National Australia Bank's chief executive has called for greater government investment in infrastructure despite Treasurer Scott Morrison having reiterated he's in no rush to enter a new round of spending.
Mr Morrison this week said federal government would only take on “so-called good debt” for infrastructure spending once borrowing for current expenditure is under control, insisting there was a clear plan to return the government to balance.
But Andrew Thorburn and NAB chairman Ken Henry – a former Treasury secretary – both used the bank’s annual general meeting in Adelaide to stress the importance of greater outlay on infrastructure in boosting low economic growth.
Mr Thorburn called for greater government leadership to help create conditions for job creation, with small and medium businesses particularly likely to benefit from lower taxes, further deregulation and better infrastructure.
“This requires leadership, greater collaboration amongst political and business leaders – and a national mindset of action,” Mr Thorburn said on Friday.
“The benefits are obvious: economic growth, more opportunities for businesses and more jobs.”
With continued weak business investment featuring prominently in the national accounts’ recent contraction, Mr Thorburn highlighted the need for long-term thinking to boost the confidence to invest.
Westpac chief executive Brian Hartzer made the same point in November and again at his bank’s AGM last week.
“We are in a low-growth environment, and we know the geopolitical and economic landscape will continue to change,” Mr Thorburn said.
“Our business customers have been telling us for some time they need an environment that is simpler and easier to operate in.”
Dr Henry told his first annual general meeting as chairman that infrastructure spend was key to maintaining economic growth and standards of living.
“Our population growth means that there is going to have to be significant infrastructure investment over the decades ahead,” Dr Henry said.
“With the right infrastructure investments, we can make Australian businesses more productive, Australian communities more liveable, and Australian citizens better equipped for the jobs of the future.”
The federal government is aiming to protect Australia’s triple-A credit rating to keep down borrowing costs and maintain its attractiveness to investors, but Merrill Lynch economist Tony Morriss is among those who suspect losing it could be in the country’s long-term interest.
Mr Morriss said none of the clients he had recently met with would change their investment strategy toward Australia, particularly toward government debt, if Australia lost its AAA rating.
“No government wants to be the government that loses the triple-A,” Mr Morriss said this week.
“But if Australia was downgraded – and I think it would be more likely in May than it is next week – if that removes the political constraint to have a political discussion about good debt to invest in infrastructure going forward I think that might be a good idea.”