Port Infrastructure Paul Lindwall Ports Australia Biennial 23 October 2014 Torlonia Relief, Ostia Antica, Portus Augusti Productivity Commission Population growth Productivity Commission 2 Growth in living standards 1986-87 to 2012-13, per cent 6 3 0 -3 Real GDP per capita Real net national disposable income per capita -6 198687 198889 199091 199293 199495 199697 199899 200001 200203 2004- 2006- 2008- 2010- 201205 07 09 11 13 Source: ABS (Australian System of National Accounts, Cat. no. 5204 , Nov 2013). Productivity Commission 3 Contributions to growth in average incomes – forecast labour productivity growth 4 Percentage points contribution, annual average 4 Forecast labour productivity growth (Treasury) 3 3 2 2 1 1 0 0 -1 -1 1960s 1970s 1980s 1990s Labour productivity Labour utilisation Net foreign income Per capita income 2000s to 2013 Decade to 2023 Terms of trade Source: PC estimates based on ABS, Australian System of National Accounts, 2012-13, Cat. no. 5204.0, Table 1 & Treasury calculations. Productivity Commission 4 Contributions to growth in average incomes – needed for long run GNI growth 4 Percentage points contribution, annual average Productivity growth needed to preserve long-run GNI per capita growth 3 4 3 2 2 1 1 0 0 -1 -1 1960s 1970s 1980s 1990s Labour productivity Labour utilisation Net foreign income Per capita income 2000s to 2013 Decade to 2023 Terms of trade Source: PC estimates based on ABS, Australian System of National Accounts, 2012-13, Cat. no. 5204.0, Table 1 & Treasury calculations. Productivity Commission 5 Key productivity trends Sources: ABS (Estimates of Industry Multifactor Productivity, Cat. no. 5260.0.55.002, Dec 2013). Productivity Commission 6 Rome’s Cloaca maxima and Madrid’s Ciudad Real airport Still in use after 2600 years Productivity Commission Closed after four years 7 Infrastructure: smart investment or white elephant? This Or this? Productivity Commission 8 Canberra light rail Productivity Commission 9 Montreal Olympics (1976) Productivity Commission 10 An Ancient PPP contract (Temple of Zeus) Dr Robert Pitt, Deputy Director British School at Athens Temple of Zeus Basileus in Lebadeia Productivity Commission 11 Expenditure on engineering construction work for the public sector (per cent of GDP) Productivity Commission 12 Canal, rail, road Par UK Productivity Commission 13 Autonomous car Productivity Commission 14 Project selection Productivity Commission 15 Understanding construction costs Productivity Commission 16 Cost shares for public infrastructure Labour costs Equipment and other capital Materials Other intermediate inputs Financing costs % % % % % Roads 23 24 36 18 0 Railways 31 15 31 23 0 Ports 36 21 23 19 1 Water supply and sewerage 19 8 37 37 0 Energy 38 16 32 13 0 Productivity Commission 17 Port infrastructure – some relevant recommendations and findings • Privatisation of major ports subject to appropriate processes • Natural monopoly and price monitoring • Access regimes (Part IIIA of the Trade Practices Act) • Corridor preservation • Secondary approval processes • Environmental approval processes (dredging) Productivity Commission 18 Tasmanian shipping, freight and passenger movements – an overview Coastal shipping between Tasmania and the mainland (million tonnes) Tasmanian freight movements, 2012 13 (mt = million tonnes) 12 10 8 Southbound 6 4 Northbound 2 0 1995-96 1999-00 2003-04 Sea and air passengers (return journeys, million) 2007-08 2011-12 Motor vehicle and berth-only passengers (one way trips, million) 2.0 0.8 1.5 0.6 1.0 0.4 Motor vehicle passengers Air 0.2 0.5 Berth-only (foot) passengers Sea 0.0 1993-94 2002-03 2012-13 0.0 1983-84 1998-99 2012-13 Tasmanian shipping and freight • Cabotage restrictions – proportionately more effect on Tasmania • Coastal shipping review • TasPorts – inquiry into pricing policies; privatisation / long-term leases • Coherence of infrastructure investment – comprehensive, long-term integrated freight strategy Productivity Commission 20 Conclusion • • • • • • • • • • Transparent cost-benefit analysis for project selection Better data collection Apply user charges Allocate risk appropriately Build in flexibility Credibly reserve corridors but allow alternative use Better procurement practices More efficient approval processes Review cabotage restrictions Develop a comprehensive long-term integrated freight strategy for Tasmania Productivity Commission 21 Questions? Via Appia Productivity Commission 22