By Daniel Archibald | CFA
Due to the size of the continent on which we live, there has always been a need for foresight and implementation of large infrastructure projects. Since federation, government and business have supplied the country with a vast array of important infrastructure on which our society and economy relies.
Some of the most significant projects in our history include:
Overland telegraph - Completed in 1872, this important piece of infrastructure helped connect Australia to the rest of the world.
Snowy Mountains Scheme - Finished in 1974 after 25 years of work, the scheme consists of 16 dams and 9 power stations and helped turn the water lost to the Tasman Sea back inland towards the farming communities of the Riverina.
Canberra - Established in 1913 as a compromise to the Sydney/Melbourne debate, the city has grown to house almost 400,000 people, 1,000s of businesses and our Federal government.
NBN - A work in progress.
And it would seem that the notion of 'nation building' is back on the agenda.
According to Infrastructure Australia, there are about 100 projects or initiatives nation-wide that have been classified as either high priority or priority. These include:
High Priority
- WestConnex in Sydney
- M80 Ring Road upgrade in Melbourne
- Sydney and Melbourne Metro rail
- Cross River rail in Brisbane
Priority
- Bruce Highway upgrade in QLD
- Inland rail through inland NSW
- Level crossing removals in Melbourne
- New England highway upgrade in NSW
- AdeLINK tram network in Adelaide
One reason why infrastructure building may have taken a back seat over the past decade is the high wage rate caused by the mining boom and the subsequent construction boom. Many public and private projects over this time were hit with major cost blowouts and construction delays, making the case of new projects difficult. And from a government point of view, major issues stemming from 'Building the Education Revolution" (school halls scheme), "Energy Efficient Homes Package" (pink batts scheme), and the NBN has not helped the cause of nation building.
Due to this reluctance to open the public purse, commentators have been calling on the private sector to get more involved. In 2008, all state and territory governments endorsed the National Public Private Partnership (PPP) Framework. This effectively, gives different levels of government more flexibility in engaging with developers and capital markets in the construction and operating of large infrastructure assets.
Superannuation has also been raised as a potential source of funds for nation-building projects, with some industry experts calling for legislative changes to promote Australian infrastructure investments. Though such a move is highly unlikely, the pressure for the large super funds to show how they are helping to solve the issue is growing.
Australia managed to dodge another recession following the end of the mining boom, due to the cut in interest rates and the surge in property developments. However, the end of the current residential and office construction boom may be upon us in the short-to-medium term, which could well see the brakes slammed on the Australian economy. With the RBA having spent most of its firepower, look for the federal government to step in and open up the taps for infrastructure and good ol' nation building.