Infrastructure: it’s more than just building roads and bridges

As WA’s second largest industry, contributing in excess of $31 billion to the State economy, the property industry is perfectly positioned to provide a catalyst for growth in the face of on-going decline in resources sector investment. The industry can work closely with the Government to utilise targeted investment in infrastructure and deliver the greatest return on investment.

Although the State currently faces significant budget deficits, it will actually be more counterproductive to delay investment in growth-enhancing infrastructure investments. Rather it is essential to identify where the best infrastructure opportunities lie in order to enable job creation, facilitate continued growth in WA and optimise factors such as liveability, access to affordable housing, reduced congestion and pollution, and better commuting times. Identifying these benefits will assist in finding the best ways to fund the investments – potentially through Public-Private Partnerships, asset recycling, user charges or debt-funding – or indeed a combination of options.

Comprehensive analysis demonstrates that large investments in infrastructure is not fiscally irresponsible, rather they can deliver better outcomes – for economies and budgets – over time. In fact, if the WA Government were to turn its back on new investment in key infrastructure initiatives, the opportunity cost of lost economic growth and employment, social and environmental amenity, as well as fiscal repair, would be enormous.

The Western Coast Expansion – one of the three infrastructure projects identified to provide the most significant economic and social benefit for WA.

Utilising the framework and assessment criteria, three major projects demonstrated strong credentials for further analysis. Publicly available information and a realistic, but accelerated, timeline for infrastructure investment enabled Urbis to model the potential of each project. The model unlocked property development and the resulting economic and social gains that could be delivered, strengthening the outlook for the WA economy over both the short and longer terms.

Key estimated outcomes for each are shown below:

In addition to establishing the significant benefits of each of the three projects, the framework also proved useful in removing some of the difficulty associated with political factors that sometimes affect economic decisions. We were able to clearly demonstrate the value of each investment through a truly transparent framework for assessment.

The process we have undertaken can be easily applied and implemented by other government agencies who wish to understand the opportunity costs, as well as short and long term benefits, of various types of infrastructure projects. We have demonstrated how by correctly prioritising projects, there are significant gains to be made that will support jobs, economic prosperity and communities.

Creating true opportunities for growth through infrastructure is more than just building roads and bridges.

For further details on the report’s findings and recommendations, download The Keep WA Growing Summary Report or read the full Keep WA Growing Technical Report.

This article first appeared in  Urbis Insights – Infrastructure edition on 1 September 2015.