Capital Investments Will Grow Our Economy

Herald Sun
8 June 2012

By Tony Shepherd
President, Business Council of Australia

If Australia is able to deliver on an unprecedented $921 billion pipeline of major capital investment projects, we will transform our cities and regions for the better.

These sorts of programs will generate the dividends, economic and social infrastructure, job creation, world-class skills development and services that are needed to underpin a strong, growing economy.

A new study by the Business Council of Australia, Pipeline or Pipe Dream?, explores for the first time the totality of Australia's major project pipeline – going well beyond the mining sector to oil and gas projects, roads, ports, water, communications and industrial complexes, as well as major social infrastructure, such as schools and hospitals.

The research finds parts of the Australian community are concerned these large projects are not benefiting individuals or communities, and that economic growth has not been supported by timely and appropriate infrastructure that makes people's lives easier.

This has resulted in some Australians rejecting the very growth that is essential in improving living standards, higher wages, and better services and infrastructure into the future.

To put the scale of the current pipeline into context, the cost of the iconic Snowy River Scheme would have been $8 billion in today's dollars. Right now, we've got 11 projects that are bigger than the Snowy and the benefits they will bring are equally transformative and enduring.

I remember how Australians back then recognised what a great nation-building project the Snowy Scheme was. It opened up our agricultural market, gave us low-cost hydro-electricity and enriched us culturally as we welcomed in people from different parts of the world to work on it.

Today's pipeline is Australia's opportunity to recognise and embrace growth in a very challenging global economy, and in doing so, ensure it is managed and delivered for the benefit of all Australians. If we get this phase right, it will create better and higher-paying employment opportunities, directly and indirectly for our children and grandchildren.

Many of the projects will support economic development in regional communities and major centres, like Townsville, Cairns and Perth, including areas where more opportunities can be created to employ indigenous Australians.

But our research uncovers a range of risks and barriers that show the pipeline and the benefits it could bring to our economy and the living standards of future generations of Australians are far from assured.

Cost is a big part of that.

Resources projects are 40 per cent more expensive to deliver here than in the US Gulf Coast. Australian labour is 35 per cent less productive for resources projects near cities and 60 per cent less in remote locations.

Infrastructure costs much more to deliver in Australia than in the US, with airports 90 per cent more expensive, hospitals 62 per cent, shopping centres 43 per cent and schools 26 per cent.

Community understanding and support for economic growth is another issue that needs to be addressed.

THE growth Australia is experiencing now is a chance for Australians to benefit long-term, not through transient, one-off bonuses for today, but through real, lasting diversification of the economy, and investment in infrastructure, skills and R&D that will enrich the lives of generations of Australians.

If the community is reassured that this is what growth is about, and they see it happening in their communities, there is nothing Australia cannot achieve.