The Brisbane Times this morning draws attention to the relatively low level of heavy or engineering construction activity (e.g. on roads, bridges, dams, etc) being undertaken for the public sector in Queensland at the moment, based on analysis by RPS’s Mark Wallace. It is reported that:
“Future generations will rue present governments’ reluctance to borrow money to fund infrastructure, a multinational consultancy has warned as Queensland’s public spending sank to a 10-year low.
An RPS Group analysis of Australian Bureau of Statistics data showed the public sector spent $1.3 billion on infrastructure in the March quarter, which was the lowest level since 2006 and half the rate of expenditure seen five years ago.”
Public infrastructure spending is certainly at relatively low levels, but some context is needed. First, the very high levels of expenditure in the years around 2010 were unsustainable. Second, focusing on engineering construction ignores the full range of capital expenditures by government, including on schools and hospitals, for example. Indeed, the broader National Accounts measure of public capital expenditure, public gross fixed capital formation, has recently started growing again in Queensland (see charts below).
We should not make a fetish of heavy infrastructure and consider it superior to other types of infrastructure, the so-called social infrastructure represented by schools and hospitals, for example. Indeed, a lot of heavy infrastructure investments made by government in recent years have turned out to be questionable, including desalination and recycled water plants we do not need, and a new dam, Wyaralong, that is not connected to the SEQ water grid. So commentators should be careful what they wish for regarding infrastructure. We do not need more white elephants in Queensland.