If current trends continue, the NSW Government will face a significant gap between what it receives in tax and other revenues, and what it spends on public services and infrastructure, according to the state’s Building Momentum Infrastructure Strategy 2018-38.
The strategy, authored by Infrastructure NSW, asserts that the state’s ageing population will create lower tax revenue and higher public sector expenditure, ultimately creating a fiscal gap.
The NSW Government also has to contend with a declining share of Commonwealth revenue from GST and National Partnership Agreements. The decline is a result of the federal budget’s $10.3 billion cut to the GST pool.
To manage the fiscal gap, the NSW Government will have to cultivate new ways to deliver and fund infrastructure, while also exercising judgement on what major projects require state investment.
With this in mind, the NSW Transport and Infrastructure Department has developed multiple specialised and complementary plans, including the Future Transport 2056 plan, the Greater Sydney Region Plan, the Connected and Automated Vehicles Plan and the Road Safety Plan 2021.
The plans, according to Infrastructure NSW, are designed to work concurrently to deliver long-term infrastructure, transport, mobility and land use planning integration.
By outlining long-term goals and tangible action points, NSW Transport and Infrastructure Minister Andrew Constance tells Roads & Infrastructure the state can effectively manage infrastructure expenditure without compromising on pipeline progress.
As the member for Bega, a town 336 kilometres south-east of Sydney, Mr. Constance says he is conscious of how Sydney congestion negatively affects NSW’s overall economic health.
In a 2018 report published by transport data company INRIX, it was revealed that congestion cost New York City $34 billion in 2017. Calculations were based on direct costs, such as lost time and fuel wastage, and indirect costs such as elevated shipping prices.
While the cost of congestion in Sydney is significantly lower at $6.1 billion annually, estimates suggest the population of Australia’s largest city will exceed that of New York by 2056, meaning congestion costs are likely to rise.
“The economic loss associated with congestion affects the government’s ability to direct funding and resources to the regions. As such, approaching congestion busting as a productivity measure requires us to look at the state holistically,” Mr. Constance says.
In response, the 2019-20 NSW budget made a commitment to grow the functionality of both regional and metro NSW through substantial infrastructure investment. This includes pledging 30 per cent of the Restart NSW Fund to regional infrastructure over the life of the fund.
Restart NSW was established in 2011 with the intention of delivering high-priority infrastructure projects and is supported by the state government’s asset recycling program.
As of June 2019, funds, including investment earnings, totalled $33.3 billion.
Over four years, the budget allocated $93 billion to infrastructure, the largest infrastructure commitment in the state’s history. Of the $93 billion, $55.6 billion was awarded to road and rail projects, with the remaining allocated to schools, hospitals, energy, water and housing.
The transport sector investment represents a $4.4 billion increase on the 2018-19 budget.
Mr. Constance says the scale of the investment is made possible by the state’s asset recycling program.
“The state’s treasurer became involved in a project called asset recycling, where in essence, we lease assets, be it ports or electricity services, and invest the money into an infrastructure fund,” he explains.
“With the engagement of experts, asset recycling can provide a pipeline of projects that really lift the potential of the state.”
According to NSW Treasurer Dominic Perrottet’s budget overview, NSW has had a negative net debt for four consecutive years. As of June 2019, NSW’s net debt was the lowest in the country.
That said, the budget states that across four years to June 2023, net debt is forecast to increase, as the government continues to invest in its infrastructure program.
“By using asset recycling proceeds and budget surpluses to fund investment however, government is able to ensure its borrowing remain at sustainable levels,” the budget reads.
The budget’s highlights include $268 million to begin Great Western Highway duplication works, $500 million for the Fixing Country Bridges program, $322 million to upgrade the Princes Highway between Nowra and the Victorian border and $6.4 billion over four years to accelerate construction on Sydney Metro West.
Sydney Metro, Mr. Constance says, is the most critical project in the state’s infrastructure pipeline.
In addition to Metro West, the Sydney Metro program includes North West Metro, which has already been built, Sydney Metro City and Southwest and the North South Metro Rail Link.
When completed, the project will equip Sydney with a 66-kilometre standalone metro railway, with 31 stations between Rouse Hill and Bankstown.
“Sydney Metro will completely change the way people move around the city,” Mr. Constance says.
Another city shaping project, Mr. Constance says, is West Connex – a 33-kilometre tunnel network.
“We opened the first of four West Connex tunnels two months ago, and the community is raving about it,” he says.
