Australia’s infrastructure “woes” as seen from Canada

From the front page of today’s Globe and Mail: Infrastructure bank seeks to avoid woes of Australian peer.

Politics is a clear dividing line in Australia when it comes to infrastructure. Since 2013, Australia has been led by the Liberal Party of Australia, which is more conservative than the left-leaning Australian Labor Party, the country’s other main political party. Australia is divided into six states and two territories.

The Australian Liberal government brought in an incentive program in 2014 called asset recycling that provided a financial reward to state governments that privatized assets. State reaction to the incentive largely broke down along partisan lines, with likeminded New South Wales praising the program as the “secret sauce” of success, while some Labor-led states declined to participate. Australia cancelled the program in 2016. . . .

John Quiggin, an economics professor at the University of Queensland, said other privately financed projects such as a $4.8billion toll road tunnel to the Brisbane airport, led to “disastrous losses for investors” as the original consortium went into receivership. He said it would appear from Mr. Sohi’s Sydney itinerary that he would have received a one-sided view of Australia’s experience. Prof. Quiggin said there have been several recent examples of Australian governments moving in the opposite direction, expanding public ownership in areas such as power generation.

“Looking at the itinerary, the minister will have spoken almost exclusively to advocates of private infrastructure, who will have told a rosy tale,” he wrote in an e-mail. “The fact is that these guys have lost the debate, as witnessed by the sudden surge of new public enterprises.”

Jeff Kennett, a former Liberal premier of the state of Victoria who approved his state’s first private toll road in the 1990s, has said those types of deals don’t make sense for governments with healthy finances. The toll highway, known as CityLink, opened in 1999 at a cost of $1.8-billion. Australian newspaper The Age estimated that the private owner, Transurban, is on pace to collect more than $20-billion in revenue by 2034.

Beats me what the point is but was nice to see all the usual gang on the front page of the local paper.

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15 Responses to Australia’s infrastructure “woes” as seen from Canada

  1. Tim Neilson

    Quiggin is the reverse compass of economics.

    Yes, some projects fail and the investors lose their money. So what? The investors have chosen to go into it. (Except for the poor saps in union super funds – but the taxpayers will end up bailing them out.) The whole point of private enterprise is voluntary assumption of risk/reward. Does Quiggin not get that?

    As for the comeback of “public ownership”, God spare us. Governments are “moving in” the direction of disastrously unproductive public “investments” in “ruinable” energy. Unfortunately both wings of the cartel are in on the scam so the true magnitude of the losses and damage to society will be hidden from the public forever if they can get away with it. But economists should be able to see through the spin. (Thanks Alan.)

  2. arrrr

    John Quiggin/Lee Rhiannon, same same

  3. duncanm

    I’m not worried about the public ownership part, nor the private bits.

    What I’m concerned about is the public funding of private incomes and assets — aka: the renewballs scams.

  4. Leo G

    Governments are “moving in” the direction of disastrously unproductive public “investments” in “ruinable” energy.

    A ruined energy market is the investment to realise a low energy future.

  5. Mother Lode


    Might as well ask Krugman.

    Or Swan.

  6. The difference between Public and Private outcomes would be a fraction of the 30% CFMEU construction ‘tax’.

  7. DaveR

    The comment that is valid is that there should be more examination of the Kennett era CityLink sale, whether the financial terms of the 40 year lease were ultimately in the interests of the community (net of sale proceeds) and whether the Kennett govenment was misled by its investment banking advisers.

  8. Rabz

    Whoever wrote that drivel appears to have ingested the same “secret sauce” as the NYT reporter who recently graced “the Gold Coast town of Byron Bay”.


  9. RobK

    CityLink, opened in 1999 at a cost of $1.8-billion. Australian newspaper The Age estimated that the private owner, Transurban, is on pace to collect more than $20-billion in revenue by 2034.”

    What are the various operating costs, fees, taxes? We’ve only got half the story.

  10. Nicholas (Unlicensed Joker) Gray

    Never mind all that! Page 14 of The Australian has a column by David Leyonhjelme! All about how statistics are misused when it comes to guns and violence. A good column.

  11. Sinclair Davidson

    I think this is a great story – Australians being quoted in a Canadian paper An Australian debate of international interest. I don’t know if this has ever happened in an Australian paper. I suspect we don’t pay enough attention to Canada.

  12. Paul Farmer

    Did Quiggan mention the NBN ? I can’t think of a better example of public infrastructure such as this working well, on time , on budget, quality service in the entire history of our Commonwealth.

    Piece is typical of leftist journalists…….decry private companies losing money as evidence of capitalism failing…………I see it as evidence of it working very well and punishing people who underestimate risk, over estimate revenue and poorly project manage cost outcomes. Huge plus the taxpayer wasn’t lumbered with these losses. Then as it typical of the left, who wants to have their cake and eat it too, within the same article , have a shot at other private companies for making too much money and impliedly suggesting they are ripping taxpayers off. This is how capitalism works , encourage specialization and competition to sort out the good from the bad.

    Infrastructure building and ownership involves often great risks and an efficient market should price in these risks. If the market performs as it should, those good at it will survive, those who aren’t will die. Society and taxpayers win win as these projects ultimately more often than not should be done and managed by competent people that way. If this is some sort of critique of private capital as opposed to public capital doing and owning projects, it simply did nothing to advance the argument that public ownership brings net benefits to society.

    Unfortunately most leftists see everything through the prism of world that is all about redistribution of wealth and opportunity in a zero sum game, ie if a capitalist is making a buck I am worse off and if a capitalist is losing a buck I am also still worse off because some comrade of mine in the public sector could have had a job doing it. Its hard to reason with people like this.

  13. Confused Old Misfit

    Canada is developing nicely into a social justice warriors haven. The sense of righteous virtue that oozes from there is palpable. Their economic policies are as horrifying as Shorten’s. They They have assumed that the good times will roll on under the aegis of socialist federal and provincial governments and the Quebec problem continues to fester.
    If you are going to pay any attention to Canada be very cautious of following their lead.
    I kin tell you about Canajuns eh? Sorry, but I were one!

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