18 Mar 2011

A strategy for delivering investment to the national freight network

by Stuart Cosgriff

The National Land Freight Strategy Discussion Paper sets out five priorities for the future of freight and infrastructure in Australia.

That a more efficient, integrated and national network of freight infrastructure would be a positive contributor to Australia's economic growth and way of life is, with hardly a moment's thought, obvious.

The right strategy, including the right mix and priority of capital investment and policy reforms, directed towards achieving that outcome is somewhat less obvious.

What should be agreed by all is the need to develop and continuously define the strategy, and to engage in the debates about how to pay for it – and who should pay for it. Infrastructure Australia's draft strategy for the development of an integrated national land freight network, "National Land Freight Strategy Discussion Paper", should act as a catalyst in this process.

The draft National Land Freight Strategy

The draft strategy aims to place investment in Australia's land freight infrastructure firmly on the agenda of upcoming meetings of the Council of Australian Governments.

The discussion paper sets out three key things:

  • Infrastructure Australia's thinking on goals, objectives and strategic directions and priorities for the national land freight network strategy;
  • an indicative list of projects and programs that Infrastructure Australia has flagged for inclusion in a "National Land Freight Network Plan"; and
  • Infrastructure Australia's five "priority areas for action".

The key question the discussion paper raises (and the answers the paper implicitly hopes that a national strategy will help provide) is how to best to promote the economic conditions necessary to encourage non-government investment in an efficient national freight network.

Importantly, the discussion paper recognises that while a successful freight network strategy must include long-term planning for developing infrastructure capacity, as well as simplifying approval processes, to promote private investment in the development of that infrastructure, the long-term development of a national land freight network should not delay worthwhile investment and reform proposals in the short term.

The identification of the assets which should be treated as the "national land freight network" is the first of Infrastructure Australia's five "priority areas for action", but this is only a first step.

The strategy also needs to determine which projects should be done as a priority and which should only be done if justified by future capacity demands. The paper notes that long-term programs need to be more substantial than simply doing "projects that just deal with capacity constraints via government funding" and acknowledges that not every potential project "needs to be done, least of all done now or with funds collected from general taxation. Rather it points to these ideas as being the type of long term programs that could underpin a national network – if volumes of networked freight are sufficiently high".

Further, Infrastructure Australia notes that the "traditional model" of freight infrastructure funding (a supply driven "predict and provide" model funded largely from taxation revenue) has the capacity to distort rather than promote the efficient development of a freight network.

It is clear from these statements that Infrastructure Australia considers that private sector investment should have a key role in developing the national freight network, while also acknowledging that government influence over the preconditions to private investment decisions will affect the strategy's implementation.

However, this is not to say that government (and government funding) does not have a key role to play other than directly funding freight infrastructure. To the extent which future freight growth can be predicted and that capacity constraints on that growth can be identified, Infrastructure Australia acknowledges that "the merit of initiatives to raise infrastructure capacity is likely to increase over time, and it may be worth preserving opportunities to undertake projects in anticipation of future demand". Governments are uniquely placed to preserve these policies through planning policies and the like.

Furthermore, there will continue to be a relationship between the capacity of shared networks utilised for personal transport (such as commuter road transport and mass transit) and constraints on the growth of freight (ie. the problems of "congestion").

The discussion paper notes "urban congestion could be redirected by greater public transport connectively, speed and reliability". Accordingly, developments which address this congestion can provide benefits to the freight task that may not be provided by direct investment in freight infrastructure. Achieving these types of outcomes is likely to require investment driven by the public sector.

The other priority areas identified by Infrastructure Australia are:

  • completing a long-term (ie. 50 year horizon) national land freight strategy;
  • ensuring that plans can be executed by implementing nationally consistent (and streamlined) approvals processes;
  • prioritising the development's related freight infrastructure improvement and access projects, such as road pricing frameworks and network access regimes; and
  • improving governance arrangements such that they support consistency, transparency and accountability and are integrated nationally and across all transport modes.

Interestingly, the fifth priority echoes a theme arising from one of the "key lessons" identified in the Commonwealth Department of Infrastructure and Transport's Infrastructure Planning and Delivery: Best Practice Case Studies Report, released in December 2010. There, the case studies of a series of successful infrastructure projects demonstrated the importance and value of strong governance process to the success of those projects. Unsurprisingly, there seems to be a clear link between good governance and the necessary confidence to make an investment decision in a project.


The right balance between public and private investment in the renewal of existing infrastructure capacity and development of new infrastructure capacity to deliver upon such a strategy is open to debate and is a subject upon which views can and do legitimately differ.

Hopefully this draft strategy will help foster a full and open debate. Infrastructure Australia seeks submissions on the draft strategy by the end of April 2011.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.