Construction and national net worth continue to decline under Turnbull

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Infrastructure is rapidly collapsing in Australia. Not literally. Not yet. But that could happen if current trends continue.

Australia’s investment in infrastructure remains well and truly in the slump that began soon after the 2013 change of government.

This is proven by the latest quarterly construction data from the Australian Bureau of Statistics (ABS), which shows private and government spending on engineering and building projects up to the end of last year.

This matters, not just because it is yet another outcome diametrically opposite to solemn Coalition promises, but because Australia’s national net worth is now declining disastrously.

Contrary to expectations, private sector construction has actually performed worse than in the public sector. This is pretty alarming, given the extraordinary encouragements private corporations receive — via tax cuts, subsidies, eased regulations, low wages and low interest rates.

Here is the dismal data.

Private sector engineering construction

The total for the 2017 calendar year was just $69 billion, down a staggering 36.3% from the healthy $108.3 billion in 2012 — the last full year of the Labor Government.

The annual total for last year is the second lowest since 2010, at the depths of the global financial crisis (GFC).

This is particularly disturbing as most construction, historically, has originated in the private sector. In 2012, corporate investment accounted for 75.8% of total construction. It is now just 66.9%.

Government sector

Public sector investment in construction recovered in 2017 from the previous three aberrantly low years. This was still below 2011 and 2012, however, at $34.2 billion for the year.

Total private and public engineering construction for calendar 2017 was just $103.2 billion, fully 27.7% below the 2012 level. This is the second lowest output since 2010, during the GFC. Only last year was lower.

Grand total for all things built

The sum of all building and construction, including housing, non-residential buildings and engineering works came to $215 billion for the year. Although up marginally on the previous two years, this remains $17 billion – or 7.3% – below 2012 and also well below the output in 2013 and 2014.

National net worth

The loss to the national estate of the failure of the Abbott and Turnbull regimes to maintain spending on infrastructure is measured by the Department of Finance in its monthly reports on the state of the books.

Net worth is the measure of federal government assets minus liabilities. Assets include cash, investments, land, buildings, equipment, infrastructure and cultural assets. Liabilities include superannuation and other employee charges, debts to suppliers and government borrowings.

During the two years then Prime Minister Tony Abbott and Treasurer Joe Hockey tried unsuccessfully to manage the economy, Australia’s net worth plummeted by a staggering $114.6 billion, down to negative $320.6 billion — the lowest level ever to that point.

It has fallen by another $79.2 billion since Prime Minister Malcolm Turnbull and Treasurer Scott Morrison replaced them — on the pretext that economic management needed to improve. It is now negative $399.8 billion.

This makes 26 consecutive months net worth has been deeper than negative $340 billion. The lowest this ever reached under any previous government was negative $263.8 billion. That was in September 2012 towards the end of the world’s worst recession in more than 80 years.

Global comparisons

With the current global boom in trade, investment, jobs and company profits into its fourth year, most well-managed economies are expanding their roads, bridges, ports, airports, rail networks, power generators, factories, offices, housing and other buildings. Most, but not all.

Tradingeconomics.com tracks construction output over time for 35 major economies. Of these, only four have experienced a decline since 2012. They are Malaysia, Russia, the United Kingdom and Australia.

Commitments trashed

Construction should currently be booming in Australia along with all other well-managed economies.

Especially when we recall how the nation stood to attention, moist-eyed and saluted Tony Abbott every time he said in Opposition:

“I would like to be, should I get the chance, a prime minister who revels in seeing cranes over our cities, who revels in seeing bulldozers at work ... That is the kind of Prime Minister that I would like to be if I get the chance.”  

He had the chance. He did not deliver.

Malcolm Turnbull also said in 2010 that what Australia urgently needed was

“ ... conscious planning and adequate financing of critical infrastructure.”

Turnbull has delivered neither.

Such is Australia’s doom.

You can follow Alan Austin on Twitter @AlanAustin001.

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