In recent years all Australian governments have experienced constrained budgets.
In part this can be related to a large number of baby boomer taxpayers leaving the workforce though retirement, but it can also be attributed to tax policy and the difficulty in adjusting tax policies to meet expenditure objectives.
Within this framework Australian governments, like most others in the world, have had difficulty in adjusting annual recurrent expenditures to be consistent with annual tax revenues, and in controlling foregone tax revenue expenditures. One highly publicised consequence of this is that Australian and international governments have seen their net debt increase.
A second less widely publicised implication is that many governments have been forced to delay and/or cancel major infrastructure projects. The consequence of this is that Australia, in common with many countries, has a recognised infrastructure gap.
This ‘gap’ has emerged precisely because governments have experienced difficulty in funding construction of new infrastructure from taxpayer revenue. The funding of upgrades and maintenance of existing infrastructure has also been constrained in some cases. Although the exact number is debated, any significant infrastructure funding gap raises questions about the long-term productivity and competitiveness of the Australian economy. There is a well-established correlation between the quantity and quality of infrastructure and economic performance.
Infrastructure funding is about both quality and quantity of projects. Some of the identified infrastructure gap reflects the rising expectations we have for the quality of both hard and soft infrastructure. Like communities in most advanced economies, Australians expect that the quality of infrastructure like railways, roads, airports, hospitals and communications will rise over time.
The costs of infrastructure provision rise in part, therefore, as greater capacity is needed to deal with growing population and in part because the infrastructure investment per capita increases consistent with delivering greater quality of infrastructure services and rising standards of living. The infrastructure gap encompasses all forms of infrastructure and arguably it is not reasonable to look at one sector (such as transport) in isolation. Road projects compete with port projects compete with sporting and health projects for funding. Capital city projects compete with regional projects.
However, the recent period sustained high growth rates and the impact of GST revenue sharing arrangements have been especially significant for WA in recent years insofar a planning for infrastructure provision is concerned.
Against these needs, the focus of the research is to undertake a review of infrastructure provision and funding in WA preparatory to PATREC undertaking more detailed and specific research projects on transport infrastructure provision.