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How strategic infrastructure planning in Australia could evolve

09 January 2023

The Australian government has responded to recommendations made by an independent review of Infrastructure Australia. 

How strategic infrastructure planning in Australia could evolve
IA is widely seen as having strengthened national infrastructure planning. Image credit: Shutterstock

Infrastructure Australia (IA) is the independent infrastructure advisory body tasked with ensuring Australia has a strong pipeline of infrastructure projects linked to national priorities.

The Australian government accepted the review’s finding that it needs to clarify IA’s mandate and has set out how it will do this.

However, the government’s response raises questions about IA’s future independence, transparency and governance.

Below, we break down the background to the review, the key findings and what it could mean for infrastructure planning in Australia.

Why was the review launched?

Australia’s new federal government promised to review IA’s role as an independent advisor on nationally significant infrastructure priorities.

IA is widely seen as having strengthened national infrastructure planning and appraisal since it was set up in 2008.

However, constraints on investment capital and increasingly complex long-term challenges – such as decarbonisation and climate adaptation – mean the coming decades are expected to be difficult.

Achieving national priorities efficiently will require changes in the planning and selection of major infrastructure projects.

The review was therefore tasked with identifying what changes could be needed to IA’s focus, priorities and, if necessary, its governing legislation.

The aim was to strengthen its ability to provide quality, independent cross sectoral advice to the government on nationally significant infrastructure.

The ICE submitted a response to the review drawing on the Enabling Better Infrastructure programme’s 12 principles.

What did the review find?

The key issue the review identified is finding the right balance between the independence of expert infrastructure investment advice and its influence on government decision-making.

The range of public bodies now advising the government on investments makes this particularly challenging.

Within this landscape, the review found that IA has been ‘undervalued, poorly tasked and directed by government’ and therefore not as effective or influential as it could be.

To address this IA needs a clear mandate and the power to carry it out. The review made 16 recommendations to strengthen IA’s role. These include:

  • the government should formally issue a Charter of Infrastructure Investment Objectives every five years
  • IA’s products should be more targeted and better aligned with government infrastructure investment objectives
  • the government should be required to formally, and publicly, respond to IA’s recommendations within six months
  • IA’s remit should be expanded to include social infrastructure
  • IA should develop a national planning and assessment framework
  • the definition of ‘national significance’ should include more non-monetary metrics

There are also recommendations for strengthening IA’s governance framework, its relationship to Australia’s states and territories, and its role in project assessment and post-completion evaluations.

How did the Australian government respond?

In December the government responded to the review’s recommendations.

It accepted it needs to give IA more direction and further reforms to enable it to provide more targeted advice.

The government says it will clearly define IA’s mandate by articulating its role in the IA Act. In addition, it will issue an Infrastructure Policy Statement setting out its investment objectives.

It will also continue to issue a Statement of Expectations to:

  • guide IA on how it can support delivery of the government’s immediate priorities
  • implement recommendations for IA to develop a national Infrastructure planning and assessment framework

Infrastructure priorities informed by policy objectives

The government wants to make Australia’s Infrastructure Priority List more targeted and informed by its policy objectives.

To that end, it says IA’s focus should remain on nationally significant projects relating to transport, water, communications and energy infrastructure.

However, there will be more flexibility for IA to decide which projects are nationally significant rather than being limited to those above AUD$250m.

It also supported giving IA greater responsibilities in the post-completion stage, with reviews likely to focus on a few significant projects each year

What impact will the changes have?

The recommendations are intended to enhance the focus of IA’s work and strengthen its influence in government.

The government agreed on the need to change IA’s governance framework. It supports a commissioner-like governance model, but IA will first undertake formal inquiries on this.

However, IA will not move to one of the central government departments to raise its status. Instead, it will remain within the infrastructure portfolio.

Potential limits on transparency and independence

Nor did the government support tabling IA’s annual statement to government, or publicly responding to advice which may be the subject of cabinet deliberations.

It says it will seek other means of increasing the transparency of the infrastructure investment pipeline.

However, there is risk that the emphasis on in-confidence cabinet papers means much of IA’s work will be less visible than at present.

The response also only gave limited support for IA’s ability to initiate inquiries, with the government expecting to be consulted first.

IA's new relationship with state and territories

The government supports evolving IA’s role in project assessment to one of accreditation or peer-review in support of state and territory processes and capabilities.

This should enable IA to focus on national infrastructure priorities.

However, this change will depend on the state infrastructure bodies having sufficient capacity and robust tools and methodologies to lead on assessments.

ICE’s view

IA has been the blueprint for many other countries looking to improve the strategic planning and prioritisation of their infrastructure systems.

The ICE’s Enabling Better Infrastructure (EBI) report in 2019 featured a deep-dive case study on IA as an exemplar for others, looking at its work and impact.

However, reviews of infrastructure bodies are common practice to help ensure they have the functions to match the ever-changing requirements of infrastructure policy making.

How effective the changes to IA are will depend on the clarity and certainty the government provides about its long-term objectives and investment plans.

The impact of the changes on the transparency of IA’s work and its ability to act independently will also need monitoring.

As it undergoes this renewal process, IA will continue to provide lessons for global infrastructure policy-makers.

The ICE will be looking to capture these insights as part of our programme in 2023 to update the 12 EBI principles.

In case you missed it

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  • David McNaught, policy manager at ICE