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Transparency and Performance Audit of Infrastructure Australia

Estimates & Committees
Scott Ludlam 27 Oct 2010

Rural Affairs and Transport Committee
Infrastructure Australia
21 October 2010

CHAIR-Questions for Infrastructure Australia?

Senator LUDLAM-I have some broad questions about the operations of IA with particular regard to the ANAO's recent performance audit. I will just do a quick trip around the country and fill in some of the issues that Senator Macdonald raised around different parts of the country. I will go first to the recommendations of the audit report. IA has agreed to 1 and 2. With regard to recommendation 1, which just says that there be greater transparency over the development of the priority lists, IA has agreed to that, which is good. Can you tell us what that is going to look like in future funding rounds? What can we expect to be different?

Mr Deegan-As you know, I invited in the Australian National Audit Office to look at our processes. We are a new organisation with a new structure and a new approach to the assessment of infrastructure priorities across governments and, indeed, how the funding issues would be addressed in both the short, medium and long term. So I welcomed the ANAO involvement. It was a very active engagement we had with their office.
We are currently in discussions with them about updating our guidelines, which will appear hopefully on our Infrastructure Australia website very shortly. Those guidelines will go to a range of issues that have been raised at this committee and elsewhere about the sorts of factors that we might consider in the assessments of infrastructure projects. In the June 2010 report, to which I referred earlier, we list the cost-benefit ratios for those projects that we deem ready to proceed. We intend to continue undertaking that work and increasing the transparency around those sorts of issues so it is clear to the community the benefits versus the costs of these major pieces of work.

Senator LUDLAM-That is great. What can you tell us about an issue that I have raised before, which is the idea that at the moment it is up to the discretion of the states and territories, who you are taking most of your substantive proposals from, as to whether they release their bids into the public domain or not? There has been a bit of a patchy response. There has been some push and pull through freedom of information in Victoria, for example. I know you are not in a position to compel the states and territories to do that, but do you have a view about that, or have you expressed that, or did it come up in the Audit Office's work that it would be beneficial to have a greater degree of transparency upstream of where you are involved?

Mr Deegan-There are some issues associated with this, as you know. We have had a very productive discussion with the states on this issue. What we have asked them to do is push for the release of more of their work and their reports where that is possible. A number of states have raised some quite genuine issues around some commercial-in-confidence approaches and projects that are at an early stage of thinking where they need to work out how to engage the community in that process properly. So they are working on how they align those two systems-putting ideas for us to work with them on and then how they bring their communities with them in that discussion. So it is a proactive discussion about engagement with communities and, indeed, industry on the sorts of issues that are before us but also some sensitivity around some of the funding mechanisms that do lead to some commercial-in-confidence discussions.

Senator LUDLAM-Is there a chance that we might see in future funding rounds a greater degree of transparency on behalf of the states and territories?

Mr Deegan-We are already seeing a much greater level of transparency. The states are seeing a virtue of publishing, where it is possible, of more of their work, and I think that is a healthy thing.

Senator LUDLAM-Indeed. I would not disagree. I am going to paraphrase what was in the study because I would probably put it a little more strongly than the Audit Office would. You have at the moment two lists of priority and pipeline projects, your A and B lists, which have then been brought forward for funding. In some instances, do you tell proponents, be they states or anybody else, not to bother? Is there a ‘don't bother bringing this back' list?

Mr Deegan-Senator, what we have done is, in our June 2010 report and in following discussions with the Audit Office and the Infrastructure Australia council, create four key categories for the assessment of our projects. Again, this is published in our June 2010 report. It is publicly available. I have offered Senator Macdonald his own copy. I will make sure you get one as well.

Senator LUDLAM-Thanks.

Mr Deegan-Those categories are in four areas. There are initiatives that are at an early stage that address a nationally significant issue or problem, but the identification or development of the right solution is at an early stage. We list a range of projects in that category. There are those with real potential, where they clearly address a nationally significant issue or problem. There has been a considerable amount of analysis of potential solutions but they obviously need more work. Then there is a threshold category, moving across and up this scale, where they have both strong strategic and economic merit and are only not ready to proceed due to a small number of outstanding issues. The final category is where we believe that they are ready to proceed. The work has been undertaken. That is where we publish the cost-benefit ratio with our recommendation. So across those categories we try to build things in. We have a fairly frank discussion with the states about which projects we believe are likely to move from the threshold category to the ready-to-proceed category. Of course, many of the states would like for their own reasons to have them in that final category, but we are quite firm about the rigor of our process and that they do need to meet our criteria to get into that category.

Senator LUDLAM-But the do-not-bother category is still done one on one with the proponents?

Mr Deegan-It would perhaps be put in terms of, ‘Make sure you allocate the resources to the best effect,' Senator.

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