Construction workers and sites like https://www.ambertiles.com.au/ aren’t enjoying the recent downturn in resident construction happening across Australia, but the recent boom in infrastructure projects might help everyone compensate.
Australia’s state governments, via their recent budgets, have splashed tens of billions of dollars in public infrastructure and other public work projects.
Queensland’s Government recently committed to about $50 billion worth of infrastructure spending over a four-year time span, which includes $23 billion for road and rail works.
Meanwhile, Victoria’s Treasurer reported that the state had approximately $107 billion worth of state capital projects commencing or underway, with its 2019-20 budget having a centrepiece of a $27.4 billion suburban transportation project.
Other state governments are also spending billions on infrastructure, with NSW beating out all others, with $93 billion set aside for infrastructure for the next four years.
Reserve Bank Governor Philip Lowe, however, wanted the state governments to spend even more on infrastructure, noting that he believes that this is the perfect time to do it.
He notes how the Australian government can borrow at the cheapest rate in its history, with the 10-year government bond rate sitting at 1.35%, on top of economic indicators suggesting that the AU government can borrow at below 2% for almost 30 years, which he explains means that there must be some projects with risk-adjusted return rates around 1.5%.
The Commonwealth Bank’s Senior Economist Belinda Allen notes that infrastructure investment have two major benefits, providing short-term economical boost thanks to increased employment via construction, while generating medium-term growth by improving productivity, which she says is the real benefit of infrastructure.
Meanwhile, the Bureau of Statistics notes how the short-term employment effects are being felt by the construction industry, which they note will compensate for the housing downturn affecting sites like https://www.ambertiles.com.au/, as well as the construction, real estate, and retail sectors.
In the three months to May, the Bureau of Statistics notes that construction employment went up by more than 30,000 in the three months leading up to May, translating to jobs growth in the sector of about 7,000 over the past 12 months, which Ms. Allen explains is a sign that the AU’s infrastructure boom was helping compensate for building workers that got hit by the apartment bust.