Prioritise infrastructure to build economy, growth

The Albanese government’s decision to review hundreds of projects, from new traffic lights to drains, will be worthwhile if it helps concentrate infrastructure spending towards productive investments with the capacity to build economic growth. Labor’s mantra of blaming the previous government for the nation’s ills is wearing thin. But given the importance of infrastructure, a short independent review of the $120bn worth of projects in the 10-year infrastructure pipeline, done well, will be no bad thing. Announcing the 90-day review on Monday, Infrastructure, Transport, Regional Development and Local Government Minister Catherine King said the number of projects in the pipeline blew out under successive Coalition governments from nearly 150 projects to almost 800, with about 160 projects having a commitment of $5m or less. The clogged pipeline, Ms King said, “has caused delays and overruns in important nation-building projects”.

The review should prove timely. It comes as the government recognises the need to boost the nation’s intake of highly skilled, well-qualified younger immigrants at a time of serious skills and labour shortages. A historic surge in migration is under way as international students and working holiday-makers return following Covid-19 border closures. That is essentially catch-up, however. As the report released last week by former secretary of Treasury and the Department of Prime Minister and Cabinet Martin Parkinson pointed out, high-flying newcomers are needed to make a valuable contribution to productivity and growth.

Attracting younger immigrants, including those with children, to Australia will also help mitigate one of our most pressing economic and social policy challenges. That is the ageing of the population and the decline in the percentage of productive workers and taxpayers to retirees, including those in the aged-care system.

Like other opinion polls and surveys, a new Institute of Public Affairs survey, reported on Tuesday, suggests most Australians do not react well to announcements of higher immigration. It showed about 60 per cent of those surveyed favoured a temporary pause in the intake of new migrants until more infrastructure such as roads, hospitals and houses could be built. Frustrations about clogged roads, housing shortages and hospital waiting times are understandable, especially among residents of capital cities where infrastructure and service delivery have not kept pace with population growth. About three million of Australia’s 26 million population are permanent migrants who have arrived since 2000. Of those, 87 per cent have settled in capital cities, mainly Greater Sydney and Greater Melbourne.

Growing the skills base has important implications for housing policy and infrastructure development, especially transport, healthcare and schools. Those demands underline why, as the nation grows, infrastructure development must remain a priority, with public money invested to best advantage to improve quality of life as well as the economy’s productive capacity. Given revenue shortfalls and high deficits, no side of politics should underestimate the value of thorough cost-benefit analyses of proposed projects. That should apply as much to projects in regional areas as to developments in and around capital cities. Some projects, even when decades overdue, stand to make outstanding contributions to productive capacity and quality of life. The new western Sydney airport and its surrounding transport and residential developments, for example, promise to have a transformative effect on the area, its economy, our largest city, the state of NSW and the nation.

On Monday, Coalition frontbenchers ­attacked the infrastructure review, claiming it would rip funding out of the regions and that no project would be “safe from the axe”. That remains to be seen. The review and its findings will receive close scrutiny. While regional infrastructure should not be misused as an electoral pork barrel – an accusation sometimes hurled at the Nationals – neither should it be neglected. As Dr Parkinson noted in his immigration report: “Better planning, housing, infrastructure and service provision will make regions more attractive to both Australians and migrants.”

Infrastructure, immigration and prosperity are inextricably linked. Higher productivity and economic growth are essential for growth in higher real wages and living standards, and debt and deficit reduction. Infrastructure, and securing the best return for taxpayers’ investment in it, is a vital component of economic policy.