Economics and finance, Government and governance, Trade and industry | Australia

17 April 2020

With the country in hibernation, Australian policymakers must not be tempted to slow down on infrastructure. If anything, this may be the perfect opportunity to stimulate the economy for a faster recovery, Sara Bice and Kirsty O’Connell write.

Australia’s leaders have moved mountains in recent weeks to battle COVID-19 and its flow-on economic damage. By the end of March, government loans and spending totalled around $330 billion, spent in an effort to stimulate Australia’s economy.

So far, economic packages have rightly focused on health funding, job seeker payments, business subsidies, bank lending, and welfare. But past crises demonstrate the importance of Australia’s infrastructure sector to national stimulus and recovery. Australia’s experience in the Global Financial Crisis also showed that stimulus for infrastructure should not wait until recovery before being injected into the economy.

Australia is currently pursuing an unprecedented $235 billion infrastructure program, which can be visualised here. Prior to the pandemic, Infrastructure Australia called for an investment of three times the current infrastructure spending. Meanwhile, the G20’s Global Infrastructure Hub says there is a $15 trillion gap in global infrastructure spending.

It is critical that Australia maintain a focus on infrastructure project delivery during this time, perhaps even considering an increase in spending before economic recovery begins. It is also possible to do this in a way that puts Australian businesses and workers at the centre of this effort.

Such an approach holds the potential to reduce impact while possibly accelerating project delivery. But what would that entail?

For a start, the empty business districts brought by COVID-19 may present an opportunity for infrastructure delivery. In recent years, an estimated $30 billion in infrastructure investment has been lost due to project delays, cancellations, or mothballing caused partly by community opposition.

More on this: COVID-19: The Scythe and the Hammer

Communities and small business owners, particularly in the construction-filled growth corridors of Sydney and Melbourne, have been critical of the impacts of many infrastructure projects. The realities of attempting to trade in the middle of a construction zone have sent some businesses to the wall and driven many communities to distraction.

Infrastructure sector professionals responding to The Australian National University Institute for Infrastructure in Society’s annual State of Infrastructure and Engagement Survey consistently rated community opposition as a leading cause of project delay – even higher than factors such as technical challenges and access to funding.

Now in its third year, this research reveals considerable tangible and intangible costs associated with infrastructure project delay, often stemming from community concerns.

Importantly, many of these costly concerns come with merit. Communities throughout Australia are experiencing the most intensive period of infrastructure delivery in the nation’s history. Construction fatigue is putting pressure on communities and on the infrastructure sector’s social license. The Institute’s research reveals that this is impacting project budgets and schedules.

The challenges are particularly acute when infrastructure projects impact retail, hospitality, and tourism precincts that rely on foot traffic, create further delays within already congested transport arteries, or when they stop city-dwelling workers from getting a good night’s sleep.

While much of Australia’s economy is hibernating, governments have a chance to kill two birds with one stone. They can reduce the impacts of project delivery on urban businesses while also reducing the likelihood of costly opposition for projects.

More on this: Imagining Australia after COVID-19

There are opportunities now to be clever and agile in the way projects are sequenced and delivered. Rethinking the sequencing of major infrastructure project delivery may be one way that governments can help Australian businesses and workers hit the ground running once normal life returns.

A genuinely community-centric approach to Australia’s infrastructure delivery would also recognise that in many parts of Australia, suburbia is the new city centre. So, while the pandemic might result in less people working in usually high traffic areas, it also means that many more are spending their days working outside Central Business Districts (CBDs). It’s difficult enough to not to be photobombed by your kids or be seen videoconferencing in your pyjamas, Australian workers don’t need the added pressure of a jackhammer outside their homes.

Resequencing or refocusing infrastructure delivery to high traffic corridors could help to mitigate the impact on workers now forced to do their jobs remotely for the next six months. It is also important to determine ways to mitigate impacts of necessary projects happening in the new places people are working. This might require rapid community engagement to understand people’s new working arrangements and the rescheduling of specific projects.

Work with government departments and private sector partners to interrogate the schedules of all major infrastructure projects should begin now. This should involve identifying elements of work within CBDs, in tourism or hospitality precincts, and within major public transport corridors. Simultaneously, it should identify places where suburban infrastructure projects may now be affecting Australia’s new remote working population.

Policymakers must ask crucial questions of current infrastructure projects. Can work in certain high traffic areas be accelerated or ideally completed within the next six months? Could attention be shifted from suburban delivery to urban? What scheduling changes could be made to reduce impacts on workers who would otherwise normally be in their offices during the day? Based on the answers to these questions, projects could then be re-scheduled or re-sequenced to both take advantage of national hibernation and stimulate the economy.

Of course, any potential infrastructure gains must not come at the expense of construction workers’ health. Very recently, a construction worker on Multiplex’s Melbourne Square worksite tested positive for COVID-19.

Current plans indicate the site will close temporarily for disinfection, with self-isolation of exposed workers being implemented. The work and advice of health professionals, government, and relevant unions will be essential to ensuring that any infrastructure delivery proceeds only where it is safe to do so.

Wherever it is possible however, governments and policymakers must make it a priority, throughout and despite this crisis.

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One Response

  1. john austen says:

    Dr Bice and Ms O’Connell: thank you for an interesting article. What you say about community acceptance rings true – the issue is not unique to Australia. At this time I am yet to be persuaded that more infrastructure is an answer to anything in Australia – other than protecting jobs in the burgeoning infrastructure lobbying/advisory industry. There remain serious governance and accountability issues, and in several States major infrastructure projects/proposals have led to unnecessary degradation of services. Doubling down is an apt term – it is a gamble which in my view Australia ought avoid for some time because of its potential to damage economic performance and democratic functioning. Thanks again and best wishes

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