Defects in Infrastructure Planning and Delivery in Queensland (2002)

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There are serious defects in the machinery that Queensland is trying to use for infrastructure planning and delivery. The following attempts to identify the nature and causes of those defects, and a potential cure.

In Brief:

  • Queensland traditionally planned and delivered most infrastructure through government departments and other authorities. This machinery (which was constrained by the vertical fiscal imbalance of Australia's federal system) virtually ceased to operate in a process of reform in the 1990s which unfortunately involved both de-skilling of the Public Service, and ignoring the need for realistic infrastructure planning while adopting 'commercialization' and competitive service delivery;
  • there are fundamental defects in the new system that has been created because: public administration remains politicized (ie obliged to focus on the opinions of influential interest groups rather than on whether policy will work in practice); agency strategic planning systems are unrealistic; and (in a competitive user-pays environment) much infrastructure now needs to be demand, rather than public policy, driven;
  • the situation has been somewhat further complicated: by attempts to integrate infrastructure planning with regional planning; by underlying potential problems in public financing; by a couple of attempts at 'central planning' for infrastructure that ignored both of the previous complications; by procedures for Public Private Partnerships which it has been hoped might provide greater value-for-money (but can seldom do so because likely savings in production costs and infrastructure quality will be lost in the complexities of contract management); and by the privatization of monopoly infrastructure which has created an impossible regulatory conundrum;
  • any realistic solution will require: professional renewal of the Public Service; elimination of the systemic problems that have been created; and serious efforts to develop a productive economy (and thus a stronger tax base for infrastructure and other services).
Public Evidence

Evidence that there is a problem in infrastructure planning and delivery in Queensland includes:

  • the 'Koala Road' / South Coast Motorway whose mismanagement under the Goss Government appeared to contribute not only to politically-damaging protest (see Towards Good Government in Queensland), but also to a subsequent unwillingness by any government to make hard decisions;
  • the case of the Brisbane River footbridge;
  • cost blow-outs on many projects, which one observer suggested had arisen from inadequate knowledge and experience in design and construction (see  'Troubled waters' - Peterson D. Courier Mail, 2/6/01);
  • widespread concern about the un-satisfactory state of transport systems in SE Queensland (see Transport - Archive);
  • various Strategic Infrastructure Plans that the Department of State Development prepared in 2000 and 2001. The author's Comments on State Infrastructure Plan - Strategic Directions 2001 suggest that (a) DSD's plans were attempted because other planning machinery was ineffective, but that (b) they also were unsuccessful;
  • pressure for increases in public infrastructure spending (eg Owen R. ‘Budget infrastructure spending takes a 15 year slide’, Courier Mail, 25/3/02), at the same time that the state budget projects a significant fall in annual public capital formation (See About Queensland's 2001 Budget);
  • the Queensland Local Government Association's inquiry into road funding (O'Dwyer E 'State toll road system considered',  Courier Mail,  18/1/02);
  • the Institution of Engineers suggestion that Queensland's infrastructure was suffering from a lack of integration and coordination - and that the pace of adopting PPPs has been slow (Owen R. 'Govt drags chain on introduction of PPPs',  CM,  20/4/02)
  • a call for a strong regional coordinating body in SE Queensland to overcome problems in the provision of infrastructure (Sommerfeld J., ‘Shaky foundations’, Courier Mail. 1/3/02);
  • the emergence of a minor loss from a foreign investment by one government enterprise involved in infrastructure; 
  • the potential risks to Queensland's budget position from infrastructure competition suggested by Queensland's Rejection of Competition Reforms of the Electricity Industry
  • general conclusion of a national report card on infrastructure (see extracts in Aspire Australia, Business Council of Australia) 2002) that included:.
    • inconsistencies in regulatory frameworks, and difficulties with competition reform;
    • conflicting planning constraints especially regarding transport issues;
    • rating of most infrastructure no higher than adequate, because of maintenance deficiencies, environmental concerns and issues of future replacement;
    • unsustainable increases in road traffic;
    • a lack of: timely consistent data; integration / coordination; and long-term planning
  • an assessment by the Civil Engineering Construction Alliance that major backlogs in infrastructure investment have emerged in Queensland in the decade to 1994, and that standards are well below those in larger Australian states and international comparisons [1];
  • the failure to develop electricity distribution networks in SE Queensland which led to the potential for frequent blackouts (see Failure in Queensland's Electricity Distribution Network);
  • an Infrastructure Report Card by the Institution of Engineers, which identified major infrastructure deficiencies in Queensland [1]
  • infrastructure bottlenecks nationally are seen as one factor constraining exports [1] - of which the Dalrymple Bay coal loader has gained particular notoriety (see below)
  • delays in determining a regulated access regime have also affected state rail system [1];
  • serious skill shortages are seen to constrain the level of infrastructure / capital investment that is needed - which is leading to large labour cost increases [1];
  • though there are major infrastructure problems around Australia, there are no creative plans to deal with the difficult problems involved [1]
  • a farcical situation developed where a state government regulator had to approve capital investment by state government agencies and (reportedly) its main concern in approving investment was that the government might pocket the money and rip-off consumers to benefit the state's bottom line [1].
  • CEDA suggested that nationally infrastructure was in a state of disrepair / crisis [1]
  • state proposals to upgrade infrastructure to meet future demands for coal transport were described as 'irrational exuberance' and likely to be sub-optimal by a major mining company [1], while the Queensland resources Council supported the proposal and sought federal funding [1].
    • [Comment: This suggests the emergence of an infrastructure planning process which (a) takes place in a political, rather than a professional, environment and (b) introduces the complexity of intergovernmental relations into purely regional transport issues].
  • $500m tilt train (promoted as advanced technology) has been suggested by critics to turn out as a total 'dud' [1]
  • QRail has the potential to be the 'next Energex' [1]. It is no longer possible for farmers to ship produce from Darling Downs to Brisbane Port by rail because aging tracks can not carry the loads. [1]
  • business argued, following report of PM's task force to examine export infrastructure, that governments needed to address problems in infrastructure generally [1];
  • Australia invests considerably less in water infrastructure than other OECD countries [1] - despite the fact that it arguably the driest inhabited continent. Problems associated with water shortages in SEQ are blamed on state government for failing to plan and pay for adequate infrastructure [1];
  • Queensland Government established a top level committee to sort out what was happening in terms of major infrastructure [1]. This task should have been able to be dealt with by upper-middle management.
  • Queensland Government has 'picked winners' in terms of which infrastructure investments should be expedited  (a practice which necessarily disrupts the process of dealing with other projects) and the basis of dubious economic assumptions [see comments on 1]
  • Construction industry is concerned that capacity problems will worsen as a consequence of $2bn North South tunnel . [1]
  • infrastructure investment appears to be declining in short term despite announced $55bn program of 'additional' infrastructure over 20 years [1]
  • cost of state governments infrastructure plan for SEQ increased $11bn apparently due to rapidly rising construction costs. [1]
  • the public is not convinced that the state government is bringing the water crisis under control [1];
  • mining companies perceive serious problems in Queensland's government-dominated infrastructure decision making chain [1]
  • years of inaction and a lack of planning is seen as responsible for the water supply crisis that emerged in SE Queensland in 2006 [1]
  • SEQ's public transport system is in crisis - as passenger numbers can at times not be carried [1];
  • a need has been perceived to dramatically improve the processes and planning within all government organisations for dealing with infrastructure [1]

Furthermore one apparently informed observer suggested that a $2+bn hospital expansion program has created long term financial problems because decisions about capital investments were made without considering the implications for ongoing operating costs (which typically are 50% of capital costs annually for hospitals). According to that observer, Queensland is unable to afford to operate some hospital facilities constructed under that program.

