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April 16, 2009
BrisConnections, it is fair to say, is yet another example of the disaster that arises from private public partnerships to build urban infrastructure. Why so? What explanations are available. One general argument is that the problem arises from incompetent state governments not the market failure per se. Thus Michael Bounds in The Australian says that:
The BrisConnections Airport Link in Brisbane is the latest casualty of a failure of responsible state governance of infrastructure development. Under the Airport Link funding model the, mostly small, shareholders are obliged to pay a further $2 on shares that have now fallen from $1 in value to 1c. They are understandably reluctant to pay. Anna Bligh remains silent about this elephant in the city.
Isn't this a failure of the Macquarie model of financing infrastructure as distinct from just being a problem of state governance? Why should the state be held totally responsible for the way that Macquarie set up the financing within a neo-liberal mode of governance?
Deregulation has devolved management down to the management of individual developments resulting in conflicts of interest and a regulatory vacuum in relation to both infrastructure development and the quality of life in new medium density developments associated with the rapid transformation of our economy to a service sector driven economy.
There been a shift away from the neo-liberal mode of governance to one based on state intervention as a result of the fallout from the global financial crisis? Bounds, who is an Australian sociologist and Associate Professor in the School of Social Sciences at the University of Western Sydney, uses the BrisConnections example and the cross-city tunnel under Sydney's CBD to argue that state government's should not be trusted with infrastructure development as opposed to the neo-liberal mode of governance. He argues thus:
The federal Government, through the Building Australia infrastructure fund is about to give $12.5billion to the states for infrastructure development. When the leaders of government are routinely blaming the banks and finance houses for the global financial crisis, the answer is to pour money into infrastructure.State governments have proven themselves singularly inefficient in managing the development and financing of infrastructure yet they are about to be showered with billions of dollars and an instruction to spend it as quickly as possible.
He has a point in that the early reports on state bids to the commonwealth infrastructure fund were that bids were so ill considered as to be unacceptable. The Infrastructure Australia Committee has formed its priority list for funding state projects and has produced a checklist of minimum information to be provided.
Bounds in his recent Urban Social Theory: City, Self, and Society is a proponent of the new urbanism. This is a movement that confronts the contemporary problems that beset our cities: problems of urban sprawl, crime, environmental degradation and alienation through the promotion and creation, and restoration of diverse, walkable, compact, vibrant, (and) mixed-use communities that include the housing, work places, shops, entertainment, schools, parks, and civic facilities that are essential to the daily lives of the residents.
Unlike the free market advocates Bounds is not arguing for the market to replace state government within a regulator framework. His concern is that:
we should be hearing proposals for the federal Government to monitor the performance of states in the financing and implementation of infrastructure projects. There should be no impediment to establishing an independent authority to report on the financial engineering and realisation of development targets on such proposals.Without an auditing process, on the basis of experience taxpayers can expect their $12.5billion may well be spent without a successful outcome...
He has a legitimate point.
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isn't the quality of life in new medium density developments associated with the rapid transformation of our economy to a service sector driven economy associated with the process of gentrification’ ---- the residential redevelopment of a brown field site and its repopulation by largely middle class, that is, tertiary educated and service industry employed workers and their families?