Under-pressure civil contractors have called on state and federal governments to take on further debt to finance more public infrastructure projects.
Under-pressure civil contractors have called on state and federal governments to take on further debt to finance more public infrastructure projects.
The Civil Contractors Federation WA is among those seeking to change perceptions about the ‘demonisation of debt’, amid an estimated $2.7 billion state deficit for the 2015-16 financial year and a $35.1 billion federal government deficit in 2015-16.
CCF WA chief executive Jeff Miller told Business News a report it commissioned found that civil construction work in Western Australia was expected to
decline more than 60 per cent, or nearly $12 billion annually between 2012-13 and 2017-18.
Mr Miller said the BIS Shrapnel report for CCF released today was not a self-serving exercise on the part of the federation, but rather an opportunity for the state to take advantage of the current economic environment.
“Debt is not the enemy to public finances,” Mr Miller said.
“What our industry would love, and why we funded the report, is we want to see a different conversation around government debt ... there ought to be a rational, very calm and measured discussion about the correct use of debt for long-term infrastructure.
“We (have) built a huge amount (of infrastructure), but the fact is we’ve still got a lot more to go and now the argument needs to turn to not doing it as a stimulus, not doing it because an industry needs rescuing … but what is best is getting the infrastructure in and operating.
“This is a once-in-a-lifetime opportunity.”
Mr Miller said low interest rates, lower construction costs and a bipartisan political acceptance WA was significantly lacking in public infrastructure meant now was the best time to borrow and build.
“At the moment, the thing we all have in common is we’re taxpayers and we’re seeing, because of the spare contracting capacity that’s in the market, extraordinary value for money. Contracting dollars are stretching 30 to 50 per cent further,” he said.
Mr Miller said the report did not advocate for specific infrastructure projects in WA to receive approval, but made seven recommendations aimed at improving the transparency in costing projects and facilitating a greater number.
“CCF recognises it is the role of politicians to choose projects, that’s why we elect them. But what we’re wanting to do is to ensure the community at large gets to see the true benefit cost ratios that go with those choices,” he said.
According to the latest Infrastructure Australia audit (using a direct economic contribution methodology), the value attributable to WA’s infrastructure is projected to be worth $74.2 billion (equal to one-fifth of the national total) by 2031.
This is up from 2011 figures, which placed WA’s value attributable to infrastructure at $25.5 billion, (equal to one-seventh of the national total at that time)
As WA’s population is tipped to reach almost 4 million people by 2031, infrastructure growth is predicted to occur fastest in the greater Perth region, followed by the Pilbara.
The direct economic contribution from infrastructure in Perth is projected to grow from $18 billion as measured in 2011 to $54 billion by 2031.
