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Wider economic benefits workshop

Adept Economics Director Gene Tunny recently delivered a workshop as part of the “Building a Coalition for Quality Infrastructure Funding and Finance” short course hosted by the University of Queensland (UQ) International Development and supported by the Australia Awards program. The short course brought together Indonesian government officials and experts for a comprehensive learning experience. The course, held in Brisbane and Sydney from September 23 to October 4, 2024, aimed to strengthen infrastructure funding and financing capabilities among participants, enhancing their skills in project assessment, stakeholder engagement, and economic appraisal. Gene’s workshop on September 30 at UQ Brisbane focused on the latest advances in economic appraisal for infrastructure projects.

Gene’s session emphasised how advanced appraisal techniques can support informed decision-making and maximise public value in large-scale infrastructure projects. Drawing on real-world case studies, Gene’s presentation explored vital methodologies, including cost-benefit analysis (CBA) and the importance of incorporating Wider Economic Benefits (WEBs) in project evaluation. He discussed how economic and social impacts can extend beyond traditional CBA measures, including the agglomeration economies and labour market enhancements that infrastructure projects can bring. Gene’s presentation updated his 2022 presentation to a previous group of Indonesian officials:

Wider economic benefits of infrastructure projects – Adept Economics | Decision Defining Insights

Gene’s workshop underscored the value of rigorous economic appraisal to inform quality infrastructure investment and optimise public value. Rigorous economic appraisal is essential given the development of good PPPs faces several challenges:

• Overly optimistic forecasts: Many toll road projects failed due to unrealistic traffic volume predictions. For example, the Cross City Tunnel in Sydney attracted only about a third of the predicted daily vehicle traffic (see Here’s what makes a successful public-private partnership | INTHEBLACK ).
• Ineffective risk transfer: In some cases, like the Port Macquarie Hospital, the original contracts did not effectively transfer critical risks to the private sector (see Public-private hospital partnerships are risky business – Grattan Institute).
• Long-term contract issues: The extended duration of these partnerships often outlasted governments, creating democratic risks and accountability problems.

The Adept Economics team is proud to have contributed to advancing the skills of professionals in infrastructure funding and development across the Asia-Pacific region.

Course participants and facilitators at Customs House, Queen St, Brisbane.

Building a Coalition for Quality Infrastructure Funding and Finance short course: additional information

Participants from Indonesian agencies, including the Coordinating Ministry for Economic Affairs, Ministry of Finance, and Ministry of National Development Planning (Bappenas), engaged in workshops, site visits, and presentations. They explored the Australian approach to infrastructure development and best practices in public-private partnerships (PPPs), sustainability, and project finance. The course provided a platform for these officials to apply learned skills to their Award Projects, aiming to address Indonesia’s infrastructure needs effectively.

The course featured a distinguished lineup of presenters who shared their infrastructure funding and development expertise.  The course was expertly facilitated by Former Queensland Government transport and finance minister, the Honorable Rachel Nolan,  Associate Professor Neil Paulsen, and Dr David Ray. The program’s primary focus was attracting international and institutional investors. To that end, the facilitators arranged for speakers from QIC, Plenary Group, IFM Investors, and ANZ Bank to address what investors look for when evaluating whether to invest in a project. 

Rachel provided insights into Australia’s infrastructure landscape, drawing from her experience in government. Neil facilitated several sessions, including discussions on public-private partnerships (PPPs) and site visits to significant infrastructure projects. David played a pivotal role in the course by facilitating key stakeholder management and project finance sessions, helping participants understand best practices for engaging communities and structuring financing to ensure project viability and long-term success.

PPPs play a crucial role in Indonesia’s infrastructure development, helping bridge the significant funding gap needed to support the country’s rapid urbanisation and economic growth. Given the extensive investment required for transport, energy, water, and sanitation projects, PPPs may offer an effective model for leveraging private sector expertise and financing while enabling risk-sharing between the public and private sectors. These partnerships have facilitated major projects, including toll roads, ports, and power plants, improving essential services and boosting economic connectivity across the archipelago. As Indonesia prioritises sustainable development and enhanced infrastructure, PPPs are integral in meeting these ambitious goals to align with government policies, such as those set forth by Bappenas, to attract investment and promote efficient project delivery.

Australia’s experience with PPPs offers several valuable lessons for Indonesia as it seeks to enhance its infrastructure through similar models. First, Australia’s well-established framework for PPPs, particularly in sectors like transport, healthcare, and education, emphasises the importance of rigorous planning and transparent risk allocation. Australia has developed clear guidelines, such as those from Infrastructure Australia, that define roles, responsibilities, and performance expectations for public and private partners, helping ensure projects meet public needs while delivering value for money.

Moreover, Australia’s focus on stakeholder engagement and community consultation is a key aspect of successful PPP delivery, which Indonesia can adopt to build local support and mitigate opposition to infrastructure projects. For instance, major Australian PPPs, such as Melbourne’s EastLink toll road, involved extensive community outreach to align project goals with public interest. This approach fosters public trust and smooths project execution.

That said, Australia has its fair share of unsuccessful PPPs, such as Sydney’s Lane Cove Tunnel, and one of the benefits of short courses such as these is the opportunity for Australian policy advisers to interact with officials from other countries to share lessons learned and frameworks for best practices. 

Published on 27 November 2024. For further information, please email us at contact@adepteconomics.com.au or call us at 1300 169 870.