COVID-19 emerged while Australians were trying to recover from the worst bushfire season experienced in recent memory. First the borders shut, then the pubs. Finally, people were told to stay home unless it was essential to go out. No Easter long weekend at the beach. No quick interstate trips to visit family. Suddenly, businesses and individuals were under enormous stress, with queues around the block at Centrelink. Once it was upon us, it moved fast.
Now, as we’ve begun to come to terms with the impact of this crisis, the nation’s gaze has turned towards recovery. In doing so, we ask ourselves what will Australia look like on the other side?
Governments at all levels must choose their path wisely. Seeking to simply restore our country to the state it was in before the pandemic will not be enough. We must deploy strategic investment, alongside creativity, to make Australia a fairer, more prosperous and resilient nation. Infrastructure investment must be at the heart of this recovery strategy, as has often been the case over the course of Australia’s history. In times of national hardship, it has been government that has led the way.
In the midst of World War II, John Curtin established the Department of Post-War Reconstruction, with Ben Chifley as its first minister; this led to large-scale investment in new industries such as car manufacturing, new infrastructure for irrigation and hydro-electric power, vocational and university education, research, schools, public housing, the Commonwealth Employment Service, and the expansion of the modern welfare state. In just four years, the Chifley Government set up an effective postwar reconstruction of the Australian economy that led to a period of unprecedented prosperity, with rising living standards and the establishment of a stable middle-class society.
In 1983, faced with high unemployment and rampant inflation, the Hawke Government’s Prices and Incomes Accord transformed a moribund economy, compensating workers for restraint in wage claims with a ‘social wage’ in Medicare, improved welfare payments and investment in education.
And, as countries around the world struggled to cope with the economic devastation wrought by the global financial crisis, the Rudd Government provided a comprehensive response that included major rail and road projects, community infrastructure provided through local government, investment in social housing, construction of what was intended to be a world-class national broadband network, and upgraded facilities at schools right across Australia. As the infrastructure and transport minister in that government, I oversaw investment in our nation’s rail and road network that was aimed at bringing people together, making travel safer and improving logistics while providing good, secure jobs. Overall, we more than doubled annual federal infrastructure spending from $132 to $265 per Australian, taking the nation from twentieth out of twenty-five OECD countries to first when it came to investment in public infrastructure as a proportion of national income. We did all that because of, and in spite of, the fact that our government was confronted with what was then the most severe and far-reaching global economic downturn since the Great Depression of 1929.
This time, too, stimulus through economic and social infrastructure will be critical to the recovery. COVID-19 has shown us the importance of essential infrastructure. Without the Labor Government’s investment in communications infrastructure—including the NBN, however flawed the rollout after 2013—Australians may not have been able to adapt so quickly to working and studying from home. Similarly, the success of our freight and logistics networks during this time demonstrates their essential role in national security. As we look towards the future, we must aspire to truly improve the lot of the nation.
To achieve this aim, there are several key principles that must guide investment. Firstly, governments should embrace this opportunity to bring infrastructure in our outer suburbs and regional centres up to standard. Secondly, we should look to establish new and genuine partnerships across all levels of government and with the private sector to unlock additional investment. Finally, we must ensure that our recovery plan leaves a legacy we can be proud of, as has been achieved in previous responses to economic crises. In doing so we can build Australia’s resilience, allowing us to emerge as a stronger and fairer nation—one that holds no one back and leaves no one behind.
A sweet spot in time
As we seek to restore our economy and build its resilience, we should recognise the altered economic and fiscal context in which we operate. The fact is that COVID-19 has fundamentally changed the savings and risk preferences of Australian businesses and households, with both seeking secure, long-term investments.
Over the longer term, and with interest rates expected to remain low, infrastructure investments in Australia will be attractive to international markets and competitive on the world stage. Our world-class health system, together with the natural protection afforded by our island nation, has allowed us to navigate a better path through the pandemic than many other nations. Our population is young relative to comparable countries, and as a democratic nation with strong institutions, our investment markets are not subject to sovereign risk.
These factors bode well for recovery, especially in an economic context in which there is no better time to secure long-term, low-cost financing for infrastructure investment. With the right direction, policy settings and a pipeline of projects, investing in infrastructure post COVID-19 could well be a historical sweet spot unlike anything seen in recent times.
An opportunity to catch up
Australia is one of the most urbanised countries in the OECD, but rapid growth in population, combined with inadequate planning, has left people in our fast-growing outer suburbs facing few local employment opportunities, lengthy commutes to their places of work, poor access to public transport, and insufficient public facilities such as parks and sporting fields.
Early research from the National Growth Areas Alliance shows that these growth areas will likely be hit particularly hard by the economic effects of COVID-19, with up to 424,000 people unemployed. More than 330,000 of Australia’s most vulnerable small businesses (those with fewer than twenty employees) operate in growth areas. What is more, sixteen of the top twenty postcodes suffering mortgage stress are in these same regions.
