The latest official figures show Australia’s infrastructure investment has plummeted, reports Alan Austin.
AUSTRALIA HAS BORROWED heavily to weather the recent COVID-induced economic storm. But in contrast to previous major global recessions, it is emerging with virtually nothing tangible to show for the debt incurred.
Australian Bureau of Statistics (ABS) figures show infrastructure spending under the current Adminstration has dropped off alarmingly. Total government investment in construction projects for calendar 2020 was $34.9 billion.
That is a decrease from 2019 spending, despite the raging pandemic last year and the urgent need to boost the economy with infrastructure development. Worse, it is $4.75 billion below the investment back in 2018, or down 12 per cent.
Last year’s spend was also less than the infrastructure investment in each of the critical four years of the Global Financial Crisis (GFC), from 2009 to 2012.
When calculated relative to population or to gross domestic product, the comparisons are more dismal still.
Proactivity needed in wake of pandemic
There is no excuse for this failure to invest. Infrastructure Australia has identified many urgent priorities. Almost 1.1 million Australians are underemployed and more than 778,000 have no job at all. Thousands of these people are in the construction sector.
Australia should have abundant tax revenue, given the extraordinary demand for most exports, the recent surges in commodity prices and record volumes shipped since early 2018.
Just since Scott Morrison has been Prime Minister, Australia has reached a new all-time record high monthly trade surplus six times. The latest was a thumping $9.62 billion in January this year. The coffers should be overflowing.
This is vastly different from the challenging global conditions Australia faced through the GFC. Yet that Administration built extensive infrastructure with relatively little debt.
Investment by prime ministers
Infrastructure spending should ideally increase steadily year on year, as the growing population requires more transport, housing, communications and community services. Yet year-on-year spending actually declined both Abbott years (2014 and 2015) and Morrison years 2019 and 2020.
Infrastructure spending per person should also steadily increase year on year – with occasional slight variations – as the economy expands and community wealth increases. It hasn’t.
The increase in spending per person through the Howard years over the Keating period is normal and expected. The surge in the Rudd years was abnormal, but justified by the need to respond to the GFC, which Australia did better than any other country, according to most independent analysts.
The slight contraction in the Gillard period was not a worry, as spending stayed high. That Government built new roads and bridges, energy and water infrastructure, insulation in 1.1 million buildings, new community social housing, national park extensions and school and community buildings in every single town, suburb and rural region. Virtually all of these are still in productive use and will continue to deliver a return on the investment for many decades to come.
The sharp reduction in infrastructure spending under Abbott was a major failure, particularly after he had stated before becoming Prime Minister that:
“I absolutely hope that in four or five years’ time people will say ‘yes, that Tony Abbott, he did all sorts of things but by God, he was an infrastructure Prime Minister. He was a builder’.”
Investment recovered marginally under Malcolm Turnbull, but nowhere near the spending per person of the Labor period. Investment has slumped again under Morrison.
Stark comparisons between the parties
For Labor to have built so much infrastructure it would be reasonable to conclude that they had to borrow far more. This is the perception the Coalition and the mainstream media constantly reinforce. But the facts don't bear that out.
In the critical three years 2008 to 2010, the Rudd Government increased gross debt by $115.7 billion. In the last three full years, from 2018 to 2020, the Coalition borrowed $290.3 billion.
Over its full journey, the Labor Government added $213 billion, or $37. billion per year. The Coalition, in contrast, has added $565 billion, or $74.3 billion per year.
Where has all that money gone? This is one of the major differences between the political groupings in Australia. Labor and the Greens borrowed to stabilise the economy by building the national estate. The Coalition has borrowed largely to replace wealth and income lost to foreign corporations through company taxes not collected and, increasingly frequently, money just handed out to media companies, marginal electorates and mates.
Alan Austin’s defamation matter is nearly over. You can read the latest update here and contribute to the crowd-funding campaign HERE. Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @alanaustin001.
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