Overview of Australia's assistance for infrastructure

How we are helping

2017-18 Budget Estimate:
$273.1 million

Australia's Strategy for Investments in Economic Infrastructure guides our official aid expenditure in infrastructure and supports our program teams to make informed investment choices within their respective global, regional or country level allocations for 2017-18 and beyond.

The strategy prioritises investment in infrastructure as part of the strategic target of the Government's commitment to scale-up the aid for trade portfolio. It covers transport, energy, large–scale water and sanitation, urban and ICT infrastructure investments and provides guidance to support the Government's development, economic diplomacy, trade and investment priorities.

Why we give aid

Infrastructure drives economic growth by facilitating trade and investment, stimulating enterprise opportunities, generating employment and providing poor people with access to basic services. The poor also benefit indirectly from the contributions that infrastructure makes to economic growth through reliable energy supply, better roads, improved water supply, access to sanitation, rehabilitated railways and ports and modern telecommunications.

Australia is committed to tackling infrastructure bottlenecks to help create the right conditions for sustainable economic growth and to enhance trade and investment opportunities across the region.

Transport infrastructure development contributes to investment and economic growth through increased productivity and efficiency, because it links resources to industry, people to jobs and products to markets. Without safe, sustainable and reliable transport access poor people have difficulty accessing markets to buy and sell goods, families cannot reach health clinics in a reasonable time and children are discouraged from attending school. Furthermore, urban areas do not operate as effectively or efficiently and people's opportunities to be engaged in political, social and cultural activities are limited.

Access to reliable energy is vital for businesses and for communities. Companies need a reliable and affordable supply of power to deliver goods and services. At the community level, access to energy increases incomes for all by modernising agricultural processes and improving the productivity of small and medium enterprises, homes, schools and health facilities. Electricity grids provide access to safe lighting and services that rely on electronic networks such as banking and financial systems. Using clean cooking fuels, such as natural gas, has major health benefits in preventing the harmful effects of indoor smoke. In addition to energy infrastructure, policy priorities include energy security, innovative technology and the relationship of energy to climate change.

Large scale water and sanitation infrastructure investment contributes to economic productivity and opportunity. Increased access to water and sanitation services increases available time for productive activity, reduces time and costs associated with poor health, supports business development where water is a key input and generally supports economic growth, especially in urban areas.

Investment in information and communication technologies (ICT) leads to broad economic benefits from higher productivity, lower costs, new economic opportunities, job creation, innovation and increased trade and exports. ICT technologies, including smart phones, are transformational in providing financial inclusion, market information and commercial opportunities, as well as improving health and education services for poor people and strengthening social cohesion.

Australia's experience and expertise in infrastructure is highly relevant to our partner countries. Australia is acknowledged as a world leader in key areas such as innovative public private partnerships, integrated water resource management and sustainable urban planning and development.

How we give aid

Strategy for Australia's Investments in Economic Infrastructure

Our support for transport infrastructure includes road and rail infrastructure, which improves regional connectivity, as well as public transport, ports and airports. This assistance includes providing policy and project preparation support, as well as grants and loans to build physical assets.

Roads have been the main focus of our transport programs, which include support for maintenance and rehabilitation of existing infrastructure, as well as construction of new roads. Australian aid's major transport infrastructure programs are in Indonesia, Papua New Guinea and Vietnam, with smaller programs in the Mekong and the Pacific. Under the Eastern Indonesia National Road Improvement Program, Australia supported 20 major road projects across nine provinces, totaling 395 kilometres of national roads and 1,300 metres of fabricated steel bridge structures. In PNG, Australia will continue to support the maintenance and rehabilitation of PNG's national priority roads to improve access to services and reduce costs of doing business by creating a better functioning road network.

In Indonesia we support the innovative Water and Sanitation Hibah, which uses an output based payment mechanism that encourages local governments to invest in their own water utilities. Water and sanitation is also an area where small scale businesses and social enterprises have a role to play in supply-chains and service delivery.

Australia's approach to delivering infrastructure programs does not solely focus on physical infrastructure. It also focuses on the governance and policy arrangements needed to provide safe, sustainable, affordable and reliable infrastructure. Partner government delivery systems need to be carefully evaluated and sometimes strengthened, civil society needs to be engaged, feasibility studies and detailed engineering designs need to be prepared and open and transparent procurement processes need to be carried out before construction work can begin. As a result infrastructure programs have long lead times.

The effective development of infrastructure requires appropriate action to safeguard communities and infrastructure investments from environmental and displacement/resettlement risks. It is also important that gender and access for people with disabilities are integrated into infrastructure activities to support inclusive development.

Australia provided K139 million and worked in partnership with Papua New Guinea to reconstruct four bridges in Oro Province that were destroyed during Cyclone Guba in 2007. The Project was completed in 2016. The bridges will help to support Oro’s economic growth potential in agri-business and tourism. Located along the Kokoda and Northern Highways, they help connect an estimated 100,000 people. The project itself employed 200 local residents. Photo: Michael Foster
Last Updated: 9 May 2017