As reported in Fairfax today, Prime Minister Malcolm Turnbull is set to announce a new scheme that would boost investment in big-ticket infrastructure projects across Australia’s major cites:
To be called Smart Cities, the project will begin with a $50 million allocation for planning and the brokering of deals between the Commonwealth and private funders that want to leverage its balance sheet…
The Prime Minister plans to issue long-dated bonds – perhaps up to 30 years – to lock in historically low interest rates to part-fund projects such as Sydney’s Badgerys Creek airport, Melbourne’s Metro Rail and Brisbane’s Cross River Rail.
The funding would be delivered on the condition recipients show it would return to the Commonwealth through demonstrated faster economic growth and higher tax revenue, as well as “value capture” charges on businesses that benefit from the developments…
The government will “prioritise projects that meet broader economic and city objectives, such as accessibility, jobs, affordable housing and healthy environments”.
Cities Minister Angus Taylor said the Commonwealth was interested in outcomes, “not just handing over a blank cheque”.
Sounds promising, although the devil will obviously be in the detail.
Nevertheless, it is great to see Australia’s governments finally taking action on Australia’s massive infrastructure deficit (see below chart) which, in the face of rapid population growth, would only erode living standards even further without massive and ongoing infrastructure investment.
In theory, provided a project’s benefits exceed its costs, then by definition, it will help close any infrastructure deficit Australia might be facing.
Depending on how quickly projects could get off the ground, boosting infrastructure spending could also cushion the blow as mining capex craters next year and into 2018.
