ICE policy position statement: how can infrastructure delivery productivity in Australia be improved?

Australia’s population has grown by 3.5 million people in the last decade. It’s projected to grow by another 4.5 million over the next decade.

This means that the country faces the significant task of delivering the infrastructure needed to support its growing population. This, in addition to delivering on its goals of achieving a net zero economy and increasing self-sufficiency in critical industries.

The challenge is that many major infrastructure projects are over budget, over schedule or are not deliverable. Building firms are entering administration at more than twice the rate of other industries.

Improving productivity in the way infrastructure is designed, built and operated is critical to delivering the infrastructure Australia needs for prosperity and to maintain a high quality of life.

Stagnating productivity in the infrastructure sector is underpinned by growing uncertainty.

In 2023, more than 50 projects were cut from Australia’s Infrastructure Investment Program following an independent strategic review.

The review determined that many projects didn’t provide an adequate business case to justify significant Australian government investment.

This has led to rising concerns about the impact of short political cycles on the infrastructure pipeline.

In June 2024, the ICE launched a green paper consultation seeking input on how Australia’s infrastructure productivity can be improved.

This policy position statement draws on evidence received through the consultation and outlines specific recommendations.

Recommendations

• Task an existing (or new) advisory group with reviewing and updating the definition of infrastructure delivery productivity in Australia. This definition should move beyond traditional ‘input versus output’ metrics to consider how projects are delivering better social, economic and environmental outcomes. This is to ensure Australia is productive in pursuing its goals and vision.
• Adopt a standard system of infrastructure productivity assessment and monitoring as part of the annual infrastructure review process. Explore and consider examples of international benchmarking methodologies.
• Develop a long-term National Infrastructure Strategy, with a goal to outline a 20-year vision and planned and projected investments over the next 10 years. This should include pre-funding, pre-delivery, delivery and completed projects in alignment with established key policy themes.
• Introduce an expert leadership role that is responsible for championing the National Infrastructure Strategy (including planned and projected investments). It should have cross-party support to withstand political cycles.
• Develop an Engineering Workforce Strategy in alignment with the National Infrastructure Strategy. This is to ensure Australia has the right skillsets to deliver on its infrastructure commitments and improve productivity. Creating efficiencies and driving innovation requires building greater technical capacity in the workforce.
• Expand infrastructure reporting to include projects completed, including an assessment of benefits realisation. This will provide more accountability and transparency on broad outcomes and trends over the long term.
• Coordinate a review of projects that have used a standard collaborative contract, such as the Sydney Water and Queensland Hydro projects which have adopted NEC4. Understand the benefits, efficiencies and outcomes achieved as a result of the collaborative approach to build a business case for using them more widely.
• Encourage the use of standardised collaborative contracts on government infrastructure projects. Develop advice for transitioning to a standardised approach to collaborative contracting, with a goal to minimise bespoke contracts unless required.