Urban infrastructure minister Alan Tudge has called on the states to “bring forward their schedules” on major development projects, as the Reserve Bank reiterated the importance of a strong pipeline of projects to help prop up the economy.
With another interest rate cut expected before Christmas, the Reserve Bank has expressed renewed concern about unemployment, flat wages growth and weak business sentiment. In its minutes, the board said it will continue to monitor the labour market and “adjust monetary policy if needed”.
Reserve Bank governor Philip Lowe said that while the Australian economy is growing and “fundamentals are strong”, further investment in infrastructure was need to reduce spare capacity in the economy.
Speaking on Radio National’s breakfast program on Wednesday, Minister Tudge said that the government was “heeding the call” of the Reserve Bank governor.
“We have a record amount of infrastructure this financial year, [projects] like the Western Sydney Airport, the M80 in Melbourne or the North-South Road in Adelaide is under way right now.
“But [it’s] ultimately up to the states to bring forward their schedules.”
Of the $100 billion infrastructure pipeline, $30 billion is scheduled to be spent over the four-year forward estimates period. The minister said that 160 major projects are currently under way, with 120 currently in the planning phase.
The minister conceded that large projects cannot be “turned on” overnight.
“If they can be accelerated, we will negotiate bringing forward our funding to match the new project schedule,” the minister wrote in an op-ed for the Financial Review.
Treasurer Josh Frydenberg defended the government’s infrastructure pipeline at a lunch in Brisbane this week.
“Long lead times and significant planning and regulatory co-ordination means that major projects cannot materialise quickly.
“Our focus now is sitting down with premiers and treasurers and infrastructure at state and federal level to swap notes and to align project timetables and review capacity constraints to ensure these projects are implemented as promised.”
Economist Stephen Koukoulas said that infrastructure spending can definitely be ramped up — to the extent that the economy needs a boost.
“The question about infrastructure is what can be done, now,” Koukoulas said.
“A lot of infrastructure projects take a long time to be built, so to the extent that the commonwealth can work with the states to fast-track some of these projects, the better.”