We can show the world how to build bridges
Gary Sturgess
The Australian - 26th March, 2007

THEY have a saying in North America, used in addressing the highly gullible: "If you can believe that, then I've got a bridge you might like to buy". It's based on the legend of the great 20th century con artist, George C. Parker, who allegedly sold Brooklyn Bridge to naive investors, several times.

And yet in 1968, it was an American who bought a bridge from the British - London Bridge was sold to a billionaire named Robert P. McCulloch. John Rennie's famous landmark was carefully disassembled, the parts meticulously numbered, and shipped to Arizona where it stands today on the shores of Lake Havasu. 

I want to know why we aren't selling the Sydney Harbour Bridge. Why aren't we selling Australian infrastructure abroad? Of course, you can't physically export a road or a dam. Rennie's bridge was an exception in that regard. But you can unbundle the assets - separate out the various services that help to make up a piece of physical infrastructure and sell those services overseas. 

A bridge or a tunnel doesn't just consist of steel and concrete. It must be designed, so that urban planning and civil engineering expertise is involved. Construction must be planned and supervised, so that project management skills are required. Funding must be found. The facility must be maintained over the course of its life. And as Sydney's cross-city tunnel and the much more successful M7 demonstrate, if a toll is to be charged, someone must manage the relationship with road users. 

It's not difficult to understand why we remain trapped into thinking of our public infrastructure solely in terms of its physical manifestation. The elegance of a Sydney Opera House makes it difficult for us to move beyond the physical form, and a brand new bridge or tunnel offers a much better photo opportunity for politicians than a well-designed program of maintenance. 

But it we are unable to think in terms of infrastructure services, if governments are incapable of imagining an infrastructure services industry, then we will deny ourselves the opportunity of unbundling our bridges, hospitals and prisons, and selling our expertise to governments overseas.

In fact, in one or two areas, Australian governments have been extraordinarily successful at commercialising their infrastructure services. The tollroad industry is the most obvious example. It is little appreciated in this country that the NSW and Victorian governments were world leaders in the development of public-private partnership tollways in the late 1980s and early '90s, and in providing a constant deal flow over more than a decade, they deepened local expertise and gave Australian companies a significant competitive advantage in international markets.

The most successful of these was Macquarie Bank, which has become the market leader in tollroad financing in Europe and North America. Transurban is another, and over the past two years, it has taken its pioneering e-tag technology and its customer service culture into the US market. 

I am speaking here of public infrastructure - governments must be involved in making the decisions about what infrastructure we build, where we build it and when. But that does not mean that government itself needs to provide the full range of services associated with such facilities.

Much of the expertise that will be necessary to build a competitive infrastructure services industry is presently to be found inside government departments and agencies. The key to unlocking this untapped resource lies in a paradigm shift on the part of government - a move to public-private partnerships at home and commercial exploitation abroad. 

Again, there are precedents. When the Victorian government outsourced its hydro-technology group to Sinclair Knight Merz in 1995, a number of talented public servants made the transition to the private sector. Among them was a hydro-geologist who is working with a World Bank team on groundwater management in the Hai River basin in China. 

Public-private partnerships offer us the opportunity to unpack these public sector capabilities, to magnify them, to commercialise them, and sell them into world markets. China and India have an enormous need for infrastructure services, initially for economic facilities, but for social infrastructure as well. 

But PPPs are now being pursued right around the world - presenting a significant opportunity for countries that are agile enough to commercialise their public services and render them amenable to export. 

There is no reason to fear that in doing so we will weaken our public services here at home. This is not a zero-sum game. On the contrary, an international trade in public service managers has the potential to deepen our domestic capabilities and lead to the importation of best practice from overseas. 

The Australian tollroads example demonstrates that there is a first mover advantage in these markets. We have seen this in other sectors: the French and the British have dominated international water markets because they moved first; the Americans took an early lead in prison markets for the same reason. 

Australia used to be one of the leaders in several other PPP markets - in hospitals and prisons, for example - but for a variety of reasons, we surrendered that role to the British. In part that was because we failed to grasp the significance of what we were doing. But we also made mistakes with some of our models (as we were destined to do in breaking new ground), we didn't understand the need for a constant deal flow, and in some cases, innovative financial instruments were employed for the wrong reasons. 

Australia has immense value locked up in its infrastructure services sector. We have a great deal to offer the world. Whether we step up to the mark depends largely on whether our governments, state and federal, make the transition from an outdated paradigm based on the monopoly provision of public works.