Analysis and Commentary

The myth of infrastructure spending – it is just not happening

Analysis and Commentary

Analysis by Peter Roberts

You could be forgiven for thinking that federal and state governments have massively boosted investment in infrastructure projects to help Australia move through the Covid-19 related recession.

There are seemingly daily mutterings from Canberra of big spending, coming soon…but apparently not actually coming at all.

New figures from Infrastructure Partnerships Australia, reported in Channel 9 media, show that there has been a $20 billion slump in major project approvals since the coronavirus crisis began.

Far from an infrastructure boost, the value of major contracts being awarded fell to $6.7 billion in the first eight months of this year, down from $27.1 billion approved last year.

In part the figures reflect a small number of very large contracts let last year, and perhaps they show that these big projects just can’t be turned on and off.

In Victoria for example the small number of very large contractors are fully engaged on existing projects, and awarding them further work is just going to dillute efforts on existing projects.

There is a finite amount of capability in the big contracting sector.

So what of many small projects rather than a few big ones?

It seems these are not particular shovel ready, to use a phrase the politicians are fond of.

Again we have heard of such projects for decades but when they are needed, there simply aren’t too many projects in the $1 million to $500 million range sitting on the shelf waiting to go.

Perhaps this reflects the cuts in the capabilities of the public service – around the country government is simply not capable of doing more.

So when you read about Deputy Prime Minister Michael McCormack promising new spending on infrastructure in the October 6 budget, watch out for more smoke and mirrors.

Picture: Infrastructure Partnerships Australia

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