Australian
infrastructure:
some facts
and figures
F o re w o rd
Australia’ s cities are the powerhouses
of the national economy. W e need
smart, sustainable and resilient cities
to prov ide liv eable, productiv e and
v ibrant places for Australians to liv e
and work.
T o thriv e and grow, smart cities need strong, ev idencebased planning and prioritisation of proj ects, the right
owners i
odel innovative fundin and finan in
and a strong infrastructure inv estment pipeline.
T his document paints a picture of the economic
importance of our cities, the pressures they face
and the wav e of new smart city initiativ es in Australia.
t rovides interestin fa ts and fi ures on infrastru ture
funding and ownership models and the changing role of
the priv ate sector in prov iding essential infrastructure.
It also looks at Australia’ s ev olv ing PPP market and the
future landscape for big transactions.
T he E Y Infrastructure Adv isory practice looks forward
to discussing these issues with Summit speakers
and delegates.
D a v id L a r o c c a
E Y O ceania Partner
H ead of Infrastructure Adv isory
2 | Australian infrastructure: Some facts and figures E Y
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W h a t ’s in t h is d o c u m e n t ?
is do
ment provides a ts and fig res on t e o owing fiv e i s s u e s
1.
S m a r t c it ie s a r e v it a l t o o u r e c o n o m ic p r o s p e r it y
P a g e 2
•
ities are t e ower ouses of our national e ono
ut fa e several ressures
including population growth, housing affordability and growing congestion.
•
W at are
art ities
nd will t e address t e
allen es fa in our ities
S t r o n g in f r a s t r u c t u r e p la n n in g a n d p r io r it is a t io n
P a g e 6
i rant eo le entri and onne ted ities need t e ri t ro e ts funded at t e
right time. O rganisations such as Infrastructure Australia hav e raised the bar in
infrastructure decision making.
•
ettin ro e t e ono i s ri
that giv e the best returns.
•
it lannin is e o in
ore eo le entri en a sulatin a variet of fa ets of
life — where we liv e, work and play, how we mov e around a city, how we engage
with each other and the time we spend in open spaces.
2.
•
t is vital t is often t e ro e ts t at osts t e least
T h e r ig h t f u n d in g a n d o w n e r s h ip m o d e l
•
nfrastru ture owners i in ustralia as een raduall transfor in over t e
past decades, leav ing more of our assets in priv ate hands.
•
rivate os itals are vital to ustralia s ealt se tor a in u ust under alf of
all Australia’ s hospitals, with hospital funding coming from a number of different
gov ernment and non- gov ernment sources.
•
ustralia as a a or s orta e of so ial ousin
ere are lon waitlists for so ial
housing across Australia yet gov ernment funding for social housing is falling.
•
n reasin l
•
ustralia s ur an water se tor lar el re ains u li l owned and o erated
has a large degree of priv ate sector inv olv ement.
•
rivate se tor owners i of our trans ort assets is rowin
ut so e asset
classes hav e more priv ate sector inv olv ement than others, with airports and ports
leading the way.
3.
4 .
5.
P a g e 8
ustralia s ener
infrastru ture is ein
eld in rivate ands
ut it
•
A u s t r a lia ’s e v o lv in g P P P m a r k e t
P a g e 18
ustralia s
ar et as rown si nifi antl in t e ast de ade arti i ant
countries in Australia’ s PPP market has doubled. T he av erage v alue of
transactions has increased 1 2 fold.
•
B ig in f r a s t r u c t u r e t r a n s a c t io n s
P a g e 19
e transitions lands a e in ustralia is uid We ave seen so e lar e deals
close in recent years with more in the pipeline, including Port of M elbourne and
E ndeav our E nergy.
Australian infrastructure: Some facts and figures E Y
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1
S m a r t c it ie s a r e v it a l t o A u s t r a lia ’s
e c o n o m ic p r o s p e r it y
Australia’ s cities are the
powerhouses of the national
economy — v ital to our well- being
and economic prosperity.
ities ouse t e a orit of ustralia s o s and u of
the nation’ s key economic infrastructure. In fact, 8 0 % of
Australia’ s economic activ ity is concentrated in and near
our cities. 1 Australia’ s cities currently contribute $ 8 5 4
billion to the national economy, and this is proj ected to
almost double to $ 1 . 6 trillion by 2 0 3 1 . 2
As cities shape up to be the pillars of our national
economy, they face sev eral pressures:
ro ing o ulations —
four in ever five
people residing in Australia will liv e in our cities. Perth
will be Australia’ s fastest growing city ov er the next
two decades, growing at 1 1 times the rate of New
or it 3 , six times the rate of London4 and four
times that of H ong Kong5 .
•
P r o je c t p o p u la t io n in A u s t r a lia ’s c a p it a l c it ie s
1 0 0 0 0 0 0 0
8 0 0 0 0 0 0
6 0 0 0 0 0 0
4 0 0 0 0 0 0
2 0 0 0 0 0 0
0
S y d n e y
2016
M e lb o u r n e
2036
our e: ustralian ureau of tatisti s
B r is b a n e
P e rth
A d e la id e
o ulation ro e tions
at no
4
5
2
H o b a rt
2056
3
1
C a n b e rra
rattan nstitute
Australian Infrastructure Audit, Infrastructure Australia, 2 0 1 5
2 | Australian infrastructure: Some facts and figures E Y
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W en o ared to New or s o ulation fore ast ade : e it of
New or e art ent of it lannin
W en o ared to ondon s o ulation fore ast ade : reater ondon
Authority, 2 0 1 6
W en o ared to on on s o ulation fore ast ade : ensus and
Statistics Department H ong Kong Special Administrativ e R egion People’ s
e u li of ina
•
•
Aging o ulation — T he population aged 7 5 or more
years is expected to rise by 4 million from 2 0 1 2 to
2 0 6 0 , increasing from about 6 . 4 % to 1 4 . 4 % of the
population. 6
e o
onwealt overn ent s
art ities lan sets
out t e ustralian overn ent s vision for ustralian
cities and its plan for maximising their potential. It is
based on:
ising congestion
o
utin into ities is
e o in in reasin l diffi ult Wit out a tion t e
av oidable social cost of congestion in Sydney is
expected to grow from $ 6 . 1 2 billion in 2 0 1 5 to
$ 1 2 . 6 0 billion in 2 0 3 0 . 7
1 .
ousing afforda ilit and ur an s ra l — In
Australia’ s cities – especially Sydney, M elbourne and
Perth – rapid house price growth in inner city areas
has made liv ing near work unaffordable for many. O n
av erage, Australian households spend more than 2 7 %
of their monthly income on mortgage repayments. 8
H ousing affordability challenges hav e pushed people
to reenfield develo ents in frin e su ur s ivin
rise to lower- density liv ing and costly new
infrastructure networks.
