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Coalition hypocrisy on infrastructure surges as actual spending stalls

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Cartoon by Paul Dorin / @DorinToons

Infrastructure is the latest area of Morrison Government incompetence exposed by fresh data from the Bureau of Statistics. Alan Austin reports.

WHEN HISTORIANS survey the damage done to Australia’s economic, social and physical environment by arguably the least competent government in the Westminster world since the Second World War, infrastructure failure will be high on their list. This area of mismanagement has been one of the most destructive. And most hypocritical.

Serious spending slump

The Australian Bureau of Statistics (ABS) showed us last week that total investment by all state and federal governments in construction projects for the full financial year 2018-19 was just $46.1 billion. That might seem okay at a glance. But it isn’t.
Remember, the world is now in its fifth year of an extraordinary upswing in international investment and commerce. This is in dramatic contrast to the global recession which devastated the world from 2008 to 2012.

So infrastructure spending last financial year should have broken all records. This could have been the year which fixed congestion on Australia’s capital city roads, trains, trams and buses, once and for all.

The opposite has happened. Infrastructure spending declined last year. Public transport stress worsened. So did the condition of bridges, reservoirs, regional airports, railway stations, remote housing and other vital infrastructure.

That $46.1 billion spent last financial year was $2.4 billion less than the year before, down 4.8%. Worse than that, it was $3.6 billion below the quantum Labor allocated back in 2009-10, and a thumping $4.2 billion, or 8.4%, below Labor’s 2010-11 investment. That was the year infrastructure received the strongest boost from a national Government since records have been kept. (Data is from ABS File 8782.0.65.001, Construction Activity: Chain Volume Measures.)  

Political hypocrisy back then

Why this area of incompetence will be treated harshly by historians is that the Coalition in Opposition campaigned effectively on infrastructure development and, with the connivance of the mainstream media, persuaded the electorate Labor had failed.

Infrastructure was Opposition Leader Tony Abbott’s dominant theme before the 2013 Election. He gave an entire speech on the subject in May 2012 in which he brutally condemned Labor’s “mismanagement of infrastructure” and promised:

“There is a better way. The Coalition has a plan for Australia’s infrastructure of the future.”

He told a campaign rally in Adelaide in April 2013:

I have already made some big announcements about the economic infrastructure that would start to go within 12 months of a Coalition government being elected. I want to see cranes over our city. I want to see bulldozers on the ground. I want to see the traffic moving.

He deceived a big Melbourne rally in June 2013 with this:

I hope – I take nothing for granted, ladies and gentlemen – but 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. He built this nation because he built the roads and the other infrastructure that we so desperately need’.

People will never say that of Abbott, nor of anyone in the Coalition. They promised the world. But, by God, delivered very little.

Government comparisons

Let’s focus on public sector investment in engineering construction over recent years. This includes all engineering projects but excludes housing. The average spend during the 11 years of the Howard Government was $1,040 per person. Not bad.

This increased dramatically through the Rudd/Gillard period to average $1,480 per person per year. Remember that was during the global financial crisis when times were tough and revenue was well down.

Then came the boom years from 2014 onwards when the current Coalition presided over surging global trade, investment, jobs, corporate profits and potential government revenue. Engineering construction should have exceeded Labor’s by a huge margin. That’s what was promised. Instead, it has fallen to $1,275 per person per year.

Similarly, when calculated as a percentage of gross domestic product (GDP), the recent infrastructure investment has been criminally negligent. GDP has expanded by 27.5% since 2013.

Global comparisons

Australia’s infrastructure efforts over the last year have clearly been the worst among developed countries for which we have comparable data.

Tradingeconomics.com shows construction output for 26 member countries of the Organisation for Economic Cooperation and Development (OECD), the group of wealthy, developed capitalist economies.

Of these 26, only three spent less on construction last year than the year before – Mexico, South Korea and Australia. Mexico’s decline has only been over the last year and South Korea’s over the last two years. Australia’s failure to maintain infrastructure spending, however, has been over the last five years.

All other 23 developed countries boosted infrastructure to varying degrees last year. Six increased the annual spend slightly, while another eight increased it moderately. Four boosted investment strongly while another five did so extremely strongly.

Austria’s increase over the previous year was 7.0%, New Zealand’s was 10.6%, Poland lifted its spend 12.5%, while Ireland achieved 14.2%. Slovenia’s annual increase was 16.7%. Hungary’s was an extraordinary 30.9%.

Clearly, these are boom times for infrastructure development across the developed world. Except in two poorly-managed economies and one extremely badly-managed economy.

Political hypocrisy now

Finance Minister Mathias Cormann said in his speech to the Sydney Institute less than two months ago:

“Our Government is delivering a record $100 billion, ten-year Federal infrastructure pipeline.”

See? They are still trying to make it sound like present tense. But it isn’t. Cormann is referring here to budget projections — what they hope to do in the future:

“The combined impact on our economy of our income tax relief plan and our infrastructure investment plan just over the next four years of our forward estimates period is almost $95 billion.”

Treasurer Josh Frydenberg did the same in his May Budget speech. He said, “We are getting on with the job of building infrastructure”, implying this was already happening. It isn’t.

Infrastructure Minister Michael McCormack told the National Party last month:

“Friends, the new vision for regional Australia revolves heavily around infrastructure ... This can be done. It is being done.”

No, it isn’t. It might be done in the future. Or it might not. We must wait and see. But, by God, what we do see now is monumental hypocrisy.

You can follow Alan Austin on Twitter @AlanAustin001.

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