Building the national heritage: Difference between Labor and the Coalition

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Cartoon by Mark David/@mdavidcartoons.

In stark contrast to the last international financial crisis, Australia is now going into deep deficit and debt with very little to show for it. Alan Austin reports.

LABOR HAS BEEN smacked around the ears by the mainstream media, the Coalition parties and others ever since it took on a light amount of government net debt in 2009 to deal with the greatest global recession since the 1930s.

This belting has been totally unwarranted from the outset. It can now be seen to be extraordinarily hypocritical as Australia’s debt has deepened disastrously through the last six years of global economic boom.

One major difference between Labor and the Coalition is this: Labor borrowed in order to build vast infrastructure and in so doing provided jobs for hundreds of thousands of Australians. The Coalition has borrowed to facilitate the transfer of wealth and income to the large, mostly foreign, corporations through company taxes foregone and, sometimes, direct handouts.

Spending slump continues

The Australian Bureau of Statistics (ABS) reveals that total investment by all state and federal governments in construction projects for calendar 2019 was $46.7 billion.

While that sounds a lot, it is actually a decrease of $3.8 billion – or 7.6% – on construction spending in 2018.

It was only slightly higher than the spend in 2017, which was a poor year for infrastructure. It was well below infrastructure spending during the Labor years. In fact, the 2019 investment was down on the 2010 level by $6.6 billion — a thumping 12.4%. Former Prime Minister Kevin Rudd’s 2010 allocation remains the all-time high for infrastructure investment, at $53.3 billion.

It is crucial to understand that until the pandemic hit the world in February, the global economy had enjoyed six years of ever-rising investment, jobs, trade and profits. Australia has been achieving record exports and all-time high trade balances. Never has demand for Australia’s resources been so high. This is in stark contrast to the global recession which devastated the world from 2008 to 2012.

Infrastructure investment last year, therefore, should have hit an all-time high and added at least one new airport, or one new major rail link, or one new port or... at least something tangible to show for the extraordinary outflows of Australia’s wealth.

Infrastructure by prime ministers

About the only positive news for the nation is that the Morrison Government has not let infrastructure spending fall to the appalling lows of the two benighted Tony Abbott years.
You may remember Tony Abbott.

He asserted just before he became PM 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’.”

As the purple chart shows, infrastructure plummeted under Abbott, recovered marginally under Prime Minister Turnbull but slipped back again last year, although not as badly as under Abbott.


This is based on data from ABS file 8782.0.65.001 – Construction Activity: Chain Volume Measures, table one, public sector engineering construction. This includes all engineering projects, but excludes housing.

Global comparisons

Australia’s recent infrastructure efforts rank poorly among comparable developed countries. Tradingeconomics.com shows construction output for 29 members of the Organisation for Economic Cooperation and Development (OECD), the group of wealthy, developed capitalist countries. Of these, 20 well-managed economies increased construction investment in 2019 over the year before. The Netherlands, Austria, Sweden, Poland and Slovenia lifted spending by more than 4%. New Zealand, Ireland and Luxembourg increased it by more than 10%. Hungary took full advantage of the global boom and spent 25.8% more on construction.

At the other end of the table, Australia was one of nine losers which spent less, along with Greece, Spain, Mexico, Latvia, Switzerland, Slovakia, Japan and South Korea.

Failure of national vision

In his media release last Friday, Minister for Finance Mathias Cormann used an unfortunate metaphor:

‘As a Government we committed to the fight against the virus and to building the economic bridge to the other side.’

Yes, the efforts by state and federal governments to limit the impact of the virus in Australia have been impressive. Australia is one of the leading nations worldwide in controlling the spread of the virus and limiting deaths.

Unfortunately, the only bridges – or other useful structures – this government has tried to build are metaphoric rather than real and this looks like continuing indefinitely. Of the spending Cormann announced, none went to expanding the national heritage of solid, lasting, productive infrastructure.

This is in dramatic contrast to the vision formulated and the strategies adopted by Australia’s government 12 years ago when faced with a similar challenge.

This is a great tragedy, as the debt incurred by this administration will be a burden on future taxpayers for many years to come, probably decades.

Nevertheless, the payments Cormann announced are necessary and should be welcomed.

No surplus after all

The finance minister acknowledged that there will be no surplus this year, despite having won last year’s election on the assurance that it had already been delivered.

This is actually not news. It was evident in January’s monthly Finance Department statement that the surplus was doomed when that month’s deficit tumbled to $26.6 billion. So while it is true that the pandemic has worsened the budget outcome, another deficit was inevitable in any event.

This will remain the situation as long as the current government allows Australia’s wealth to be shipped out by the foreign corporations with so little returned to the people of Australia.

A revised tax policy and budgets framed to share the wealth and income equitably will ensure Australia’s built heritage is increased rather than run down. This has been accomplished before. It can happen again.

Alan Austin’s defamation matter is nearly over. You can read an update here and help out by contributing to the crowd-funding campaign HEREAlan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @AlanAustin001.

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