Infrastructure logjam must be cleared, says David Gonski

ANZ Bank chair David Gonski has urged governments to clear the infrastructure logjam by ignoring “accounting heroes”.

ANZ Bank chairman David Gonski. Picture: Hollie Adams

ANZ Bank chair David Gonski has urged governments to clear the nation’s infrastructure logjam by ignoring “accounting heroes”, taking advantage of rock-bottom interest rates and reaping the benefit of efficiency gains and “multiplier” effects from soundly chosen projects.

Addressing an Infrastructure Partnerships Australia conference in Melbourne, Mr Gonski echoed the call of Westfield boss Frank Lowy last March to find a way of funding major national assets outside the recurrent commonwealth budget.

“One of the obfuscations is that we’ve become accounting heroes,” the ANZ chair said.

“I’d say spend the money now, which was (Mr Lowy’s) instinct, and don’t take it as an expense.

“To me, when you look at where interest rates are at the moment, the amount of infrastructure required, and the multiplier that comes from infrastructure, we have to find a way of doing it.”

Australia’s long-term borrowing costs have crashed to a record low with a subdued inflation outlook expected to keep official cash rates low for the medium term. Australia’s 10-year bond is trading at an implied yield of 1.9 per cent.

Mr Gonski lamented that Mr Lowy’s views — in which the multi-billionaire argued for the creation of a dedicated federal government balance sheet for capital projects of undisputed potential — had been largely ­ignored.

The approach would recognise that government spending can create national assets capable of being treated as balance-sheet items.

Variations of the approach have been used with the National Broadband Network, as well as the HECS student loan scheme, where the loans are separate from the recurrent budget.

“I’m not, by the way, seeking to get more business for the bank,” Mr Gonski said.

“I’m basically talking as someone who believes we should stop this logjam, spend the money and not confuse that this money we’re spending is recurrent money. It’s much more a question of spending it well so that we are producing benefits for the future of all Australians.”

Mr Gonski’s call to remove accounting blockages was echoed on the same panel by the former secretary of the Department of Prime Minister and Cabinet, Terry Moran.

His comments came after figures were released on Wednesday showing private sector investment for the June quarter had slumped 8.3 per cent compared to a year ago. Economists said this pointed to worrying signs about Australia’s future growth prospects.

National Australia Bank chief executive Andrew Thorburn told a media briefing last week that small to medium-sized businesses were telling NAB that their biggest challenges were the state of the nation’s infrastructure and the “cost and difficulty of getting things done in Australia”.

Mr Moran, head of PM&C between 2008 and 2011, welcomed Malcolm Turnbull’s preference for treating infrastructure as an equity injection, with the asset to be held on the commonwealth balance sheet.

“I think (that would be) a huge breakthrough ... for infrastructure investment in this country,” Mr Moran said.

“The problem with Treasury economists trying to be accounting experts is that they’re not very good at it.”

Mr Gonski also took a pot-shot at people decrying Senate obstructionism and the unwieldy number of crossbench Senators, saying the problem had been there as far back as the 1980s when he was an adviser.

“This is just Monday to Friday in the Senate,” he said.

“So rather than being obsessed with how many crossbenchers there are and what they stand for, I think, like anything in management, what is ahead of the government is that they must manage the situation.

“My instinct is that they will probably do it well and obviously there will be ups and downs, but that’s the joy of democracy. I think you accept it and move on.”

Spotless chair Margaret Jackson, who was also at the forum, said there was a continuing interest in reform, including outsourcing of the ongoing maintenance of state-owned assets to companies like Spotless.

However, there was often a pause in the letting of contracts after companies had gone through a tendering process and a preferred bidder had been chosen.

“It mightn’t be the right time electorally to make an announcement, so a year goes by and then they permanently defer,” Ms Jackson said. “There seems to be a lot of process and then a pause, but when they actually do go ahead the savings are quite phenomenal.

“Somehow there’s not a strong enough will or a nervousness politically.”

Reform momentum had suffered, according to Mr Moran, because business had “bowed out” of debates on where the country was going. Instead, business people tended to think that self-interest should “immediately be recognised by government as a golden truth”. “The real problem is that for 45 years we’ve had a debate about and an acceptance about Australia’s move to a globalised economy,” he said.

“Governments worked assiduously on that project and made world-leading progress. But we’ve found that, as in the UK and the US, many people feel left out by the result and they’re grumpy.

“They’re not as grumpy here as they are in the US but they’re grumpy nonetheless, and politicians haven’t found a way to refresh the story and take the country in a new direction.