Australian A$1.5b Infrastructure Investment Boost
(15 June 2020 – Australia) Australian Prime Minister Scott Morrison is set to announce a A$1.5 billion new infrastructure funding commitment as the federal government seeks to kickstart the economy as it lurches out of the coronavirus enforced lockdown.
The funding will be fast tracked to immediately launch work on small priority projects identified by the states and territories. A$1 billion is set to be allocated to ‘shovel-ready’ projects with the A$500 million balance to improve road safety works.
A priority list of 15 major projects to be fast-tracked under an agreement by the Commonwealth, states and territories to speed up the approval process from an average of 3.5 years to 21 months include the long maligned A$10 billion inland rail link from Melbourne to Brisbane and the ‘Marinus Link’, a second power interconnector from Tasmania to link renewable hydroelectric power to the mainland.
The PM has also listed a planned expansion of BHP's Olympic Dam copper mine, emergency town water projects in NSW and road, rail and iron ore projects in Western Australia.
The speech will be the second in his ‘JobMaker’ series as the government outlines plans to rebuild the economy over the medium term and pull Australian enterprises ‘out of ICU’ after coronavirus restrictions led to many taking significant hits to their bottom lines and relying on the Government's ‘JobKeeper’ scheme to stay afloat. The government will have brought forward or provided extra funding worth A$9.3 billion in infrastructure investment in the past eight months to fast track second-tier projects.
As well as the infrastructure approval and spending announcements, the PM is expected to detail the Government's keenly awaited plan for deregulation.
According to analysis from Moody’s Investor Service, the federal government’s A$260-billion stimulus program in response to the COVID-19 crisis has helped mitigate financial stability risks across the banking sector by reducing dependence on foreign funding.
Moody’s noted that the stimulus measures have driven strong monthly growth in deposits across the banking system, up 5.2 percent in March and 2.4 percent in April. This compares to average monthly deposit growth of 0.8 per cent over the 12 months to March 2020. This resulted in the issuance of approximately A$108 billion in debt securities among the Big Four during respective 2019 fiscal years. The stimulus has included cash payments to households and the Reserve Bank of Australia’s (RBA) associated quantitative easing (QE) program, which has resulted in the purchase of A$54 billion in government bonds from the banks.
Mr Morrison is seeking to reopen most parts of the economy by the end of July, underpinned by success in containing the spread of the coronavirus and keeping the rate of new daily infections to below 0.2 percent despite fears abroad of a ‘second wave’. In many countries the coronavirus pandemic is resurging as economies come back online after lockdowns. Beijing forcibly closed the city’s largest fresh food market and locked down nearby housing districts as dozens of people associated with the wholesale market tested positive for the coronavirus while Tokyo reported its highest daily total of new coronavirus cases since May 5.
"As we come out of the COVID crisis, infrastructure can give us the edge that many countries don’t have. All levels of government, business and the community must rethink how these systems can better contribute to our recovery from the pandemic'' Mr Morrison is slated to say at the Committee for Economic Development of Australia (CEDA) function on Monday.
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