Boost to infrastructure spending will create jobs and stimulate activity across the economy

“Ai Group welcomes reports that the federal government will boost infrastructure spending over the next few years. Extra infrastructure work will create new jobs and will lift demand for the wide range of products and services supplied to the engineering construction industry. These impacts can be expected to multiply through the broader economy. The boost comes at a time when activity in engineering construction has been falling and when labour market growth has been slowing,” Mr Innes Willox, Chief Executive of Ai Group said.

“With the economy growing only modestly and with no signs of excessive inflation, there is certainly economic capacity to accommodate the extra work although it is critical that businesses access to skilled migration programs for key occupations is maintained. Extra spending on infrastructure will complement stimulus measures already in the pipeline from interest rate reductions and income tax cuts to underwrite higher incomes for, and spending by households and business.

“We understand that the increase in spending over the next few years will involve both additional funding and a bring-forward of spending originally set down for later years. This is a sensible strategy that leverages from the current strength of the budget associated with relatively high iron ore prices. In lifting incomes and spending it is a strategy that will also boost future tax revenue.

“As always, it is critical that infrastructure projects that receive government financial support are carefully selected for their contributions to economic and social well-being and are backed by rigorous cost-benefit analysis and transparent prioritisation processes,” Mr Willox said.

Source: Ai Group