Prime Minister Scott Morrison claims the federal government’s “massive” infrastructure investment program will help stimulate the economy. The government has committed some $100 billion on infrastructure projects over the next decade, including $48.2 billion over the next four years. From The Australian:
Scott Morrison has put his infrastructure spend at the centre of his fightback against soft economic growth figures…
Mr Morrison said on Thursday that the infrastructure pipeline was one of the keys to stimulating the economy… He said the results would not show until the September quarter figures.
“That infrastructure investment this year will be just shy of $10bn and that will scale up over the forward estimates to up to $12bn. And it’s over $100bn over the next 10 years,” he told Adelaide’s FIVEaa radio…
At the same time, Morrison has ruled out fast-tracking infrastructure projects to boost the economy, claiming capacity constraints are causing cost blowouts in infrastructure projects:
“We are really starting to hit our head on the ceiling in terms of how much infrastructure work you can get under way at any one time,” he said.
“And that’s actually putting some cost pressures into the system”…
“There’s a lot of projects going on, not just in Melbourne but around the country too and that’s putting some price pressures into the system.”
This is hilarious. This $100 billion of infrastructure investment from the Commonwealth over ten years is dwarfed by the states (New South Wales and Victoria in particular).
This $100 billion also won’t be nearly enough to keep up with the 3.5 to 4.0 million population growth expected to be added over this 10-year period, nor backfill the infrastructure deficit that has accumulated over the past 15 years as Australia’s population has soared:
The whole reason why Australia has an infrastructure deficit in the first place is because the federal government has for more than a decade run a mass immigration program more than double the historical average. And this population crush is projected to strengthen over the Budget forward estimates:
With massive population increases projected for NSW (~600,000) and VIC (~650,000) over the next four years:
The federal government, which collects more than 80% of the nation’s tax revenue, runs a mass immigration ‘Big Australia’ policy because it gets to collect the benefits via personal and company taxes.
But the costs are borne by the states and existing residents, who have to stump up funding for all of the extra economic and social infrastructure required to accommodate the larger population (think schools, hospitals, roads, rail, etc).
The fact is, catering for population growth costs a fortune. But these costs aren’t born by the federal government, which sees migrants purely as a cash cow to milk for extra tax revenue.
Moreover, whatever infrastructure is delivered will be crush loaded before launch, will be pork, or be sold to rentiers for private taxation. It won’t lift productivity, incomes or living standards. It will lower all three in the context of mass immigration and rampant corruption.
Let’s not forget that we were here just two year ago, arguing exactly the same things. That’s because relying on building to drive economic growth never lasts. It is the rate of change in the investment that matters so you always have to build more every single year to add to growth at all:
It’s nearly impossible to keep the pipeline full enough. The failing Chinese model is the greatest living example, now building a new Europe every year and striding backwards into stagnation and debt.
As we crush load everything in sight with mass immigration, we have little choice but to keep the rat wheel spinning. But let’s not pretend that it is anything other than a pointless running on the spot enriching nobody but a few growth lobbyists like Transurban.
The answer is as obvious today as it has been for years: cut immigration; boost innovation and competition; reform tax concessions; lower land prices; lower energy costs and lower the AUD.
Following the current path will further hollow out Australia’s productive capacity, leading to much deeper stagnation as we force feed people and pointless building.