•
overn ents a ross ustralia are res ondin
to these challenges with a wav e of new initiativ es
to build smarter and stronger cities.
H o u s e p r ic e s v s d is t a n c e f r o m
2 .
e o in s arter investors in our
cities’ infrastructure
oordinatin and drivin s arter it
oli
3 . Driv ing the take- up of smart technology,
to improv e the sustainability of our cities
and driv e innov ation
s art of t e
art ities lan ri e inister al ol
T urnbull, rev ealed a funding plan to build “ 3 0 - minute
cities” , where residents are able to cut their daily total
commute to an hour each day. T he plan inv olv es
esta lis in a rivate se tor infrastru ture finan in
unit and a commitment of $ 5 0 million to accelerate
planning and dev elopment works on maj or
infrastructure proj ects. 9
Smart city initiativ es are also on the agenda for state
and local gov ernments, with new smart city ideas and
plans being discussed, debated and announced on a
regular basis.
C B D , M e lb o u r n e f o r s e le c t e d y e a r s
H ouse prices vs distance from C B D , M elbourne for selected y ears
2 ,0 0 0 ,0 0 0
Nominal house price ( $ )
1 ,8 0 0 ,0 0 0
1 ,6 0 0 ,0 0 0
1 ,4 0 0 ,0 0 0
1 ,2 0 0 ,0 0 0
1 ,0 0 0 ,0 0 0
8 0 0 ,0 0 0
6 0 0 ,0 0 0
4 0 0 ,0 0 0
2 0 0 ,0 0 0
0
0
1 0
2 0 1 3
2 0
3 0
Distance from M elbourne Central B usiness District ( km)
2 0 0 9 -1 0
2 0 0 0 -0 1
4 0
5 0 +
1 9 9 0 -9 1
Source: Department of Infrastructure and R egional Department, State of Australian Cities 2 0 1 4 - 1 5 ,
Commonwealth of Australia, Canberra, 2 0 1 5 .
6
7
8
rodu tivit o
ission n ein ustralia: re arin for t e uture
2 0 1 3
ureau of nfrastru ture rans ort and e ional ono i s nfor ation
Sheet 7 2 , 2 0 1 5
T he M oody’ s Australian H ousing Affordability M easure, 2 0 1 5
9
ri e
2 0 1 6
inister of ustralia
inister for
a or ro e ts
inister for ities
Australian infrastructure: Some facts and figures E Y
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3
W h a t is a s m a r t c it y ?
‘ Smart city’ is a broad ranging concept with ambitious
policy goals. At its heart, smart cities aim to harness a
range of tools to build stronger and more resilient cities
that improv e the q uality of life of citizens. E Y ’ s approach
to smart cities is displayed in the diagram below.
It starts with a set of principles that form the pillars of
smart cities — data driv en, interconnected, intelligent,
collaborativ e and streamlined. T hese principles are
applied to different focus areas to generate ideas and
prov ide for a new and holistic way of thinking about
our cities.
F o c us areas
S mart c ity p rinc ip les
Using analytics and cognitiv e tools to driv e behav ioural change
C o llabo rative
S m
en art
erg
y
S tr a te g y a n d
m a r k e t in g
V is io n
a n d
in n o v a t io n
S mart city
focus areas
City employees and citizens j oining together to work
collaborativ ely. T ransparency and open data is key
S m
he a r t
alt
h
SS treamlined
treamlined
S mart
culture
G reen
I ntellig ent
F u n d in g
a n d d e s ig n
nd
ba
ad
B ro
en S m
vi art
ro
nm
ent
Lev
eraging
the
‘ Internet
of T hings’
improv
e the
city’ sto
ability
collected
from
traditional
systems,
and to
improv
e a city’
s ability
“ sense
to
and respond
andsense
respond”
S m
ar
g ov
ern t
me
nt
art n
S m catio
u
ed
S mart
economy
5|
I nterc o nnec ted
ISmart
nterc cities
o nneclev ted
erage the Internet of T hings to enhance the data
t
ar
S m rity
u
sec
4|
B uild and
operate
art
S m ility
b
mo
3|
Capturing, integrating, enriching, storing, and sharing data to
improv e the decision- making abilities of the city
D ig i
tal
2|
2|
D ata D riven
S mart
j ustice
1|
Systemsof- citizens
engagement
to are
reduce
the barriers
Prov
iding
withare
servreworked
ices that
accessible,
convbetween
enient
the “ gov erning” and the “ gov erned” . Complexity is greatly reduced.
and efficient
Citizens are engaged through multiple platforms.
A range of technological, behav ioural and urban trends are driv ing the need for smart cities. T hese trends, which are
displayed in the diagram below, present multiple opportunities spanning local serv ice deliv ery, the urban env ironment
and economic dev elopment.
