SUBMISSION ON THE STRATEGIC INFRASTRUCTURE PLAN FOR SOUTH AUSTRALIA

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1 SUBMISSION ON THE STRATEGIC INFRASTRUCTURE PLAN FOR SOUTH AUSTRALIA FEBRUARY 2011

2 Infrastructure Partnerships Australia is a national forum, comprising public and private sector CEO Members, advocating the public policy interests of Australia s infrastructure industry. SUBMISSION ON THE STRATEGIC INFRASTRUCTURE PLAN FOR MORE INFORMATION PLEASE CONTACT: BRENDAN LYON CHIEF EXECUTIVE OFFICER INFRASTRUCTURE PARTNERSHIPS AUSTRALIA Level 8, 8-10 Loftus Street, Sydney NSW 2000 PO Box R1804, Royal Exchange NSW 1225 P E brendan.lyon@infrastructure.org.au ZOE PETERS POLICY OFFICER INFRASTRUCTURE PARTNERSHIPS AUSTRALIA Level 8, 8-10 Loftus Street, Sydney NSW 2000 PO Box R1804, Royal Exchange NSW 1225 P E zoe.peters@infrastructure.org.au

3 RECOMMENDATIONS The South Australian Government should: Prioritise transport projects to enable the efficient and safe movement of people and goods. Continue to develop and implement mechanisms that will more effectively and efficiently harness private sector capital and expertise. Continue the planning and procurement of essential development corridors for medium and long term projects. Explore opportunities for greater integration of South Australia Government and national infrastructure planning and delivery frameworks.

4 ABOUT INFRASTRUCTURE PARTNERSHIPS AUSTRALIA Infrastructure Partnerships Australia is the nation s peak infrastructure body. Our mission is to advocate the best solutions to Australia s infrastructure challenges, equipping the nation with the assets and services we need to secure enduring and strong economic growth and importantly, to meet national social objectives. Infrastructure is about more than balance sheets and building sites. Infrastructure is the key to how Australia does business, how we meet the needs of a prosperous economy and growing population and how we sustain a cohesive and inclusive society. Infrastructure Partnerships Australia seeks to ensure governments have the maximum choice of options to procure key infrastructure. We believe that the use of public or private finance should be assessed on a case-by-case basis. IPA also recognises the enhanced innovation and cost discipline that private sector project management and finance can deliver, especially with large and complex projects. Our Membership is comprised of the most senior industry leaders across the spectrum of the infrastructure sector, including financiers, constructors, operators and advisors. Importantly, a significant portion of our Membership is comprised of government agencies. Infrastructure Partnerships Australia draws together the public and private sectors in a genuine partnership to debate the policies and priority projects that will build Australia for the challenges ahead.

5 EXECUTIVE SUMMARY Infrastructure Partnerships Australia ( IPA ) is pleased to provide this submission to the South Australian Government in response to the Discussion Paper on the Strategic Infrastructure Plan for South Australia. The Strategic Infrastructure Plan for South Australia was first released by the South Australian Government in 2005 to drive a new coordinated, efficient, sustainable and innovative approach to infrastructure provision. South Australia s first Infrastructure Plan has guided significant progress in infrastructure development since 2005 with more than 80 per cent of the priority projects listed in that Plan completed or in progress. The successes attributable to the 2005 Plan reveal its essential role in the decision making process and in the delivery of South Australia s infrastructure pipeline. As it has done since 2005, the updated Plan will continue to allow for the integration of varying policies and planning requirements; will enable the effective engagement of all necessary and interested stakeholders; and will enable a degree of flexibility in the event that circumstances change. This update provides the South Australian Government with the opportunity to ensure the continuity of the successes of the Strategic Infrastructure Plan for South Australia by putting forward a new and complementary strategic package of projects. This strategic package could incorporate the projects outlined in this submission that fall in the following areas: Rail revitalisation Major roads projects Transit-oriented developments Freight The Plan s clear prioritisation of these projects would provide certainty to all interested stakeholders, including the private sector, whose capital and expertise will be integral to their delivery. The South Australian Government has worked in partnership with the Australian Government and industry to deliver on a number of the state s infrastructure priorities. An update of the Infrastructure Plan provides an important opportunity to renew and strengthen this partnership to achieve ongoing alignment of priorities and integration of planning and delivery of infrastructure across the state.

