Debate ‘Heats Up’ On Australia’s Aging Infrastructure

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Thursday, January 30th, 2014
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At a time of a fading mining investment boom, Deloitte Access Economics is pleased to see policymakers discussing Australia’s creaking urban infrastructure.

The independent forecaster’s latest Investment Monitor highlights the peaking nature of the resource-related investment spending with definite projects in the final months of 2013 posting the biggest drop since the depths of the 2008-2009 global financial crisis.

However, Deloitte Access Economics partner Stephen Smith notes in the report on Thursday that public infrastructure, particularly for transport, has been the focus of considerable discussion in Australia over the past few months.

The federal government has directed the Productivity Commission to examine major infrastructure projects, drawing organisations such as Infrastructure Australia, the Reserve Bank of Australia and the Business Council of Australia into the debate.

“That the state of Australia’s creaking urban infrastructure is stirring the passions of Australian policymakers gives hope that a more efficient system of identifying, assessing, financing and constructing public infrastructure may be in store,” Mr Smith said.

“However, there is also a risk that any policy changes are designed with short term growth risks rather than the longer term sustainability of infrastructure spending in mind.”

The report shows the value of definite projects – those under construction or committed – dropped by almost $25 billion over the December quarter, the most significant quarterly fall since the December quarter 2008. Definite projects over the year were down 1.2 per cent.

Mr Smith said not a single new liquified natural gas (LNG) project began construction over 2013, although there was a further $2 billion cost blowout for the Gorgon LNG project.

The value of planned projects – those under consideration or possible – rose by more than $17.5 billion over the quarter.

However, a $40 billion increase in the value of projects under consideration was partly offset by a $22.3 billion fall in the value of possible projects.

Overall, the total value of projects at their various stages fell 0.8 per cent compared to the September quarter – or $7.4 billion to $866.3 billion – to be down 9.2 per cent over the year.

 

By Colin Brinsden
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