Mismanaged 'Reform': one Direct Contributor to the Problem

Australia's federal system has long distorted infrastructure planning and delivery because of the existence of the world's highest level of vertical fiscal imbalance. As the result of constitutional, political and judicial decisions, the Federal Government gains most tax revenues and the states have most spending responsibilities.  This fact, and partial efforts to achieve national goals through special purpose funding, have traditionally complicated the planning and delivery of infrastructure. And the massive increase in such funding by the federal Whitlam Government in the 1970s seriously eroded the ability of states to plan or undertake significant infrastructure initiatives - by creating dependency, biasing state efforts towards lobbying for funding and shifting power within state administrations away from technical specialists who knew what infrastructure was needed and how to provide it. The effect was like the impact which tariff protection had had on manufacturing industry, and this is the most probable initial cause of the infrastructure backlogs which some observers argue emerged in the 1980s and 1990s. See also Federal-State Fiscal Imbalances.

However most of the above symptoms (probably the fore-runners of larger still-hidden problems) seem to be mainly due to very poor economic and public sector management tactics in the 1990s.

Queensland's traditional system had involved infrastructure planning and delivery by government departments or statutory authorities - with considerable use of private design consultants and construction contractors. Under this system infrastructure planning relied on the accumulated knowledge and experience of a fairly professional bureaucracy which was subject to:

  • political control over general policy and the ultimate allocation of funding; and
  • diverse other pressures, such as: expert opinion; changes in technology and international practices; community and business proposals; needs studies; etc. 

However in the early 1990s this system was broken down  without the creation of any effective alternative. This occurred because reformers who lacked the ability to anticipate the effect of what they were doing were politically authorised to pursue simplistic goals. In particular

  • badly conceived Public Service 'reform', whose only serious goal was to increase political control and which was characterised by the complete absense of any moral or professional credibility, stripped Government of much of the knowledge, skills and experience required for practical advice about, and implementation of, policies for infrastructure and many other public functions; and
  • tactics chosen to boost economic performance emphasized competition and 'business-like' methods for public services delivery. And these were introduced without considering: the need for infrastructure to be planned; or the intrinsic complexity of many public goods and services which often makes it impossible to define satisfactory market or business-like solutions.

The intelligent way to change any complex working system (eg that for planning and implementing infrastructure) is through evolutionary adjustments which allow important aspects of the system to be maintained (see the author's 1990 suggestions for Changing the Queensland Public Sector which were based on earlier (1970s') experience of successful reforms). This can protect the integrity of such a system from single-issue reformers who are not familiar with every aspect of it.

Only the most extreme optimist would allow amoral first-year apprentice aircraft fitters to completely redesign and rebuild the engines of a jet while the plane is flying at 30,000 feet.

But the latter was, in effect, what was done. And the optimists were then quite surprised when the plane crashed (see The Origin and Spread of the 'Queensland effect').

Unfortunately the reformed 'engines' can still not realistically be expected to work.

How Queensland's Infrastructure Management System Deteriorated

1. Deskilling Government Administration

Many senior staff with technical skills relevant to infrastructure (and all other public functions) were eliminated in an ill-informed and  autocratic process of across-the-board 'restructuring and re-staffing' in the early 1990s.

Amongst other things the 'reform' process under the Goss Government involved the adoption of 'managerialist' philosophies and the parallel politicisation of public administration. Managerialism was the view that management was a generalist / coordinating process that did not require technical skills, and that, in fact, such skills tended to result in biases. This process and its outcomes are outlined in Towards a Professional Public Service for Queensland 

Observers' comments on the resulting predicament of Queensland's administration in 1999 are outlined in Note 43 on Queensland's Challenge - and (though the exercise has not been repeated) it appeared in 2002 that recovery has been patchy and that in many areas the situation had continued to get worse.

A lack of administrative realism (and administrative failures) have been the predictable consequences (eg see Queensland's Ongoing Challenges)

2. Commercialization and Competitive Service Delivery

Queensland's public infrastructure service providers were then increasingly exposed to:

  • commercialization (ie adoption of commercial goals initially in an effort to create a 'cash cow' to underpin public revenue in a situation in which there was little competition); and then to
  • competitive service delivery under National Competition Policy (which had been introduced to promote economic productivity by removing regulatory protection of inefficient producers). 

National Competition Policy required competitive neutrality between public and private providers, so the main emphasis of Departments shifted onto:

  • regulating the 'commercial' operation of competitors (of which one or more was usually a government business enterprise - either a Government-owned Corporation (GOC) or a commercialized subsidiary of the department);
  • purchasing services on behalf of the public - where the service was considered to be a public good;

At the same time private provision of some infrastructure was encouraged

The immediate effect of these often well-intended but poorly-implemented changes was to further erode Queensland's machinery for planning infrastructure, because:

  • the state government's ability to take responsibility (or be held accountable) for economic infrastructure (eg electricity, ports), which had already been hamstrung by federal / state fiscal imbalances, was further reduced by the need for services to be developed in response to market demand rather than public policy;
  • those responsible for infrastructure delivery (who had the detailed technical knowledge) were shifted from departments into separate entities - with only a lightweight technical capability remaining to determine what actually needed to be done, or how to do it;
  • competing interests (ie GOCs; private service providers; and government departments) were simultaneously trying to plan infrastructure - which made particular problems for infrastructure that has to be integrated (eg into transportation networks) [1] and for that hard infrastructure that needs to be integrated with regional land use and environmental considerations (which requires that someone be able to negotiate this);
  • government agencies, informed of private proposals and accustomed to making the decisions, could not resist using the ideas themselves (giving rise to 'intellectual property' concerns).

However, less obviously, Queensland's 'commercialization' models for government business enterprises (ie where entities subject to competition remain in public ownership) has also created an impossible conflict in planning infrastructure between the desires of their Ministerial shareholders (ie to achieve political goals), and the often quite different requirement to respond effectively to market demand.

Given real commercial competition and the adoption of commercial goals, infrastructure service providers (whether public or private) must respond mainly to market demands - and only to public policy to the extent that this makes government into a customer (or a Community Service Obligation contributor). If they do not do so, then in a competitive user-pays environment they will not be financially viable, and / or government's CSO costs will blow out.

However there is no way that GOCs can be protected against informal political pressure (given the power that Ministers have over Board appointments).

The effect of this conflict of interest does not yet really seem to have begun to be appreciated.

Ultimately, in a highly competitive environment quasi 'nationalized industries' (ie entities subject to both political direction and commercial competition) are likely to be sources of large financial losses to a state budget - which is critically dependent on their competitive success (See Notes 76 and 75 on Queensland's Challenge).

3. Regional Planning

A further (minor) complication then arose from a desire to integrate regional land use and infrastructure planning. An attempt was first made to plan infrastructure through regional planning studies (eg SEQ 2001), followed by the embodiment of infrastructure coordination procedures in the Integrated Planning Act (IPA). 

