Chapter 3: Infrastructure

Outcome 1— Improved infrastructure across Australia through investment in and coordination of transport and other infrastructure

Programme 1.1 Infrastructure Investment contributes to Outcome 1 by increasing the efficiency and safety of Australia's land transport infrastructure while strengthening the Australian economy.

Programme 1.1—Infrastructure Investment

In Focus

Infrastructure Policy Initiatives

  • Agreement was gained by all jurisdictions on 10 October 2014 on the National Partnership Agreement on Land Transport Infrastructure Projects. The agreement is designed to contribute to a safe and sustainable national transport system that enhances the interconnectivity of corridors (networks) of significant economic opportunity across Australia.
  • The Land Transport Infrastructure Amendment Bill 2014 was passed through both houses of Parliament on 28 August 2014. The newly retitled National Land Transport Act 2014 enabled the Roads to Recovery programme to continue, reducing administrative burden and streamlining project assessment processes.
  • Work with Austrade continued to implement a partnership strategy to promote, attract, facilitate and retain foreign direct investment in Australia's infrastructure construction industry. This work is driving future growth and productivity in the Australian economy.
  • The Department assisted the Australian Government to deliver its commitment to reform Infrastructure Australia, which became an independent statutory authority in September 2014.
  • Reforms were progressed to address the matters raised in the Productivity Commission's Inquiry into Public Infrastructure, particularly in regard to improving long-term planning for infrastructure, government assessment and prioritisation processes, and major project delivery and evaluation.
  • Work on the delivery of the Australian Government's commitment to construct inland rail was continued and the Department provided secretariat services to the Inland Rail Implementation Group.

Remedial Road Projects

  • A total of 267 Black Spot projects were approved for funding to improve the safety of road sites which have been identified as high-risk areas for serious crashes.
  • A total of $350.0 million was provided to the states and territories for the maintenance of roads on the National Land Transport Network.
  • A total of 57 projects approved under rounds two and three of the Heavy Vehicle Safety and Productivity programme were completed and 53 projects were approved under round four. The programme focuses on the safety of the drivers of heavy vehicles through fatigue management and road enhancement projects.

Assisting Local Councils with Improving Land Transport Infrastructure

  • Sixty-four Roads to Recovery project assessments were completed as part of the assurance, compliance and evaluation programme. A major refresh of the framework and templates for the assurance and compliance component was also undertaken in readiness for the next phase of the programme.
  • Local, territory and state governments were able to put forward proposals under the $300.0 million Bridges Renewal Programme from 1 July 2014. Proposals for over 250 bridges were received under round one. Of these, 70 projects worth approximately $115.0 million were announced in February 2015. The opening of round two was announced at the National General Assembly of Local Government in June 2015.

Major Project Facilitation

  • A total of 17 projects had access to Major Project Facilitation services in the infrastructure, mining and petroleum development sectors. The projects have been estimated to generate more than 24,000 jobs during the peak construction stages and 10,000 permanent jobs.

