Infrastructure A New Era for South Australia The Voice of Leadership

Transcription

1 Infrastructure A New Era for South Australia The Voice of Leadership

2 The Property Council of Australia is the national representative of the property investment industry. Our members help shape, build and finance our cities and have a long-term interest in the vitality of Australia s economy and communities. In South Australia, the Property Council represents the interests of over $33billion invested directly in property. Locally, our members include the bulk of South Australia s investors in office buildings, shopping centres, industrial parks, tourism, accommodation, aged care and infrastructure, as well as major developers of commercial, residential and industrial property. More than nine million Australians have a direct stake in our industry through their superannuation, life insurance and managed funds. The property industry also represents a major component of the SA economy, and makes a huge contribution to State Government revenue, providing 43% of total Own-State taxation revenue.

3 Contents Message from the President The Need for a Plan The Methodology The Top 10 Projects two three four six 1 Modernisation of metropolitan rail network 2 Expedite the North-South road corridor 3 Fill regional rail gaps 4 Upgrade regional airports 5 Expand reticulation of non-potable water supplies 6 Fast-track South Australia s desalination capacity 7 Stormwater recovery and storage program 8 Facilitate geothermal energy 9 New gas-fuelled power station 10 Modernise telecommunications The Three Pathways for Delivering Infrastructure: Investment and Funding Next Steps ten eleven one

4 It appears the old Chinese curse May you live in interesting times has come to pass. Only twelve months ago, we were looking forward to a future of unfettered prosperity, limited only by our imagination. Now every utterance in the media is a harbinger of gloom and doom. In the same period, we have gone from the threat of skill shortages to the spectre of unemployment. Federal and State Governments alike are rushing to boost the economy with increased capital expenditure and financial stimulus packages to keep finance flowing through the economy during these tough times. Message from the President Shortly, Infrastructure Australia (IA) will announce its funding package, one that will deliver medium- to long-term infrastructure investment, delivering productivity and sustainability gains across Australia. To aid IA s thinking on the critical projects South Australia needs to remove bottlenecks now and into the future, the Property Council has brought together key infrastructure stakeholders and, using a rigorous and objective assessment tool, has developed a list of the Top 10 infrastructure projects needed to deliver long-term prosperity. Most of these projects fit neatly into the State Government s infrastructure priorities, proving that as a State we are on the right track. But now is the time for delivery; we cannot sit back and wait for the perfect window of opportunity. The Property Council will be leading the charge for immediate action, and we will be using the lead up to the State Election in 2010 as leverage to get the political wheels turning in the right direction. All the proposals in this document will contribute to the goal we share with the entire South Australian community to make South Australia the best place to live, work and invest in the nation. Let s get on with it. Justin Hazell President, Property Council of Australia (SA Division) two

5 The Need for a Plan Governments have historically used infrastructure investment as a pivotal tool for growing state prosperity; investment paid by multiple generations through public debt. However in recent decades, political expediency has seen this investment decline steadily, and public investment in infrastructure has failed to keep pace with community needs. Efficient infrastructure is critical to the long-term viability of a community because it builds the capacity to satisfy a community s lifestyle aspirations and well-being. The timely, effective and efficient delivery of catalyst infrastructure is essential to securing a prosperous future for South Australia. While South Australia has a Strategic Infrastructure Plan, this plan does not successfully integrate competing priorities with the State s Planning Strategy. The Property Council recognises that the State Government is currently developing an integrated strategy and long-term vision that: will guide whole of government decision making; is linked to the State s Spatial Plan and population projections; is realistically achievable within the context of other endeavours such as the existing backlog of capital works projects; and synchronises service delivery with population growth. The State Government s recent efforts to boost infrastructure spending is complimented by the Federal Government s Infrastructure Australia initiative that will provide funding for a range of critical projects needed to boost economic productivity in Australia. The list contained in this report has been provided to Infrastructure Australia for consideration in its current funding round. The purpose of this document is to inform the relevant infrastructure authorities of the projects most likely to generate the necessary economic momentum and throw the property sector s support behind those initiatives. three

