Infrastructure expert calls for red-tape reform

INFRASTRUCTURE expert and News Corp director Sir Rod Eddington has said senior business leaders in Australia believe the costs of doing business are rising and industrial relations uncertainty is holding them back.

By InvestSMART · 23 May 2012

By InvestSMART ·
23 May 2012

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If you listen to people like chief executives, this is people like Jac Nasser, the chairman of BHP . . . theyre pretty clear: its more expensive to get things done, the industrial relations uncertainty is real, Sir Rod, chairman of the federal government advisory body Infrastructure Australia, said yesterday.

Sir Rod said regulatory reform was essential to boost Australias short to medium-term productivity.

If you talk to people in the space . . . theyll tell you the things that worry them are duplication of the environmental assessment process between the federal and the state government . . . higher bid costs and disproportionately complicated bidding processes, he told an Australian British Chamber of Commerce lunch. Theyll talk about some of the challenges they feel in industrial relations . . . and the way they believe thats a step backwards rather than forwards.

Theyll talk about regulation as it relates to green tape, as opposed to red tape. My point is that if you want real short-term productivity improvements, its regulatory reform.

Infrastructure Partnerships Australia chairman Mark Birrell also stepped up calls for small Australian super funds to merge in order to gain the funds and expertise to invest in infrastructure, noting that sovereign wealth funds and offshore pension funds recently snapped up Melbourne toll-road operator ConnectEast.

Two-thirds of [Australian] superannuation funds have no investment in infrastructure theyll have investments in real estate, hotels and things like that but not infrastructure.

And one of the reasons for that is that many of those funds are too small to have the internal skills to be able to research.

We need amalgamation of super funds so they have greater scale, theyll have greater reach in terms of dealing with high-quality assets.

Sir Rod and Mr Birrell were both upbeat on the prospects for Australias education sector, with Mr Birrell tipping it could leapfrog iron ore and coal to become Australias top export earner within decades. Putting infrastructure money into universities I think is an absolute no-brainer I think the business case would be profoundly strong, Mr Birrell said.

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Frequently Asked Questions about this Article…

What did Sir Rod Eddington say about red tape and the rising costs of doing business in Australia?

Sir Rod Eddington told business audiences that senior leaders believe the costs of doing business are rising and that industrial relations uncertainty is holding projects back. He argued that regulatory reform — cutting unnecessary 'red tape' such as duplicated environmental assessments and overly complicated bidding processes — is essential to boost short- to medium-term productivity.

How does duplication between federal and state environmental assessments affect infrastructure projects?

According to the article, people in the infrastructure sector say duplication of environmental assessment between federal and state governments increases delays and bid costs. That duplication is seen as a major worry that makes it more expensive and slower to get projects done.

Why are industry leaders worried about industrial relations uncertainty and what examples were mentioned?

Industry leaders—including figures cited by Sir Rod and executives like Jac Nasser of BHP—have said industrial relations uncertainty raises costs and can be a step backwards for getting work done. The article notes that this uncertainty, combined with complex regulation, is a key concern for businesses planning infrastructure projects.

What kind of regulatory reform did experts recommend to improve productivity?

Experts in the article recommended regulatory reform aimed at streamlining approvals and cutting unnecessary red tape. They emphasized simplifying bidding processes, reducing duplicated environmental assessments across federal and state levels, and focusing on reforms that deliver short-term productivity improvements rather than adding 'green tape' that complicates projects.

Why do many Australian superannuation funds have little or no investment in infrastructure?

Infrastructure Partnerships Australia chairman Mark Birrell said about two-thirds of Australian super funds have no infrastructure exposure because many funds are too small to have the internal skills and scale needed to research and manage infrastructure investments. They may hold real estate or hotels, but lack the expertise for direct infrastructure deals.

What solution was proposed to help super funds invest more in infrastructure?

The article reports a call for amalgamation of smaller superannuation funds so they can achieve greater scale, build internal expertise and gain access to high-quality infrastructure assets. Larger funds would be better placed to co-invest or buy assets that smaller funds currently miss out on.

How have foreign investors shown interest in Australian infrastructure assets?

The article notes that sovereign wealth funds and offshore pension funds recently purchased Melbourne toll-road operator ConnectEast, illustrating how large overseas investors are actively acquiring Australian infrastructure assets.

What does this discussion mean for everyday investors watching infrastructure and superannuation trends?

For everyday investors, the article highlights two trends to watch: policy and regulatory reform that could reduce project costs and delays, and consolidation among super funds that could increase domestic investment in infrastructure. Both trends could influence the availability of infrastructure investment opportunities and the long-term performance of superannuation funds, so keeping an eye on government reform and fund mergers may be worthwhile.