President Trump’s infrastructure plan last week is pitched in the language of the can do. Not only does it aim to unleash over a trillion dollars of investment, it promises a major project bonanza that will have Prime Minster Turnbull’s business delegation salivating at the prospect of getting a cut of ‘Making America Great Again’.

Massive tax cuts, surging military spending and now an unfunded infrastructure plan is a potent Manhattan cocktail for US economy to digest.

Despite a decade of best endeavours from the US Federal Reserve, President Trump has managed to do what quantitative easing never did, rekindle inflationary and animal spirits.

Observers of the Australian delegation visit must see through diplomatic pleasantries, and recognise the unique opportunities from the heightened interest of the US in Australian infrastructure. Deep superannuation pockets and policy experience can assure the nation a place at the President’s table, but we must be open that the lessons are two way.

The US outperforms Australia on innovation, productivity and finding better use for existing infrastructure. It has achieved this because of many reasons including the harsh reality that money for public infrastructure has been very scarce.

‘Necessity is the mother of invention’ simply rings true when it comes to US infrastructure. But there is no doubt the US has sweated its infrastructure to within an inch of its life. The time for renewal is overdue. Australia on the other hand is the mirror image of the US, where availability of big dollars has breed a cavalier build first mindset.

It will not be a day too soon, when strong investment and robust economic growth is the reason that Australia can jettison its low inflation, low bond yield economy. We must be sober to the reality that a decade of cheap money has not resolved any fundamental infrastructure challenges.

The hollowness of big project proponents that over promise and under deliver has contributed to higher costs and lower service quality. Meanwhile, declining liveability in cities and regional centres reflect the neglect of community infrastructure that is in a permanent state of disrepair.

Inflation heightens investor sensitivity to the time value of money especially when it is locked up for decades in big infrastructure projects. Higher inflationary risks will be critical in reawakening institutional investors to greater diligence in the scrutiny of investments so they are well placed for the long term.

Australia continues to choose projects that are not accretive to long-term economic growth or improved liveability, despite independent infrastructure agencies giving assurances the problem is fixed.

Government led NBN is an unfolding case study about what is wrong in Australia, while inland rail, Snowy 2.0 and Western Sydney Airport might be well intentioned projects but rightly trigger taxpayer anxiety.

Getting the global economy back on track to economic normality with moderate inflation and presence of future inflationary risk will help discipline infrastructure decision-making and invite stronger long-term stewardship.

That is where asset owners and operators continuously lift their game, develop new services, and secure revenues through better services with less reliance on automatic CPI plus increases in prices.

Owners and operators must be better incentivised to innovate, work towards earning customer loyalty and trust that lowers risks of operation, opens new investment opportunities and strengthens financial performance for investors. Governments can do more in ensuring project concession deeds and regulation enable operators to innovate and meet long-term customer needs.

While the promised benefits of President Trump’s infrastructure plan may dazzle some, Australia needs to play the long game in US where exemplarily customer led infrastructure is what distinguishes us, not just deep superannuation pockets.

If infrastructure investors and owners in US and Australia fail this 21^st century balancing act between debt obligations, equity returns and keeping customers happy then the alternative is readily apparent. Jeremy Corbyn’s agenda to renationalise large chunks of UK infrastructure is a timely reminder of what is at stake.

*Published in the Australian Financial Review 21 February, 2018.

Garry Bowditch*

Superannuation and infrastructure have a lot in common, and so they should: they represent two sides of the same coin.

Superannuation plays an important role in intermediating national savings for financing and funding infrastructure. But the public policy settings that enable this to happen must be soundly based.

As has been widely reported, the Australian Federal Government is seeking to define and legislate an objective for superannuation. This is important, because in the absence of clear objectives, governments enjoy more latitude to tinker with short-term priorities without accountability to the risks of inferior long-term outcomes.

It is an indictment on public policy that super has been without any legislated objective since it began in 1992: but it is hardly a one-off.

Infrastructure is in a similar situation but curiously, Infrastructure Australia (IA) doesn’t seem to mind.

Billions of taxpayers’ dollars spent on building roads, for example, is not anchored to a consistent and enduring objective. Could this be a reason why so little benefit is translating to the community from more than a decade of big-dollar transport spending?

Despite the plethora of recommendations from the IA latest audit, the nation’s independent adviser appears hamstrung by a focus on its favourite project list. In part this is courtesy of poorly conceived terms of reference. Australia benefited enormously when objectives of monetary policy were clarified and good institutional arrangements followed, including Reserve Bank independence.

The nation must heed lessons from its past: good governance begets great long-term outcomes.

There is still time for IA to sharpen the national infrastructure pencil through championing good governance.

It can do this by helping develop a clear strategic objective that government can legislate into law. For example, one that takes account of roads within the broader transport system and how service outcomes adapt over time to a rapidly changing world.

Surely this is an appropriate starting point, along with erecting a much-needed scaffolding to reinforce good public policy outcomes like performance reporting, disseminating cost data and rigorous case studies on project and policy success and failure.

Transparency is key and it should govern every moment of IA’s existence. It will help sanitise poor decision-making and even poorer project performance and cost overruns that undermine the nation’s future.

In the case of road pricing reform, IA’s agenda must shift the mindset of all stakeholders to a new standard; it is not just about finding another funding pot.

IA appears blind sided by the evaporating revenues from fuel excise and what that means for funding new infrastructure, without deeper consideration to the long-term outcomes the community expects of their roads.

The roads sector has had a carte blanche operational model for the best part of two centuries, where political will has prevailed without the discipline of balance sheet management, commitment to service standards and rate of return on assets.

A recent Newgate survey commissioned by the Better Infrastructure Initiative points to both tolled and regular arterial roads as holding the “wooden spoon” of infrastructure when it comes to customer perceptions.

Clearly change is needed, where service quality outcomes with roads is the main game, not more bitumen. Whatever are the final reforms for roads pricing, it will be intolerable for the community to be lumbered with another new tax or user charges uncoupled from service quality.

Recognising the uncanny resemblance between infrastructure and superannuation and to act in unison fixing both is a good starting point for 2017.

That means for example, all legislation that commits funds for land transport has clear and actionable objectives enshrined in law.

Australia was a world leader in infrastructure, and we can do it again starting with land transport. Rigorous reform through corporatisation and privatisation from the late 1980s and 1990s is still reaping dividends but is badly in need of the next tranche.

New South Wales and Victoria are channelling this golden era of infrastructure to good effect, but the social licence to sell assets is fragile, and needs ongoing stewardship.

Unfortunately, IA with its project list and appetite for big spending is falling short of challenging the nation to innovate through doing more with less. There is much to be gained for IA to pursue deep infrastructure governance reform, starting with establishing strong objectives to help ensure great long-term outcomes.

* Garry Bowditch is Executive Director, Better Infrastructure Initiative, John Grill Centre for Project Leadership, University of Sydney. This article appeared in the Australian Financial Review on 5 December 2016.

President elect Trump has promoted a big infrastructure program to revitalise the American economy. So, Australia and the US have a lot in common for now.

Unlike Australia, the US has been a miserly spender when it comes to public infrastructure. As a result rusty and decaying infrastructure is on display across US cities and its vast regional areas.

The scarcity of money ensured the ‘buff and shine’ of US infrastructure was long ago substituted with something far more potent – innovation and inventiveness.

Necessity is the mother of invention and the US stands as a good example of pursuing high net benefit interventions like decongesting and debottlenecking existing infrastructure.

New York’s Fulton Rail Interchange is a case in point, along with innovation around big data, ride and asset sharing such as Uber and using analytics to sharpen and identify how to make US cities work better.

These are all important and beneficial characteristics for President Trump towards unlocking even more potential from cities and the infrastructure system.

Sweating assets in business and infrastructure is a prerequisite for lifting productivity and getting the most for every dollar invested. But the US is rapidly approaching a tipping point where the net economic gains of austerity are nearly depleted.

It is both timely and laudable that Mr. Trump considers fixing inner cities and rebuilding highways, bridges, tunnels, airports, schools, hospitals as a priority.

The US has room to move on this but not in the traditional way. Its infrastructure stock to GDP ratio sits at about 64 per cent, compared to 70 per cent for other major economies. However US Federal Budget with endless deficits and growing public indebtedness will require a different approach if a new infrastructure era is to be activated.

Australia and the US can work together to help make the Trump infrastructure agenda happen. Its infrastructure reform of the 1980s and 1990s is a worthy benchmark for US to adopt.

Reforming the US government balance sheet should easily connect with the Trump business mindset much like NSW asset recycling has unlocked previously closed doors with a skeptical public. It has the potential to do the same in US too.

We think a new stakeholder led US Infrastructure Bank could generate and allocate the money through corporatisation and privatisation of government assets and businesses much more efficiently than bureaucratic processes.

Despite local successes the social license to privatise is tenuous. Australia has threated the privatisation needle many times, and the lesson for the US is pretty simple; focus on long term efficiency not short-term stimulus.

Australia can share with the US our strong private sector infrastructure empowerment with full accountability to balance sheet reporting. We can work with our American cousins on our lessons where regulation has been kept to a minimum and where government sought to get out of the way to enable private sector to interact with their customers.

This is a winning formula in Australia, and same for the US.

But before that can happen the US must resolve a persistently stubborn contradiction. How can the world’s pin-up capitalist economy be so ambivalent to private ownership of public infrastructure?

Australia can and should seek to help the Trump Administration navigate an overdue national mind shift in favour of privately owned customer led infrastructure. It is an enormous market waiting for long term superannuation capital and expertise from Down Under.

On the other side of the coin there is plenty we can learn about how US cities are introducing smart city transport and local water and energy decentralisation and activating partnerships between universities. We can learn how to unleash new entrepenuership innovation districts that are building new jobs and revitalising large and small communities.

Both nations stand at the forfront of a new urban infrastructure enhanced future that can re-shape opportunities for people and places where both nations become leaders for the world.

*Garry Bowditch, Executive Director, Better Infrastructure Initiative, John Grill Centre, University of Sydney; Edward J Blakely is Chair of the Future City Collaborative and professor and dean at several US Univerities as well an OECD urban expert.

This article was published in the Australian Financial Review on 17 November 2016.