Who wants to win $200 billion in infrastructure?
One day, Gina Rinehart is projected to be worth $100 billion. In the past, I’ve argued she should use a big chunk of that money to do something grand, like fund an entire Aussie space program.
So imagine what two particularly philanthropic Ginas could do if they both decided to invest $100 billion into Australian infrastructure.
According to reports this week, during secret mining tax negotiations the day before he was knifed as Prime Minister, Kevin Rudd struck an in-principle deal with mining exec Andrew “Twiggy” Forrest that would’ve allowed mining companies to avoid liability for the 40 per cent mining tax by instead writing off their capital expenditure on Australian infrastructure. Estimates suggested the plan would’ve pumped at least $200 billion into Australian infrastructure every five years. A huge deal for the country.
The Prime Minister Julia Gillard has dismissed the allegations, which came from Twiggy Forrest, as “rehashed nonsense”. But The Punch was curious: what could such an eye-popping sum do for Australian infrastructure? What could it do when Australia’s biggest cities are crying out for new infrastructure?
Just to put it in context, an Associate Professor of Economics, Cameron Gordon, from the University of Canberra, told The Punch yesterday over the next 20 to 30 years the nation needs $1 trillion to $4 trillion in infrastructure spending. In the shorter timespan of every five years, an added $200 billion would make a nice dent in that figure.
In the 2009–10 Budget the Federal Government committed $8.5 billion to projects for road, rail and port infrastructure - on top of the spending state governments make as well. Private sector spending is harder to quantify.
Professor Gordon said that a huge amount of that $200 billiion sum would have to go into repairing and upgrading infrastructure - an amount that’s difficult to quantify without knowing what the government’s potential infrastructure priorities. And much of infrastructure spending would have to go towards building and maintaining non-transport infrastructure like electricity and water supply.
But if just an extra, say, $30 billion of that $200 billion went into new transport infrastructure every five years, we could build several new major projects across the country that we currently can’t afford.
The Brisbane cross-river rail link is an $8 billion project. An M4 East motorway in Sydney would cost $10 billion. Hypothetically, we’d be able to afford three of such massive projects every five years on top of the infrastructure already being built.
We aren’t privy to some of the specifics of the Rudd-Forrest deal, if it even in fact existed in the first place.
Would the mining companies be in control of their infrastructure investments? Would it go into a blind or government trust? Would they form public-private partnerships, which have had limited success but can, according to Professor Gordon, actually work if designed well? How much of that $200 billion would go into electricity and other essentials?
I guess now we’ll never know. At least, unless Gina’s willing to open her purse…
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