Australia’s peak employer body representing the Civil Construction industry has urged the Federal Government to fully embrace ‘good debt’ and commit to an expanded infrastructure investment program.
Civil Contractors Federation National CEO Chris Melham said he welcomed recent comments by Federal Treasurer Scott Morrison acknowledging that debt funding of productive infrastructure is a viable option.
“Many economic commentators, including the current and previous Reserve Bank Governors, have proposed a debt-funded infrastructure push as the most effective way for the Federal Government to stimulate Australia’s weakening economy,” Mr Melham said.
“It’s refreshing to now hear the Federal Treasurer speaking along the same lines.
“However, the CCF is concerned at the Treasurer’s proviso that any debt-funded infrastructure investment program can only take place after borrowing for recurrent spending has been reduced.
“With Australia’s economy shrinking, and with interest rates low, the time to act is now. The Government can still borrow at well under 3%, significantly less than the expected return on productive infrastructure, so why would you delay?
“The CCF also observes that the Federal Government’s $50 billion infrastructure program while significant, is being spread over six financial years (2014/15 – 2019/20), not the usual four years for forward estimates.
“The new Australian Infrastructure Statistics Yearbook 2016 demonstrates that governments aren’t pulling their weight – public sector infrastructure construction as a percentage of GDP has fallen from 2.2% in 2010/11 to 1.5% in 2015/16.
Contractors and suppliers to the civil construction industry have already felt the impact of falling construction work on their businesses and the near term outlook remains challenging, to say the least. While falling resources-related investment has been a key architect of the construction downturn, falling state government revenues and rising debt has also stymied publicly funded civil construction.
“The CCF is calling for a new phase of productive public infrastructure investment by taking advantage of low interest rates, lower industry costs, shovel-ready projects with proven productivity benefits initially, and then on maintaining a rolling, long term infrastructure investment program that provides industry confidence and certainty”, Melham said.
For further information
Mr Chris Melham
Chief Executive Officer (National)
Contact: (02) 6273 8312