IN a process that will complement the National Commission of Audit, the Australian Government will commence a thorough examination of infrastructure costs and financing in Australia with a new Productivity Commission inquiry.

According to a joint statement by the Prime Minister, Treasurer and Assistant Minister for Infrastructure and Regional Development, the inquiry will deliver on a key Coalition commitment and forms part of the government’s ‘ambitious infrastructure agenda’.

The Terms of Reference for the inquiry provide scope for the Productivity Commission to analyse and report on the following areas:

  • How infrastructure is currently funded and financed in Australia, including by the Commonwealth, the states and the private sector;
  • The rationale, role and objectives of alternative funding and financing mechanisms;
  • Examine the cost structure of major infrastructure projects in Australia, including where infrastructure project costs have increased considerably, compared with other countries;
  • Provide advice on ways to improve decision-making and implementation processes to facilitate a reduction in the cost of public infrastructure projects; and
  • Comment on other relevant policy measures, including any non-legislative approaches, which would help ensure effective delivery of infrastructure services over both the short and long term.

“The government is mindful of the financial risks posed by alternative funding and financing mechanisms,” said the joint statement.

“In this respect, the Terms of Reference also ask the Productivity Commission to consider these risks to the Commonwealth, as well as their possible impact on the Budget and fiscal consolidation goals.

“The overall cost of infrastructure and engagement with the private sector on infrastructure financing are key economic challenges faced by Australia and other countries in our region.

“Australia must ensure that private investment is as attractive as possible by reducing the cost of building infrastructure by driving efficiency and removing red tape.”

The government says this inquiry will be crucial in lowering construction costs and developing a partnership with the private sector to ‘build the infrastructure of the 21st century that Australia needs’.

The Productivity Commission will hold public hearings and release a draft report for public comment before delivering a final report to the Government within the next six months, with a draft report to be released in March 2014.

More information is available here.