6 TRANSPORT FOCUS A transport system which facilitates the efficient and safe movement of people and goods is an essential keystone of any competitive economy, and of a liveable and inclusive community. A recent Working Paper released by the Bureau of Transport and Regional Economics and commissioned by the Council of Australian Governments estimates that the avoidable costs of congestion for Adelaide was $0.6 billion in 2005, and projects this figure to rise to $1.1 billion by Additionally, South Australia s population growth rate has been increasing since 2004 the combined result of a large influx of immigrants and significant rates of economic growth. In the State s population increased by 1.2 percent per annum. If current rates of growth are maintained for the long term future, then it is likely that the state may achieve a population of 2 million by 2027, 23 years ahead of South Australia s Strategic Plan population target for The compounding affects of increasing urban congestion and population growth means South Australia faces considerable challenges in ensuring its transport system remains efficient and responsive to future demand. As such, the South Australian Government must make the timely, efficient and coordinated delivery of new transport infrastructure the highest priority. A ROLE FOR THE PRIVATE SECTOR Since the release of the 2005 Plan, private investment in infrastructure has reached record highs. The State Government has passed reforms that reduce red tape impacting on private sector investment in infrastructure. In July 2008, an independent audit report by Deloitte Australia illustrated that the government s red tape reduction program was saving business over $170 million per annum. The Government has also undertaken a number of improvements to facilitate working with the private sector in response to the strategic priorities listed in the 2005 Plan including: The effective use of PPP s to deliver regional police and courts facilities, six new schools and the new Royal Adelaide Hospital; and The increased use of innovative and flexible procurement methods including alliance contracting, design and construct, early contractor involvement and PPP s in the government s major infrastructure procurement programs, among others. 1 Estimating urban traffic and congestion cost trends for Australian cities Working Paper No 71 p.13-14

7 Additionally, the PPP program is enabling aged, under-performing and difficult to maintain buildings to be substituted with new facilities, thereby improving the delivery of vital public services in the areas of justice, education and health. The South Australian Government s recognition of the role that the private sector will play in contributing to, and investing in, future infrastructure is particularly welcome. The Discussion Paper states that the South Australian Government is keen to build on its partnerships with the private sector aimed at delivering social and economic infrastructure where and when it is most needed. The Discussion Paper also notes that the new edition of the Plan will clearly identify priorities for private investment. Infrastructure Partnerships Australia commends and welcomes the certainty this will bring. As there are currently no projects in South Australia listed in Infrastructure Australia s pipeline of potential PPP s, there is much room for improvement. 2 Private sector involvement in future infrastructure projects will be essential to ensure their timely delivery, and to ensure that the limited financial and physical resources of government are deployed effectively. With the right procurement model and an equitable risk share arrangement (on a project by project basis), the private sector is both willing and able to deliver projects which are vital to South Australia s future. The South Australian Government should therefore continue to develop and implement mechanisms that more effectively and efficiently harness private sector capital and expertise, and that increase public understanding of the significant benefits that private sector partnerships bring. The South Australian Government should look at innovative ways of harnessing private sector finance, for example through PPP s. LONG-TERM APPROACH In recent decades, jurisdictions across Australia have had a variable approach to infrastructure planning; with the result that infrastructure has, in some cases, been planned and delivered without the level of capacity to provide for future growth. The South Australian Government s forward-thinking approach which includes a project outlook of up to 30 years, with the 30 Year Plan for Greater Adelaide, and the current Plan update s mandate of setting infrastructure priorities for the next 15 years should therefore be strongly commended. Long-term, integrated planning is the key to delivering the best infrastructure outcomes, at best value to taxpayers and commuters. Specifically, a longer-term outlook will allow for the integration of varying policies and planning requirements; enable the effective engagement of all necessary and interested stakeholders; and will afford a much needed degree of flexibility and adaptation in the event that circumstances change. 2

8 CORRIDOR PRESERVATION The Plan presents an opportunity to ensure that new corridors are set aside in accordance with growing demand this should be given greater significance in the final Plan. Many infrastructure projects which may be required in the longer term will be known in advance. To ensure that costly land resumptions due to factors such as unplanned developments from natural population and economic growth do not negatively impact the viability of these projects down the track, all authorities need to take steps to plan and preserve corridors for future development. It should also be noted that corridors reserved for transport development, for example the Adelaide North-South Corridor, can also be utilized for other purposes. Such corridors may well add value in due course as routes for communications links, utilities, cycle-ways, parks and wetlands and even power generation. The Plan should clearly identify the corridors and land parcels that are likely to be required in the future. The South Australian Government will need to work with the Federal Government in this respect. The South Australian Government as part of the long term strategy should also consider that these corridors are capable of expanding when capacity is met. For example in regards to corridors for motorways there should be suitable room for widening. This means developments can begin smaller and can grow and expand in line with the population. PRIORITISATION OF PROJECTS In addition to the Plan s longer-term outlook, there is an opportunity to more clearly identify those projects which the South Australian Government considers to be key priorities. The Discussion Paper advises that the planned timing of infrastructure priorities will be presented in the new edition of the Plan in five year timeframes of , and 2020 and beyond. The clearer prioritisation of these projects would provide project certainty for the community and private sector, whose support will be integral to their delivery. Priority projects should include those needed in the immediate term to address capacity constraints, as well as medium to longer term projects which will be needed to meet the demands of future growth and continued economic and social development. Initiatives within each of the 15 infrastructure sectors will be assessed for inclusion in the plan depending on their state-wide significance and assigned ranking of 1, 2 or 3. Rankings

9 will be determined by considering whether the initiative: Makes a positive and sustainable contribution toward the achievement of one or more targets in the South Australia s Strategic Plan Directly addresses immediate or emerging infrastructure related constraints to sustainable development and improved living standards for the state Improves performance of the state s infrastructure asset base or facilitates more efficient use of existing infrastructure Is consistent with the South Australian Planning Strategy Aligns with the strategic priorities in the discussion paper In this submission, several projects have been identified which closely target the existing capacity constraints on South Australia s metropolitan road and public transport networks, and which pre-empt capacity constraints arising as a result of future increases in population, and therefore demand. These projects all fulfill the requisite criteria above and are outlined in greater detail below.

10 1/ RAIL REVITALISATION Strategic Priority: Manage urban congestion. Recommendation The South Australian Government should: Continue to progress the programme of rail revitalisation for Adelaide. The revitalisation of Adelaide s rail network is the centerpiece of a $2.6 billion transformation of Adelaide s public transport system over 10 years. Prioritising the rail revitalisation programme encompasses prioritising the following projects: The Seaford rail line extension The Noarlunga rail upgrade and electrification The Gawler rail line upgrade and electrification The Outer Harbor rail line upgrade and electrification New electric rail cars These projects will combine to transform the network into a sustainable state-of-the-art system, providing faster, cleaner and more efficient services for commuters. This is the largest single investment ever by a State Government in Adelaide's public transport system. Infrastructure Partnerships Australia commends work done to date in this regard and urges the Government to remain proactive in seeing this through. The improvement and increased use of public transport will help ensure the sustainability, liveability and productivity of Adelaide into the future. 2/ MAJOR ROADS PROJECTS Strategic Priority: Manage urban congestion. Recommendation The South Australian Government should: Continue to work with the Federal Government on the following major roads projects: South Road Superway Southern Expressway duplication Northern Connector from Port Wakefield Road to the Port River Expressway. These projects form part of the ongoing work to improve the Adelaide North-South Transport Corridor. The State Government has committed $432 million over 5 years towards the South Road Superway, and the Australian Government has committed matching funding. The

