Urban Taskforce | Policy Agenda

Fact sheet: Funding infrastructure

26 February 2011

Its now trite to observe that Australias capacity to sustain strong job growth will be heavily influenced by its infrastructure investment.

Whenever the topic is raised, images of ports, airports, national highways and snaking coal trains spring to mind. If its big and clunky and involves exports we readily accept the need for federal leadership.

However, in the next 20 years, around two-thirds of the increase in Australias population and jobs are projected to occur in capital cities.

Urban infrastructure constraints threaten growth


The constraints of more mundane urban infrastructure, such as arterial roads, threaten to limit the growth and divert jobs overseas.

Heres why. Large modern cities came into existence because the Industrial Revolution delivered even lower transport costs. In the United States, for example, the last century saw a 90 per cent fall in the real costs of moving manufactured goods. This made it possible to combine economic activities in a small number of very large cities.

Cities offer a large and varied job market, for both employees and employers. A citys future becomes clouded if its citizens lose their ability to be mobile. Reduced freedom of movement means that jobseekers are less likely to seek out a better, more suitable, employment.

Similarly, congestion limits employers choice of workers and makes it harder for businesses to attract as many customers as they otherwise would. When the benefits of being located in the city begin to be outweighed by the costs of congestion, business will move elsewhere.

High congestion costs can undermine the economic purpose of a city. If Australia cant offer footloose internationally competitive firms the right environment in our major capital cities, they will go somewhere that can.

More investment


For decades the Federal Government has ignored this risk to Australias economic future. To its credit, the current government has slowly started turning the ship of state around. Its investments in urban public transport are unprecedented. Nonetheless, its not enough. To be frank, compared to the scale of the investment required, the announcements made so far are almost symbolic in nature.

More investment is required in new public transport services. But beyond that, the Federal Government needs to overcome its reluctance to support new road infrastructure vital for urban growth.

In a discussion paper released in December 2010, the Federal government expressed its concern about supporting the growth of suburbs accessed mostly by car. Such suburbs are, apparently, unsustainable. This latest statement echoes new Infrastructure Australia guidelines which discriminate against emerging suburbs on the edges of the existing urban footprints. Public transport that facilitates the development of new suburbs is now viewed unfavourably by Infrastructure Australia, as are new or upgraded major roads that connect land release areas to existing urban communities. New motorways designed to help motorists get from the edge of cities into urban business districts are also viewed dimly.

Frankly, the governments approach is naive. Private road vehicles now account for about 90 per cent of the total urban passenger task. The great majority of commutes are by motor vehicle, as are shopping and social journeys. The federal government cannot avoid an economically destructive congestion crisis without investing in key urban roads.

Mobility matters. It allows more jobseekers to find the right jobs. More businesses are able to attract extra customers. More people enjoy higher living standards. Our cities are our economic engine room. The federal Government must invest in roads, as well as public transport, if our major cities are to continue to deliver for our economy.


More information

For more information (and source details) please read our fact sheet:


Fact sheet: Funding infrastructure

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