Speakers at the conference have urged federal, state and local governments to boost infrastructure spending to help the country through the economic downturn.
National Australia Bank chief economist Alan Oster told delegates he expected public sector infrastructure would be one of the few growth areas in an economy that would struggle overall.
“If I was advising the government I would not be telling them to give tax cuts,” he said.
“Give tax cuts and people will either stick it in a bank or stick it under the bed.
“What you need to do is get money out there and spent in the economy, and that means government spending – and what you would like [governments] to do is invest in infrastructure.”
Oster, who has advocated that the federal government borrow money to fund infrastructure projects, told conference delegates that private investment in infrastructure – through arrangements such as public-private partnerships – would now suffer as private investors would find it much more difficult to get finance, if at all.
“Certainly, offshore partners may find it very difficult to get finance,” he said.
“International capital markets are either extremely expensive or closed.”
Simon Moore, director of the Australian branch of private equity company the Carlyle Group, said governments would need to step up and take the start-up risk on major projects such as toll roads and tunnels.
“On larger infrastructure projects, where private capital has typically provided both the debt and the equity, I think you’ll find the government will move to de-risk those projects,’ he said.
Last year the Carlyle Group and National Hire bought Australia’s biggest construction equipment hirer, Coates Hire.
“Between us we put up $2.8 billion to buy into the industry, and we certainly did that with the view that the outlook for infrastructure in Australia [was positive],” Moore told the conference.
“And despite all the goings-on in financial markets we still maintain our belief that this industry, over the next five to seven years, will be a place of significant activity.”
Moore said the problem of long lead times on major projects in Australia would affect governments’ ability to react quickly to the crisis and assist the economy.
CCF national president Philip Marsh also took aim at poor planning by governments.
“The biggest problem is getting governments to consistently deliver projects for us to build,” he said.
“The boom and bust mentality just doesn’t work. We’ve trained all these people, [now] we need to make sure governments deliver these projects and deliver money into infrastructure.”
Federal Opposition infrastructure spokesman Andrew Robb told delegates the financial crisis had made the need for a nationally coordinated infrastructure plan even more urgent.
“The heavy lifting done by the private sector in recent years will now need to be supported by more government effort, not only with capital injections … but also with coordinated national forward planning,” Robb said.
“With the Hume and the Pacific [highways], it has taken a long time and there’s a long way to go, but at least everyone knows where it’s heading.
“In most other areas – in rail freight, in ports, in so many other things – people haven’t got a sense of any coordinated forward plan. Contractors need these plans to have the confidence to invest.”
Robb said the former Howard government’s economic and industrial relations reforms had put Australia in a stronger position than the US and Europe to deal with the crisis.
“We need to build on these reforms if we are to deal effectively with what lies ahead,” he said.
“Civil construction can be one of the anchors in weathering that storm.
“Sensible infrastructure projects steadily coming onstream over the next three years will not only provide critical commercial activity in difficult times, but also a real springboard to bounce out of the world downturn.”
