Why Investing in Infrastructure is a Good Way to Fire Up the Australian Economy – Opinion Piece – Business Insider – Tuesday, 18 September 2018
If there is a one thing Australia’s major political parties agree on, it is the need for governments to focus on economic growth and job creation to provide opportunities for Australians.
However, while growth is our shared aim, it is unfortunate that in the current political climate we are struggling to agree on how to create that growth.
If you listen to the rhetoric of the Federal Government, you might think the only way to drive growth is to cut taxes for huge corporations and high-income earners.
For years now, the Government has pursued tax cuts for big companies and criticised Labor because we place a higher priority on investing in health and education.
The problem with the Government’s approach is that it has placed all of its eggs in one basket – tax cuts – while ignoring other drivers of growth.
Take infrastructure investment.
Good rail and road projects boost productivity, which also leads to economic growth and job creation.
If, for example, we were to improve access to ports by expanding rail capacity, businesses would save time and money by getting their products to their customers more swiftly.
They could then invest the resulting savings back into growing their businesses and creating more jobs.
But back in 2013, Prime Minister Tony Abbott dumped the former Labor Government’s sensible plan to duplicate rail access into Sydney’s Port Botany, which, if it had proceeded, would have been nearing completion by now.
Then there is the issue of traffic congestion.
According to the Bureau of Infrastructure, Transport and Regional Economics, traffic congestion costs the economy more than $16 billion year in lost productivity.
The problem is getting worse each year and is now undermining the Australian quality of life and creating tension in our communities.
But the Coalition has failed to respond.
In 2013, Mr Abbott cancelled billions of dollars of planned Federal investment in public transport projects like the Melbourne Metro and Brisbane’s Cross River project.
Mr Abbott’s successor Malcolm Turnbull talked a lot about public transport, but failed to reverse Mr Abbott’s funding cuts.
Indeed, Mr Turnbull simply refused to invest in Cross River Rail, even though it will provide a significant boost to the capacity of the rail network right across South-East Queensland
The new Prime Minister, Scott Morrison, should press the reset button on growth.
Mr Morrison should abandon the Coalition’s previous one-dimensional approach and look at other growth strategies, including investing in productivity-enhancing infrastructure projects.
Judging by his record in drafting the 2018 Budget as Treasurer, the signs are not good.
In the lead-up to the Budget’s delivery, the Government announced support for several public transport projects, including Western Sydney Rail, the Melbourne Airport Rail and the Perth METRONET.
It leaked the details to the media, which duly attracted front page newspaper coverage.
But when the Budget Papers finally hit the desk, we found that 85% of money committed to infrastructure in the 2018 Budget won’t be invested until after the four-year Forward Estimates period.
Mr Morrison has pushed investment off into the Never Never.
This is bad for our economy. We need investment now, not years from now.
The independent Parliamentary Budget Office has already calculated that over the next decade, Federal infrastructure grants to the states will fall from 0.4% of GDP to 0.2%.
Yet Mr Morrison has chosen to delay meaningful investment.
It is time for a rethink. Mr Morrison should get on with it.
This piece was first published in Business Insider today: https://bit.ly/2MCrKad