A ‘short-term window’ to build infrastructure for long-term gain
Hub chief executive officer Marie Lam-Frendo said low interest rates and the depth of the recession meant there was now an opportunity for all nations, including Australia, to do far more to position their key infrastructure systems for the future.
“I think we have a short-term window to get this through,” she said.
Economists, analysts and even the Reserve Bank believe much more will be needed given the depth of the recession.
Four weeks out from the October budget, calls are growing for new and substantial infrastructure projects to address a slump that is now the biggest since the Great Depression.
Liberal MP John Alexander said the pandemic intensified the case for high-speed rail projects to allow faster travel out of the big cities and encourage the growth of regional cities.
“The position that high-speed rail can’t pay for itself has been totally refuted,” Mr Alexander said.
The Sydney MP is chairing a parliamentary inquiry into ways to fund a bullet train between Sydney and Melbourne and connecting to Brisbane over time, lifting the value of land along the corridor.
The inquiry is investigating the gains from faster connections from regional cities and towns outside those big cities and how to preserve land now to prepare for the long-term.
“This devastation to our economy makes us sit down and realise we can’t make the mistakes of the past,” he said.
“Here is a chance to have really major infrastructure as we did at the end of the Second World War, because we will have huge demand from people wanting to come to our country.
“The way to house them is not to try to stuff them all into Sydney and Melbourne, as we’ve done in the past, but to have our regions really blossom through greater connectivity, which means faster rail and high-speed rail.”
Grattan Institute chief executive Danielle Wood estimates another $70 billion in stimulus is required on top of the $180 billion in federal spending already announced and the Reserve Bank’s $200 billion emergency lending program.
Ms Wood has named infrastructure and social housing as a target for new spending, along with social services and a permanent increase in the JobSeeker rate for the unemployed.
Independent economist Saul Eslake also says a major investment in social housing should form part of the Morrison government’s infrastructure response to the recession.
He said this would deliver many jobs in all parts of Australia that could be put in place relatively quickly.
Bigger picture, he says the long-planned Marinus Link – up to two power cables linking Tasmania to Victoria – should be on the government’s agenda.
“It has considerable potential benefits for electricity consumers in Victoria, NSW and South Australia, and will assist Victoria and NSW in reducing their dependence on coal-fired electricity and in achieving their emissions reductions targets, so it can rightly be seen as a project of national significance,” he said.
Infrastructure Australia this year noted for the first time the need to boost the deep water container port capacity of the nation’s east coast, saying the growing size of cargo ships required major upgrades to ports in Sydney, Brisbane and Melbourne.
It warned that as Australia relied on ships for most of its international freight, the country would suffer a “disproportionately large impact” in competitiveness and consumer prices if the nation’s port networks were not upgraded.
Ms Lam-Frendo said in the wake of the coronavirus recession, private firms across the world were keen to invest in public sector infrastructure works, which delivered substantial economic support, the Hub’s research found.
She said Australia had proven over recent years it was ahead of other nations in understanding the importance of infrastructure to generating economic growth.
But she cautioned projects still had to be worthwhile.
“You want these to be not only be shovel ready but also shovel worthy,” she said.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.
David Crowe is chief political correspondent for The Sydney Morning Herald and The Age.