Thursday’s budget update will include a massive boost to infrastructure spending on top of already announced projects as part of the ACT’s response to the coronavirus-induced economic slowdown.
Chief Minister and Treasurer Andrew Barr says the government will heed the advice of the Reserve Bank to borrow at record low-interest rates to stimulate the economy and create jobs.
”We foreshadowed some time ago that we will be undertaking a very ambitious infrastructure program,” he said on Monday (24 August).
”A normal infrastructure program would have between $600-700 million annually contained within it, so over four years $2.5-3 billion would be the standard program.
”We’re going much bigger than that.”
On Thursday the government will release its economic and fiscal update, and its Jobs and Recovery Plan that will add hundreds of millions of dollars to the budget deficit and blow out net debt beyond the current 7 per cent of state gross product.
But Mr Barr says RBA Governor Philip Lowe made it clear at National Cabinet last Friday that the states and territories should take advantage of the lowest-ever cost of borrowing, which would be in place for at least three years or more, and that now is the time to invest in productive infrastructure for the future.
Dr Lowe has publicly and privately told state and territory governments not to worry about preserving their credit ratings and to instead prioritise creating jobs.
The RBA says they need to spend an extra $40 billion over the next two years.
Mr Barr says the mistakes of governments during the Great Depression will not be repeated.
”The Prime Minister, state leaders and myself are being very clear that monetary policy is as low as it can be. It’s now up to governments using their budgets to stimulate economic activity, and that’s exactly what we’re doing.”
Mr Barr also took a shot at industry groups such as Master Builders ACT, which called for the government to bring forward infrastructure spending to provide a clear pipeline of work.
MBA CEO Michael Hopkins has noted that “suggestions by community and industry groups to bring forward infrastructure spending, such as the Molonglo River crossing, Convention Centre or sports stadium, have been swiftly rejected by the Chief Minister in recent months”.
“This has led many local construction businesses to wonder if the Government is saving these announcements to provide maximum political benefit ahead of the October election, or whether the Government simply cannot afford a sustainable infrastructure program to support Canberra’s long-term growth,” Mr Hopkins added.
But Mr Barr says these comments are ”woefully off the mark” and that these groups have not been paying attention.
”In the last month we’ve announced the largest-ever expansion of Canberra Hospital, today we’re announcing $250-300 million investment in TAFE [Woden CIT] and public transport,” he said.
”A little over a week ago we added another $60 million to the billion-dollar public housing renewal program. This is the most extensive level of investment in infrastructure in the Territory’s history.
”So those comments are not based on fact, and the industry associations who are making them are just wrong.”
This year’s budget was postponed until after the 17 October ACT election due to the pandemic.
Last year’s budget outlined a 10-15 year program of infrastructure works.