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We must borrow and build infrastructure

By Ian Spring - posted Tuesday, 19 June 2012

State and federal budgets are under extreme pressure, state borrowing is fading, and private investment funds are scarce, so traditional methods of providing monies for infrastructure are drying up. We need some extra source of funding.

My proposal is for a prudent federal borrowing and building program, which should solve our major infrastructure problems within 20 years, with no increase in national net debt as a proportion of GDP.

Net National debt will peak this year at just under 10 per cent of GDP, a very safe figure. GDP grows at 6 per cent per annum, 3 per cent real growth and 3 per cent inflation.


Rather than just letting net debt melt away as a percentage of GDP as GDP grows, the federal government should borrow enough each year to keep the debt at 10 per cent, and commit these new borrowings to spending on infrastructure.

This program would generate some $9 billion in the first year, and, in current dollar terms, $90 billion in the first 10 years, and $200 billion in the first 20 years.

This 20-year total could grow to $300 billion when coupled with other funds, on perhaps an 80-20 basis with the states, and up to 50 per cent free federal funds into individual PPPs. The $300 billion figure would match infrastructure Australia's estimate of investment needed on infrastructure.

The whole process should be easy to subject to transparent public audit.

Access to Federal borrowing would mean that, perhaps for the first time in our history, funding would not be the limiting factor on infrastructure building.

The benefits of such borrowing and build program would be enormous. It would permit the construction, within a generation, of a majority of the infrastructure projects on the various states’ wish lists.


We would become a much more efficient country, and still have debt at only 10 per cent of GDP.

Within the first 20 years, desperately needed projects such a satisfactory heavy rail system across Sydney, including a new harbor rail crossing, both the Parramatta-Epping and North West rail links, Sydney expressway linkups, the port linkups in Sydney, major interstate rail links, including the Melbourne-Brisbane Central Western Link, fixing the Bruce Highway, and corresponding projects all around the nation would all be either completed, or well on their way to completion.

Commuters across the country would see things happening almost immediately. With the provision of new expressways and new urban rail in all major cities, they would start to get worthwhile relief from the daily grind of traffic gridlock within the first 10 years.

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About the Author

Ian Spring, BEc(Hons) is a retired economist/manufacturing general manager who has set out to encourage forward planning and action to solve our infrastructure problems.

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All articles by Ian Spring

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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