Government stifling infrastructure investment

11 November 2011
| By Benjamin Levy |
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Federal Government inertia in building infrastructure is stifling opportunities to take advantage of the commodities and investment cycle, according to ANZ Bank chief economist Warren Hogan.

Speaking at the Association of Super Funds of Australia conference in Brisbane, Hogan blamed the situation of minority government for the failure to build public infrastructure in places that were growing as a result of the mining boom.

Business investment as a proportion of the economy was hovering around 15 per cent, and could rise to 30 per cent over the coming year, Hogan said.

The global infrastructure and commodity cycle happening around the world is only now transitioning from a price movement to supply response and investment, he said.

But Hogan questioned how investors could take advantage of that upswing in the investment cycle in Australia when the Government wasn't building the infrastructure around it.

The lack of infrastructure was also contributing to the negative influence of the "fly in, fly out" culture in mining which was causing huge stresses on workers and families and could only be sustained for a certain amount of time, Hogan said.

Towns that were booming centres of mining activity, such as Gladstone in Queensland, should be benefiting from massive investment in hospitals, schools and other public infrastructure, but the Government wasn't building what was necessary, he said.

"Why don't people move to these regional areas? Maybe some of the reason is that the infrastructure is not in place there," Hogan said.

"The role of Government to do this is there - whether or not they have the capacity to do this is somewhat under question," he added.

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