Q+A: How $242bn of infrastructure spending actually gets allocated
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What is the main topic discussed in this episode?
Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Sean Aylmer. Infrastructure is having its moment, or maybe more accurately, decade, in the sun.
What is the significance of the $242 billion infrastructure spending?
Whether it be the infrastructure to support housing and population growth, the energy transition, supply chains, the AI revolution, the country's public infrastructure pipeline is estimated at $242 billion in the four years to the 2029 financial year. There seems to be unlimited demand for infrastructure, but of course, it all costs money, mostly measured in the hundreds of millions or billions of dollars. So how does government, business, anyone else pick where the money should be spent? To give us an insight into that very question, we welcome to the show Adam Kopp, CEO of Infrastructure Australia. Adam, welcome to the show.
Thank you, Sean.
How does Infrastructure Australia prioritize infrastructure projects?
Pleasure to be here.
Infrastructure Australia has released its priority list. Before we go through the five themes, just explain the role of Infrastructure Australia and how you came up with the list. And I suppose the other thing is what timeframe you're thinking, because we're not talking the next three to six months here.
No, we're not.
What are the main themes in Infrastructure Australia's priority list?
So Infrastructure Australia has been around since about 2008. It was set up by the then infrastructure minister, Anthony Albanese, who's now our prime minister. And we're a government agency, but an independent government agency. So we provide advice across a range of investment opportunities for the Australian government. And then we also assess the business case for a lot of those opportunities as well. And one of the major things that we've done since 2008 is create an infrastructure priority list because, as you said, there's unlimited wants and demands on the public purse for infrastructure investment. And what we do is take a view of what the needs are across the nation and then provide up a prioritised list of investments over the next 10 years.
There's a lot of issues that we're facing as a country and in the world.
Why is improving freight networks a priority for Australia?
There's climate change, population growth, changing trade terms, changing defence environment. And we've taken a broad view of all those megatrends and then mapped that against all the different asset classes we need to invest in and have come up with a list of 68 projects to invest in over the next 10 years.
Okay. So let's run through some of them, not the 68 programs, we won't do that, but some of the broader themes. There's five broader themes and kind of in brief, we don't want to go into each of them too much. So the high productivity freight networks is the first one. Explain that.
How is port capacity and connectivity being addressed?
So it is number one for a reason. The freight network is often regarded as the poor cousin of a lot of the other different parts of the infrastructure environment because Freight doesn't vote, people often say, but it's so important as we saw during COVID and as we're seeing during this fuel crisis, it's so important to have high quality freight and logistics networks. With population growth, Australia is going to grow to be about 40 million people by 2060. and changes in terms of climate, we will really have to have a big focus on better connecting our cities and towns and better connecting to the world.
What role does sustainable water play in infrastructure planning?
So the high productivity freight network chapter is particularly focused on getting more freight on rail as opposed to road. So we're projecting that road freight will increase by about 77% over the next 30 years and rail freight will only increase by about 6%. And why do we need to get more freight on rail? Well, if you've got more trucks on the road, you're dealing with more congestion. Freight on rail is actually 16 times less carbon intensive. than road freight. And it's also about three times less fuel intensive.
How is Australia transitioning to a clean energy economy?
So for a range of climate change and population growth reasons, it's really important that we try and make sure we're moving a lot more of our goods on rail.
Okay. Next one, ports capacity and connectivity. It's something that we've probably heard a lot about in the last few weeks.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:06–0:18
2
What is the significance of the $242 billion infrastructure spending?
0:18–0:57
3
How does Infrastructure Australia prioritize infrastructure projects?
0:57–1:16
4
What are the main themes in Infrastructure Australia's priority list?
1:16–2:04
5
Why is improving freight networks a priority for Australia?
2:04–2:39
6
How is port capacity and connectivity being addressed?
2:39–3:16
7
What role does sustainable water play in infrastructure planning?
3:16–3:47
8
How is Australia transitioning to a clean energy economy?
3:47–12:01