However while it may improve information interchange the IPA could not be taken seriously as a way of defining infrastructure needs:

  • the task of planning any particular facility tends to be very complex. It is not just a case of nominating 'projects' that look good on a map. Rather attention must be given to detailed considerations affecting infrastructure service providers. This must involve, for example,  (a) technical questions (b) integration with existing operations and (c) consideration of financial viability. Land use planners simply can't take these issues into account - or rely on advice given to them by service providers who have to seek corporate competitive advantages; 
  • regional planning studies can not realistically envisage how a region's economy will change - and thus planners' forecasts of infrastructure requirements can be indicative at best (eg SEQ2001 was merely a plan for perpetuating SE Queensland's poorly developed economy);
  • in practice a coordination role in government can only be undertaken by entities with a high status and institutional power - and this is limited to agencies under the Chief Executive (who has a general coordination role in Cabinet) or the Treasurer (who has financial power). Coordination on a 'regional' basis never works - because of the absence of any ability to control either the budget or flow of papers to Cabinet. Even if well-meaning governments try to establish other coordination agencies 'with teeth' they will always be undermined - because their technical credibility depends on the quality of information which those they are coordinating supply them with (which won't be provided if there is any real difference of opinion - ie if a coordinating agency which lacks institutional power tries to show any 'teeth' it will soon find itself made to look ridiculous).

The Integrated Planning Act has been described by a reputable commentator as: disastrously conceived; making no contribution to achieving real outcomes; and creating a mass of procedures and processes which add to legal disputation and costs while allowing the state to escape responsibility for coordinating local planning  [1]

4. Central Planning

The Queensland Government then tried to solve these problems by creating a whole-of-government mechanism for coordinating infrastructure through State Infrastructure Plans produced by the Department of State Development (DSD).

DSD's initial effort, Strategic Infrastructure for Queensland's Growth (2000), clearly showed that administrative difficulties and confusion existed.

The author's preliminary analysis of SIQG suggested that: 

  • SIQG was unlikely to identify meaningful proposals because it did not even reveal awareness of the practical obstacles to traditional means for planning infrastructure; 
  • an attempt was made to define infrastructure 'projects' centrally, even though institutional changes to promote productivity, now require government to manage much infrastructure primarily by setting rules that govern the operation of 'enterprises' who provide infrastructure services in response to diverse demands - only some of which are from government; and
  • there was no consideration of the financial implications of infrastructure - despite Queensland's increasingly difficult financial predicament and the budget's critical dependence on the financial health of government business enterprises.

DSDs' State Infrastructure Plan: Strategic 2001 was no more satisfactory. It made a useful start by outlining why it is hard to define economic infrastructure through a central plan - but it then presented no real solution, as reliance on consensus amongst infrastructure service providers (apparently a major method used) is inadequate especially in a competitive user-pays environment.


  • the Plan only considered the relationship between infrastructure and economic considerations;
  • the relationship between the Queensland Government's two independent infrastructure coordinating arrangements (the other being the Integrated Planning Act) was not defined; and
  • the extent to which private infrastructure service providers are able (or encouraged) to act independently in initiating infrastructure proposals was unclear. 

Ultimately DSD's infrastructure plan disappeared without a trace and did not seem to be mentioned in 2004 when a newly created Office of Urban Management and Infrastructure Coordination produced a draft SE Queensland Regional Plan which sought to identify a growth strategy for that region.

In May 2005, a SEQ Regional Infrastructure Plan and Program was released to complement the Regional Plan. This appeared to present a coherent and modest proposal for infrastructure development in the region. However it suffered numerous deficiencies such as: producing a glossy report rather than addressing defects in infrastructure machinery such as outlined here; uncertain financial viability; and various apparent practical defects.

5. Public Private Partnerships (PPPs)

Arrangements for private sector involvement in infrastructure were formalized through Public Private Partnership Guidance Material, in 2002.

The latter identified agency strategic planning as the primary way in which infrastructure projects would be defined, though this was of limited value because:

  • that strategic planning process itself lacks realism in dealing with core government functions (see Evaluation of 'Managing for Outcomes');
  • the Commonwealth, through its AusLink scheme for transport PPPs, envisages planning and development in this critical area by the private sector under a national indicative planning process rather than by state governments (Marris S. 'States fear federal road funding cuts', Australian, 23/5/02); and
  • for infrastructure subject to competition and user-pays, planning through politically accountable institutions seems likely to be financially dangerous.

The main goal of PPPs is apparently to help overcome serious underlying problems in Queensland's financial situation by increasing efficiency.

There are many aspects of Queensland's underlying potential difficulties in balancing its budget, eg greatly increased public spending, stripping the assets of Government Owned Corporations to fund a short term boost in capital spending, reliance on a transitory boom (see About Queensland's Budgets)

However what is particularly important is that the financial challenge is closely related to the state's economy, because:

  • Queensland's Gross State Product / capita is well below the national average - reflecting the low productivity of the industrial structure that has been encouraged by past economic strategy. This can not provide an adequate tax base for funding a rapidly growing state at a high standard;
  • raising tax rates to increase revenues would have adverse economic impacts;
  • several other states have launched an inquiry into Commonwealth Grants Commission arrangements because of concern about large interstate transfers to Queensland of Commonwealth tax revenues that are ultimately due to Queensland's economic underdevelopment, and weak tax base. (see Review of Grants Commission Arrangements)

However PPPs (while they are undoubtedly of value in some situations) have no significant prospect of improving the financial position, and are likely to further complicate the environment in which infrastructure is planned.

Comments on Public Private Partnerships for Infrastructure suggests that:

  • the UK who originated the PPP model that Victoria, and now Queensland, have copied, is experiencing serious difficulties in its public services;
  • at best PPPs can be used for a very small percentage of infrastructure - and so should not be the main focus of attention;
  • the greater production efficiencies achievable through private delivery of infrastructure services is unlikely to produce high quality services at lower cost because of problems in contract management ie (a) many public goods and services are intrinsically complex - for the same reasons that they became 'public' in the first place - and thus difficult to define (b) Public Service skills may be inadequate and (c) ultimately the arrangement could raise the risk of corrupt collusion in contracting for infrastructure;
  • many infrastructure systems need to be managed as a whole, and this can be impossible where some elements are undertaken as essentially private undertakings;
  • Queensland's situation is much more complex than that in Victoria (and the UK) from which Queensland copied its PPP model (and that model is thus even less appropriate), because Queensland did not privatize its major economic infrastructure. Thus their market-oriented planning requirements must be dealt with through a politically-prioritized system not designed for their needs;
  • the real requirement for improved infrastructure provision in Queensland is to strengthen the state's tax base - which requires becoming serious about developing the economy.

More particularly it is understood that Melbourne's City Link freeway system was developed under a PPP arrangement which reportedly had to involve a provision for government to compensate the developer for any other changes in the transport system that might reduce their revenues. Creating a few such links in a region's transport system would ensure that planning future development of the network became essentially impossible.

These are not likely to be just 'teething' problems which will can eventually be overcome, because the market failures that cause many functions to be in the public sector in the first place (eg their complex relationships with other functions, dependence on political value judgments, or 'lumpy' investments) also makes them hard to manage contractually.

It is also clear (on the basis of intense lobbying for a very high level of infrastructure investment by self-interested groups) that PPP arrangements have the potential to distort the process of decision making about infrastructure - a risk that is amplified by the weakening of public services referred to above.

6. Privatization of Monopolies Leading to Regulatory Failure

In at least one case, a monopoly service (the Dalrymple Bay coal loader) became the centre of controversy in relation to the operator's failure to expand capacity to meet demand for coal exports [1, 2, 3, 4, 5, 6, 7], after it had been sold by the Queensland Government for $600m to a private operator.  

Problems were seen to arise because the regulatory authority (the Queensland Competition Authority - which under National Competition Policy is required to review the prices charged for monopoly services) had made a price determination which was said to be too low to encourage further investment [1].  The issue (which has led to disputes in other cases) became a matter of national political concern, resulting in the establishment of a task force to report to the Prime Minister [1], which did not seem to generate a viable solution.

In that case a failure to invest by a privatised / regulated business threatened to block regional development. The problem seemed to revolve around difficulties in managing the difference between prices needed to earn a reasonable return under normal circumstances (which regulators’ models showed to be reasonable) and the much higher prices needed to justify the risk of major new investment (which market forces would have bid up if the system was not being regulated).

 The problem may well be that regulated private ownership (rather than public ownership) may simply not be a viable option for monopoly infrastructure.  It can be noted that this case is not unique, eg:

  • regulatory delays in determining an access regime have also affected Queensland's rail system [1];
  • disagreements have arisen about whether charges at Sydney Airport are excessive [1];
  • serious difficulties are arising in setting prices for aging electricity distribution networks. When the networks were privatized, investors paid too much and expect access prices to be set to give them a return on what they invested, rather than on the underlying asset value [1].
    • [Comment: This is like problems that have arisen from regulatory determination of taxi prices in Queensland, which have been set to provide an assured return on the cost of a taxi license. Naturally the result was that the value of a taxi license rose rapidly - along with the prices paid by customers. Ultimately a substantial fraction of taxi fares simply went to pay for taxi licenses, and this greatly reduced demand and the contribution that the taxi industry might have made to the overall transport task]
  • there has been concern about abuse of monopoly positions by rail freight companies [1]

In other situations attempts to create competitive markets have resulted in systemic failures (eg in efforts to create electricity markets in US where prices were reportedly manipulated through blackouts and power shortages) [1]

Moreover: it has realistically been noted that Queensland has difficulties interfacing with Australia's national electricity market [1] because:

  • during the 1990s there was little investment in generating capacity, and supply shortages which forced up wholesale prices became apparent in 1998;
  • a policy of ensuring 25% spare capacity was then adopted resulting in large overcapacity, and falling prices to the point where parallel private investment became uneconomic;
  • interstate connection will in future prevent the intended 25% spare capacity being available to Queensland

The problem is that there may be an unavoidable market failure in electricity generation because it is commercially to provide peak / spare generation capacity and highly advantageous (in terms of gaining high prices) to allow power shortages to develop. 

The problem at the Dalrymple Bay Coal Loader (and in relation to similar concerns about regulatory price fixing in relation to other assets) was probably not that regulators went too far in trying to constrain the prices of monopoly infrastructure services,

Why: Fixed prices on monopoly infrastructure must either be set at a level that inhibits new investment (at times) or else allow excessive profits (at other times), because no regulator can determine a fixed price which mimics the dynamic response of a competitive environment which would vary the pricing at different stages in a business / investment cycle.

The problem of effective regulation can also be described in terms of (a) the difference between average prices and the marginal prices required to justify new investment (b) the need for a pricing structure which meaningfully rewards increased service quality as well as increased quantity and (c) the fact that gains from investment may be achieved by users rather than by operators [1

Another source of difficulty is that regulators are likely to have concern about the rent-seeking behaviour, which makes it difficult to gain agreement on an appropriate rate of return [1].  At Dalrymple Bay port users initially saw the problem as the port operator's desire to gouge out unjustified profits [1].

Where goods and services that have a 'natural monopoly' character are privatized, regulatory failure seems to be a common outcome [1, 2] - and this may well be unavoidable and require serious consideration about where such functions should be operated by the public sector.

It has been pointed out that (a) regulation always distorts the use of resources and (b) such problems were deliberately ignored in advocating 'reform' in order to reduce obstacles to change [1] - an approach to policy which may have been quite irresponsible.

In response to these difficulties a federal government task force reportedly concluded that there was no current infrastructure crisis - but one is possible in future unless an effective regulatory regime is established to mobilize private investment [1]. It suggested in May 2005 [1, 2, 3] that:

  • export ports should be subject to little regulation;
  • the goal should be to promote collaboration between ports, road / rail connections and port users;
  • regulation should be a federal government responsibility (though perhaps not by the ACCC).

This proposal seemed significant because:

  • recognition of the importance of promoting 'vertical' collaboration (ie the development of industry clusters) is long overdue (see The Inadequacy of Market Liberalization) - and presumably arose because the task force comprised representatives of ports and users, rather than economists;
  • the possibility of a national regulator other than the ACCC presumably was considered because the ACCC would promote 'horizontal' competition, not 'vertical' collaboration;

However the task force's conclusion that a regulatory regime which enables large scale private infrastructure investment is an adequate solution to future infrastructure development appears invalid (eg as argued above PPPs are a mechanism of limited relevance and proper regulation of privatized monopoly assets appears impossible).

Moreover the method reportedly proposed by the task force to achieve its goals seemed very poor because:

  • 'export' ports (even those which are primarily dedicated to one or a few users) may also have other 'public' users - and in this respect require regulation as monopoly assets. The task force appeared to have devalued market failure issues;
  • a government-administered collaboration process would be inadequate in dealing with commercial functions or leading edge economic trends (as suggested in Defects in Economic Tactics, Strategy and Outcomes).  The process would tend to be slow to respond, and be unworkably 'political';
  • there is a risk of creating a 'corporate state' arrangement whereby 'mates' gain strong influence over government decisions;
  • a confusing lack of uniformity in dealing with infrastructure would be introduced (especially for ports though this could extend to road, rail and airports) if the intent was that all 'export' infrastructure be treated in uniform way [1], that was different to other infrastructure of the same type).

The best way to stimulate and manage collaboration could be through better constituted port corporations - of which there are examples elsewhere in the world. A similar approach would seem to be useful in promoting collaboration around ports which are not primarily dedicated to exports.

A private group proposed an independent arrangement to managed Queensland's coal supply chains [1], which would be an alternative that could work - though implementation would require great care to avoid the risks implicit in central planning.

