Wednesday, April 29, 2009

Is Victoria falling apart?

Maybe. It's been underspending on infrastructure:

Victoria's transport, electricity, water and communications infrastructure may be in the worst condition of any state's other than South Australia's according to a new landmark study conducted by Engineers Australia.

The study examines spending on ew engineering construction adjusted for population and inflation over the last 20 years.

It finds that while Victoria's annual infrastructure spending has climbed 121 per cent in real terms since 1988, the national total has soared 190 per cent.

"When normalised by population, Victoria's infrastructure expansion path began below Australia's in 1988 and tracked consistently below Australia's throughout the two decades since," says policy analyst Andre Kaspura in the report...

Engineers Australia conducted the study because it found it was almost impossible to tell from most budget documents how much infrastructure each state has.

"Somewhere within the Victorian government the answers would be known, but the information isn't public," said Mr Kaspura.

New South Wales is the only state to make public its estimates of its infrastructure stock each year in its budget time, along with the ACT.

"We have had to cobble together a national picture using Bureau of Statistics figures on new engineering construction each year and adjusting them for population and prices."

Mr Kaspura conceded that his picture could be misleading because it took no account of the fact that Victoria was more compact than other states and so needed fewer kilometres of roads, pipes and wires.

He said even so Victoria's relative underinvestment was profound and the gap was widening.

In 1988 Victoria accounted for 19.8 per cent of Australia's engineering construction. By 2008 Victoria's share had fallen to 15.3 per cent.

In the last two years Victoria's spending on infrastructure had shrunk 8 per cent while national spending grew 17 per cent.

"Victoria's spending on roads per 100,000 people has been lower than national spending in all but one of the last 20 years while its spending on water and sewerage facilities and on bridges, railways and harbours has been below the national average for each of the last 20 years.

Its spending on electricity and gas infrastructure kept pace with national spending until 2002 when it fell sharply below accelerating national spending.

"There is now a substantial gap between Victoria and the rest of the nation," said Mr Kaspura.

The gap has widened as infrastructure provision has been privatised. In 1988 more than 80 per cent of Victoria's new engineering construction was publicly funded. By 2008 it was more than 60 per cent privately funded.

Queensland and Western Australia have invested in infrastructure much faster than the rest of the nation with Queensland distinguished from the other states by having most of its infrastructure publicly funded.

NSW kept pace with the rest of the nation until 2005 when it began to fall sharply behind.

The Rudd government has before it a report from an Infrastructure Australia committee chaired by Sir Rod Eddington examining more than 90 projects submitted for Commonwealth funding including Victoria's massive $38 billion transport plan.

It hasn't yet indicated when it will announce the winning projects.

Victoria's budget is next Tuesday May 5. Australia's is the following Tuesday May 12.

4 comments:

djm said...

In 1988 Victoria accounted for 19.8 per cent of Australia's engineering construction. By 2008 Victoria's share had fallen to 15.3 per cent.That's a bit misleading: 1998 is a local minima on the chart you provided. I think it would have been more informative to compare against a long term trend or a less exceptional year.

Also, what proportion of the total Australia engineering construction is mining-related? Such activity would naturally be expected to largely bypass Victoria.

Peter Martin said...

djm - It's 19-eighty-8 - the start of the series - that Engineers Australia is comparing with the end of the series. I agree that it would be wrong to use 1998 as a reference.

Re your second question, the ABS stats crunched by Engineers Australia are for road, rail, ports, electricity, gas, water and communications engineering construction - not for mining engineering construction as such.

Of course some of the electricity, rail, port etc construction measured would be related to mining, as you point out.

djm said...

oops - my apologies and thanks for the clarification.

Dave Bath said...

Spending low, yes, but I reckon we are getting REALLY low value on each of those dollars (e.g. lots of spending on water pipelines that won't have any water to send through!)

Post a Comment

COMMENTS ARE CLOSED