Stimulus spending a risk to Queensland rebuild

THE government risks drawing resources away from Queensland's massive rebuild by pumping more than $1 billion into state stimulus projects.

THE Gillard government risks drawing resources away from Queensland's massive rebuild by pumping more than $1 billion over the next 18 months into state stimulus projects devised to head off recession.

Almost two years after the Labor government launched its $42bn response to the global financial crisis, its economic stimulus package is still soaking up labour and materials across the country, with 21,814 construction projects yet to be completed as of October 31 last year.

In Queensland alone, $644 million was still to be spent on primary school building projects and $551m on social housing projects, data to August 31 shows. The state will also have to find the labour to contribute to the National Broadband Network's target of connecting 317,000 premises nationwide to its fibre network by June 2012.

Saul Eslake, director of the Grattan Institute's Productivity Growth Program, said the original economic rationale behind the stimulus program -- to save Australia from recession -- no longer applied and had been overtaken by political and practical concerns.

"In theory, it would probably be desirable to reallocate spending on rebuilding school halls and things towards more urgent post-flood reconstruction work," he said.

Unofficial estimates of the costs of the Queensland floods, which Wayne Swan has warned could prove the nation's most expensive natural disaster, have risen to as high as $20bn.

But Queensland will have to repair its critical transport, power and water infrastructure while juggling the hundreds of federally funded projects still on its books, including almost 90 multi-unit housing developments and more than 500 school building projects awaiting completion.

The Queensland government, which had earlier pushed out its timetable for completing school science and language centres under the commonwealth's nation-building program, is now dealing with 92 state schools affected by the floods.

Two primary schools with federally funded projects on the go -- Milton State School and Rocklea State School in Brisbane -- are so damaged their students have been transferred to other schools.

The federal Treasurer's spokesman yesterday backed the continued rollout of the government's nation-building projects.

"Something like 97 per cent of major building and construction projects from the government's successful stimulus program have commenced or been completed, and it's important that these buildings are completed," he said.

But opposition finance spokesman Andrew Robb demanded that Canberra reprioritise its infrastructure projects, starting with the NBN and projects linked to the economic stimulus program.

Additional reporting: Mitchell Bingemann, Patricia Karvelas