However even before the task force reported the Federal Transport Minister sought to take over regulation and planning of all ports [1, 2] - apparently seeing in this an extension of Auslink [1]. It was also suggested that the ACCC would in fact be an appropriate regulator for ports - and that it would be desirable for ACCC to adjudicate in all disputes over access to transport systems [1]. In relation to this proposal it was argued that:

  • state regulation would be more effective [1];
  • the Commonwealth's constitutional base for such action was weak; the resulting regulatory regime could be very complex because the Commonwealth could only deal with some aspects; coordination problems would thus grow; and creating conflict with the states over this might not be in the national interest [1];
  • the legal basis of extending the ACCC's powers would be difficult to build, and likely to result in disputes [1]

The Federal Transport Minister's proposal seemed undesirable also because:

  • the reason given for the proposed takeover was regulatory delays (which adversely affected exports) as the reason for the proposed takeover [1]. However, as argued above, adequate regulation of privatized monopoly infrastructure is not actually possible. The problem arises from defects in National Competition Policy assumptions;
  • obstacles to port expansion in one case involved purely local factors that the federal government would not want to have to adjudicate [1]
  • the centralization of government power which the present federal government has been pursuing seems undesirable in the Australian situation for many reasons. One of these is that developing ports can be critical element in economic development, which is a state responsibility;
  • the ACCC seemed to be being expected to cover too wide a field ranging from consumer protection to the completely different domain of managing logistics systems. 

The private sector reportedly make numerous submissions to the Prime Minister's task force on infrastructure bottlenecks which sought 'solutions' mainly through either central planning or large scale private investment [1]. None seemed to address the general systemic breakdown in infrastructure machinery that has cause the problem.

The Prime Minister's ultimate proposal reportedly involved performance incentives for the state for regulatory reform on the grounds that federal regulation of ports was impractical [1]. However it is not clear what can be achieved by providing incentives to do things that are impossible such as regulatory price fixing on privatized monopolies.

It was also suggested that:

  • emphasis should be placed on commercial negotiations rather than regulation [1, 2];
  • new federal regulations were introduced which favoured port owners and made it harder for others to seek regulatory determinations [1] [Comment: This simply avoids the problem of regulation by increasing the risk of abuses of monopoly power]
  • in the event that state regulators fail, provision was made for federal intervention [1] [Comment: transferring a decision to the federal government does not help if the problem is impossible for anyone]

An expert member of the PM's task force argued that infrastructure constraints were not a serious problem but merely evidence that infrastructure machinery, which is much better managed that it used to be, is being tested and thus developing [1]. Attention was seen to be needed to:

  • effective governance - eg by avoiding half-publicly owned facilities;

  • problems in deciding who should pay for infrastructure associated with splitting facilities vertically (so as to separate monopoly activities from those subject to competition);

  • reducing the number of regulators.

The problem with this view is that Australia's machinery for managing infrastructure is not more effective than it was. In seeking to create arrangements that would increase efficiency in undertaking individual projects, arrangements needed to deal with infrastructure systems as a whole have been incapacitated as argued above. Moreover:

  • the governance problems that arise from incompatibility between the goals of private and public joint owners of infrastructure undertakings apply equally to public-private partnerships (ie the private sector's focus is on efficiency a particular function, while government's focus is on the relationship amongst diverse functions)

  • the vertical coordination and regulatory problems reflect fundamental weaknesses in assumptions about competition policies

In addition to regulatory failure, immense difficulties appear likely to emerge in achieving diverse policy objectives through privatizing assets subject to market failures (eg NSW Government's attempt to sell its share of Snowy Hydro has been seen as likely to sabotage 10 year environmental plan to restore river flows[1])

7. Economic and Infrastructure Committee

In August 2005 the Queensland Government established a top level committee to expedite action on major infrastructure, so as to demonstrate that it had the structure to get things done [1].

 Unfortunately this revealed quite the opposite, because such a task should have been able to be dealt with by upper-middle management (see Middle Management from the Top).

One apparent outcome of the deliberations of this group involved giving special priority to developing the Wiggin Island Coal Terminal an initiative that may not be constructive.

Gladstone will be world's biggest coal export port following a decision to fast-track a third coal loading facility.  Massive growth by China's / India's economies is expected to underpin global demand for Queensland coal for decades. For the first time in history it is seen to be possible to be confident of the future for 20-40 years [1]

Though many analysts express similar optimism, the claimed certainty about future prospects seems suspect. Future growth by China / India depends critically on sustaining US demand and deficits - which currently cause concern because global fiscal imbalances are simply not sustainable. Moreover others expect that the favoured position of Australian commodity exports will only last (say) 2 years because of growing competition from other sources [1] (eg Brazil and China itself) and there are many environmental uncertainties associated with large scale fossil fuel usage, while others (in recognition of all such considerations) point out that commodity markets are inherently volatile [1]. The proposal is thus risky.

Moreover creating procedures which expedite a particular project will necessarily disrupt work flows in relation to all others, and the net effect may not be constructive for the economy overall - especially as coal exports produce financial benefits mainly for investors and the state government, while the community generally might benefit more from other forms of economic growth.

A better initiative for the Coordinator General from the point of view of general public interest might have been to expedite routine work flows related to dealing with ALL infrastructure investments.

This project may however be favoured due to the possibility the state government hopes that increased mining and other revenue can pay for health spending increases without increased taxes [1]. Perhaps a proposed mini-budget on funding health reforms (which has been said to be taking a multi-year approach similar to that for SE Queensland infrastructure [1]) could rely on speculative projections of future revenues from coal exports to compensate for short term deficits.

Looking for Deeper Causes: Weak Economic Strategy

In addition to the tactical mismanagement of Public Sector change in the 1990s as outlined above, the main reason that difficulties are being experienced in dealing with infrastructure is arguably the weakness of the strategy adopted to boost economic performance in the 1990s.

While liberalizing the economy, no real effort was made to systematically develop the productive capability of the market economy to succeed in a competitive environment (see Defects in Economic Tactics, Strategy and Outcomes). The potential economic gains from doing so would have been (and remain) very high - given the gap between local commercial capabilities and leading world practices. In turn this would have dramatically improved the tax base for public goods and services.

In practice, rather than developing industry clusters within the market economy, emphasis was given to trying to 'fix' the public sector as a major way to boost economic performance (eg cutting public spending on the grounds that this would boost growth and by lifting productivity especially in infrastructure by introducing 'business-like' methods). When combined with the effect of politically-driven deskilling of the Public Service, the results were as outlined above.

A core of the problem is that reforms were designed to promote efficiency in undertaking individual infrastructure projects which disabled machinery for managing infrastructure systems as a whole because it was (incorrectly) assumed that those projects could be coordinated properly through market mechanisms.

Moreover, trying to undertake government service delivery in a 'business-like' way resulted in a Public Service that was even less well equipped to advise government about its core business of 'governing' (ie creating a framework for the community's economic and social transactions).

All of this probably came about because:

  • there is a general lack of competent institutional means for developing public and economic policy. Economists (with no practical knowledge of infrastructure) and interest groups (eg business who knew little of public administration and favoured options that might lead to easy profits) developed certain theories. Political leaders listened to such opinions, and Public Services (increasingly dominated by opportunists) were unable or  unwilling to point out the risks;
  • Australians' tradition is to seek benefits by lobbying government, rather than by taking initiatives - as indicated by the all-round industrial protection Australians relied upon as their status steadily declined for most of the 20th century. When protection was discredited, the only thing left that government could be lobbied about was 'fixing' the public sector - even if the public sector was not what was most broken.

What could be done?

If these difficulties continue escalating, it seems likely that:

  • the perceived effectiveness of services' delivery will continue to deteriorate, as has reportedly been the case in the UK which is an original source of the models that Queensland is now emulating;
  • financial losses recorded by infrastructure GOCs operating in a competitive user-pays environment will grow;
  • both of the above will provide pressing reasons for tax rises that will have significant economic repercussions; and
  • either the infrastructure system will be slow and cumbersome (to ensure proper accountability), or corrupt collusion could become a problem in infrastructure contracting.

Three key steps might overcome these difficulties, namely:

  • renewal of Queensland's Public Service on a professional basis;
  • creation of infrastructure coordination machinery - whose role is not be to 'call the shots' on infrastructure projects, but rather to sort out the systemic mess outlined above that makes it impossible for functional agencies to get on with the job;
  • serious efforts to develop the productive capabilities of Queensland's economy to provide a stronger tax base for infrastructure and other services.

May 2002

Don't Look for Scapegoats in QRail

Don't Look for Scapegoats in QRail - email sent 25/10/16

Hon Ms Annastacia Palaszczuk, MP.,
Premier of Queensland

Re: Caldwell F., Furious Premier Annastacia Palaszczuk demands answers on rail debacle, Brisbane Times, 23/10/16

This article referred to your concern about the shortage of train drivers following the opening of the Moreton Bay rail link and the resulting need to cancel some services across the whole Brisbane rail network.

A Quote: “A furious Queensland Premier Annastacia Palaszczuk has said heads could roll over the Queensland Rail debacle that led to more than 100 services being cancelled on Friday. …. "I want to know, very clearly from the Queensland Rail board, how did this happen?" Ms Palaszczuk said. "And why was my minister not notified about it at an earlier date?" … Ms Palaszczuk said Mr Hinchliffe was notified on Thursday night. She said she was not ruling out someone losing their job over the fiasco. "Because how did it get to this? It has been planned for many years about the opening of the Moreton Bay Rail Link," she said. "I understand the training must happen for the drivers but surely someone in Queensland Rail knew that this was going to be a problem and failed to alert higher up the line."

If you are serious about ‘getting to the bottom’ of the problem, then I submit that there is probably mainly a need to look outside QRail – ie at problems in Queensland’s overall machinery of government with particular reference to those associated with infrastructure planning and development. If any ‘heads should roll’ they should be those who established and have failed to review machinery whose systemic defects are likely to have made it difficult for QRail to coordinate infrastructure development with staff development.

Some years ago an inquiry into medical competency problems in the Bundaberg Hospital focussed narrowly on who in Queensland Health was to blame – though it was abundantly clear that what happened was a consequence of problems in Queensland’s machinery of government generally (see Intended Submission to Health System Royal Commission, 2005).

As the latter noted Queensland has built hospitals and then found that they could not be fully used because there had been inadequate provision for the staff needed to run them. If both Qrail and Queensland Health can have similar problems, then simply seeking scapegoats internally in QRail (as was done with Queensland Health in the case of the Bundaberg Hospital fiasco) will not ‘get to the bottom’ of anything.

There have been serious problems in the machinery for developing infrastructure in Queensland and nationally – see Infrastructure Obstacles and Opportunities: Submission to Productivity Commission (2014) and Defects in Infrastructure Planning and Delivery in Queensland (2002). Amongst those problems are:

  • removing the planning and development of infrastructure ‘projects’ from control by the organisations that are ultimately expected to make use of them (and who would need to plan for the necessary staffing). In part this reflects the dependence that states have had on federal funding for infrastructure. This shifted control from the agencies responsible for the function for which new infrastructure is a capital component to central agencies involved in lobbying for federal funding (especially Treasury). The problem has been compounded by futile attempts by ‘central planners’ in Infrastructure Australia to identify specific ‘projects’ that should receive funding (rather than to identify ways to fix the shambles that now exists in Australia’s infrastructure planning and development machinery);
  • fragmenting the control of genuine public sector functions (ie those affected by significant market failures) by corporatizing operational components with a view to maximizing ‘business-like’ efficiency without recognising the reduced scope that this provides for ensuring essential coordination amongst related tasks being undertaken by separate groups;
  • failing to value a depth of knowledge and experience in making ‘senior’ public sector appointments. ‘Managerialism’ was the original rationale for politicising senior appointments – ie the assumption that ‘managing’ was a generalist function that required no knowledge of the function being managed. Increasing political ‘responsiveness’ was another rationale.

Other areas in which these defects have resulted in significant problems (and costs) in the past were (a) Queensland’s electricity distribution network; and (b) water supplies in SE Queensland.

It is undoubtedly a good idea to ‘get to the bottom’ of what has gone wrong with staffing for Brisbane’s rail network. However this won’t be achieved by looking for scapegoats in QRail.

John Craig

Why Not End Queensland's History of Public Sector 'Disasters'?

Why Not End Queensland's History of Public Sector 'Disasters'? - email sent 11/11/16

Courier Mail – not for publication

Re: Rail Fiasco shows ALP failing basic duties, Courier Mail, editorial 29/10/16

You noted (in commenting on proposals to investigate the Queensland Rail (QR) driver shortage that followed the opening of the Moreton Bay Rail Link) that ‘Queensland is used to public service disasters’.

Queensland’s susceptibility to ‘disasters’ (including QR’s current driver shortage) arguably largely reflects structural problems in Queensland’s machinery of government (and in machinery for infrastructure development in particular). The investigation of operations-level failures in QR that the Premier commissioned can only deal with some symptoms of such problems. It can’t identify ways to eliminate the government-wide source or prevent Queensland from suffering numerous other public sector ‘disasters’ in future.

My Interpretation of your editorial: The Queensland Rail (QR) chairman and CEO resigned after it was revealed that the Redcliffe line could not be implemented properly due to a shortage of drivers. QR’s head of train delivery had been stood down 3 days ago – and resigned yesterday. Queensland is used to public service disasters – with the Queensland Health pay debacle being the latest. The Premier commissioned a review by Phillip Strachan (a former Rio Tinto executive) that will run for 3 months. The key factors to be examined will be what happened in the lead-up to the timetable meltdown (including rosters, recruitment and training) and how the staff shortages and lack of planning happened. Actions by the Transport Minister (Stirling Hinchcliffe) will also be examined (eg interim measures to recruit more drivers, draw up stop-gap timetables and develop more flexible working arrangements). Attention also needs to be given to the role of the Rail and Tram Bus Union and whether work practices influenced what happened

You are undoubtedly right in noting that ‘Queensland is used to public service disasters’. Large numbers of examples (dealing respectively with Queensland’s public sector generally and infrastructure development in particular) are cited here (in The Growing Case for Professionalism, 2001+) and here (in Defects in Infrastructure Planning and Delivery in Queensland, 2002+).

Professor Ken Wiltshire (No Avoiding Accountability, Courier Mail, 3/11/16 – see my outline here) pointed to the need to consider systemic problems in Queensland’s Government that have been developing for 30 years and which both sides of politics have supported (eg politicisation of public services and political interference in Government Owned Corporations - GOCs).

The government-wide causes of QR’s internal problems undoubtedly include those Professor Wiltshire mentioned – though they arguably go further for reasons suggested in Don't Look for Scapegoats in QRail.

For example: as Professor Wiltshire indicated politicisation was rationalised initially by ideas about of ‘generic management’ (‘managerialism’) – ie that ‘senior’ officials did not need deep understanding of the issues they were managing. This was a factor in the massive problems that were created by the Goss Government’s public sector ‘reform’ agenda from 1989. A lack of top level knowledge and experience contributed not only in that government’s inability to actually achieve anything but also to the disasters that its successors experienced when they tried to do so (see Queensland’s Worst Government, 2005). Limited ‘senior’ level knowledge and experience led to frictions and a lack of communication. Just as the Goss Government’s ‘reforms in the early 1990s had led to widespread public service concern, ‘senior’ staff continued having to ‘bully’ junior staff who were sometimes more aware of technical issues that might invalidate official policies (see Driven to Distraction, 2002; 'Plague of bullies' (2005); C'mon Pete its time for action (2005); More Silencing and Scapegoating of Public Service Employees? (2005); and Bullying of Staff by Queensland's Politicians .. Really?? (2008). Poor communication, which QR’s recent problems exemplify, was made endemic.

Attempts to use business-like institutions for public sector functions that are subjected to significant market failures has arguably been another source pf problems (see Governing is Not Just Running a Large Business, 2002). Functions that are subject to serious market failures simply can’t be run ‘commercially’ (either through GOCs - or through privatisation as this requires imposing a strict regulatory regime). Political intervention can be needed to achieve non-commercial outcomes that market pressures do not make obvious. As Professor Wiltshire indicated, Queensland Governments have disrupted the functions of GOCs by intervening politically. However the problem was not that governments intervened to achieve ‘public’ purposes – but that the GOC model required them to significantly disrupt the affected organisation to do so.

Federal attempts to micro-manage state functions through special-purpose funding have also played a role in rendering competent performance of some state functions almost impossible.

Finally it can be noted that: (a) there is nothing unique about Queensland in being affected by infrastructure 'disasters' (see Infrastructure Constraints on Australia's Economy, 2005; Australia's Infrastructure Incompetence, 2015; and Spectacular cost blowouts show need to keep governments honest on transport, The Conversation, 25/10/16); and (b) QR’s organisational arrangements had previously been seen to create a risk of disasters (see ‘Tilting Towards Trouble, Courier Mail, 20/11/2004)

Such government-wide problems are clearly beyond the terms of reference of the QR inquiry that the Premier commissioned. As indicated by the public comment that has emerged in relation to QR’s train driver shortage (eg see Public Comment) there are a lot of issues for that inquiry to consider. However without an ability to identify problems that are symptoms of government-wide defects (because of terms of reference limited internal causes within QR), there is no reason to suspect that the Strachan inquiry will be able to identify ways to prevent Queensland from continuing to experience public sector ‘disasters’.

Both sides of Queensland politics have clearly been happy to ignore the government-wide causes of public sector disasters (eg see Politicisation Lowers Public Service Standards and Performance, 1999 and Intended Submission to Health System Royal Commission, 2005). The real question is thus whether, and if so when, Queensland political establishment might recognise the need to do more.

John Craig 

Examples of Public Comment

A furious Queensland Premier said that heads would roll over QR's debacle - as 100 services had had to be cancelled. Explanations will be sought from QR board about why minister was not notified earlier. The line had been planned for years. Drivers had to be trained. Surely someone knew that there would be a problem (Furious Premier Annastacia Palaszczuk demands answers on rail debacle, Brisbane Times, 23/10/16)

State Transport Minister refused to back tenure of QR's CEO - and was called on to himself resign by the Opposition. A furious Premier demanded answers. The minister said that 100 drivers would be recruited to to deal with the shortfall - and did not answer questions about the CEO's position. QR's CEO indicated that she was unable to explain the source of the problem. She had advised the minister that the service would be able to be delivered. The minister repeatedly blamed QR's lack of advise about the potential problem  (Brisbane trains: Transport Minister refuses to back tenure of Qld Rail boss, Brisbane Times, 24/10/16)

An alleged benefit of public provision of services is that this results in better service leve;s / reliability than private provision. QR's crisis requires that this be reconsidered. QR is a sclerotic, inefficient bureaucracy that needs shaking up. Privatizing QR's rail services would be a good way to do this and this was recommended by Queensland 2013 Commission of Audit. Though privatization does not always work well - given QR's record it is hard to see how it would not be better. As was predicted when the Commission of Audit's report was released, little has been achieved due to inertia related to public sector reform (Inquiry should consider contestability and privatisation of QR Services, Queensland Economy Watch, 25/10/16 

The senior public servant (QR;s head of rail service delivery) stood aside in the wake of the train timetable debacle was warned in March of potential problems by a Canadian company – but failed to act properly on the information. (Former Rio Tinto chief executive to head up examination of Queensland Rail timetabling debacle, Courier Mail, 25/10/16

QR's CEO and the chairman of the QR board have resigned over the Brisbane train debacle. An inquiry has been set up whose terms of reference include "The adequacy of Queensland Rail scheduling, rostering, recruitment and training practices; What circumstances led to the driver shortage; When deficits in train crew availability were known and what action was taken; The nature and suitability of actions taken by Queensland Rail once the train crewing issues manifested under the new timetable.   " (Queensland Rail boss Helen Gluer, chairman Michael Klug resign over driver crisis, ABC News, 27/10/16)

The transport minister said that he had been consistently advised until recently that crewing levels were acceptable and service levels would be met (Queensland Rail crisis: Stirling Hinchliffe warned of driver shortage, email reveals, SMH, 29/10/16)

Queensland’s transport minister was sent an email from a public transport advocate warning of driver shortage in March 2016. Paul Pluta had suggested that "Your current drivers can't drive the trains, and you need 60 more and you have not even begun training, your department said we would see those services running in 2016 and it takes at least 12 months to train a new driver, the equipment to train the drivers on the new trains is not even installed." (Train woes build for Qld Minister, 29/10/16)

A senior Queensland Rail figure was stood aside in the wake of the train timetable debacle, despite a key report this year warning there was no succession plan for his “critical role” (No Plan for Critical QR Role, Courier Mail, 1/11/16)

Transport Minister Stirling Hinchliffe has again defied Opposition calls for him to resign, after he was forced to admit he had no idea about the existence of a report that warned of driver shortages in January. (Minister: Fundamental Failure of Management, Courier Mail, 1/11/16)

More than two dozen Queensland Rail staff, including senior figures, were interviewed as part of the damning report that warned of train driver shortages. But Transport Minister Stirling Hinchliffe says he knew nothing – even though QR’s high-ranking operations officer was involved in discussions and the GM of Citytrain was the person the report was prepared for. The report had been prepared by external consultants, Indec. Rail advocate Paul Puta had obtained a copy of the report. A significant driver deficiency had been predicted in February 2016 – ie 60 drivers short of the 548 that would be needed when the Redcliff line opened (Everyone knew except this guy/a>, Courier Mail, 1/11/16)

Train drivers will be stripped of a 20-minute comfort break, blamed for exacerbating the timetable crisis. The 10 minute break every 2,5 hours had been provided to encourage more women to become drivers and was only introduced when the Redcliffe line was opened (Little comfort for train drivers, Courier Mail,1/11/16)

There was an obstacle to training new drivers because a critical role in the training team had not been filled (Training position left unfilled as vacancies soar, 1/11/16)

Good government is essential in Queensland – Australia’s most decentralized state where government's role has been social and economically crucial and the largest employer. Current rail, health and welfare fiascos are symptomatic of serious decline over past 3 decades. The most obvious evidence involves public service – once a career service (expert, vocationally oriented and operating on Westminster principles where permanent tenure was given to ensure frank and fearless advice. This produced many great public servants n Queensland. Now public service is fearful – not fearless – largely because it has been politicised. Governments have appointed mates after sacking competent officials. Short term contracts don’t encourage giving unpopular advice. Another problem has been the creation of ‘generic’ managers. Senior ranks were once filled with specialists in the work of the department – but now there is a dangerous assumption that any manager can manage any department. A symbol of politicisation has been the creation is declining power of Public Service Boards and the rise of tame Public Service Commissions. Queensland Rail’s current problems is an example of how poor governance affects services. Australia led the world in creating government owner corporations (GOCs) to ensure that government business activities could free of the complexities of Crown Law and free from undue constant control interference. GOCs should be at arm’s length from ministers for day to day matters – though accountable for operational policy. The Department would be involved in providing advice on such (eg transport) policy – while also monitoring Board / management performance. Few Queensland Governments got this combination right. Both sides of politics stacked the Boards with mater, interfered in daily operations and raided their financial reserves when desperate for money to prop up their budgets. A lack of ministerial responsibility is the main cause of current train service problems. It was noble for QR Board chair and CEO to resign – but the minister must bear ultimate responsibility – even though the foundation of declining governance is that too much policy advice and practice is driven purely by ideology. This was the case for the draconian Newman LDP government and is the case with the confused Palaszczuk administration. It has admitted being driven by ideology in relation to the provision of welfare housing by governments rather than not-for-profits. It now does not insist that taxi drivers know where they are going and can speak English. In the delivery of crucial public services governments need to take the politics out of policy (Wiltshire K. ‘No avoiding accountability’, Courier Mail, 3/11/16)

Two QRail staff at the centre of timetable fiasco were put in charge after controversial political appointments by Newman Government. Kevin Wright (chief operations officer who resigned over fiasco) was appointed after Glen Dawe became chairman of QR board. He had been removed from this role by former QRail chief (Paul Scurrah) who advised against giving him that role. Dawe was reportedly running QR everyday operations in 2012. Mick Skinner (Train service delivery manager)was also stood down in October. He had been put into job just after Dawe was appointed and had worked with Dawe and Skinner. Dawe was appointed just months before high-performing mangers installed by Scurrah were made redundant. It was about bringing back the old-fashioned railway-men - rather than those with business degrees. LNP over-rued the board to put Dawe an associate of premier Newman in charge as QRail's CEO.  He lasted only 6 months before resigning for personal reasons. He had not been in short list of top 3 candidates. Former CEO (Lance Hockridge) who left in 2010 said that politicization of key operations created an organisation that does not have a performance orientation. Deputy premier criticized QR for giving inconsistent information about crew resources and described its culture as bad. LNP spokesman said it was ludicrous to link train problems with Dawe's appointemnt (Fraser K., 'LNP overruled board on key appointment', Courier Mail, 7/1/17) 

"A group of old-school “railway men” recycled from more than a decade ago turned Queensland Rail into a virtual “chamber of secrets” ahead of the collapse of its Citytrain timetable. An examination by The Courier-Mail of the rail body’s leadership dating back to the 1990s reveals a behind-the-scenes battle between newly appointed “outsiders” trying to shift QR into the 21st century and a group of men who joined as fresh-faced schoolboys and climbed the ladder, to finally secure $500,000-plus jobs. The clash of cultures came to a head more than four years ago with a purge of staff with outside business experience in favour of old-time, career railway men." (Fraser K., Queensland Rail insiders not surprised Minister was kept in the dark about driver shortage, Townsville Bulletin, 7/1/17 )

The following comment was offered by a contact who had studied what was being said about the situation.

" From a quick scan of the problem, it seem that there were problems from design, surveys, hydrological reports, funding, fights with different agencies, sacking of training staff, lack of recruitment, major issues with the signaling system, politicians who commissioned reports and dismissed findings and advice and pure bad governance and mismanagement. It really does need a forensic investigation."

And another observer's speculation was that:

"Just wondering if the split of the suburban train from the whole network had anything to do with QR’s recent problems (see here, here, here and here)  I would not be at all surprised to find the hand of Qld Treasury behind some of the problems that have happened at QR. They possibly starved them of money possibly to get rid of the top brass or save money as they are broke. Again it could all be  a union operation to get rid of the top brass. Who knows. The suburban rail system was always a loss making operation and I would say that it probably still is. "
Politically-driven Infighting Continues in QRail: The Unasked Question is 'How Should It Be Resolved?'

Politically-driven Infighting Continues in QRail: The Unasked Question is 'How Should It Be Resolved?' - email sent 7/1/17

Kelmeny Fraser,
Courier Mail

Re: ‘LNP Board overruled board on key appointment’, Courier Mail, 7/1/16 (outlined here) and Queensland Rail insiders not surprised Minister was kept in the dark about driver shortage, Townsville Bulletin, 7/1/17 (see extract here)

Your article indicated that QRail’s staff scheduling problems are probably a consequence of political interference.

This is hardly surprising (see Why Not End Queensland's History of Public Sector 'Disasters'?). From the start of the public sector ‘reform’ process in the early 1990s, those who the political system thought were best qualified were installed in ‘senior’ positions and experience was disregarded. As political advisers often had an overly-simplistic and out-of-date view of the issues (and were unwilling to listen to those with experience or up-to-date knowledge - because they didn’t know what they didn’t know), the results were often abuses of power that led to: (a) widespread staff discontent and a lack of practical accomplishments by the Goss Government which started the mass-politicisation process; and (b) many dysfunctions and frequent crises under its successors who also thought that politicisation was great idea.

Your second article implied that political appointees with outside business experience have been ‘trying to shift QR into the 21st century’ and were being opposed by ‘old-time, career railway men’. However that assumption may be wrong. Poor assumptions about infrastructure have been unquestioningly accepted (see Defects in Infrastructure Planning and Delivery in Queensland ). For example: (a) corporatisation of Queensland’s GOCs is incompatible with their success in a competitive market; and (b) many of the goods and services that the public sector provides suffer real market failures (ie can’t just be provided by a competitive market), so a ‘business-like’ approach to them creates disruptive tensions between meeting the challenges of competition and performing governments’ necessary ‘political’ role of compensating for market failures.

The issues that most need to be considered by the Strachan inquiry into problems in rail timetables (which history suggests are likely to be well outside its terms of reference) are arguably:

  • should Queensland’s railway operations best be conducted through corporatized / ‘commercialised’ entities such as QRail?
  • how can staff groups with different perceptions of the organisations’ incompatible goals collaborate, rather than conflict, within such organisations?
  • how is it possible to avoid politicisation of ‘senior’ appointments (ie appointment of cronies and ‘yes men’) by ministers whose advisers often lack necessary experience and / or up-to-date knowledge?

Queensland has had serious problems in many areas (ie not just in infrastructure such as QRail’s staff scheduling) because of structural weaknesses in government machinery that have been created by inexperienced and technically out-of-date politically-supported ‘reformers’ – see Appalling Queensland Governments.

John Craig