Australia could save billions of dollars if it shifted infrastructure spending away from "building big things" to improving existing infrastructure networks, a new report from the University of Sydney says.
"Infrastructure is about service delivery not about building assets," said Garry Bowditch, the author of the report, Re-establishing Australia's global infrastructure leadership, and the head of the university's new research group, the Better Infrastructure Initiative (BII).
"We need to invest in big infrastructure, but we need to rebalance it to do 'small is beautiful' infrastructure as well," Mr Bowditch said.
The report, which comes as the National Australia Bank invests more than $1 million over four years into BII, calls on governments to evaluate the costs and benefits of infrastructure projects so money can be more effectively allocated to future projects.
Recent big Australian infrastructure projects like Sydney's new $15 billion WestConnex motorway and Victoria's East West Link motorway – which cost taxpayers more than $1 billion after it was scrapped – have been controversial, with local communities claiming the projects are unnecessary and that the money could be better spent elsewhere.
"Most countries get seduced by wanting to be able to announce shiny new bits of infrastructure, there is a risk you end up building expensive infrastructure which maybe you don't really need," said Chris Heathcote, chief executive of the Sydney-based Global Infrastructure Hub, which reports to the G20.
"The key point of infrastructure is to provide a service to the customers, not to build a bridge or road of whatever else."
Governments should analyse the "blockages" in existing infrastructure before building new pieces of infrastructure, Mr Heathcote added.
Productivity not necessarily improved
The BII report argues spending billions on new projects, such as roads, does not necessarily improve productivity unless governments establish systems for monitoring the performance of roads after they are built, and make long-term plans for developing adjacent land and additional transport networks.
"No motorway public private partnership in Australia links the toll charge to a service outcome like a minimum speed guarantee," the report says.
Governments should also be considering a broad range of funding options, such as land value capture and tax benefits, for new projects rather than relying on funding from taxpayers, Mr Bowditch said.
Ross Israel, head of global infrastructure at investment group QIC, said governments needed to "depoliticise" infrastructure planning to focus on the most efficient projects.
"It's politically great to announce jobs in greenfield construction, but if you could spend an eighth of the cost and get the same effect from a services experience for the customer, that is a more prudent use of government money," Mr Israel said.
Steve Lambert, head of capital financing at NAB, said the bank wanted to help "challenge the orthodoxies" around what constituted good and bad infrastructure
NAB last year called for more joint decision making on infrastructure investments as well as more rigorous cost benefit analysis in a submission the Australian Infrastructure Audit.
The University of Sydney established the BII research group within its John Grill centre for project leadership last year to create closer ties with industry. BII will collaborate with the centre's program for executive leadership.
NAB is the first industry partner of BII, which is also in talks with other potential financial partners.
Mr Lambert said research undertaken by BII would draw on global best practice and help create a more robust infrastructure market.
BII intends to focus on the experiences of users of infrastructure, challenging the mentality of 'build it and they will come," Mr Bowditch said.