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34 responses to “Can governments borrow enough to fix our infrastructure backlog?”

  1. Sam

    Let’s get a few things straight. The only infrastructure we need is roads. We most certainly do not need any so-called public transport.

    And the roads should be paid for by cutting back on so-called health and so-called education spending.

    This message has been brought to you by the CAEGARWTT (Coalition of Australian Employer Groups and Right Wing Think Tanks).

  2. Alister

    QTWTAIN (Questions To Which The Answer Is No). You can find the money, but you can’t find the workers.

  3. Graham Bell

    Alister @ 2

    Really? Then all the unemployed over-30s, keen to get any job that pays wages on time and doesn’t involve risking their lives, must be figments of our collective imagination.

    Sam @ 1

    Oh no. Not another irrational train-hater.

    Hurry up; that was the final boarding call for your flight back to Los Angeles: quick! or you’ll miss it; now don’t you worry about us poor folk Down Under; we’ll be fine; we’ll work out some sort of transport system for ourselves: bullock-drays, bicycles, steam trains, horseless carriages. Now you just have a nice flight home, d’yuh hear now.

  4. Tim Macknay

    Graham, I could be wrong, but I read Sam’s comment as a satire of Abbott’s policy position.

  5. aidan

    What are the equity issues with big increases in road tolls etc? For the most part in Australian cities the poorer you are the further from the city centre you live, so the burden of increased commute costs falls more heavily on the poor.

  6. Douglas Evans

    Where will the money come from? Well they might start cutting back on the billions they chuck at extremely profitable foreign owned mining and fossil fueled energy companies every year just to keep them quiet.

  7. Russell

    “The first hurdle is accepting that Government budgets do not have sufficient headroom to fund all the infrastructure we require, even if they increase their borrowings.”

    Why can’t the government increase its income, Australia is not a high taxing country?

    “The second hurdle is a fundamental disconnect between the infrastructure we want and our willingness to pay for it – either through higher taxes or user charges.”

    So we just borrow and push the cost onto the next generation so we can get what we want now? What we have had are years and years of tax CUTS because politicians pander to our worst selves. Time to wise up and pay for what we want.

    But, like Aidan, the left should be wary of too many indirect taxes. Why should we go for policies which will allow the wealthy to cruise down uncluttered streets in their expensive cars because the poorer have been forced off them into overcrowded public transport?

    “Not another irrational train-hater.” I was a train commuter until it became unbearably crowded and I decided I would rather eat less if necessary to pay for city parking. Public transport is good in theory, but bad in practice – the trains in Perth have been horribly crowded in peak time for the past 20 years, ALP or LNP governments.

    So this bit of government-speak: “Road charging also has the benefit of improving use on surrounding public transport networks” actually means that even more people will be made to force themselves into carriages where the unfortunate users are already packed in like sardines.

    I’m not following the link to McKibbin because I’ve read enough of his stuff over the years to know that he is very much a right-wing economist.

  8. duncanm

    Where will the money come from?

    How about not throwing it at pink batts, $900 tax refunds, unwanted school COLAs, NBN black holes, UN-suckholing and the like?

  9. Tim Macknay

    In related news, Alannah MacTiernan has nominated for the Federal seat of Perth, which is being vacated by Stephen Smith. While it probably won’t impress Russell ;) , in the unlikely event that Labor wins the election she’d make a great transport minister.

  10. John D

    Tolls are inherently unfair because they are paid by people who are unlucky to live or work in the wrong place. For example, my wife spent about one percent of her wages on Logan motorway tolls because she lived in chapel hill and worked in Logan. If she had travelled the same distance along Ipswich road she would have paid no tolls.
    In Brisbane all the tolls are on roads, bridges and tunnels that bypass congested areas. Funny thing, there are no tolls for driving through the middle of congested areas. The tolls have also been set at levels that are high enough to keep the riff raff out. For example, by the end of this year a commuter who does the right thing by commuting through the airport tunnel will be fined (sorry pay) over $2000/yr for being a responsible road user.
    The interesting thing is that the Courier Mail (June 8-9) said that travel times on untolled roads associated with the airport tunnel had dropped by 11 minutes because of the diversion of traffic through the tunnel. The benefit would have been higher if more people could have afforded to use the tunnel. Perhaps it is a case of talking about beneficiary pays instead of user pays. (In other words pay for tunnels with taxes, not tolls.)

  11. John D

    One of the worst things that Howard did was pay for a series of unsustainable tax cuts for the rich by letting infrastructure run down.
    One of the great disappointments with Labor is that it has allowed itself to to be trapped into supporting these Howard tax cuts. As a result most of the good things that Labor wants to do have to be financed by finding cuts elsewhere.
    One of the other things that Howard got away with was creating the idea that the measure of good government was low debt and endless budget surplus.
    At the moment there is room to borrow more to spend on the infrastructure needed for us to have a good future. There is also room to raise the top tax rates and cut back on the lurks that allow the better off to pay much less tax than they should.

  12. Chris

    Tolls are inherently unfair because they are paid by people who are unlucky to live or work in the wrong place. For example, my wife spent about one percent of her wages on Logan motorway tolls because she lived in chapel hill and worked in Logan. If she had travelled the same distance along Ipswich road she would have paid no tolls.

    That just means you need more tolls on more roads :-) Actually ideally I think a rego based on number of kilometres driven would be great if it could be implemented.

    The tolls have also been set at levels that are high enough to keep the riff raff out. For example, by the end of this year a commuter who does the right thing by commuting through the airport tunnel will be fined (sorry pay) over $2000/yr for being a responsible road user.

    Why is taking the airport tunnel the “right thing”. Paying the toll is essentially paying to save time. If anything I think we should have more toll roads – even on existing roads – as a way to pay for future road development and current maintenance. With electronic billing the overhead really isn’t that high.

  13. Russell

    “ideally I think a rego based on number of kilometres driven would be great if it could be implemented.”

    Why not just increase the tax on petrol? Very easy to implement and would encourage an environmentally responsible choice of smaller/more efficient vehicles.

  14. Russell

    “While it probably won’t impress Russell ”

    No, it won’t. Every morning as I jog along Port/Leighton Beach I grind my teeth as I pass MacTiernan Towers – a perfect example of world’s worst practice in town planning!

  15. duncanm

    Why not just increase the tax on petrol?

    How about they spend the taxes already gathered from fuel on transport infrastructure?

  16. Sam

    my wife spent about one percent of her wages on Logan motorway tolls because she lived in chapel hill

    Quelle horreur! We can’t have people who live in the wealthy, leafy, western suburbs of Brisbane paying for the infrastructure they use, can we?

  17. duncanm

    Sam,

    the inner city luvvies don’t pay for their overly generous (relative to the rest of the population) access to public transport – why is this different?

  18. Tim Macknay

    No, it won’t. Every morning as I jog along Port/Leighton Beach I grind my teeth as I pass MacTiernan Towers – a perfect example of world’s worst practice in town planning!

    I also jog along that beach quite regularly Russell, and strangely enough I don’t object to it quite as much as you do.

    As I recall, the development was consistent with planning guidelines set up in line with community expectations after a popular campaign forced the abandonment of a much more ambitious earlier proposal. Those guidelines also led to the development of a more comprehensive coastal planning policy. Furthermore, the controversy, and the development of the planning guidelines, occurred under the Court Liberal government, so blaming it on Alannah MacTiernan is a bit of a stretch.

    You are of course under no obligation to approve of the development, but “world’s worst practice in town planning”? You’re just making it up.

  19. GregM

    Why not just increase the tax on petrol? Very easy to implement and would encourage an environmentally responsible choice of smaller/more efficient vehicles.

    Not to forget wildly popular with motorists who make up the vast majority of voters. I’m sure it would be a guaranteed vote winner and I wonder why governments haven’t taken that easy option before.

  20. Graham Bell

    Tim Macknay @ 4

    Yeah. I knew sam’s comment was satirical; so was my response :-)

    but I have actually heard similar nonsense coming out of the mouths of supposedly informed and responsible decision-makers.

  21. Graham Bell

    Russell @ 7

    Train-haters? I was having a crack at the transport economics experts who look no further than the USA. The USA is a special case because railways (railroads) were built by private money and because the real loot, pelf and booty came from BUILDING the railways and then off-loading them before the suckers realized they had been taken for a ride. Hardly an example we should follow in fulfilling Australian needs in the 21st Century.

    Everyone

    Before we uphold the Australian tradition of borrowing huge amounts of money at any cost and then thinking about how we can blow it on useless toys and amusements …. let’s try thinking about reversing the process: work out what we actually do need, now and several decades into the future …. then work out the most cost-effective way of getting it all done …. and only when we have exhausted our own sources of potential funds , go to those financial institutions that will give us the best long-term deals, no matter where those financial institutions are.

    Fat chance of that ever happening though. The bad habits, the pig-headedness, the gullibility, the lack of planning, the hostility to vision and the arrogant stupidity are all too deeply entrenched among Australian decision-makers.

  22. Russell

    Well Tim, perhaps you like apartments for millionaires being built on beaches. (I think $9 million was the top price wasn’t it?) You’re right that under the hated Court government Westrail wanted to develop all its land along there, and after huge community opposition settled for a much reduced development and those ‘guidelines’.

    But then the ALP came into office and Alannah made it clear that she didn’t support the guidelines and would like to see more development. The Leighton action Coalition website says: “In 2001, when Labor came in, the new Minister for Planning and Infrastructure began another series of community deliberations to consider increasing the area for development. Community pressure prevailed, just, and the area proposed for development remained at 4 hectares. ”

    Basically the development-mad minister was fought up and down the coast … I have just Googled up something from the Green Left Weekly (considered by LP readers as a newspaper of record):

    “The “three harbours policy” follows the WA Labor government’s approval of two other controversial foreshore developments in the area, the Port Coogee Marina and the Stockland housing project on the dunes of South Beach. In both cases Alannah McTiernan, the minister for planning and infrastructure, has ignored the government’s own coastal planning policy for the benefit of private developers. The Fremantle Socialist Alliance convener, Sam Wainwright, told Green Left Weekly, “McTiernan and the Labor government are behaving like the old Queensland National Party white shoe brigade. The developers flash the cash and the government does what it’s told”.

    MacTiernan Towers are built, what, about 200 metres from the sea and about one metre above sea level? Built, basically, on a beach. Because of climate change and predicted rising sea levels, it has been considered, for a long time already, bad planning practice to build developments on beaches.

  23. John D

    Sam: What was unfair was that the toll was on the Logan motorway but not on any similar length of road elsewhere in Brisbane.
    Someone from Ipswich going to Logan would have beenhit by the same amount.

  24. John D

    It would be fairer if fixed costs such as registration and insurance were converted to variable costs charged on something like a tonne vehicle weight per km basis.

  25. faustusnotes

    Is it a “far-reaching reform” if government and opposition are both able to ignore it? I think not …

    Also, what is this rubbish they’re spouting?

    There is not an endless supply of funding for infrastructure.

    Really? What, we have a farm somewhere that grows money, and if we harvest it all we will run out and there will be no more? Or is there a big ATM that the government uses, and it doesn’t get refilled? What tosh. What’s the point in establishing an organization like this if its members don’t understand how a fiat currency works?

    I saw some senior figure from treasury spouting this crap recently. Let’s be clear about this. Whether you object to it politically or not, the above statement is manifestly false, it is the exact opposite of the truth. In a fiat currency the correct statement is “There IS an endless supply of funding.”

    The question is whether you want to use it to make your country a better place and employ the unemployed while you do it, or if you want to whine on about debt and taxes.

  26. Sam

    John D @ 23

    That is an argument for tolling all arterial roads, not none of them.

  27. Brian

    In a fiat currency the correct statement is “There IS an endless supply of funding.”

    Theoretically perhaps not, but practically not even governments can raise unlimited funds. If they can, best you go advise the Europeans.

  28. Graham Bell

    Before we rush off to the world-wide pawn-brokers with our CRT TV, our collection of videotapes and our Whitworth spanner set, let’s wait until we have sobered up enough to think about what we really do need and to think about why continuing to do what we have always done has failed to meet our needs.

    We need to change our whole way of thinking. Look at Aboriginal health. Look at the deplorable state of our gravy-Navy. Look at Brisbane’s tunnels. Look at affordable housing for ordinary people. Do you need more appalling examples before I get onto infrastructure itself?

    Why do infrastructure projects almost always go way over time, have massive cost blowouts and then fail to deliver much of what was expected of them?

    Here are my choices of likely causes:

    1. The tender system. It looks honest, it looks as though it gets the best price for the job, it looks fair. It’s none of these things. What’s worse, it’s a great way to expand corruption – no, not when tenders are opened, too many stickybeaks then, but when the tender documents are being drawn up and a few dollars or a few favours in the right place can get your firm the contract you want plus an Open Sesame to the funding organization’s bottomless moneybag.

    2. Lack of vision and boldness. Example: a much-needed project familiar to me finally got started after decades of dithering and duck-shoving. Instead of solving the overall problem with some everyday bold engineering, the project has been toddling along, fiddling at the edges of the problem and ‘next-year-in-Jerusalem” when the project is eventually finished(?), it will be at several times the cost and a long way less effective than if the straight-forward bold engineering option had been chosen.

