tax base is large and growing and revenue continues to flow into Treasury.

New South Wales does have a budget problem but it is not a revenue problem – it’s an expense problem.

Labor simply spends a lot of money on unproductive bureaucrats and mismanaged projects.
 
That is why I proposed to restructure Government reducing the number of departments to nine and using natural attrition to reduce bureaucrat numbers by 20,000 over four years.

That initiative would save at least four and a half billion dollars over the next four years - funds that could be used for more frontline staff and for investment in infrastructure.

The option remains for Labor to do the right thing and I would applaud them.

The State Government also has access to debt and they are really giving the credit card a whack in recent years. Governments are not opposed to debt and never have been. But some of them misuse debt to shore up recurrent expenditure. Debt must be used for productive assets ie infrastructure.
 
If changes are made to the way the State Government does its business, New South Wales also has access to unlimited private sector funds and should utilise them for many projects without the ideological constraints imposed by the Labor Party.

Ladies and gentlemen, on the night of the state election in March this year, I said the people of New South Wales had given Labor one last chance to fix the state’s problems – including our infrastructure.

Since then, it is clear the New South Wales Government hasn’t really changed its modus operandi and lazy leadership remains the order of the day.

But I remain hopeful ongoing public debate can exert some real influence.

As professionals involved in the field you have an opportunity to also add to the debate and hopefully achieve change.

Having participated in the infrastructure debate for the last thirteen years, the points I’ve mentioned this morning are chestnuts which must be resolved if we are serious about excelling in this field, instead of living with mediocrity.

Thank you again for the opportunity to meet with you today and I hope you will join me in arguing for change – real change. 

I hope some of my words will provoke debate here this morning and I am looking forward to hearing your views.

Thank you.