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| Australia should borrow to build infrastructure, Anthony Albanese says | |
| (35 minutes later) | |
| The Labor frontbencher Anthony Albanese has suggested borrowing and spending on new productive infrastructure to stimulate the economy as it transitions and to drive future growth. | The Labor frontbencher Anthony Albanese has suggested borrowing and spending on new productive infrastructure to stimulate the economy as it transitions and to drive future growth. |
| In a speech on Tuesday night to the Master Builders Association, Albanese, who is shadow minister for infrastructure, quotes arguments from both the former and current governor of the Reserve Bank in favour of borrowing to fund productive infrastructure. | In a speech on Tuesday night to the Master Builders Association, Albanese, who is shadow minister for infrastructure, quotes arguments from both the former and current governor of the Reserve Bank in favour of borrowing to fund productive infrastructure. |
| The Labor frontbencher says both Glenn Stevens, the outgoing RBA governor, and the current governor, Philip Lowe have “stressed that the government should consider borrowing to fund good infrastructure projects that provide a solid public benefit in returns for the investment”. | The Labor frontbencher says both Glenn Stevens, the outgoing RBA governor, and the current governor, Philip Lowe have “stressed that the government should consider borrowing to fund good infrastructure projects that provide a solid public benefit in returns for the investment”. |
| Lowe said last week that the government’s efforts to achieve fiscal consolidation should not preclude spending on infrastructure. | Lowe said last week that the government’s efforts to achieve fiscal consolidation should not preclude spending on infrastructure. |
| The RBA governor said the government needed to achieve a better balance between recurrent spending and revenue, but infrastructure spending, when backed by a solid business case, “can provide support for the economy and can help generate the productive assets that a prosperous economy needs”. | The RBA governor said the government needed to achieve a better balance between recurrent spending and revenue, but infrastructure spending, when backed by a solid business case, “can provide support for the economy and can help generate the productive assets that a prosperous economy needs”. |
| “Done well, infrastructure spending is not inconsistent with establishing a better balance between recurrent spending and revenue,” Lowe said in Melbourne last week. | “Done well, infrastructure spending is not inconsistent with establishing a better balance between recurrent spending and revenue,” Lowe said in Melbourne last week. |
| Albanese said on Tuesday the federal government needed to lift infrastructure investment across the country for two reasons. | Albanese said on Tuesday the federal government needed to lift infrastructure investment across the country for two reasons. |
| “The first is that if we choose the right projects – those that provide a return to the public – we can extract productivity gains that will allow us to get more out of existing resources,” the shadow infrastructure minister said. | “The first is that if we choose the right projects – those that provide a return to the public – we can extract productivity gains that will allow us to get more out of existing resources,” the shadow infrastructure minister said. |
| “Those gains will also set up new waves of growth into the future, but there is also a short-term imperative. | “Those gains will also set up new waves of growth into the future, but there is also a short-term imperative. |
| “You don’t create new industries overnight. During this period of economic transition, we must seek to maintain economic activity and sustain employment – government projects will do just that.” | “You don’t create new industries overnight. During this period of economic transition, we must seek to maintain economic activity and sustain employment – government projects will do just that.” |
| Albanese’s message to the MBA followed a discussion in Canberra earlier on Tuesday about how super funds could invest their half a trillion dollars of capital to boost Australia’s depleted infrastructure stock. | Albanese’s message to the MBA followed a discussion in Canberra earlier on Tuesday about how super funds could invest their half a trillion dollars of capital to boost Australia’s depleted infrastructure stock. |
| At the Industry Super Australia conference Chris Richardson, from Deloitte Access Economics, said the cost of capital had never been lower in recorded human history, so governments ought to be taking the “stunning extra opportunity” to do so. | At the Industry Super Australia conference Chris Richardson, from Deloitte Access Economics, said the cost of capital had never been lower in recorded human history, so governments ought to be taking the “stunning extra opportunity” to do so. |
| “[But] when the GFC hit NSW had a mini budget, [and] it cut back its capital spending,” he said. “So did New Jersey in the US. It’s silly stuff.” | “[But] when the GFC hit NSW had a mini budget, [and] it cut back its capital spending,” he said. “So did New Jersey in the US. It’s silly stuff.” |
| “We need budget repair around the day-to-day stuff, but we also need to be doing our capital budget, our investment in infrastructure, better than we have been.” | “We need budget repair around the day-to-day stuff, but we also need to be doing our capital budget, our investment in infrastructure, better than we have been.” |
| Ross Garnaut, one of Australia’s most respected economists, told the Industry Super conference that businesses were not investing in infrastructure because of the record-low rate of productivity growth. | Ross Garnaut, one of Australia’s most respected economists, told the Industry Super conference that businesses were not investing in infrastructure because of the record-low rate of productivity growth. |
| He said productivity growth in all developed countries was the slowest it had been since the beginning of the industrial revolution. | He said productivity growth in all developed countries was the slowest it had been since the beginning of the industrial revolution. |
| “That reduces business investment because if there isn’t innovation the incentive to put in new capital stock is falling. So we’ve got historically low business investment in all the developed countries, so that’s reducing demand for capital.” | “That reduces business investment because if there isn’t innovation the incentive to put in new capital stock is falling. So we’ve got historically low business investment in all the developed countries, so that’s reducing demand for capital.” |