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PostPosted: 10 Mar 2013, 15:35 
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Some things can't be left to our pollies. Herald Sun 6/3/'13 p.29. By Jessica Irvine.

COULD this be the biggest-spending election campaign of all time? [2013] Six months out and the bacon is flying.

Pork barrelling is on for the old and youn, with billion-dollar pledges from both parties to build new roads in Sydney's traffic-clogged western suburbs.

You can expect the caravan to roll around the country. Some top-ups for Brisbane's Cross River Rail, Melbourn'es East-West Link, Adelaide's South Road and Perth's Gateway airport road project? Yes, all necessary projects. Too necessary, in fact, to be hijacked by the political cycle. When funding announcements are engineered to win votes, rather than ease congestion, they are likely to be underfunded, poorly planned and haphazardly executed. Australia already confronts an infrastructure backlog worth as much as $770 billion, on one estimate, over the coming decade.

It's time to remove infrastructure funding from the vagaries of the electoral cycle. It's time we beefed up the Governments's infrastrucutre adviser, Infrastructure Australia, and set it free, like the Reserve Bank, to be a fiercely independnt and analytically rigorous manager of the nation's infrastructure plans. It should be delegated the authority to determine the appropriate level of federal funding for different projects.

At present, Infrastructure Australia does not have the staffing firepower to live up to this expanded mandate. Cncieved by Labor in Opposition, Infrastrucucture Australia was born in April 2008. Today it has 11 Boadrd members, including businessman Rod Eddington and Treasury Secretary Martin Parkinson. Why shouldn't they meet every month to discuss infrastructure funding priorities and release a statement, like the Reserve Bank?

TGhe Australian National Audit Office recommended in 2009 that Infrastructure Australia should, in addition to its Infrastructure Priorities List, also dish out advice on how much the Federal Government should fund of the projects it adopts.

Why not have a list of shovel-ready projects ready to roll out when fiscal stimulus is needed? At present, Infrastructure Australia has no power to assess projects unless state or federal governments have submitted them for costing.

Developing a steady rollout of national infrastructure projects is too important to be subject to the whim of politicians. Closing the nation's infrastructure gap would enable population growth without leaving people feeling cramped and crowded, which leads to the sort of anger and resentment we see today at new settlers. The vibrancy of our people is one of the keys to Australia's economic success. As many people as possible should be able to share the privilege of living in the best country in the world. Better planned and executed infrastructure would allow that.

Of course, we can't have a debate about infrastructure without also talking about where the funds will come from.

We have become too debt-phobic. Yes, government debt is bad if used to fund recurrent spending. But it is OK if used to invest in projects that increase the economy's productive capacity. Every property owner knows it's OK to borrow for renovations, as long as the benefit you expect to receive exceeds the borrowing cost. It's the same with spending on roads, rail ports and bridges, which actually increase our productivity and ability to generate income.

The Federal Government must take on debt to restore the nation's ailing urban infrastructure. If we have to spend a bit of the extra income we would generate paying off the debt required to achieve it, that's OK. We are still better off overall.

Bank of America Merrill Lynch chief economist Saul Eslake says a rise in spending on infrastructure would help to offset the contractionary effect of the high Aussie dollar.

Eslake told me this week: "Between them, the federal and state/territory governments could borrow the equivalent of, say, 5 per cent of GDP over the next two years and spend it on well-targeted, rigorously evaluated infrastructure projects without imperilling Australia's AAA rating."

After all, as Eslake points out, Canada has a stable AAA rating and a federal debt-to-GDP ratio of 30 per cent, treble ours, and no one suggests Canada's rating is under threat.

So what is standing in the way? Politics, pure and simple.

Eslake says: "There's a higher probalbility of Tasmania getting its own AFL team while Demetriou remains CEO of the AFL than of policy going down tht path."

What Australia needs is to decouple infrastructure planning from the election cycle by putting funding decisions in the hads of a credible, independent group.

Now that sounds like a real infrastructure plan. END QUOTE.

Jessica Irvine is national economics editor


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PostPosted: 16 Mar 2013, 22:23 
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Copy/paste of rag newspaper articles is boring.

Are you asking what the priority should be?

Sydney/Melbourne fast rail.

That is all.

Thank your mother for the rabbits.


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