    3. Building infrastructure for local short-term political reasons and not for the overall long-term good of the state or the nation. Example: Tunnels in Brisbane as against better culverts on rural highways …. how many orders of magnitude in overall cost is that?

    4. Insufficient workers, plant and materials for the job. Example: a project that in another developed country would have had over a hundred well-organized workers and perhaps twenty or so appropriate machines on the job with materials stockpiled and those stockpiles being continually refreshed …. here that similar project of similar size had only 3 machines trying to do all tasks and the 14 or so hard-working blokes had to stand around waiting for more material to turn up. I know Australian workers are pretty good (if they have confidence in management) but none of those 14 workers was wearing a red cloak nor had a big S for Superman on their chests.

    Okay, your turn to add to the list.

  29. duncanm

    Sam @ 26. no

    I get where John’s coming from. It would be very easy to tax on tonne x mileage basis without any road tolling. Especially with today’s technology.

    Much fairer, and would discourage people from using cars where there was a suitable alternative.

    Policing it is another matter.

  30. Tim Macknay

    Russell @22, I’ll make a couple of comments and then desist, and we’ll have to agree to disagree, as this discussion is getting off topic. :)

    perhaps you like apartments for millionaires being built on beaches. (I think $9 million was the top price wasn’t it?)

    Am I surprised that developers like to build luxury apartments on coastal real estate? No. Whoever paid that price (at the height of the property bubble) would have lost money.

    With all due respect to Sam Wainright (for whom I have a lot of time), that GW Weekly quote is just political rhetoric, and therefore not a reliable guide to what was actually going on.

    The Port Coogee marina was a legacy development, with State contractual commitments and planning decisions going back to the beginning of the 1990s (I had the misfortune to look into its history for a work-related matter several years ago). Those kinds of commitments don’t get overturned just for the sake of a new planning policy, regardless of who is the Minister.

    Your own comment, and the Save Leighton web site, both tacitly acknowledge that Alannah MacTiernan took a consultative approach and responded to community views during her time as Minister.

    Personally, I thought the “three harbours” proposal was a sensible way to respond to the ballooning demand for boating facilities by adding onto existing port facilities instead of new greenfields development. Of course, Fremantle’s cabal of professional NIMBYs objected to it, as they invariably do to any proposal for any change whatever (they objected to the North Mole wind farm proposal, FFS!). Anyway, it didn’t go ahead.

    There’s also the tricky detail that both Port Coogee and South Beach developments rehabilitated badly contaminated industrial land, and the most appropriate way to fund the astronomical decontamination costs was by development. Rehabilitating industrial wasteland, and urban infill housing, is usually considered good planning policy.

    And as for the Leighton development, it’s not on the beach as you well know – it’s on former industrial land above the beach. It’s not “1m” above sea level, and it’s consistent with the state coastal planning policy. That policy (which expressly takes into account climate change induced sea level rise, which was innovative at the time) may not be perfect, but it’s certainly not “world’s worst practice in town planning”.

    /off-topic rant

  31. faustusnotes

    No Brian, governments can raise infinite funds. This is the very essence of fiat curency. They may not want to, it may not be wise to, but that’s not the point. The fact that our entire political class and the upper echelons of the major investment and finance organizations of our government don’t – or won’t – understand this is a really sad indictment of their intellectual rigor, and of the chilling grip that classical economics has on the political discourse.

    Every time a politician or government official says “we don’t have infinite funds” or “there is no money tree” or any other such folksy crap, they are either stupid or lying. They are not presenting the full range of policy options. That is not how government officials should work, and for Infrastructure Australia to be couching all its development logic within the terms of debt and taxes is both ignorant and irresponsible.

  32. Russell

    Tim – OK, we’ll agree to disagree, and maybe reopen the discussion if she becomes the new MHR for Perth.

    (Were you down there this morning? Even through streaming eyes [three degrees c. !] and in the moonlight, those apartments didn’t look more than 250m from the water, and not much more than a metre above sea level – hopefully a storm surge will prove me right!)

  33. Tim Macknay

    Russell, I’m sure storm surges will eventually make life unpleasant for that development among others. But in answer to your question, I wasn’t down there this morning – it must have been chilly!

  34. hannah's dad

    Further to #31 by faustusnotes

    http://bilbo.economicoutlook.net/blog/

    For an ongoing analysis, complete with that rare commodity detailed evidence, on the [potential] role of governments that, like Australia, enjoy a fiat currency see Professor Bill Mitchell’s blog.