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AFR - Infrastructure money 'no economic panacea'
State governments have been told to lift their game on funding new infrastructure projects, and can no longer treat the Commonwealth like an automatic teller machine that spits out cash, Major Projects Minister Paul Fletcher says.
Mr Fletcher will outline on Tuesday why infrastructure shouldn't be regarded as a magical panacea for sluggish economic growth.
'Too often we think about infrastructure primarily as an instrument of macroeconomic, Keynesian demand stimulation policy," Mr Fletcher will tell a gathering organised by the Centre for Independent Studies in Sydney.
"It is just as important to think about infrastructure in microeconomic terms - as a tool to stimulate productivity, efficiency and competitiveness."
The speech comes a day after the respected Grattan Institute published a damning report showing governments are failing to pick projects based on the national interest and have allowed marginal-seat politics to distort investment decisions.
Mr Fletcher defends the Commonwealth's level of spending on new roads, railways and other projects, saying Canberra's share of the heavy lifting has increased substantially in recent decades.
He will say the Commonwealth accounted for 25.7 per cent of total government spending on rail in 2013-14, up from 10.4 per cent in 1998-99, with the share of total road spending rising over the same period from 16.9 to 22.4 per cent.
While Canberra's road spending has increased 113 per cent in 15 years, state and territory spending is up by less than half that amount.
"The Commonwealth cannot carry all of the load itself," Mr Fletcher will warn.
"State governments need to improve their performance."
While Mr Fletcher will laud the NSW government's sale of electricity distribution assets to recycle into new projects, he will criticise both the Queensland and Victorian governments for failing to carry their share of the burden.
He takes particular issue with a demand in February from the Victorian government to fund the Melbourne Metro project.
He notes that just before midday on February 23 the Victorian government sent the Commonwealth government a copy of the business case for the rail project shortly before Premier Kevin Andrews issued a media release saying it was "time for Turnbull to back the Melbourne Metro".
Mr Fletcher will say the media release demanded $4.5 billion from the Turnbull government with Victorian Transport Minister Jacinta Allen saying: "The updated business case has been delivered as promised, now the only thing Victorians are waiting for is Malcolm Turnbull."
Mr Fletcher will say: "This is a good example of what the Prime Minister has referred to as the states and territories treating the Commonwealth as an automatic teller machine, expecting it to spit out cash."
Unsurprisingly, the federal government would not be handing over such a sum on the same day it received a business case, he will say. "Instead, we have a more structured and principled approach to the way we will work."
5 April, 2016