11 Superway will create non-stop travel from Regency Road to the Port River Expressway. This will address the delays to traffic and the associated costs, and will improve the accessibility for heavy freight vehicles on this section of South Road. The multidisciplinary Darlington Transport Study, which commenced in mid 2009, has recognised that the Southern Expressway is unable to cater for current traffic demands and has identified the advantages of bringing forward the long term plan for its duplication. Construction of the duplication is due to commence this year and will cost $445 million, opening for traffic in Planning is well advanced for the Northern Connector, an innovative dual purpose road and rail corridor, and Infrastructure Partnerships Australia recommends that the progression of this project remains a priority. The Northern Connector will achieve the final long term strategic link in freight route from northern South Australia to both Adelaide and the Port of Adelaide with a variety of benefits. It would benefit the north s rapidly developing industrial and residential growth areas while also reducing the impacts of heavy freight rail movements through existing built up residential areas, such as Salisbury, Parafield and Mawson Lakes. The quality of life of residents of these communities would improve as a direct result, and the safety of the state and national transport network would improve. The Australian Government has recognised the importance of a north-south road corridor to South Australia and has committed $500 million through the Nation Building programme to partner the State Government on the development of this corridor. Infrastructure Partnerships Australia encourages the South Australian Government to remain proactive and engaging in its collaborative approach to obtaining funding for major projects. In relation to obtaining funding for major roads projects, Infrastructure Partnerships Australia encourages the use of innovative financing methods. One option could include availability model PPP s such as that used in the delivery of the Peninsular Link in Melbourne. 3/ TRANSIT-ORIENTED DEVELOPMENTS Strategic Priorities: Manage urban congestion; Improve people movement. Recommendation The South Australian Government should: Prioritise the delivery of transit-oriented developments, ( TOD s') and focus on planning that facilitates the use of public transport as a viable transport option. The greater integration of public transport and urban development will help ensure the sustainability, liveability and productivity of Adelaide into the future. The development of a modern metropolitan public transport network will support directions for a more compact urban form facilitated by TOD s at key sites. Consistent with land use planning directions, transport interchange facilities should be developed at strategic sites to support

12 connectivity and create a more sustainable public transport system. This would help to reduce the costs of urban congestion and assist will the movement of people as the state s population increases. The use of intelligent transport and traffic management systems and a future extension of the light rail network will also help manage urban congestion. 4/ FREIGHT Strategic Priorities: Improve road freight; improve rail freight. Recommendation The South Australian Government should: Develop more efficient land-based freight transport links to interstate and overseas markets. This is critical to South Australia s economy. South Australia should improve both road and rail freight networks by specifically focusing on: The Green Triangle Region Freight Action Plan, and The Torrens / Goodwood Road Rail Junction Upgrade The Green Triangle Region is one of Australia s most important export regions. Export trade volumes in the region are expected to significantly increase over the next five years. The Green Triangle Region Freight Plan sets out a package of road, rail and other freight priorities required to ensure the region has the capacity to cope with this immense growth. The Torrens/Goodwood Road Rail Junction Upgrade will separate passenger and freight rail services, leading to the more efficient movement of freight around Adelaide. The conflict point between ARTC Interstate rail line and TransAdelaide Urban passenger network will be removed.

13 CONCLUSION The South Australian Government should be commended for showing the foresight through a long-term, integrated plan that is necessary to deliver the best infrastructure outcomes, at the best value to taxpayers and commuters. The Plan will allow for the integration of varying policies and planning requirements; will enable the effective engagement of all necessary and interested stakeholders; and will enable a degree of flexibility in the event that circumstances change. The South Australian Government should be commended on the work done to date on improving various elements of the State s transport system. Continued investment and work in the transport system is necessary to ensure the South Australia s prosperity and liveability into the future.

14 Infrastructure Partnerships Australia A division of Advocacy Services Australia Limited Level 8, 8-10 Loftus Street, Sydney NSW 2000 T: F: E: policy@infrastructure.org.au