Raising the Standard of Land Transport Infrastructure

  • The Department administered programmes under Outcome 1 which provided approximately $4.3 billion in direct and indirect grants for construction and maintenance of land transport infrastructure.
  • Work commenced on 79 land transport infrastructure projects, including those managed under the Investment and Off-Network programmes. Work was completed on 42 land transport infrastructure, 31 road and 11 rail projects, as shown in tables 3.4 and 3.5 at the end of this chapter.
  • Construction commenced on the Great Northern Highway upgrade between Muchea and Wubin and on the North West Coastal Highway between Minilya and Barradale.
  • Significant progress was made on the Gateway WA Perth Airport and Freight Access Project, and the Perth Freight Link project also moved closer to construction.
  • As part of the North–South Corridor upgrade in Adelaide, significant progress was made to bring both the Darlington and Torrens Road to River Torrens projects to construction stage. An Australian Government funded planning study for the South Road upgrade at Darlington was completed in December 2014. On the Torrens Road to River Torrens project, early works at the Ashwin Parade intersection were completed and a contract for the major project works was awarded in April 2015.
  • Early works commenced for major construction of the Gateway Upgrade North project in Brisbane in September 2014, following completion of the business case and stage one of the upgrade in the form of the Gateway Additional Lane. 
  • The procurement process concluded to upgrade the $1.6 billion Toowoomba Second Range Crossing. Construction is due to commence in 2015–16.  The Australian Government's funding commitment to the Toowoomba Second Range Crossing is the largest commitment to a single regional road project in Queensland's history.
  • The Pumicestone Road Interchange Bridge was completed in January 2015. This was a major milestone in the interchange upgrade which is being funded as part of the Bruce Highway—Caboolture to Caloundra project. Overall completion of this project will increase capacity, improve road safety, reduce travel times and improve economic productivity.
  • Construction commenced on section four of the Townsville Ring Road (Shaw Road to Mount Low) on the Bruce Highway.  When completed it will improve the reliability and connectivity of traffic, improve safety and provide a bypass for freight and port related traffic.
  • Tenders were called for the early works package for the Bruce Highway—Cooroy to Curra—Section C project. This will fast track the project and address a range of safety concerns at the northern end of the project. 
  • Significant progress was made on the $103.0 million Tiger Brennan Drive duplication between Dinah Beach Road and Berrimah Road in Darwin. This is the biggest road project currently being undertaken in the Northern Territory.  
  • Construction commenced for two projects under the Regional Roads Productivity Package, Santa Teresa Road and Port Keats Road, with the Buntine Highway and Central Arnhem Road projects entering the tendering phase. 
  • The Alice Springs Rail Overpass project is progressing well and is expected to be completed in late 2015.
  • The tailored delivery partner contract was awarded to build the final section of the Pacific Highway from Woolgoolga to Ballina on 19 June 2015. Construction started on the first two sections of the project on 27 June 2015. This will enable full duplication of the highway to be completed by 2020.
  • Construction commenced on the $3.0 billion NorthConnex project in Sydney on 5 February 2015. This project will provide twin motorway tunnels around nine kilometres in length between the M2 Motorway at Pennant Hills Road and the M1 Pacific Motorway at Wahroonga. The project will result in a traffic-light free route between Newcastle and Melbourne.
  • Major projects in the $3.6 billion Western Sydney Infrastructure Plan started, including construction on the first stage of the Bringelly Road Upgrade and the Werrington Arterial Road, and planning works for the Northern Road Upgrade and the new M12 Motorway. Successful projects under round one of the $200.0 million Local Roads Package component of the Western Sydney Infrastructure Plan were announced in November 2014. The Western Sydney Infrastructure Plan aims to provide better road linkages within the region to benefit the growing population and ensure the proposed western Sydney airport is supported by a quality road transport network.
  • Construction on the first stage of WestConnex, Australia's biggest urban road project, began in March 2015. When completed, travel time between Parramatta and the airport will be reduced by 40 minutes, 3,000 trucks a day will be removed from Parramatta Road and 52 sets of traffic lights will be bypassed.
  • Eleven projects to upgrade the Midland Highway in Tasmania were approved. Of these, four construction projects were completed, three were under construction and four scoping/planning projects were underway.
  • A major milestone was achieved when construction commenced on 21.5 kilometres of new carriageway from Beaufort to Buangor as part of the $662.3 million duplication of the Western Highway from Ballarat to Stawell.
  • The Great Ocean Road was closed between Wye River and Kennett River to allow a drainage pipe to be replaced. This marked the start of construction on the $50.0 million upgrade of the Great Ocean Road.
  • The Australian Government committed further funding to duplicate the Western Highway from Buangor to Ararat and the Princes Highway East from Traralgon to Sale.
  • A major milestone was achieved when works commenced on the $363.5 million duplication of the Princes Highway West from Winchelsea to Colac.

Did you know?

The proportion of employed people who live in the area where they are employed is called ‘self-containment’. The self-containment rates of inner city areas is usually over 60 per cent, while it can be under 30 per cent in places like Sydney's inner west and west Brisbane.

Source: State of Australian Cities 2014–15

Summary of Performance

Table 3.1 Programme 1.1 key performance indicators

Key performance indicatorTargetResult
Australian land transport networks are safer. Projects that improve road and rail safety are delivered. 2014–15
Achieved
2013–14
Achieved
2012–13
Achieved
2011–12
Achieved
Projects funded by the Australian Government are designed to the highest safety standards and improve overall safety of the nation's road and rail network. Completed projects are shown in tables 3.4 and 3.5.

The Black Spot and Heavy Vehicle Safety and Productivity programmes addressed dangerous locations on the nation's road network.

A total of 92 Black Spot and 43 Heavy Vehicle Safety and Productivity programme projects were completed.
Australian land transport networks are more efficient. Projects that improve road and rail productivity are delivered. 2014–15
Achieved
2013–14
Achieved
2012–13
Achieved
2011–12
Achieved
The efficiency of the land transport network has been enhanced through works to upgrade and widen roads. This includes projects such as upgrading and duplicating the Bruce and Pacific highways and the Warrego Highway, and commencement of projects such as WestConnex and NorthConnex.

The Department facilitated completion of nine rail projects. The completion of the Gosford Passing Loops and North Strathfield Rail Underpass projects, which form part of the Freight Rail Upgrades between Sydney and Newcastle, were major achievements in the Northern Sydney Freight Corridor programme. When completed in 2016, this programme will deliver increased capacity for freight rail services and reduce freight rail interaction with passenger services.

The Department continued its work on the delivery of Inland Rail. Our work included independent confirmation on key parts of the business case being developed by the Australian Rail Track Corporation to ensure the Australian Government's investment in inland rail is efficient and effective.
States, territories and local governments are appropriately funded for network and off-network projects. Payments are within 5 per cent of forecast. 2014–15
Achieved
2013–14
Achieved
2012–13
Achieved
2011–12
Achieved
The Department achieved payments of 100 per cent of funding allocated for 2014–15.

Result Key
Achieved All targets for 2014–15 were met or exceeded.
Substantially achieved Targets were mostly met, and any issues are being managed.
Partially achieved Some targets were met, and any issues are being managed.
Not achieved None or minimal progress was made against targets in 2014–15.

Table 3.2 Programme 1.1 deliverables

DeliverableTargetResult
Collaboration with state, territory and local governments to plan and evaluate land transport investments consistent with Australian Government priorities. States report monthly on progress of investments. State and territory governments submitted reports for evaluation of their proposed projects, and monthly project progress reports.

The Infrastructure Investment Programme successfully transitioned to a milestone payment methodology.
Deliver the administered items in cooperation with state, territory and local governments. Payout of 100 per cent funding for project progress. The Department paid 100 per cent of funding for project progress for Infrastructure Investment Programme administered items.
Number of funding recipients receiving Roads to Recovery funding. A total of 570 recipients receive funding. A total of 542 of 565 councils were eligible for Roads to Recovery funding. Five state and territory authorities responsible for roads in unincorporated areas, the Indian Ocean Territories, the Lord Howe Island Board, the Local Government Association of the Northern Territory and the South Australian Local Government Grants Commission were also eligible funding recipients. Of these bodies, 496 received funding and about 2,800 new projects were listed for funding. The remaining 56 eligible funding recipients did not seek funds in 2014–15 or had not listed projects eligible for funding.
Efficient and effective oversight of the Australian Government's interest in the Australian Rail Track Corporation and the Moorebank Intermodal Company Limited. Timely advice to the Australian Government on performance and an orderly transition to governance and oversight arrangements under the Public Governance, Performance and Accountability Act 2013 from 1 July 2014. The Department provided effective oversight of the Australian Rail Track Corporation and Moorebank Intermodal Company Limited. Advice was provided to the Deputy Prime Minister and Minister for Infrastructure and Regional Development, the Hon Warren Truss MP, on quarterly reports against the companies' corporate plans throughout the year. During 2014–15 the Department provided policy input and undertook the due diligence review of the commercial transaction between Moorebank Intermodal Company and the Sydney Intermodal Terminal Alliance for construction of the Moorebank Intermodal Terminal. Terminal operations are expected to commence during late 2017.
Identified integrated urban and regional infrastructure priorities. Implement agreed actions. The Department maintained links with state and territory land use planning, infrastructure and regional development agencies. These arrangements informed the policy development, regional programme management, infrastructure investment and research activities of the Department.
Efficient and effective management of administered items. Items are administered in accordance with relevant legislation, published guidelines and ANAO guidance. Administered items were delivered in accordance with relevant legislation, published guidelines and Australian National Audit Office guidance.

Table 3.3 Programme 1.1 administered items

Administered ItemResult
Infrastructure Investment Programme
–Investment A total of $3.1 billion was provided for planning and construction of 87 road and rail projects on the National Land Transport Network.
–Black Spot projects The Department administered $53.5 million supporting projects to improve road safety at identified crash sites. The programme has reduced the risk of crashes through measures such as traffic lights, roundabouts, signage and edge sealing at dangerous sites around Australia.

A total of 92 Black Spot projects were completed and 183 were underway.
–Heavy Vehicle Safety and Productivity A total of $0.5 million was provided to improve safety and productivity for the Australian heavy vehicle transport industry.

In 2014–15, 43 projects were completed and 25 were underway including 17 round four projects.
–Roads to Recovery During the year $322.1 million was provided to 496 out of 575 councils for purposes including road works, bridge works and installing traffic lights. Councils lodged audited financial statements showing how they had spent the funds.

In 2014–15, 1,474 projects were completed and about 940 were underway.
–Off-network Projects A total of $503.8 million was provided to state, territory and local governments in 2014–15 to plan and construct 44 off-network projects.

Note: With the commencement of the National Land Transport Act 2014 in August 2014, funding is no longer split between Investment and Off-network projects.
–Off-network—supplementary The Department provided $250.3 million to state governments and local councils in 2006–07 to plan and construct 102 projects. No amount was expensed in 2014–15.
–Improving the National Network The Department provided $1,820.0 million as prepayments to New South Wales, Queensland, Western Australia, South Australia, Tasmania and the Northern Territory to accelerate works on ten National Network highways in 2006. The jurisdictions report on progress each month. Total expenses to 30 June 2015 were $0.05 million.
Infrastructure Growth Package
–New investments The Department provided $22.6 million for new investments under the Infrastructure Growth Package.
–Western Sydney Infrastructure Plan A total of $120.4 million was provided for projects under the Western Sydney Infrastructure Plan. Construction commenced on the first stage of the Bringelly Road Upgrade and the Werrington Arterial Road Upgrade. Preconstruction works commenced and tenders have been advertised for projects under round one of the Local Roads Package.
Plan for the Future
Sustainable Australia–National Smart Managed Motorways A total of $9.6 million was provided for two National Smart Managed Motorways projects.

Note: The budget and actual expenditure for each administered item is listed in Appendix A.

Did you know?

In 2011, 50 per cent of Sydney residents who work in the centre of the city used public transport to commute to work in the central business district and surrounds.

Source: State of Australian Cities 2014–15

Table 3.4–Road Infrastructure Projects Completed in 2014–15

State/TerritoryProject
New South Wales Pacific Highway–Sapphire to Woolgoolga
Tenterfield Heavy Vehicle Bypass—planning
Jensen Road, Wadalba
The Ridgeway–Tumbi Umbi
Kennedy Drive upgrade–Tweed Heads
Werrington Arterial Road study
Queensland Warrego Highway–upgrade from Roma to Mitchell
Warrego Highway–Brisbane Valley Highway Interchange upgrade
Gateway Motorway North (Nudgee Road to the Bruce Highway)
Bruce Highway—maintenance funding—Childers to Sarina—strengthening and widening
Cabbage Tree Creek to Carman Road and Back Creek Range section upgrade
Kirrama Range Road
Realign and raise highway from Sandy Corner to Collinson's Lagoon
Pacific Motorway—widening between Nerang and Robina Interchange
Legacy Way
Victoria Dana Street and Dawson Street intersection upgrade
Princes Highway West–Winchelsea to Colac planning
Princes Highway West–Terang intersection upgrades
Hume Freeway–Glenrowan Truck Stop upgrade
Western Australia Great Eastern Highway–Bullabulling to Coolgardie upgrade and widening
Great Northern Highway–Bindi Bindi to Lyons East Road upgrade
Albany Ring Road Stages 2 and 3—planning
South Australia South Road planning study—Darlington and Anzac Highway to Southern Expressway
South Road upgrade—early works at Ashwin Parade for the Torrens Road to River Torrens project
Northern Territory Community, beef and mining roads package—upgrade of Central Arnhem Road
Improve flood immunity, road safety and productivity on Northern Territory highways—National Highways strengthening and widening
Tasmania Midland Highway—Conara to Cleveland Stage 1
Midland Highway—north of Spring Hill
Midland Highway—Mud Walls Road Junction upgrade
Midland Highway—Kings Meadows roundabout
Westbury Road upgrade

Table 3.5—Rail Infrastructure Projects Completed in 2014–15

StateProject
New South Wales Maldon–Dombarton Rail Link—scoping and development
Freight rail upgrades between Sydney and Newcastle—Gosford passing loops
Freight rail upgrades between Sydney and Newcastle—North Strathfield rail underpass
Port Botany Road and rail access and handling improvements package—Port Botany rail line stage 2
Queensland Gold Coast Rapid Transit
Victoria Regional rail link
Western Australia Perth light rail planning study (MAX)
Trial of low profile concrete sleepers on WA Grain rail lines
Kewdale intermodal rail supply chain
Tasmania Main north–south line rail capacity improvements
Rail capacity improvements at Rhyndaston
Improvement of Bell Bay intermodal terminal

Case Studies

Pacific Highway Upgrade—Tailored Delivery Partner Model

The Australian and New South Wales governments have been working to upgrade the Pacific Highway since 1996. This is the key road corridor connecting Sydney and Brisbane and is a major contributor to Australia's economic activity. At the end of June 2015, nearly 400 kilometres or 60 per cent of the final highway length had been upgraded to a four-lane divided road with another 149 kilometres under construction.

The final 155 kilometre section between Woolgoolga and Ballina is being delivered under a tailored delivery partner model. This innovative approach has been used around the world to deliver large scale projects such as the London Olympic Games in 2012. The Woolgoolga to Ballina upgrade will be the first piece of major transport infrastructure to be delivered in Australia using this methodology.

Under the model, a major provider (the delivery partner) with design, building and management expertise is engaged to oversee the project in collaboration with the Roads and Maritime's Pacific Highway Office, managing multiple contracts to supply and build the highway. Using the model will enable multiple sections between Woolgoolga and Ballina to be constructed simultaneously, which saves time, reduces costs and enables the project to be completed by the end of the decade.

The Pacific Complete consortium, comprising Laing O'Rourke and Parsons Brinckerhoff, was announced as the successful delivery partner on 19 June 2015. Pacific Complete is expected to employ around 200 extra people for this project, including in its Grafton office. Construction commenced on the first two sections on 27 June 2015.

Moorebank Intermodal Terminal Precinct

A state-of-the-art freight and logistics hub is being delivered at Moorebank in New South Wales through an innovative partnership between the Australian Government and two of Australia's largest freight and logistics companies.

A commercial structure has been agreed for the facility between the Moorebank Intermodal Company Limited (an Australian Government entity within the Infrastructure and Regional Development portfolio), and Qube Logistics and Aurizon Holdings as the Sydney Intermodal Terminal Alliance. Australian Government funding will be administered by the Department, with the first stage of the facility expected to be operational at the end of 2017.

Australian Government land and the adjacent land owned by the Sydney Intermodal Terminal Alliance will be consolidated into a precinct with import-export and interstate terminals, a rail connection to the Southern Sydney Freight Line, port shuttle to and from Port Botany, and ancillary services such as warehousing and distribution centres for packing and unpacking containers.

Combining the site into a single development optimises outcomes and minimises taxpayer exposure. The Sydney Intermodal Terminal Alliance is expected to bring an investment of up to $1.5 billion to develop and operate the precinct's terminals and the ancillary facilities. The Australian Government, through Moorebank Intermodal Company Limited, is investing up to $370.0 million for works such as land preparation, remediation of the former Defence site at Moorebank, and construction of the rail spur.

The Moorebank Intermodal Terminal precinct will remove more freight off our highways and onto rail, driving significant improvements in national productivity. There will be open access for rail operators and other users to promote competition. Total economic benefits of the project are estimated at close to $9.0 billion, including relieving traffic congestion on Sydney's roads and reducing costs to business. Better environmental outcomes will also be achieved.

The Deputy Prime Minister and Minister for Infrastructure and Regional Development, the Hon Warren Truss MP, and the Hon Mathias Cormann, Minister for Finance are Moorebank Intermodal Company Limited's joint shareholders. The shareholders' decision to approve the transaction is underpinned by policy advice and a due diligence review undertaken by the Department (with counterparts from the Department of Finance) that has confirmed the Australian Government's objectives can be achieved for the project, that risks will be managed effectively, and that the investment represents value-for-money for the Australian taxpayer.

a 3d image of Moorebank Intermodal Terminal Precinct

Photo courtesy: Qube Holdings

National Stronger Regions Fund

The $1.0 billion National Stronger Regions Fund is building priority social and economic infrastructure in Australia's disadvantaged regions by funding projects in local communities that provide economic growth or address areas of need.

In 2014–15, 405 applications were received for funding under the initiative, and $212.3 million was provided to 51 successful projects under round one of the programme.

To implement this major initiative, the Department developed a robust framework and detailed guidelines for the programme during the year. As well as establishing the programme's design, this included developing the assessment and eligibility criteria, and ensuring that recommendations were incorporated from the Australian National Audit Office's reviews of previous regional programmes.

An assessment centre was established within the Regional Programmes Branch and staff from across the Department volunteered to assist. A comprehensive framework was also developed to assess whether applications met eligibility requirements and only those that passed this process proceeded to a full appraisal of relative merit against the assessment criteria. High risk, high value or overly complex projects were independently assessed to ensure appropriate rigour in the process.

A ministerial panel, comprising the Deputy Prime Minister and Minister for Infrastructure and Regional Development, the Hon Warren Truss MP, the Hon Jamie Briggs MP, Assistant Minister for Infrastructure and Regional Development and the Hon Christian Porter MP, Parliamentary Secretary to the Prime Minister, determined the final funding allocations in consultation with Cabinet's National Infrastructure Committee.

Round two of the programme has opened and 18 information sessions were run across capital cities and some regional centres to promote funding opportunities. More than 400 representatives from potential applicants and Regional Development Australia committees attended. Six teleconferences were also conducted for those unable to attend the sessions. All round one applicants were also offered the opportunity to receive detailed feedback to increase their competitiveness in round two. An independent review of round one is also currently underway and its findings will inform future funding rounds.

Western Sydney Infrastructure Plan

The Australian and New South Wales governments are delivering the Western Sydney Infrastructure Plan—a $3.6 billion road investment for western Sydney that will provide better road linkages, ease congestion and reduce travel times.

The initiative will transform the region's economy and capitalise on the economic gains from the airport development at Badgerys Creek. It will also create employment opportunities, with about 4,000 direct and indirect jobs expected to be created during the plan's 10 year lifetime. Between January and March 2015, 320 direct jobs were created.

The Western Sydney Infrastructure Plan includes:

  • upgrading The Northern Road to a minimum of four lanes from Narellan to Jamison Road, Penrith
  • constructing a new east-west motorway, to be known as the M12, between the M7 Motorway and The Northern Road
  • upgrading Bringelly Road to a minimum of four lanes between The Northern Road and Camden Valley Way
  • upgrading the intersection of Ross Street and the Great Western Highway
  • constructing the Werrington Arterial Road, and
  • delivering a $200.0 million fully Australian Government funded local roads package.

Construction commenced on two of the projects during 2014–15. Work began in January 2015 on stage one of the Bringelly Road upgrade, which includes converting 5.7 kilometres between Camden Valley Way in Leppington and King Street in Rossmore to a minimum four-lane divided carriageway, with one section of six lanes. The upgrade will include a shared pedestrian/cycle path on both sides of the road and traffic lights at major intersections. Works undertaken in the first half of 2015 include establishing the project compound, demolition work, vegetation clearing, earthworks, relocating utilities, environmental controls and traffic controls.

The Werrington Arterial Road was the second project to commence during the year. This $70.0 million project includes an upgrade to a four-lane divided road plus two east facing ramps on and off the M4 Motorway and a dedicated pedestrian and cyclist bridge. The upgrade will improve safety for motorists, cyclists and pedestrians, increase capacity to meet future demands, improve network connections and provide more reliable travel times for all road users.

Design and pre-construction activities are underway on all other projects. Seven successful projects under round one of the Local Roads Package were announced in November and December 2014 and construction on these will commence from August 2015.

a photogrph of a completed road project

Infrastructure, Transport and Productivity

In July 2014 the Bureau of Infrastructure, Transport and Regional Economics released the information sheet Infrastructure, Transport and Productivity. This explores what productivity is and how it is measured, why multi-factor productivity is important to the welfare of Australians, major productivity trends in Australia, and Australian transport industries.

Productivity is the efficiency of transforming inputs (capital, labour) into outputs (goods and services). The two main measures are labour productivity and multi-factor productivity. Labour productivity is a partial measure calculated as real gross domestic product or gross value added per unit of labour (commonly proxied by hours worked). Multi-factor productivity is a more complete measure calculated as real gross domestic product or gross value added per unit of combined labour and capital inputs.

The information sheet explains how multi-factor productivity growth is an important source of future national wealth. The figure below shows that since 2002–03, multi-factor productivity growth for transport, postal and warehousing has slowed. The main reason for this appears to be capital deepening that is associated with large, sustained increases in private gross capital formation. The decline has accelerated since 2007–08 associated with large increases in public road and rail investment. These capital investments are yet to deliver expected enhanced economic output. Increases in multi-factor productivity growth for transport, postal and warehousing since 2008–09 are due to significant increases in labour productivity.

Despite short-term impacts on multi-factor productivity, research suggests targeted investments in transport infrastructure result in productivity increases that benefit many other industries. Suggested improvements to transport productivity include:

  • prioritising public infrastructure investments by transparent cost benefit analysis that captures whole-of-life costs including maintenance needs
  • implementing cost-reflective pricing where user charges are linked to damage and future needs, and there is a link between heavy vehicle charges and funding improvements
  • implementing city-wide variable tolling systems for major urban roads that allow consistent time of day and volume related tolling, and
  • greater use of intelligent transport system technologies to make better use of existing infrastructure.

a chart showing that since 2002–03, multi-factor productivity
growth for transport, postal and warehousing has slowed.

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Last Updated: 7 December, 2015