And now back to the big picture… nation building after the GFC By Dan Stojanovich

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And now back to the big picture…

nation building after the GFC The beguiling lure of the distant “vision on the hill” has seen many a traveller crash and burn along the road, laid low by unforeseen circumstances at their feet, while mesmerised by the vision of a bright shining future.

By Dan Stojanovich The mother of all unforeseen circumstances, the global fi nancial crisis, has seen many fellow travellers sustain a few injuries, whereas Australia has slipped through with just a bit of a stumble and a wobble. Indeed still the lucky country. Australia’s economy has performed better than the economies of most developed nations over the past 12 months. A report by global ratings agency Standard and Poor recognised the Australian economy’s resistance to recession, saying, “Australia has been the best performing developed economy in the world in recent years.” Australia was one of only three of the 33 IMF advanced economies that recorded growth in the year to September 2009. With the global dust storm settling, the big vision for Australia’s future may be getting a little clearer and perhaps looking a little different. In a world of rapidly shifting geopolitical realities, visionary nation building is now more needed than ever. We’ve done it before and it’s time to do it again. At the time of Federation, the most expensive capital works project in the new Commonwealth of Australia was to cost the nation more than 21 million pounds. The criticism from diverse quarters was unrelenting: it would never work, it would bankrupt the treasury, there would be corruption.

That project is still productive today. In the vastness that is Western Australia, engineer C. Y. O’Connor’s epic vision to pump water to the Kalgoorlie goldfi elds via a 600km pipeline from the Mundaring reservoir near Perth was considered by many to be a national folly. Even today there are people who would describe such a scheme as madness. It was the longest pipeline in the world at the time, with a series of steam-powered pumping stations pushing the water uphill to Coolgardie. Thereafter it fl owed downhill to Kalgoorlie. The pipeline still operates today.

The overland telegraph and the Snowy Mountains scheme were both projects where bold decision-makers took a stand and pressed the go button. Our engineers are up to the challenges, but the decisions to go ahead have to be made. And then ongoing political will is needed to ensure that it does all keep happening. It requires a certain nation building social dynamic to make this sort of difference.

While the government’s generally well-regarded stimulus package helped keep things afl oat during the GFC, it also drew attention to the vital importance of infrastructure investment as an initiative with long-term consequences as well as immediate stimulatory benefi ts. The schools program has benefi tted educational institutions across the country as well as many contractors and businesses. The National Broadband Network is a visionary nation building initiative that should be transformative, affecting every corner of the land.

Extensive road and rail projects, social and defence housing, as well as community infrastructure have all received signifi cant allocations with immediate benefi ts for employment and business. Importantly, these infrastructure initiatives will also have signifi cant long-term social and economic benefi ts. The year 2010 should see the commencement and completion of many infrastructure projects.

However, with Treasury’s Intergenerational Report projecting an Australian population of more than 35 million by 2050, there is more to be done, right across the board. To maintain our strong position in the global economy, a grand vision for infrastructure, continuously informed by a vigorous ongoing debate that results in real decisions, needs to take a place at front and centre of the national agenda. That agenda must respond to a global pressures as well as local imperatives. Plan as we might, there may be a future scenario where we can no longer control the situation, where the current political paradigms don’t quite cut it. History is full of surprises.

For now, Australia is in a construction boom – recent fi gures suggest that the amount of work waiting to be done across residential, commercial and engineering sectors is worth around $133 billion, some three times that waiting to de done just fi ve years ago. And now back to the big picture...nation building after the GFC

The Overland Telegraph and The Snowy Mountains Scheme were both projects where bold decisionmakers took a stand... Our engineers are up to the challenges, but the decisions to go ahead have to be made... willpower is needed to ensure that it does all keep happening. It requires a certain nation building social dynamic to make this sort of difference.

And now back to the big picture...nation building after the GFC

CLEM 7, Brisbane. (Image: Leighton)

But it is a little lopsided. Regions driven by the resource industry are where the action is. The Gorgon Gas project alone, in WA, is worth around $43 billion. We are again starting to see images in the media of hundreds of huge ships at anchor off Australian ports waiting to take on cargo, forced to wait as a result of local infrastructure incapacity.

Resources industry-driven infrastructure is perhaps the easiest to tackle (if indeed “easiest” is a word that is at all appropriate in this context). The demand is certainly manifest. Although hardly simple or small, such infrastructure initiatives are often away from, or separate from major urban centres, they are often single purpose facilities, with clearly identifi able stakeholders with clear positions. Business cases are clear and the funding is generally easier to raise compared to major urban infrastructure projects. Not that these resources-driven projects are small and simple projects – the challenges are substantial, and the numbers are big – in terms of production, cost, and value. Just one of QR’s freight haulage contracts for yet another WA iron ore company, Gindalbie Metals, is estimated to run for 10 years at over 11 million tonnes per year, making it worth some $1.2 billion over the life of the contract. And that of course is just one of many projects.

Beyond the resources industry, the list goes on. Signifi cant transport projects like a second airport for Sydney and fast passenger and freight rail have been on the “to do” list for some time.

There are also major national projects with national security implications – communications, transport, ports, defence – before we get to the notoriously complicated battleground of major urban centres, and all the challenges of a growing population. Inadequate public transport, congestion, pollution, water, power, public safety – there is a lot to be done.

Funding is one challenge, and availability of labour is another, especially in the resources industry-driven states. Chamber of Commerce and Industry Western Australia (CCIWA) chief economist John Nicolaou told a conference in Perth recently that the biggest issue for business would be labour shortages.

“The early signs are that labour scarcity will become a major issue for WA businesses,” he said, adding that three quarters of WA businesses already cited labour shortages as a concern, and that WA would need an additional 400,000 workers by 2017 to support huge projects such as Gorgon and Pluto, as well as the ongoing growth of the iron ore industry.

About two-thirds of the growth was expected to come from overseas migration, but even so the state expects to be short about 150,000 workers. In February, federal Minister for Immigration and Citizenship, Chris Evans, announced that state- and territoryspecifi c migration plans would be developed as part of the changes to the skilled migration program.

The CCIWA also wants government to prioritise the delivery of infrastructure projects so the public and private sectors are not competing for labour, or what it calls the “crowding out” effect. Timing public projects for when private activity eases would stabilise the economy and ensure that investment was maintained in the cases of activity in the private sector dropping off.

There is much about Australian infrastructure and our standards of living that makes us very fortunate indeed to live in Australia. But the challenges we face are substantial.

Having survived the GFC, long-term challenges remain. Better infrastructure will help us better meet those challenges. Infrastructure is and will remain a key marker of our civilisation. Creating it will both test the nation, and enhance it immeasurably.