Regulated to a standstill

For more than two years cries of an infrastructure crisis has rung loudly from the halls of industry.

Governments -- state and federal -- have responded in the usual manner with more studies, advisory groups and money.

Yet, the cries have persisted.  Much of the noise emanates from the many groups whose business plans are based on more governmental spending.

Nonetheless, there are valid reasons for concern.

One thing is clear, the problem is not inadequate spending.

State government have been awash with funds, particularly since the introduction of the GST, and are spending big on infrastructure.

The capital works expenditure of the state sector has increased by 50 per cent (in real per capita terms) over the past five years and they plan to spend a record $26 billion on infrastructure in the new financial year.

If anything, too much money is being spent.  Rather the problem stems from waste, poor governance and over regulation, in short from government failure.

Governments -- state and federal -- are wasting huge sums of money on non-essential;  projects and poor cost control.

Examples abound.  In Victoria, the budgeted expenditure for the fast train project has blown out from $80 million to $1.3 billion with further blow-outs predicted.

The tunnel under Mullum Mullum creek, which the Labor Party committed to during the 1999 election in order to buy the support of a small pressure groups, will cost taxpayers more than$400 million.

And the Darwin to Adelaide railway, which has so far cost taxpayer billions, has proved to be the predicted white elephant.

Governments are also increasingly unable to make decisions in a timely and effective manners.

The tunnel connecting the eastern freeway and the Tullamarine, which is an essential link in the State's transportation network, has been blocked due to excessive influence given to local residents.

The channel deepening project, which is vital to keeping the Port of Melbourne competitive, has been postponed again in deference to a small local group.

The extension of Hazelwood Power license remains in limbo as a result of the complaints from anti-development activists.

Some vital types of infrastructure have been simply ruled out altogether.

Despite a growing shortage of urban water supplies, most states have ruled out the construction of new dams.

Instead they are subsiding home owners to in effect build millions of mini-dams in the form of household water collection and storage facilities which is both higher cost and less efficient.

The Prime Minister's Export and Infrastructure Taskforce found fundamental problems with the manner in which the State regulates or more precisely over regulates.

Under the National Competition policy, governments committed to the application of a uniform, light hand rules across the country.

Instead we have at least nine different economic regulators each applying different legislation and each with substantial discretionary powers.

Moreover regulators have shown an inclination to act in an intrusive, proscriptive, costly, slow and unnecessary manner.

Many solutions have been suggested including streamlining regulations, better national co-ordination of infrastructure and less intrusive regulations.

While these have merit, there is also a need to diminish the role of politics and specifically of lobby groups in choice, planning and management of infrastructure.

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