Grattan urges rethink on transport spend

Colin Brinsden, AAP Economics and Business Correspondent
·2-min read

A new analysis is urging the Morrison government to be cautious about what taxpayers' money it puts into big transport projects, warning they may turn out to be a "herd of white elephants".

Governments are now fast-tracking new road, bridge and other transport network projects in their quest for an infrastructure-led recovery from the COVID-19 recession.

But the Grattan Institute think tank says it makes little sense to be spending big on transport projects that were conceived before the coronavirus pandemic.

"The pandemic has pushed population growth over a cliff and fewer people will commute in future as working from home becomes part of 'COVID normal'," the institute's transport and cities program director Marion Terrill says.

"The danger is that governments are rushing to waste money on what may turn out to be a herd of white elephants."

She said even before the pandemic, the prime minister and his treasurer, as well as state infrastructure ministers, were worried that there weren't enough workers, materials and machinery for the massive construction workload.

"When there are already bottlenecks, racing to build projects dreamt up before the pandemic just pushes up prices," Ms Terrill says.

"Taxpayers would get bigger bang for their buck if politicians steered clear of what they like to call 'national building' and 'city shaping' mega projects, and instead spent more on upgrading their existing infrastructure and on social infrastructure such as aged care and mental health care."

She says that over the past two decades, Australian governments have spent $34 billion more on transport infrastructure than originally estimated.

The analysis showed that of all projects valued at $20 billion or more and built in the past 20 years that the actual costs exceeded the promised costs by 21 per cent.

The pandemic should prompt governments to rethink major projects that have been promised or are under construction, particularly those announced without a business case, the analysis says.

"The key lesson is that megaprojects should be a last, not a first resort," Ms Terrill says.