“It’s a game changer for people’s quality of life – they are getting across the city in times they could only ever imagine. When complete, the project will change the city forever.”
The project is currently tracking well, Mr. Constance says, with over seven kilometres of the link tunnel between the M4 and M5 complete, two major interchanges currently under construction and a tender for works on the Gateway that links West Connex to the airport and port botany out to market.
By 2056, NSW’s population is forecast to grow from 7.7 million to over 12 million, with Greater Sydney expected to accommodate 80 per cent of that growth. Furthermore, roughly half of Sydney’s future population is expected to reside west of Parramatta.
In response, the NSW Government designed The Greater Sydney Region Plan: A Metropolis of Three Cities, which seeks to rebalance economic and social opportunities to leverage growth and deliver equitable benefits across the region.
According to the plan, infrastructure will be sequenced to support that growth, and delivered concurrently with new homes and jobs.
“With the way Sydney is growing, we have a well-established CBD on the harbour, leaps and bounds of growth in Paramatta or the central city, and now we’re building a third city around the new airport,” Mr. Constance says.
The third city, Western Parkland, will be designed as a polycentric city, capitalising on established centres in Liverpool, Greater Penrith and Campbelltown-Macathur.
Mr. Constance says the city will become home to over two million people by 2056.
“Right now, Western Parkland is a clean sheet of paper,” he says.
“Eventually, it will turn into an innovative smart city, with investment in the most advanced technology, green spaces and agribusiness.”
Additionally, Mr. Constance says government will examine the way intermodal activity interfaces with the new airport, which will inform investment in new road and rail connections.
“It’s very much a development strategy,” he says.
The central objective of the three cities plan, Mr. Constance says, is supporting the policy goal of a 30-minute city, through the integration of transport infrastructure and land use.
“Through investment and strategy, we intend to ensure that 70 per cent of Greater Sydney residents live within 30 minutes of their place of work and/or social infrastructure and services by 2036,” he explains.
To achieve the goal, NSW will encourage travel patterns tailored to the capacity of the network and manage congestion with mobility pricing reform.
Road space in key commuter corridors with be re-allocated to give priority to the most productive and sustainable transport modes, with operational system upgrades.
“The purchasing mobility as a service concept will certainly come into play,” Mr. Constance says.
Mobility as a service describes a shift away from personally owned cars towards conceptualising transport as a service. Broadly, the concept applies to any transport system that enables customers to plan and pay for their journey’s using a range of services via a single customer interface.
Mobility as a service, according to the Future Transport Strategy, will deploy digital technologies to optimise efficiency, such as real-time data management, GPS technology and on-the-spot payment processing.
“Transport is a tech business ultimately,” Mr. Constance says.
While much of the conversation surrounding NSW infrastructure centres on the future, Mr. Constance says state development also requires attention to existing infrastructure. He adds that the state government’s infrastructure investment is driven not simply by the end product, but also the social effect it has on the NSW community.
“We have put significant effort and resources into upgrading current transportation systems, including making much of Sydney’s current rail network accessible,” he says.
According to Mr. Constance, 90 per cent of Sydney public transport journeys are now accessible.
He adds that the NSW unemployment rate, one of the lowest in the country, is largely infrastructure-led.
“It’s not just about building exciting new projects, it’s about facilitating employment pathways through skills development, for people that have not historically had access to those opportunities,” Mr. Constance says.
According to a 2019 Roads Australia industry survey, a critical skills shortage remains the most pressing issue for the transport infrastructure sector.
While the Roads Australia Industry Confidence Outlook shows short-term industry confidence is high, sector leaders believe there is an urgent need to take strong collective action to attract and retain the skilled workers needed to deliver projects beyond 2020.
“We’re addressing that by establishing infrastructure skills centres alongside many of our major project sites,” Mr. Constance says.
“Workers come to the centres and acquire pre-qualification so they can work on site, they then get up-skilled and gain certificate two or three qualification. As a result, they can move on and gain employment on the next project.”
Mr. Constance says the most pressing infrastructure issue for him is ensuring taxpayers get value for money.
“We want to make sure, particularly in terms of contractors, that the market remains strong and that there is a good pipeline of works that can be financed. Our government regards business confidence very highly,” he says.
“NSW is a global sweet spot. I can confidently say that we are up there with the top jurisdictions in the world in terms of overall infrastructure expenditure. On a per capita basis, we are globally punching above our weight.”