Damian Hale (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer outline to the House the lasting improvements the government is making to Australia’s economic capacity and why this is so important to sustainable growth with low inflation into the future?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for Solomon for his question and particularly for his interest in nation-building infrastructure. The government is investing in nation-building infrastructure to support the economy now and also, importantly, to build capacity for the future. Something like 70 per cent of our economic stimulus is being invested in nation-building infrastructure. There is investment in highways, investment in ports such as the Port of Darwin, investment in rail upgrades, investment in hospitals and, of course, investment in schools. These investments are critical to support the economy now but they are also very important to build that capacity for the future so that when we grow we can grow sustainably without the type of capacity constraints that were so obvious during the latter period of the last government.

The need for this investment now has been highlighted by Access Economics in the report today in their Investment Monitor where they talk about private investment activity remaining weak with just nine new projects added in the September quarter, the lowest on record. This is what Access Economics said: ‘The outlook for investment spending, while improving, is also not yet firing on all cylinders. Non-residential building projects, in particular, remain lacklustre.’ Of course that quote and their report underscore just how vital it is that the government maintain its stimulus investment in infrastructure. It is absolutely critical in terms of jobs now, absolutely critical for small business and absolutely critical to fill the gap which has been left by an absence of private demand. This government is absolutely committed to continuing with its nation-building program because it is essential to building productivity for the future.

We are engaged in short-term spending with lasting gains, and I think it will pay to go through the elements of that program: $22 billion in critical capacity building road, rail, port, energy and education infrastructure announced in the last budget; a very significant boost to housing, particularly social housing, a key capacity constraint; investments from the minister for infrastructure across road, rail, ports and so on; and, of course, the largest school modernisation program in Australia’s history. This is nation building and this is investment that is required now to support jobs, but it is also critical to leave a lasting legacy to build that capacity I was talking about before.

Of course this investment is supported strongly not just by the business community but also by many prominent economists. Just today we had a statement issued by Mr Peter Anderson, Chief Executive of the Australian Chamber of Commerce and Industry, who said:

This week’s affirmation by the Prime Minister that investment in nation-building transport, logistics and human infrastructure are key elements in the Government’s plan for managing the recovery is welcomed by industry …

It is certainly not welcomed by those opposite but is welcomed by industry and recognised as the sensible economic plan this country needs, given the circumstances we face. Mr Anderson continues—and this goes to the nub of what the government is doing:

Productivity growth means the economy will be stronger, the Commonwealth deficit can be paid off more quickly, living standards can rise without fueling inflation or job losses, and we can sustain population growth.

That is in essence the objective of what the government is doing through putting in place its economic stimulus and through putting in place its nation-building infrastructure program. Of course, this is supported widely in our community. It is supported by all except by the Liberal and National parties who sit opposite. It was they who, when in government, ignored something like 20 separate warnings from the Reserve Bank about the fact that capacity constraints in the economy were fuelling inflation and putting upward pressure on interest rates. The end of that sorry tale was inflation at 16-year highs and 10 interest rate rises in a row—all under those opposite. This government is determined to investment in nation-building infrastructure, to deploy the spare capacity in the economy now to invest for the future and to make sure that we can have the sustainable jobs of the future with sustainable growth and with low inflation.