Governments must act now to reduce Australia's growing social infrastructure deficit by broadening the market, improving bidding processes and increasing private sector participation, according to a new report from Allens.
The report, Time to act on Australia's social infrastructure deficit, explores solutions to overcome the widening social infrastructure gap, including forecast shortfalls in essential schools, hospitals and prisons.
While Australia was once considered a global leader in the development of social infrastructure (particularly through the use of public-private partnerships), recent trends have seen a decline in the efficiency of social infrastructure development, with a thinning pipeline and waning confidence in governments' bipartisan commitment to the delivery of announced projects.
The decline comes at a dangerous time for Australia, which currently faces the combination of an infrastructure deficit of up to $770 billion and a growing, ageing and urbanising population.
The report suggests four key actions to improve the supply of much-needed social infrastructure assets:
- Increase the number of smaller projects in the pipeline in order to open the market to more participants, increase the overall pipeline and deliver public benefits faster.
- Improve certainty for investors by depoliticised the procurement process and developing a nimbler process for selecting the preferred bidder on public tenders.
- Increase the involvement of the private sector by identifying 'challenges' for the private sector to tackle and thereby engaging private sector innovation.
- Introduce a contestability process through which private sector participants can identify inefficiencies in the delivery of the services supported by social infrastructure assets and pitch solutions.
'Improving social infrastructure delivery is critical to protecting Australia's productivity, liveability and investment attractiveness,' said lead author of the report and Allens' Head of Infrastructure & Transport, David Donnelly .
'Australia's population is expected to grow by 11.8 million people in the next 30 years. That's the equivalent of adding a city the size of Canberra - which has 150 schools, five hospitals and two prisons - to our population every year.
'Australia is home to some of the world's most liveable cities, but we can't expect to sustain that reputation if we're unable to deliver the social infrastructure assets that underpin that amenity.
'As a firm, we advise on major infrastructure projects in Australia and throughout the region. We wrote this report after noticing a number of consistent patterns emerging across the market,' David said.
'It's clear from our research and experience that something needs to be done, and it needs to be done urgently.'
Notes for editors.
Allens is a commercial law firm working throughout Australia and Asia. Through its integrated alliance with Linklaters it provides clients access to 40 offices in 28 countries around the world.