30 years to catch up: Eddington

“We know successful economies, successful communities are built on first-class infrastructure, infrastructure hard and soft. We also know that many western countries have under-invested in hard infrastructure over the last 40 years. And it shows … in parts of Europe, parts of North America and in some places here in Australia.“In the United States of America the engineering community recently estimated that the maintenance backlog and the building backlog of infrastructure in the US is $US11 trillion. Estimates of the infrastructure backlog here in Australia range from somewhere between $200 and $700 billion, and it’s going to be three decades at least before we get back to where we could be and should be. “Traditionally, of course, governments – both federal and state – have built our hard infra-structure, but we recognise that it’s increasingly difficult for governments to continue to do that due to their limited capacity to pay. [Treasury Secretary] Dr Ken Henry has made the point that when Gough Whitlam became our prime minister in 1972, the spending on soft infrastructure – on education, on health, on social security and welfare – was just under 30 per cent of total federal government spending. Today, it’s about 60 per cent. “What that means is there’s less to spend on the hard infrastructure that underpins economic growth. To make matters worse, as governments get into debt around the globe, they are increasingly borrowing in the same capital markets that private-sector companies are to build infrastructure. They are crowding out private-sector investment. “There’s no doubt in my mind that the private sector has to take on an increased role, but there are some challenges here and you don’t need to look too far to find them. “We know that the PPP model works, but it doesn’t always work. Historically, governments have asked the private sector to take all the risks up-front and to live on a utility rent – to take the construction risk, to take the patronage risk and to live on reasonably meagre returns. That model doesn’t work.” Eddington continued, “When I reflect on the industry where I spent most of my working life, aviation, and look how far we’ve come in a century, it’s almost beyond our ability to comprehend what is truly possible. “We’ve come so far, so fast, and it’s been an astonishing journey, all driven by human imagination and the power of the human spirit. So what could prevent us from using the same qualities to triumph over today’s problems? Not money I think – there is a way forward but we’ll need to make our dollars work harder.“What stops progress, or reduces it unnecessarily, is mindless bureaucracy. Government and business alike are both at fault in this area. Both find reasons to say no, to pull back, to hesitate much too often.”This article first appeared in the April 2010 edition of Contractor magazine.

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