T ec h no lo g ic al trend s
B eh avio ral trend s
In c r e a s e in
m o b ilit y
B ig d a t a
S o c ia l
n e tw o rk s
U rban trend s
In c r e a s in g
c o n g e s t io n
F a s te r d a ta
s p e e d s
N e w w a y s
o f w o r k in g
In t e r n e t o f
T h in g s
m u lt i- d e v ic e s
u s a g e
U rb a n
re n e w a l
Im p o r t a n c e o f
liv e a b ilit y a n d
s u s t a in a b ilit y
G lo b a l
c o m p e t it io n
O p p o rtunities
S u p p o r t e c o n o m ic d e v e lo p m e n t a n d liv e a b ilit y b y h a r n e s s in g t e c h n o lo g y t o im p r o v e c it y s e r v ic e s a n d
t h e u r b a n e n v ir o n m e n t
Im p r o v e t h e q u a lit y o f s e r v ic e s f o r c it iz e n s b y c r e a t in g r ic h e r in s ig h t s t h r o u g h d a t a a n d im p le m e n t in g
n e w , in n o v a t iv e w a y s t o m e e t t h e n e e d s o f c it iz e n s
4
L o c a l g o v e r n m e n t c a n p a r t n e r w it h t h e p r iv a t e s e c t o r in n e w a r e a s t o im p r o v e t h e q u a lit y o f s e r v ic e s
w h ile s u p p o r t in g lo c a l in d u s t r y
| Australian infrastructure: Some facts and figures E Y
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Smart cities need smart infrastructure
To thrive and grow, smart cities need smart infrastructure that supports our economy and our communities
and makes Australia a great place to live and work.
The list of smart infrastructure and smart cities initiatives in Australia and around the world is long, and growing.
Gold Coast Health and Knowledge Precinct
200ha hub, rapidly
growing with mixed-used
health and knowledge
development.
Newcastle Urban Tranformation
Revitalising the city by
delivering light rail, a new
interchange, and opening the
city to the harbour edge.
Sydney Central Park
Will be one of Australia’s
greenest urban villages,
housing its own on-site
tri-generation plant.
Happen, Brisbane-based Tech Start-up
The platform uses a Softwareas-a-Service solution to keep
up with a myriad of social
network sites.
Sydney M4 Smart Motorway System
Smart Motorways use
complementary
technologies to monitor
traffic conditions.
Smart city
improvement
and
development
Oran Park Primary, Future Focused Learning
Designed to support
future-focused learning,
including connected
learning spaces.
NSW Ministry of Health, eHealth
The Ministry has
implemented reforms in
system-wide
improvements in eHealth.
Digital enterprise | Does your business strategy work in the digital world?
Australian infrastructure: Some facts and figures EY 2016 |
5
S t r o n g in f r a s t r u c t u r e p la n n in g
a n d p r io r it is a t io n
i rant eo le entri and
connected cities need the right
proj ects funded at the right time.
T he way in which infrastructure proj ects are dev eloped
and prioritised in Australia has come a long way in the
past decade. T his is in part due to the introduction of
infrastructure organisations charged with taking a
long- term v iew of infrastructure needs and prov iding
independent adv ice to gov ernments. Infrastructure
ustralia and si ilar or anisations in N W i toria
Q ueensland and T asmania hav e all raised the standards
of infrastructure planning and decision making and
shifted infrastructure policy away from ad- hoc proj ects
to a more ev idence- based, long- term and strategic v iew
of infrastructure needs.
ettin ro e t e ono i s ri t is i ortant to a in
sure taxpayers money is inv ested wisely and in
meaningful proj ects that giv e something back to the
community. T he graph below prepared by Infrastructure
Australia suggests that smaller proj ects that cost the
least often hav e the greatest economic returns.
O ur city plans and infrastructure proj ects must be
grounded in the principles of good urban planning,
supported by strong institutional and gov ernance
arrangements, and founded on open and transparent
data that enables ev idence- based inv estment decisions.
ood ro e ts and ood lans o
and in and it lannin is
becoming more people centric,
encapsulating a v ariety of facets of
life — where we liv e, work and play,
how we mov e around a city, how we
engage with each other and the
time we spend in open spaces.
P r o je c t s s u b m it t e d t o In f r a s t r u c t u r e A u s t r a lia *
Strategic metropolitan plans that focus on ‘ place’ and
integrated land- use and infrastructure planning are
becoming more important. T hese plans aim to optimise
infrastructure inv estments and land- use planning by
understanding and lev eraging the connections
between them.
1 2
Forecast B CR
1 0
8
6
4
0
2
0
2 0 0 0
4 0 0 0
6 0 0 0
8 0 0 0
1 0 0 0 0
Cost ( $ million)
n udes ro e t ro osals su itted
tate overn ents for in lusion
on IA’ s priority list that are ‘ ready to proceed’ ( those with strong strategic
and economic merit that hav e met all of IA’ s criteria) or ‘ threshold’ proj ects
( those that are well dev eloped and present a detailed preferred option) .
O ther proj ects that are early stage or approv ed by state gov ernments are
not included.
6
our e: nfrastru ture ustralia su ission to t e rodu tivit
Inq uiry into Public Infrastructure, December 2 0 1 3
| Australian infrastructure: Some facts and figures E Y
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o
ission
ood it lannin will re ove arriers to invest ent
and economic growth in maj or employment centres and
transport gateways. It will create v ibrant communities
that are healthy and well connected – including through
increased access to open space and cultural
infrastructure. It will also enable a guiding framework
for deliv ering housing supply and choice.
In our cities we are seeing
a s ift awa fro
reenfield
dev elopments with more emphasis
on renewal proj ects and large- scale
urban transformations.
Urban transformation proj ects that increase density
will be essential to meeting demand for new housing
close to maj or employment centres in Australia’ s capital
cities, as well as rev italising established urban areas
through better transport and infrastructure.
In NSW , maj or urban renewal proj ects are rev italising
areas su as t e dne ar our a s re in t
aran aroo entral to velei
arra atta and
New astle n i toria develo ent will transfor
o lands is er an s end rden a aula and
Dandenong. Across the country in Perth, proj ects such
as li a et ua and ert it in are an in t e
face of the city.
overn ents at all levels s ould learl arti ulate
future city planning actions to inform cohesiv e decision
making for infrastructure and serv ices, and prov ide
a level of on oin onfiden e to t e rivate se tor
further encouraging inv estment in a city’ s key
economic areas.
Australian infrastructure: Some facts and figures E Y
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7
T h e r ig h t o w n e r s h ip a n d f u n d in g m o d e ls
Infrastructure ownership in
Australia has been gradually
transforming ov er the past
decades, leav ing more of our
assets in priv ate hands.
T he role of the priv ate sector in funding, owning and
operating infrastructure v aries considerably between
sectors. T he ports, airports and energy sectors lead the
way in priv ate ownership and long term leases while other
sectors, such as water, are at the start of the j ourney.
