After four wasted years, the Turnbull Government has finally accepted that borrowing to invest in productivity enhancing infrastructure can drive economic growth and job creation.
Treasurer Scott Morrison’s declaration today that at a time of record low interest rates it makes sense to borrow for projects that boost economic productivity is precisely what Labor, the Reserve Bank and economists have been saying for years.
However, investing in the right projects is critical, which is why the Government must reverse its ill-advised decision to sideline Infrastructure Australia by establishing an Infrastructure Financing Unit within the Department of Prime Minister and Cabinet.
Infrastructure Australia was created by the former Labor Government to independently assess infrastructure projects and to work with states and the private sector on funding arrangements.
Its key role is to ensure that when the Government does borrow for infrastructure, it invests in projects that stack up.
Creating another bureaucracy to sideline the independent adviser makes no sense. The Government should have already learned that lesson from its creation of the Northern Australia Investment Facility, which was announced two years ago but has not invested in a single project.
Having finally accepted economic common sense on infrastructure investment, the Government should use the 2017 Budget to tackle traffic congestion that is acting as a hand brake on economic and jobs growth in our cities.
Infrastructure Australia approved Brisbane’s Cross River Rail and the Melbourne Metro projects before they received funding in the 2013 Budget.
One of the key reasons for the 20 per cent decline in total public sector infrastructure investment in the Government’s first two years in office was its 2014 decision to scrap such projects in favour of dud road projects that had not been the subject of proper planning.
The Government should also work with Infrastructure Australia on other critical public transport projects including the Western Sydney Rail, Perth’s Metronet and the AdeLINK light rail project in Adelaide.