6 The challenge ahead of us as a community is to prioritise the top infrastructure projects that will act as catalysts for driving continued economic development, employment and population growth while improving sustainable and liveability outcomes for South Australia. All spheres of government must be committed to funding and completing the development of catalyst infrastructure, and must recognise the important role that private sector investment will play in the delivery of key infrastructure capacity. To this end, the Property Council is calling on local government to develop strategic plans involving Key Performance Indicators and Infrastructure Plans aligned with the State s Plans. The Methodology Objectives The focus of the Initiatives for Infrastructure project was to: compile a list of critical infrastructure projects drawing on multiple sources including government programs and Property Council member and external stakeholder input; and rank projects according to a Multi- Criteria Analysis (MCA) to identify the Top 10 critical projects. MCA methodology This report has been produced using a robust analytical database, the MCA, developed by the Centre for International Economics (CIE) in partnership with the Property Council of Australia. Using economic, social and environmental weightings, the MCA provides a priority listing of infrastructure projects that will provide maximum benefits to the South Australia. Delivery of these projects will optimise the allocation of scarce resources in the context of competing triple bottom line considerations. The MCA evaluated projects based on 16 criteria organised around five categories, which are: Economic: increasing productivity and efficiency gains; Social: maximising community well-being; Environmental: reducing ecological footprint; Governance: modernising community decision making frameworks and optimising resource allocation; and Strategic: facilitating new or significant market opportunities. This study used the following weightings: Economic (30%), Social (20%), Environmental (20%), Strategic (20%), and four

7 Governance (10%), reflecting the Property Council s priorities for development in the context of recent State and Federal strategic initiatives. This infrastructure study concentrated on projects that were considered both realistically achievable within a 10 year timeframe and significant, that is, valued at more than $50 million in construction costs. The type of projects considered fell within the following broad categories: Transport Accommodation Utilities (energy, water and sewerage) Cultural/ tourism Information and communications technology. Workshops During the second half of 2008 the Property Council held a number of workshops involving both internal and external stakeholders (involving representatives of government, industry and other sector associations) and completed a survey of infrastructure needs. Once an extensive list was compiled, another workshop was held to apply the MCA. The initial workshop identified infrastructure projects in South Australia capable of providing immediate and significant benefits. This list of projects was then amalgamated with infrastructure lists provided by other associations and government policies. This list was then refined by the workshop participants who engaged in a thorough and robust, facilitated discussion regarding the relative merits of each individual project. Through the ranking process a number of projects were identified that are already partially or fully funded by government. This should be considered a good indication that government s existing prioritisation are accurate in a number of areas. five

8 The Top 10 Projects 1. Modernisation of metropolitan rail network In 2008 the State Government announced an investment of $2 billion over ten years to electrify the metropolitan rail network, extend the Noarlunga line to Seaford and extend the light rail network to Semaphore. This investment is to be congratulated but with the State s rapid population growth, there is a clear need to expedite this investment to ensure the State can cater for even greater levels of growth and economic expansion stemming from the imminent expansion of our resources and defence industries. Light rail investment also opens specific development opportunities such as Transit Oriented Developments. KPI: Delivery of a modernised and expanded metropolitan rail network by Expedite the North- South road corridor The North-South Corridor is of key strategic importance to the ongoing economic development of the state and to the state s ability to exploit its comparative advantages in resources and defence. Major metropolitan industrial areas are located in a long band stretching north to south along the western rim of the city; this area will be subject to rapidly growing demand as industrial production ramps up and local economic demand grows. The corridor takes freight to and from Adelaide s key port, out of Adelaide to the North and distributes it within the metropolitan area, making it a key economic facilitator. Construction activity is already underway on several sites however the project must be expedited to ensure the project remains at pace with economic and population growth in South Australia. KPI: Completion of the North-South Corridor by six

9 3. Fill regional rail gaps In anticipation of Port Bonython opening as a major export port for the mining industry, the rail line between Whyalla and Port Bonython needs to be upgraded to ensure standardisation of rail gauges and connectivity along the route. 4. Upgrade regional airports Facilities in key regional centres must be upgraded to meet the demands of population growth stemming from expansion in the mining industry. Airports in particular will require redevelopment to cope with increased levels of traffic. More and larger aircraft will necessitate runway and apron expansions as well as larger freight warehousing facilities and increased security. 5. Expand reticulation of non-potable water supplies Water security is one of the most important issues facing the future of South Australia. The Adelaide City Council, State Government and Federal Governments should be congratulated for funding a recycled water pipeline from Glenelg to the City Parklands. However to maximise economic advantage from this program, a more extensive recycled water reticulation system needs to be progressively rolled out in metropolitan Adelaide. This needs to include improved, streamlined regulation covering grey water systems and use in private homes. KPI: Fix rail gauge issues and gaps by KPI: Complete the upgrading of key regional airports; Whyalla, Ceduna and Port Augusta by KPI: Expand the recycled water network to the CBD by 2010 and create a metropolitan-wide network by seven

10 6. Fast-track South Australia s desalination capacity Recycled water use and reduce water use will only alleviate some of the stress on South Australia s water system. The commencement of the state s first desalination plant will provide a base level of security. However, as there is no guarantee of a continued draw from the River Murray, it is critical that the desalination plant is delivered as soon as possible. 7. Stormwater recovery and storage program The metropolitan area flushes as much water out into the gulf from stormwater as it uses on an annual basis. While efforts are being made to capture as much of this as possible, the Government must create a stormwater network that has containment and aquifer spiking sites to minimise the amount of water lost to the gulf. 8. Facilitate geothermal energy Funds should be fast tracked for the construction of electricity transmission systems that will bring South Australia s geothermal energy from the source to remote communities and mining sites. This will relieve pressure on suppliers to major centres and assist in demonstrating the commercial viability of the technology. It is an opportunity for the state to demonstrate leadership in this new technology. KPI: Ensure funding and planning mechanisms are in place to enable the plant to be completed by KPI: Develop and roll out a program to capture 75% of stormwater by KPI: Work with the Federal Government to ensure this clean energy can be connected to the grid as soon as the sites are developed. eight

11 The Top 10 Projects 9. New gas-fuelled power station A new gas-fueled power station should be built to bolster baseload supplies. Coal supplies are projected to decline, and to prepare for additional energy demands from expected population growth a cleaner baseload supply should be made available. 10. Modernise telecommunications Modern telecommunications enable modern businesses. With the State moving quickly towards information technology reliant industries such as research and defence, we need to deliver a telecommunications network that promotes rather than hinders these sectors. To meet these demands the State must replace old copper wiring with fibre-optic cables across the entirety of the network; starting with the CBD followed by a metropolitan-wide network. KPI: Provide the appropriate planning incentives to encourage a new power station. KPI: Provide funding to broadband the CBD to international standards by nine

12 The Three Pathways for Delivering Infrastructure: Investment and Funding Demand on government expenditure is expanding constantly. These pressures must not result in lower expenditure on infrastructure. The State Government should be recognised for boosting spending at a time that the Federal Government is rolling out significant investment in the nation s critical infrastructure. In addition to these expenditure programs, Governments should also be examining alternative funding models to deliver these necessary projects. Infrastructure is costly so Governments must be innovative and open to all practical alternatives when planning to deliver it. The Property Council strongly supports the use of responsible government borrowing to fund long-term infrastructure. Debt funding spreads the costs over the life of the infrastructure, so future generations benefiting from the investment also help meet its cost. ten Landmark research by the Allen Consulting Group, commissioned by the Property Council, found debt funding is the most economically efficient way to deliver infrastructure. 1 Strikingly, the way governments fund infrastructure affects our overall economic welfare. Using the wrong method can cost thousands of jobs and millions of dollars in lost economic growth. The State Government has the capacity to invest further in infrastructure using government debt without impacting its AAA credit rating. Tax Increment Financing (TIF) provides another option to fund infrastructure. Used extensively and successfully in the US for the past 40 years, TIF draws on the financial dividend infrastructure delivers over time to help fund its cost up front. TIF avoids governments traditional reliance on expanding or adding taxes to fund investments. Instead it involves appropriating the increase in tax revenue (the increment) attributable from an investment in infrastructure (within a prescribed district) to pay back the infrastructure development cost. The Property Council urges the State Government to consider the use of debt funding, publicprivate partnerships and TIF to accelerate the delivery of key infrastructure projects. 1. Allen Consulting Group, Funding Urban Public Infrastructure: Approaches Compared, Property Council of Australia, August 2003.

13 Next Steps The catalyst projects listed in this report are of the utmost importance to ensure South Australia continues to be an attractive place to live, work and play. Delivery of these projects is essential to build our economic and community capacity. The Property Council develops policy based on sound research. The SA Division will continue to advocate for an infrastructure plan to secure our future; economically, socially and environmentally. For more information go to eleven

14 Property Council of Australia (SA Division) 142 Gawler Place Adelaide SA 5000 t: f: