May 9, 2014

Can the coalition change its spots on infrastructure investment? – Opinion – SBS Online

Conservative prime ministers always talk a lot about infrastructure but history shows they seldom take action, writes Anthony Albanese.

Legendary American author Mark Twain once noted that while actions spoke louder than words, actions did not speak very often.

By this definition, Coalition Governments have historically been pretty mute when it comes to infrastructure investment like roads, railways and ports.

Conservative prime ministers always talk a lot about infrastructure, but history shows they seldom take action.

They demand that the states and the private sector do all the investing, even if it can be shown the investment pays for itself by delivering productivity gains that drive a positive economic return.

That’s a fair contextual starting point for consideration of the current Government’s assurance that it will focus on infrastructure investment as a means to boost national economic productivity.

The last time the Coalition was in office under John Howard, it did little on infrastructure, preferring to hector states about spending and resort to the meaningless blame game when anyone complained about inadequate roads and rail systems.

The Howard Government, in which Tony Abbott was a senior minister, occasionally bankrolled roads in conservative electorates to shore up political support.

But Mr Howard refused to spend a penny on public transport in cities despite the fact that urban congestion inhibits productivity and therefore jobs growth.

Under Mr Howard, the nation’s ports were so clogged that freighters lined up for days for access to loading facilities when they should have loaded and been halfway back to Asia.

By 2007, public investment in infrastructure as a proportion of national income had plunged by almost 20 per cent from its Keating-era level.

Mr Howard withdrew $2 billion from the federal roads budget he inherited from the previous Keating government.

This had real ongoing implications.

For example, over more than a decade the Howard Government invested just $1.3 billion to duplicate the Pacific Highway.

In stark contrast, the Labor Government invested $7.9 billion to the same task over our six years in office.

The incoming Howard Government also cut $1billion from the same 1997 Budget that had been allocated over the forward estimates for the construction of a second Sydney Airport at Badgerys Creek.

Planes should have been landing there by now.

The Howard record is even worse when you consider the government ruled at the height of a mining boom that had driven government tax receipts to their highest levels in decades.

In 2005-06 – Mr Howard’s last full year in office – tax revenues as a percentage of GDP stood at 24.2 per cent, having sat around 24 per cent for the previous few years off the back of the mining boom.

By 2008-09, on Labor’s watch, the global financial crisis had smashed government revenues to 21 per cent of GDP and they fell further to 20 per cent in 2010-11.

Despite this, Labor delivered record infrastructure investment to stimulate the economy during the GFC.

According to a Treasury report released in 2008, the mining boom delivered the Howard Government $334 billion in windfall revenue to the commonwealth between 2004 and 2007.

Instead of investing the proceeds of the resources boom into nation building, the Government squandered it on middle-class welfare.

But in only six years in office Labor doubled the nation’s road budget, built or upgraded 7500km of roads and 4000km of railway track and lifted per capita infrastructure spending from $132 a person to $225 a person.

When Labor took office, Australia was 20th on a list of 25 OECD nations in terms of investment in infrastructure as a proportion of GDP.

It is now 1st.

Against this background, next week’s Budget should be closely watched because it will show whether the current government is prepared to back its rhetoric with actual investment in productive infrastructure, or whether it will revert to type and simply demand private sector and state government investment.

The early signs are not good.

We already know that Mr Abbott will use the Budget to claw back billions of dollars which Labor set aside for urban trail projects like the Melbourne Metro, Brisbane’s Cross-River rail project and public transport in Perth – investments that would drive productivity growth by reducing urban congestion.

We know this because Mr Abbott made clear before the election that, just like Mr Howard, he did not believe in investing in public transport.

That’s not a great starting point for a leader who wants to drive productivity growth in one of the most heavily urbanised countries in the world.

We know also that Mr Abbott will contribute funding to new road projects including Melbourne’s East-West Link and Sydney’s Westconnex project.

In doing so, he will breach one of his own explicit election promises – to conduct cost-benefit analysis for all projects worth more than $100 million.

No such studies have been completed on either of these roads, although their provision has been central to the government’s political promise to ease traffic congestion – an odd commitment given its absurd ideological distaste for public transport.

So already, a Government that says it wants to turn over a new leaf on infrastructure delivery is defying its own promises.

Re-announcing existing projects that are under construction like Gateway WA and Pacific, Bruce and Princes Highway projects has been the approach of the Coalition Ministers so far, in the hope that the public won’t notice the lack of any additional funding from the Abbott Government.

The only already funded projects which the Coalition have not tried to claim are public transport projects including the Regional Rail Link, Moreton Rail Link, Gold Coast Light Rail and Perth Citylink. To do so, would undermine the Abbott Government’s dogmatic ideological declaration that the Federal Government should never fund public transport projects.

Better to pretend these projects don’t exist.

The first Abbott budget will be a test of its infrastructure credentials. It needs to do more than claim already funded road projects as new and cut public transport investment if it wants to be taken seriously on infrastructure.

Anthony Albanese is the Shadow Minister for Infrastructure, Transport and Infrastructure.


This piece was published today on SBS Online: