In Australia, many commentators and interest groups argue that there is an infrastructure-spending shortfall. Declining infrastructure spending give some credence to this view. In 1969, 8 per cent of Australian GDP went on infrastructure. By 1975 this had fallen marginally to 7.2 per cent. In 1989 it was 5.5 per cent and down to only 3.6 per cent of GDP five years later (2004). While some blame the Whitlam Labor Government’s (1972-75) changed expenditure priorities from infrastructure to welfare services it has been a pattern that was not reversed by subsequent federal governments (EPAC 1985; EPAC 1990). Others contend that the problem has been exacerbated by the drive for governments to run ‘balanced’ budgets, to accrue surpluses and meet the demands of external credit rating agencies than the real needs of their respective communities (Anderson 2006; Allen Consulting 2003).

A similar decline in infrastructure spending is evident across the states. In New South Wales the public transport crisis has been blamed on low state infrastructure spending. Queensland has seen infrastructure spending as a proportion of Gross State Product fall from 5.4 per cent in 2000 to 4.2 pr cent in 2003 (see also Allen Consulting 2003). Given that Queensland is responsible for key Australian exports like coal that rely on the provision of extensive infrastructure then any shortfall in this area has the potential to adversely affect Australia’s overall economic growth. Reports recently commissioned by the Queensland Government have also highlighted inadequate spending on refurbishing energy infrastructure.

Concerns about infrastructure spending have prompted calls from the federal Opposition (Australian Broadcasting Corporation 2005), the business sector and other interest groups for an infrastructure summit (Taylor 2005), special infrastructure councils between business and government and increased spending. Partly in response to these demands the Howard Government in March 2005 appointed the Taskforce on Export Infrastructure, headed by Henry Ergas, to assess the issue.

While much of the debate has been about the amount being spent on infrastructure, some have suggested that the problem, especially for the public sector, is more about the need for better targeting and priority setting. Reluctance to accept this view is understandable. It is easier to increase spending than to make choices. It is easier to satisfy everyone by spending more than to disappoint some and set priorities. It is also easier to take broad strategies than to try to set long term goals and stick to them. Such strategic activities are inimical to government and interest groups. As commentator Alan Wood (2004) summed up the issue thus: