Thu 08 Oct 2015

Federal Support Vital to Tackle Infrastructure Deficits:

The peak national body representing the civil construction industry has welcomed a new report calling for greater Federal support of State infrastructure investment programs, including the use of debt guarantees.

WA Infrastructure Report 2015: Post-boom challenges and opportunities was commissioned by the Civil Contractors Federation WA Branch (CCF WA) and prepared by infrastructure and economic forecaster BIS Shrapnel.

CCF National Chief Executive Officer Mike Carmody said the report highlighted some of the challenges and opportunities before all governments as they grappled with the need to boost infrastructure investment. ‘While the report was written with a WA focus, its key messages apply equally to the rest of Australia – namely that we have a large and expanding infrastructure deficit and governments should not shy away from tackling the deficit by funding projects through debt…’ said Carmody.

With interest rates at historical lows, the argument for increased debt funding is even more compelling. BIS Shrapnel estimates the broader economic impact of a boost in civil construction would far outweigh the cost of the interest payments.

The Federal Government has a key role to play in this space due to its financial strength. The report suggests the Federal Government could effectively double its infrastructure investment program over the next four years without affecting its credit rating. ‘Of course it’s vital we invest in the right projects – those that have demonstrated an economic benefit through transparent cost-benefit analysis…’ said Carmody.

The Northern Australia Infrastructure Facility concessional loans scheme, announced in the May Budget, shows that the Federal Government is willing to use its financial strength to help the States build productive infrastructure. This sort of innovative thinking could be expanded to include all parts of Australia.

WA Infrastructure Report 2015: Post-boom challenges and opportunities is available for download from the CCF WA website here .