Big increase in Govt infrastructure spending in election lead up

After a couple of years of spending cuts that have contributed to Queensland’s economic sluggishness, Queensland Government infrastructure spending appears to be on the rise in the lead up to the election (see chart below based on the June quarter National Accounts data from the ABS). I expect spending on the Bruce Highway was a significant part of the increase in the first half of 2014. The timing is fortunate, because the private sector remains sluggish, with the recovery in State Final Demand reported in June quarter solely due to public sector investment, including that by all levels of Government (see Pete Faulkner’s post at his Conus blog and the Government Statistician’s brief ABS State Details).

State_capex_Jun14

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3 Responses to Big increase in Govt infrastructure spending in election lead up

  1. Jim says:

    Gene

    A quick glance at the Treasury brief indicates that the growth rates of Commonwealth Government spending across consumption, general government investment and government owned corporation investments are much higher than the growth rates for Queensland (particularly for year-on-year comparisons). The contraction in investment by Queensland GOCs is equivalent to around half of the overall contraction in SFD over the 12 months to June. So I’m not sure I’d make any link between the election and these numbers. The numbers will reflect decision made by Governments more than 12 months ago.

    These are not the numbers that indicate the pork barrelling (exercise by all sides of politics) has begun. And besides, any port barrelling only requires “announcements” and they won’t show up in the SFD data before the election anyway.

    • Gene Tunny says:

      Jim, I’d agree these are not the numbers indicating pork barreling has begun, but I think the increase in the last six months – which I suspect has come about due to investments in highway upgrades – has been well timed. Any government seeking re-election will need to point to tangible outcomes rather than just promises.

  2. KT says:

    More importantly Gene is how many government deals can be done. Whilst the public may not like it, PPPs and other such deals where the private sector privates a significant proportion of the capex allows the govt to save money (or use on another project) allows more spend in the economy. Plus when sold the old government asset (see Aurizon) generally invests more rather than waiting for a government budget.

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