The Big Issues for 2018 | Part 5 – Infrastructure

What’s in store for Australia’s infrastructure?

That’s a question asked in Commsec’s  “The Big Issues” report – which highlights the issues that are expected to influence our economy over the next 12 months.

Readers may feel a little more comfortable about the outlook for housing after the previous blog we ran yesterday.

But there will always be the gloomsters. Infrastructure

And they may contend that, while there may not be a housing market crash, once the bulk of homes are built, that will leave a gap in the economy.

So no housing downturn, but perhaps a broader economy-wide slowdown.

Well one answer to that is infrastructure.

Infrastructure can cover a number of areas.

Social infrastructure includes buildings like hospitals and schools.

Economic infrastructure includes roads, bridges, railways, airports and bridges.

Across Australia, state, territory and federal governments have announced a raft of projects in recent years.

Some of those projects have already started with years of construction ahead.

And some projects have only just started or are about to start. 

Deloitte Access Economics says that the value of road and rail projects will lift from a trough of around $4 billion in 2015 to a peak of around $16 billion in 2020.

Industry research company, Macromonitor, says spending on road, rail, harbours and bridges will peak near $35 billion in 2019/20.

In part, firmer population growth has put stress on infrastructure, causing governments to lift spending.

In part, governments have been under-spending on infrastructure, so they are at the point where they have to spend money on some facilities.

The federal government no doubt also acknowledges that it has a role to play in supporting the economy at a time where there are limits on monetary policy to drive momentum in the economy.

While governments are spending money, much of the work has to be outsourced to the private sector. Top View Of The City From Sydney Tower

It is also important to note – unlike the mining construction boom – that the projects are spread across the nation.

However, NSW, Victoria and Queensland do dominate given high population growth.

Over 2018 Commsec expect plenty of discussion about the infrastructure projects that are underway and the impact they are exerting on business spending and employment.

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Watch your inbox over the next 4 days for the rest of the articles in this series.

You may also be interested in reading the other articles in this series:

Part 1 – The Economic State of Play

Part 2 – How long will inflation stay low?

Part 3 – The disconnect between jobs and wages

Part 4 – Housing: Hard or soft landing?

Source: CommSec Big Issue Report 2018


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