We’ve now no choice but to be smarter with our assets and investment dollars

Peter Achterstraat AM

NSW Productivity Commissioner

The COVID-19 pandemic is beginning to feel like never-ending tumult. When I released my NSW Productivity White Paper in May, life seemed to be returning to normal. Abruptly, however, we were reminded that the saga is not quite over yet. Again, our daily routines have been confined to our homes and the race is on to contain infections while vaccinating as many people as possible. While a return to regular life is expected, it is not forecast for some months yet. And, amid all this, the productivity storm looms on the horizon.

The 2021 NSW Intergenerational Report forecasts our population in FY2060-61 to be larger, older, and older for longer. There will only be 2.4 working aged people to support each of our retired population, compared to 3.9 today. Without corrective measures, government debt is projected to be 2.6 per cent of gross state product by FY2060-61, excluding debt servicing costs. Importantly, these estimates are based on annual productivity growth of 1.2 per cent – around a third higher than the average pace of 0.9 per cent experienced over the past two decades. The fiscal challenge arising from the pandemic will look like small potatoes compared to the impact of growth and ageing. The implication is clear: there will be less money we can throw at infrastructure. We’ll need to get more value out of existing assets. Moreover, new projects will need to be carefully prioritised to provide the greatest benefit to the State.

Over the past decade, much has been spent on expanding the reach of our public transport network and servicing previously un-serviced areas. Going forward, we’ll need to focus on consolidating these gains. Initiatives such as More Trains, More Services show how we can use advanced technology and small investments to deliver substantial improvements in service levels. This will also ensure overall network reliability is maintained as the State grows.

We’ll also need to think how growth can be accommodated cost effectively while maintaining the quality lifestyle unique to New South Wales. We need to increase housing supply along existing public transport corridors where there is spare capacity within

reasonable travel time to jobs. High-potential growth corridors include Sydney Metro – now under construction – and the T4 Eastern Suburbs Line. This approach would also contain road use, limiting congestion, and either delay or avoid the need for new infrastructure.

It’s not just the budget bottom line that benefits – households and businesses will have more time for work and leisure activities because they spend less time in frustrating commutes. Providing easy access to jobs and social networks will make Sydney internationally competitive in attracting talent.

Of course, this would involve an increasingly consolidated urban form. But the ‘Not In My Backyard’ impulse that often comes with infill growth can be addressed by measures that increase community confidence in the planning system. The NSW Government has already made major gains with integrating infrastructure and land use planning through Planned Precincts and Growth Compacts. My Review of Infrastructure Contributions in New South Wales, delivered in 2020, includes new measures to fund better services and public spaces; delivered with development – not months or years after.

Transparency in asset management and investment prioritisation is critical to building public trust in how governments do business. 2021 marks the tenth year of Infrastructure NSW, which implements NSW Gateway Policy for infrastructure through the Investor Assurance Framework. This ensures the entire sequence of project planning and delivery is subject to rigorous, expert scrutiny that defines service needs, manages timing and cost risks, and keeps ministers and agencies on their toes. But more needs to be done. In the past, governments have announced large projects that capture public attention without going through adequate planning or consideration of alternatives. These announcements tend to be for high profile, high risk projects rather than costeffective investments that address immediate service needs. Consequently, there is a tendency for business cases to support these prior announcements. Governments should ensure proper strategic work, including full options assessment, is undertaken before public expectations are set. Post implementation reviews are also needed to ensure projects deliver their promised benefits and valuable lessons are learned that can improve infrastructure planning and delivery in the future.

But process improvements and more housing along rail corridors won’t be enough. Even if we spend responsibly, we cannot build our way out of road congestion. Limitations of Sydney’s geography mean that transport network expansions are physically constrained or require expensive tunnelling. And although it has exacerbated budget pressures, the COVID-19 pandemic has provided us a unique opportunity to change how we use our transportation system.

Currently, congestion arises in the morning and afternoon peak, but our roads and public transport system are relatively unused outside of that time. The NSW Electric Vehicles Strategy will, in the medium term, include distance-based charges for cars to replace the inefficient motor vehicle duty. But in the long term, the State would benefit were the charges to be tailored to be more time-of-day and location specific. Governments can capitalise on the rise of remote, flexible work and shift travel demand outside these peak windows. And not just for office workers – the forced staggering of construction work because of caps on the numbers of workers on a construction site show that this is possible for everyone.

For more information please contact

John Bransgrove

NSW Treasury