As our population pools in our cities, the space and
funding av ailable to inv est in infrastructure is becoming
s ar er ettin t e ri t owners i and fundin
odels
is essential to optimising our existing infrastructure.
Under the right circumstances, priv ate ownership can
deliver ore effi ient and rodu tive use of our assets
better utilisation and gov ernance, and a greater focus
on customer serv ice. Public asset sales also help to free
up gov ernments’ balance sheets, with funds raised being
reinv ested in much needed economic infrastructure. In
many cases, public ownership has been a win- win for
gov ernments, priv ate owners and the community.
H e a lt h
Priv ate hospitals are v ital to
Australia’ s health sector, making
up j ust under half of all Australia’ s
hospitals.
Australia has 1 ,3 5 9 hospitals and more than 8 9 ,0 0 0
hospital beds. O f these hospitals, around 7 2 8 are public,
prov iding 5 8 ,5 6 7 public hospital beds. T his eq uates to
2 . 5 av erage av ailable beds per 1 ,0 0 0 of population for
public hospitals — almost double the 1 . 3 av ailable beds
per 1 ,0 0 0 of population in priv ate hospitals. 1 0
P u b lic a n d p r iv a t e h o s p it a ls in A u s t r a lia
N u m b e r o f H o s p it a ls in A u s t r a lia a n d
a v a i l a b l e b e d s p e r 1000 p o p u l a t i o n 2013- 14 * *
TAS, ACT & NT *
Total private: 29
*
Private numbers
unavailable*
5 Public
62 Priv ate
80 Public
Priv ate H ospital bed
numbers unav ailable
2.2 Public H ospital
/ 1 0 0 0 people
* * Licensed beds per 1 0 0 0 population is reported as a crude
rate based on the estimated resident population as at 3 0 June
of the relev ant year
108 Priv ate
169 Public
Priv ate H ospital bed
numbers unav ailable
2.7 Public H ospital
T asmania, Northern T erritory and Australian Capital T erritory
hav e been aggregated to protect the confidentiality of the
small number of hospitals in these states/ territories.
1 . 4 Priv ate H ospital
2.5 Public H ospital
/ 1 0 0 0 people
/ 1 0 0 0 people
55 Priv ate
91 Public
1.1 Priv ate H ospital
2.9 Public H ospital
193 Priv ate
225 Public
/ 1 0 0 0 people
1 Priv ate H ospital
2.7 Public H ospital
/ 1 0 0 0 people
Private numbers
unavailable*
2 3 Public
165 Priv ate
151 Public
1 . 3 Priv ate H ospital
2.4 Public H ospital
Priv ate H ospital bed
numbers unav ailable
2.3 Public H ospital
Priv ate H ospital bed
numbers unav ailable
2.7 Public H ospital
/ 1 0 0 0 people
/ 1 0 0 0 people
Source: “ Priv ate hospital data source: ( Priv ate hospitals
ustralia
Public hospital data source: ( NPH E D, 2 0 1 5 )
8 | Australian infrastructure: Some facts and figures E Y
/ 1 0 0 0 people
Private numbers
unavailable*
3 Public
1 0
2 0 1 6
E stimates for priv ate hospital beds exclude data from T asmanina, Northern
erritor and t e ustralian a ital erritor and t erefore a e i er
os ital fundin o es fro a nu er of different overn ent and non overn ent sour es re e tin
a complex market place and a multifaceted web of serv ices, prov iders and recipients.
e dia ra
elow illustrates t e ow of funds t at su
ort t e deliver of ealt
are
T ax rebates
e ifi
purpose
payments
State and territory
gov ernments
I ndividuals
O ut- of- pocket
payments and
co- payments
D ir e c t p a y m e n t s a n d s u b s id ie s
t o n o n - g o v e r n m e n t p r o v id e r s
Australian G overnment
N o n - g o v e r n m e n t s e r v ic e p r o v id e r s
• P r iv
• M e d
• P h a
• D e n
• O th
• A d m
• R e s
Purchase of serv ices
for v eterans
a t e h o s p it a ls
ic a l p r a c t it io n e r s
r m a c e u t ic a l r e t a ile r s
t a l p r a c t it io n e r s
e r h e a lt h p r a c t it io n e r s
in is t r a t io n
e a rc h
S t a t e a n d t e r r it o r y g o v e r n m e n t
p r o v id e r s
Australian Gov ernment
Department of V eteran Affairs
3 0 - 4 0 % rebate on priv ate health
insurance premiums
• P u
• P a
• D e
• C o
• P u
• A d
• R e
b lic
t ie n
n ta
m m
b lic
m in
s e a
h o s p it a l s e r v ic e s
t t r a n s p o r t s e r v ic e s
l s e r v ic e s
u n it y h e a lt h s e r v ic e s
h e a lt h s e r v ic e s
is t r a t io n
rc h
Contributions
( includes Dept of H ealth
and Ageing, T reasury
and others)
Direct
grants
Inj ury compensation funds
Payment
for serv ices
Benefits paid
Private health insurers
Government flows
Source: Australian Institute of H ealth and W elfare 2 0 1 5
Non-government flows
1
P u b lic h o s p it a ls
2013- 14 e x p e n d i t u r e o n p u b l i c h o s p i t a l s e r v i c e s
In 2 0 1 3 - 1 4 , expenditure on public hospital serv ices
was $ 4 5 . 7 billion.
State and territory gov ernments contribute more
than half of recurrent operating expenditure for
os itals wit t e o
onwealt fundin
and
non- gov ernment sources funding the remainder.
P r iv a t e h o s p it a ls
In 2 0 1 3 - 1 4 , expenditure on priv ate hospitals
was $ 1 3 . 0 billion.
1
Around one third of recurrent funding for priv ate
hospitals is from gov ernment sources, mainly
through the priv ate health insurance rebate, but
with some contributions from the Department of
eterans ffairs and also state and territor
gov ernments.
9%
S t a t e a n d T e r r it o r y
C o m m o n w e a lt h f u n d in g
3 7%
5 4%
N o n G o v e rn m e n t s o u rc e s
Source: Australian Institute of
H ealth and W elfare 2 0 1 5 . H ealth
expenditure Australia 2 0 1 3 - 1 4 .
H ealth and welfare expenditure
series no. 5 4 . Cat. No. H W E 6 3 .
Canberra: AIH W .
2013- 14 e x p e n d i t u r e o n p r i v a t e h o s p i t a l s e r v i c e s
3 . 9%
6 .2 %
P r iv a t e h e a lt h in s u r a n c e
G o v e rn m e n t
7. 0 %
In d iv id u a l c o n t r ib u t io n s
11. 1%
48 . 6 %
D e p a r t m e n t o f V e t e r a n A f fa ir s
O th e r s o u rc e s
S t a t e a n d T e r r it o r y G o v e r n m e n t s
3 4. 1%
Source: Australian Institute of
H ealth and W elfare 2 0 1 5 . H ealth
expenditure Australia 2 0 1 3 - 1 4 .
H ealth and welfare expenditure
series no. 5 4 . Cat. No. H W E 6 3 .
Canberra: AIH W .
Australian Institute of H ealth and W elfare 2 0 1 5 . H ealth expenditure
ustralia
ealt and welfare ex enditure series no
at
No W
an erra:
W
Australian infrastructure: Some facts and figures E Y
2 0 1 6
|
9
S o c ia l a n d a f f o r d a b le h o u s in g
Australia has a maj or shortage
of social housing.
Since 2 0 0 4 , the number of social housing dwellings
per capita has declined in all States and T erritories
except T asmania. 1 2 etween
and
t e
amount of money allocated to social housing by
Australian gov ernments fell year- on- year.
In 2 0 1 4 - 1 5 , Australia had 3 2 1 ,6 2 7 social housing
dwellings, but more than 2 0 0 ,0 0 0 approv ed applicants
on waiting lists nationwide. 1 1 All states and territories
across Australia hav e social housing waitlists and
Western ustralia Nort ern erritor
i toria and N W
all hav e waitlists of more than 5 0 % of their existing social
housing stock.
W hile there has been funding inj ections into community
housing under the Social H ousing Initiativ e, which
operated from 2 0 0 9 to 2 0 1 2 , this has not been enough
to offset the long- term decline in inv estment in public
housing. T he Australian Institute of H ealth and W elfare
reported a misalignment of existing product type and
demand, ironically leading to underutilisation of 1 6 - 2 3 %
and ov ercrowding of 5 - 1 0 % for different types of housing.
P u b l i c h o P u u sb li i n c g h o d u w s i n e g l l di n w g e sl l i n a g n s d a n w d a w i a t il t i sl i s t t s s b b y y j u j u r i r s i d s i c d t i i co n t i 2014
o n 2014
- 15 - 15
1 2 0 ,0 0 0
S t a t e a n d T e r r it o r y G o v e r n m e n t s p e n d in g o n s o c ia l h o u s in g
tated and
G overnment spending on social housing
( 2013-S 14
o l l a Territory
rs )
( 2 0 13 - 14 dollars)
8
7
8 0 ,0 0 0
6
6 0 ,0 0 0
5
4 0 ,0 0 0
$ billion
Public H ousing
1 0 0 ,0 0 0
2 0 ,0 0 0
4
7. 1
3
ACT
NSW
V IC
Q LD
Dwellings
our e: rodu tivit
o
ission
W A
SA
T AS
6 .9
5 .0
0
2
NT
W aitlist
3 .9
3 .8
1
e ort of overn ent ervi es
0
2 0 0 9 -1 0
2 0 1 0 -1 1
2 0 1 1 -1 2
2 0 1 2 -1 3
2 0 1 3 -1 4
Gov ernment spending - all States and T erritories
our e: rodu tivit o
ission Report on Government Services 2016,
Housing and Homelessness, p2 0 7 - 2 0 8 1 3
1 2
1 3
1 1
rodu tivit
o
ission Report on Government Services 2016.
10 | Australian infrastructure: Some facts and figures E Y
2 0 1 6
our e: teerin o
ittee for t e eview of overn ent ervi e
rovision eview of overn ent ervi es
olu e : ousin and
o elessness rodu tivit o
ission an erra
ta le
ustralian ureau of tatisti s ustralian e o ra i tatisti s at no
an erra
rodu tivit o
ission e ort on overn ent ervi es ousin and
H omelessness, p2 0 7 - 2 0 8 .
T he reduction in gov ernment funding has not been
balanced by an increase in priv ate sector inv estment.
eed a fro t e ar et indi ates t at t e low as
yield of social and affordable housing, coupled with the
perceiv ed procedural and reputational risks in accessing
capital inv ested in social housing through property sales,
continues to limit priv ate sector inv estment.
Although state gov ernments were the traditional owners
and builders of social housing stock, we hav e seen a
long- term trend of greater engagement with the not- forrofit se tor in t e deliverin so ial ousin and tenant
serv ices. T his has inv olv ed substantial stock transfer
ro esses as overn ents see ore effi ient and
sustainable capital allocation and operational sector costs.
A s h if t in p o lic y e m p h a s is
T he continuing pressure on gov ernment- funded housing
resources has triggered a range of policy reforms and
new initiativ es to minimise long- term demand. Initiativ es
include early interv ention programs, which address why
people are forced to seek housing assistance, and more
targeted tenant interv ention programs, which support
tenants as they become more independent.
T his policy rev olution is mov ing gov ernments towards
new contracting models that place gov ernment in the
role of commissioning social and affordable serv ices,
rather than as acq uirers and owners of property.
Australian infrastructure: Some facts and figures E Y
2 0 1 6
| 11
E n e rg y
In c r e a s in g ly , A u s t r a lia ’s e n e r g y in f r a s t r u c t u r e
is b e in g h e ld in p r iv a t e h a n d s .
Priv ate sector inv estment in Australia’ s energy
infrastructure is v ital to its future. It will contribute
to a ore effi ientl
ana ed se tor reater
competition and choice for consumers,
and downward pressure on prices.
T he initial structural reforms and priv atisation of stateowned assets w i
e an in t e
s in i toria
South Australia, W estern Australia, hav e been followed
by retail in Q ueensland and, more recently, the
electricity network in NSW . Plans hav e also recently
been announced for the potential $ 1 2 billion sale
of W estern Power in W estern Australia.
T he energy industry is now facing a time of
unprecedented change due to increasing public
awareness of the env ironmental impact of fossil fuel
use, gov ernment policies supporting clean energy and
changing our energy mix, and technological adv ances
disrupting the traditional energy deliv ery model.
We are in a u
etter osition to fa e t e finan in
and inv estment challenges associated with these
dev elopments with priv ate sector inv olv ement.
12 | Australian infrastructure: Some facts and figures E Y
2 0 1 6
Initially, foreign priv ate inv estment came largely from
Americans and E uropeans, who entered the market with
early priv atisations. O v er time, ownership has slowly
migrated closer to home, with secondary sales now
lar el ein ta en u
sian investors or exa le
in t e i torian rivatisations a nu er of ower and
gas were sold to US and E uropean interests such as T X U,
tili or
ower en and National ower
ese
assets now lar el sit wit sian owners:
in a ore ower and ina tate rid
e last de ade as seen si nifi ant an es
in electricity production markets for most
of Australia’ s states.
etween
and
t e to t ree rodu ers
in N W and i toria o letel
an ed n ot er
markets, such as Q ueensland and T asmania, the top
producers remain unchanged. T he charts to the right
display the top electricity companies by capacity
production for the period 2 0 0 8 - 0 9 to 2 0 1 3 - 1 4 .
E lectricity C apacity data | E nergy company
S ta te
2008- 09
2013- 14
8 . 78 %
2 2 .0 6 %
3 0 . 6 7%
Q L D
S t a n w e ll C o r p o r a t io n
S t a n w e ll C o r p o r a t io n
3 4. 2 2 %
C S E n e rg y
T a ro n g E n e rg y
O ther 4
2 6 .8 8 %
O ther 2
0 .3 9 %
T otal of 8 participants
18 . 72 %
3 0 . 5 7%
N S W
2 7. 2 8 %
2 .9 5 %
T otal of 1 0 participants
18 . 3 6 %
M a c q u a r ie G e n e r a t io n
2 9. 12 %
D e lt a E le c t r ic it y
A G L E n e rg y
O r ig in E n e r g y
E r a r in g E n e r g y
E n e r g y A u s t r a lia
O ther 2
O ther 2
3 .4 3 %
2 4. 0 1%
T otal of 8 participants
S A
C S E n e rg y
O r ig in E n e r g y
3 4. 0 5 %
8 .5 1 %
T otal of 9 participants
12 . 13 %
2 0 . 46 %
A G L E n e rg y
A G L E n e rg y
3 6 .0 6 %
In t e r n a t io n a l P o w e r p lc
O ther 2
2 1. 96 %
3 6 .3 6 %
14. 5 9%
A lin t a E n e r g y
2 6 . 93 %
2 0 .0 6 %
A G L E n e rg y
3 3 . 44%
G E A C
T R U e n e rg y
O ther 3 5 . 7 8
2 1. 96 %
7 .9 2 %
T otal of 1 1 participants
In t e r n a t io n a l P o w e r p lc
V IC
A lin t a E n e r g y
O ther 3
1 .5 2 %
T otal of 7 participants
15 . 3 3 %
G D F S u e z A u s t r a lia n E n e r g y
G D F S u e z
S n o w y H y d ro
O ther 2
2 6 .3 6 %
%
T otal of 1 1 participants
0 .1 4 %
T otal of 1 0 participants
3 .8 8 %
13 . 45 %
T A S
H y d ro T A S
H y d ro T A S
A u ro ra E n e rg y
A u ro ra E n e rg y
8 6 .5 5 %
96 . 12 %
T otal of 2 participants
T otal of 2 participants
3 . 3 7%
10 . 96 %
7. 99%
W A
S y n e rg y
E R M
S t e r is P lc
11. 2 2 %
R e d b a n k E n e rg y
P o w e r
5 0 . 90 %
S o u t h 32
74. 8 1%
O ther 1
E R M
P o w e r
O ther 2
3 .8 3 %
6 .9 2 %
T otal of 1 3 participants
T otal of 1 1 participants
1. 5 2 %
4. 6 8 %
9. 95 %
8 . 91%
N T
8 . 91%
P o w e r a n d W a t e r C o r p o r a t io n
8 8 .3 3 %
T e r r it o r y G e n e r a t io n
D U E T G ro u p
P o w e r a n d W a t e r C o r p o r a t io n
E n e r g y W o r ld C o r p o r a t io n
D U E T G ro u p
O ther 0
.2 0 %
T otal of 4 participants
8 4. 72 %
O ther 1
.6 9 %
T otal of 5 participants
Source: E SAA 2 1 0 and 2 0 1 5
Australian infrastructure: Some facts and figures E Y
2 0 1 6
| 13
Water
The value of Australia’s urban water assets was
estimated to be $160 billion at 1 July 2015.14
The diagram below displays the value of Australia’s
water and wastewater assets by states, led by NSW.
Although most of our water assets are publicly owned,
the exception is the Sydney Desalination Plant, which
was designed and constructed under government
ownership and transferred to the private sector
through a long-term lease in 2012.
Australia’s urban water sector
largely remains publicly owned
and operated.
Australia’s water assets are vast. The urban water industry
provides enough drinking water to fill Sydney Harbour
four times each year and 300,000kms of water and
wastewater pipes, enough to circle the earth six times.
Estimated value of water and wastewater assets by State/Territory | 2014-15 ($bn)
NT
$0.5 billion
$0.3 billion
QLD
$17.3 billion
$12.5 billion
WA
$8.0 billion
$7.5 billion
SA
$9.0 billion
$4.0 billion
NSW
$21.7 billion
$43.5 billion
ACT
Water
VIC
Wastewater
$2.4 billion
$1.3 billion
$17.4 billion
$13.8 billion
Source: Bureau of Meterology, National performance reports for water utilities
Note: Written down value of fixed assets
TAS
$1.4 billion
$1.3 billion
14
14 | Australian infrastructure: Some facts and figures EY 2016
Infrastructure Partnerships Australia, ‘Doing the important, as well as the
urgent: Reforming the urban water sector’, November 2015
Although priv ate sector ownership is limited, the priv ate
sector has a large degree of inv olv ement in deliv ering
water serv ices:
•
•
utsourcing ser ices — to improv e operational
effi ien su as eolia s ontra t to o erate and
aintain unter Water or oration s wastewater
treatment plants.
esign uild
erate
Alliances — which
generally inv olv e gov ernment- owned water utilities
forming contracts with priv ate inv estment structures
to allocate risk and gain share between the public
utilit and rivate ontra tor or exa le llwater s
j oint v enture with SA W ater to manage Adelaide’ s
water and wastewater s ste s and t e it West
W ater Alliance Serv ices Agreement.
Australia’ s urban water sector faces sev eral challenges,
including uncertain regulatory frameworks, ageing
infrastru ture finan ial onstraints and li ited rivate
sector inv olv ement.
W ater assets req uire substantial future inv estment to
maintain existing standards and serv ice population
growth. Sydney W ater has proposed inv esting $ 2 . 8
illion in a ital etween
and
Water as
proposed inv esting $ 1 . 2 7 billion ov er the same period.
e i torian ssential ervi es o
ission rovided
for some $ 5 . 6 billion of capital inv estment. 1 5
T he graph below displays the cost breakdown of a typical
urban water supply chain.
2 5 -3 5 %
2 5 -3 5 %
W astewater
transport
W ater transport
and distribution
10 % to 3 0 %
Around 5 %
B ulk water: Dams
and riv ers
R etail
5 % to 10 %
W ater treatment
Around 15 %
W astewater
treatment and disposal
10 % to 2 0 %
B ulk water: Desalination
and ground water
Source: Infrastructure Partnerships Australia, ‘ Doing the important, as well as
the urgent: R eforming the urban water sector’ , Nov ember 2 0 1 5
1 5
Infrastructure Partnerships Australia, ‘ Doing the important, as well as the
urgent: R eforming the urban water sector’ , Nov ember 2 0 1 5
Australian infrastructure: Some facts and figures E Y
2 0 1 6
| 15
T ra n s p o r t
Priv ate sector ownership of transport assets is growing.
ut t e attra tiveness of t e rivate se tor to invest in
our transport assets v aries between asset classes, with
airports and ports leading the way.
T he maj ority of passenger and non- bulk freight rail
assets in ustralia are u li all owned ul frei t rail
has a mix of public and priv ate sector ownership. T he
unter alle oal ain is u li l owned t rou
wit t e re ainder of ustralia s ul frei t rail
assets are priv ately owned, largely by the mining sector.
O v er the past two decades most of Australia’ s airports
hav e been transferred to the priv ate sector, leav ing all
capital city airports in priv ate hands. In more recent
years, the role of the priv ate sector has grown in
Australia’ s capital city ports while regional ports hav e
tended to remain publicly owned.
T he maj ority of Australia’ s public transport network
remains publicly owned. H owev er, the role of the priv ate
sector is growing with more franchising models.
E xamples of franchise models include part of the bus
and ferry networks in Sydney and part of the rail
networ in i toria
T he map to the right displays selected ports and airports
in Australia and indicates those that are leased or owned
by the priv ate sector.
W ith the exception of a small number of tolled roads in
capital cities most of Australia’ s road network remains
publically owned.
C o s t a n d d is t a n c e o f s e le c t e d t o ll r o a d s in A u s t r a lia
6 . 7km $
Airportlink M 7
M 7 Clem Jones M otorway
3 .9 7 -$ 5 .3 0
6 . 8 km $
Logan M otorway
4 .8 5
3 0 km $
Gateway M otorway
1 .6 4 -$ 2 .6 9
48 km $
2 1km
M 2 H illsM otorway
$ 1 .9 8 -$ 6 .6 8
40 km 3
W estLink M 7 R oad
Lane Cov e T unnel
3 . 6 km $
2 6 km
6 km $
M 1 E astern Distributor
Cross City T unnel
Sydney H arbour B ridge
NSW
Sydney
| Australian infrastructure: Some facts and figures E Y
1 6 .6 9
3 9km
V ictoria
M elbourne
Source: E Y anlaysis
16
.3 5
2 2 km $
M elbourne E astLink T oll R oad
B risbane
$ 4 .5 0
6 .7 5
2 . 1km $ 2 . 5 2 - $ 5
1. 1km $ 2 . 5 0 - $ 4
CityLink T oll R oad Network
Q ueensland
8 . 8 8 cents/ km
( capped at $ 7 . 7 8 )
1 .5 9 -$ 3 .1 8
M 5 South W est T oll M otorway
2 0 1 6
4 .3 2
$ 5 .9 4
P r iv a t e s e c t o r in v o lv e m e n t in s e le c t e d p o r t s a n d a ir p o r t s
D a r w in A ir p o r t
D a r w in P o r t
B r is b a n e A ir p o r t
W e s t e r n A u s t r a lia
N o r t h e r n T e r r it o r y
Q u e e n s la n d
P o r t o f B r is b a n e
S o u t h A u s t r a lia
S y d n e y A ir p o r t
N e w S o u t h W a le s
P e r t h A ir p o r t
F r e e m a n t le P o r t
P o r t B o ta n y
C a n b e r r a A ir p o r t
V ic t o r ia
M e lb o u r n e A ir p o r t
A d e la id e A ir p o r t
A d e la id e P o r t
T a s m a n ia
P o r t o f M e lb o u r n e
H a s t in g s P o r t
H o b a r t A ir p o r t
P u b lic
P r iv a t e
P o r t o f H o b a r t
Source: E Y anlaysis
Australian infrastructure: Some facts and figures E Y
2 0 1 6
| 17
T h e e v o lv in g P P P m a r k e t
PPPs are v ital to the dev elopment
of infrastructure in Australia and
hav e played a key role in driv ing
ost and ti e effi ien in
infrastructure deliv ery.
e ustralian
ar et weat ered t e
well with small dips in the number and v alue of
transactions in 2 0 1 0 and 2 0 1 2 followed by strong
growth in 2 0 1 3 - 2 0 1 5 .
Australia’ s PPP market continues to grow and ev olv e.
T he number and v alue of PPP transactions reached
historical highs of nine transactions with a combined
v alue of more than $ 1 2 billion in 2 0 1 5 . T his is largely
due to t e finan ial lose of Nort onnex and West
onnex
T he graph below displays the v alue and number of PPP
transactions in Australia ov er the past decade.
1 4 ,0 0 0
AUD $ m
1 2 ,0 0 0
1 0 ,0 0 0
8 ,0 0 0
6 ,0 0 0
4 ,0 0 0
2 ,0 0 0
0
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8 2 0 0 9
T ransactions
2 0 1 0
2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4
Number of transactions
Source: Infradeals, E Y analysis
2 0 1 5
1 0
9
8
7
6
5
4
3
2
1
0
Number of transactions
P P P T r a n s a c t io n s in A u s t r a lia
O v er the past decade the number of participant
countries in Australia’ s PPP market has doubled with
greater participation from markets closer to home such
as Asian nations, New Zealand and South Africa. M ore
foreign inv estment in Australia’ s PPP market has seen
t e s are of invest ent fro
ustralian fir s fall
number of deals, and 2 3 % , by v alue of deals. T he table
below displays changes in the maj or participant
countries in Australia’ s PPP market ov er the last decade.
The number of participant countries in Australia’s
P PPP
a r t i c market
i p a n t c has
o u n tdoubled,
r i e s i n A over
u s t r the
a l i a ’ last
s P P decade
P m a r k e t
Australia, Canada,
Germany,
Luxembourg,
Netherlands,
UK and USA
Australia,
Denmark,
France,Germany,
Netherlands,
Portugal, Spain,
UK and USA
Australia, Canada,
Denmark, France,
Germany,
Greater China,
Japan,
Luxembourg,
Netherlands,
South Africa,
Spain, UK and USA
Australia, Canada,
France, Germany,
Greater China, Italy,
Japan, New Zealand,
South Africa,
South Korea,
Spain, Switzerland,
UK and USA
14
7
2005
9
13
2008
2011
Source: Infradeals, E Y analysis
18 | Australian infrastructure: Some facts and figures E Y
2 0 1 6
2015
A national look at current and foreshadowed PPPs
PPPs will continue to play an important role in the delivery of Australia’s infrastructure with six PPPs currently in
procurement stage and another 11 future possible PPPs. The map below displays the current and future possible
PPPs indicating that PPPs will be crucial for the delivery of some of Australia’s flagship infrastructure projects in the
next decade, especially in NSW.
Cross River Rail
PPPs in procurement
Brisbane Metro
Potential PPPs
Grafton Prison
Social Housing
Sydney Metro CSW
Parramatta Light Rail
New Stadium
2nd Schools PPP
Western Sydney Airport
WestConnex Stage 3
Integrated Health Partnerships
South Road Corridor
AdeLINK
Western Distributor
HCMT Rolling Stock PPP
Melbourne Metro
Outer Suburban Arterial Roads
Australian infrastructure: Some facts and figures EY 2016 | 19
B ig t r a n s a c t io n s
A look back and forward at our
big infrastructure transactions
rev eals a number of high v alue
transactions, but the outlook
is uncertain.
A lo o k b a c k :
T hrough this lens alone, we can see that more than
illion of rivate finan e ot de t and e uit
has been inj ected into Australia’ s infrastructure market.
T he table below highlights transactions greater than
illion t at ave rea ed finan ial lose in t e last
two years.
#
N ame
1
e of transaction
rans rid
alue
illion A
rownfield
overn ent asset sale
$ 1 0 .3
rownfield
rivate to rivate sale
$ 6 .1
i eline
rownfield
rivate to rivate sale
$ 6 .1
4
North W est R ail Link O T S
reenfield
$ 3 .7
5
West onnex ta e
reenfield
$ 3 .5
2
a e in ludes il and N
ssets
acq uisition and Apache E nergy Limited)
3
N
6
a ifi
7
Nort
8
9
dro
rownfield
onnex
reenfield
rivate to rivate sale
$ 3 .0
$ 2 .9
rown astle ustralia
rownfield
rivate to rivate sale
$ 2 .0
ir ort in
rownfield
rivate to rivate sale
$ 1 .9
rivate to rivate sale
$ 1 .8
ris onne tions
1 0
ona as lant
rownfield
1 1
Sydney Light R ail
reenfield
$ 1 .7
reenfield
$ 1 .6
1 2
1 3
1 4
oowoo
a e ond an e rossin
E nergy Dev elopments Ltd
it
in
rownfield
ulla Widenin
rivate to rivate sale
rownfield
1 5
R oyal North Shore H ospital
rownfield
1 6
Nort ern ea
reenfield
es os ital
$ 1 .4
$ 1 .3
rivate to rivate
$ 1 .0
$ 1 .0
A lo o k f o r w a r d :
e lands a e for asset sales in ustralia is uid and
the changing political landscape has thinned out the
transaction pipeline. T he market continues to react to
changes in gov ernment policies that impact the number
and timing of transactions in the pipeline.
n ueensland reviousl identified overn ent
transactions hav e been taken off the table and,
in t e re ent o
onwealt ud et t e sale
of
was res inded
20 | Australian infrastructure: Some facts and figures E Y
2 0 1 6
O ther transitions, such as the Port of M elbourne and
W estern Australia Ports, are still going ahead, despite
taking longer than anticipated. In NSW , Ausgrid and
ndeavour ner are t e next onfir ed transa tions
under t e N W overn ent s e uildin N W lan
to lease 4 9 % of the state’ s electricity network assets.
n a si ilar ove t e Western ustralian overn ent
recently announced that state’ s electricity poles and
wires will be put up for sale next year, under a plan by
t e arnett overn ent to raise
illion to drive
down record debt and fund new infrastructure.
E Y
| Assurance | T ax | T ransactions | Adv isory
A b o u t E Y
E Y is a global leader in assurance, tax, transaction and
adv isory serv ices. T he insights and q uality serv ices we deliv er
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