Transcript No Slide Title

Infrastructure gaps and
opportunities
Tomorrow’s Transport Infrastructure
BTRE Colloquium 2005
18 May 2005
Dr Warren Mundy
Director
Bluestone Consulting
Policy
Advice
Strategy
Today’s Discussion
•
Econtech modeling for AusCID
•
Modeling for policy debates
•
What gaps and what to do about
them
What today’s discussion is not about
•
Evil regulators
•
Avaricious and flawed tax regimes
•
Tardy planning decisions
•
Rent-seeking customers
Today’s Discussion
•
Econtech modeling for AusCID
•
Modeling for policy debates
•
What gaps and what to do about
them
Basic approach
•
Estimate macro economic outcomes if know
deficiencies were corrected
•
Identify stock deficiency from third party sources
– project based
•
Investment returns based on private sector
returns
•
Gorey details at
www.auscid.org.au/home/papers.php?id=3
Capital stock deficiencies –
identifying the gaps
Infrastructure Ratings in the 2001 Australian Infrastructure Report Card
Infrastructure
Ports
Airports
Telecommunications
Electricity
National Roads
Potable Water
Gas
State roads
Wastewater
Local roads
Storm water
Irrigation
Rail
Source: Institution of Engineers, Australia (2001).
Rating
B
B
B
BC
C
C
CCD
D
DD-
Capital stock deficiencies – valuing
the gaps
Estimates of Under-investment and Rate of Return* by Sector
Sector
Electricity
Gas
Road
Rail
Water
Total
Under-investment
($bn)
1.15
2.60
10.00
8.06
3.00
24.81
*The rate of return is the nominal pre-tax rate of return.
Source: AusCID
Rate of Return
%
10.5
12.5
12.5
12.5
9.0
Capital stock deficiencies – fixing
the gaps
Estimates of Macro-economic Effects
(% deviation from baseline)
3%
1.8%
2%
1.8%
1.2%
0.8%
1%
0%
Business
investment
Housing
investment
Exports
GDP
And for those who still think public
sector investment is inflationary
Estimates of Living Standards and Price Effects
(% deviation from baseline)
1%
0.4%
0%
-1%
-2%
-3%
-3.2%
-4%
Consumer Price Index
Living Standards
Today’s Discussion
•
Econtech modeling for AusCID
•
Modeling for policy debates
•
What gaps and what to do about
them
Modeling approaches for policy
debates
•
First, understand where the benefits
should be found
•
Always check sub sectoral outcomes
for sensibility
•
Don’t over cook the goose
•
Always answer your policy question
Today’s Discussion
•
Econtech modeling for AusCID
•
Modeling for policy debates
•
What gaps and what to do about
them
What to do about gaps
•
•
•
•
•
Bottom up approach is required – its about
projects, not about expenditure aggregates
We need transparency and objectivity
We need to better understand where private
and public sector capital possess their
comparative advantage and develop policy
around that
Need to understand that its not just about
spending money and bagging regulators and
monopolists
Don’t panic
Thank you
Dr Warren Mundy
Director
Bluestone Consulting
Policy
Advice
Strategy