Our regional centres, which have largely escaped the worst health effects of COVID-19, are also suffering. The situation has been compounded by a complete lack of vision about regional Australia’s potential from government since 2013. A number of these communities, particularly across the south coast and northern parts of New South Wales, southern Queensland and the east coast of Victoria, have also been hit by drought and bushfires, let down by a government that was too slow to respond to either challenge and can’t reach agreement when it comes to action on climate change.
Yet even before the bushfires and COVID-19, Australia’s economy was weak. Growth was below trend and repeatedly downgraded, living standards were flatlining, wages were stagnant, and productivity was sliding backwards. Both business investment and consumer confidence were in decline, and unemployment was stuck above that of comparable economies, with almost 2 million Australians either unemployed or underemployed. Public debt at the time of the 2019 Mid-Year Economic and Fiscal Outlook stood at over $556 billion, with little public investment to show in return. The government had no plan for the economy, and it still doesn’t have an effective one now.
In contrast, Labor has always had a plan for Australia’s economic future, even in the most challenging times. Already we are working on our vision for what the nation should look like post COVID-19. We know that ensuring ongoing resilience in communities, and supporting them beyond the recovery phase, will require a focus on catching up those areas that need it the most: our outer suburbs and regional centres.
Social and economic infrastructure must be at the heart of any plan to build resilience at a community level. From investment in roads and hospitals, to recreational space and public transport, bike paths and social housing—these projects will stimulate the economy while making our suburbs and regional towns even better places to live, work and raise a family.
We must prioritise decent and secure jobs. At the most basic level, this means employing locals and providing apprentices with training opportunities throughout the construction phase of new stimulus projects. At a strategic level, governments must collaborate with each other, with superannuation funds and with the private sector to map new job creation through investment in advanced manufacturing, our health and social services system, and other identified priority areas. In many outer suburbs and regional centres, innovative projects are already underway that in some cases will support hundreds, if not thousands, of workers. Sydney Science Park, for example, in Western Sydney’s Aerotropolis, is expected to provide more than 12,000 jobs in the knowledge economy.
In regional Queensland, Downer’s Maryborough facility employs more than 250 people, including thirty apprentices. This train manufacturing plant has been charged with bringing Queensland’s New Generation Rollingstock up to standard, after they were originally built in India and failed to meet Australian disability access standards. Supporting rail manufacturing in Australia presents a real opportunity, and not just in terms of increasing the number of local jobs. The Commonwealth can deliver coordinated procurement across states and territories, and, with the private sector, smooth out production, reduce costs and build skills and capability.
Ultimately, the experience of working from home in recent months has given a practical insight into how many businesses could improve their cost structures and productivity by moving to regional cities and towns. For many, the location and nature of their work will have changed forever, with the potential to increase productivity and decrease urban congestion. An appropriate decentralisation strategy that boosts regional economic development and takes pressure off our capital cities should be at the heart of national economic development.
There is another great economic story in our regions, with our resource and agricultural producers at the helm of the development, design and application of artificial intelligence, drone technologies and genetics. One project in particular has the ability to unlock the potential of regional Australia, which the current government refuses to consider despite the presence of supporters in its ranks. High-speed rail, for which I have long been an advocate, would be an economic game changer, particularly for those communities along its path, including the Gold Coast, Grafton, Coffs Harbour, Port Macquarie, Newcastle, the Central Coast, Southern Highlands, Canberra, Wagga Wagga and Shepparton.
As we look to modernise our energy infrastructure, we can create new jobs throughout our economy and capitalise on Australia’s huge potential as a renewable energy superpower. In doing so, we should remember the important regional dimensions of this change. Given that our renewable energy sources are largely based in the regions, investment in this industry naturally favours regional job creation. The University of Technology Sydney recently analysed the job opportunities associated with strong renewables investment and concluded that more than 60 per cent of new renewable jobs in Queensland, New South Wales, Victoria and Tasmania resulting from a supportive national policy would be located in regional Australia.1
Building partnerships
An infrastructure-led reconstruction provides government with an opportunity to build stronger, and in some cases new, relationships. Whether they are across Australia’s three levels of government or with the private sector, one fact is key: these partnerships could unlock even greater investment in Australia’s productive capacity.
While federal and state governments are best placed to deliver larger projects such as motorways and public transport, it would be unwise to overlook the critical role local government can play. Partnering to deliver smaller projects, whether parks or local roads, will improve the liveability of our suburbs and regional towns while providing good jobs and generating economic activity. Now is the time for the federal government to get shovel-ready projects underway, big and small—especially in our outer suburbs and regional centres.
Housing is another area ripe for collaboration and investment. Governments should be working with the private sector and superannuation funds to deliver significant investment in social and affordable housing, which would help those in need and keep many tradespeople on the tools. A number of state governments have already announced their plans to invest in social housing, including maintenance and repairs, but the federal government has shirked its responsibility to support them. Investment in new affordable housing stock is a win-win. It will put roofs over the heads of Australians who need them and create work for thousands of tradespeople.
This approach would also make it easier for essential workers to find affordable rental accommodation closer to work. Investment in social and affordable housing, and in sufficient supporting public infrastructure, would ensure that people living in outer-suburban and regional areas have access to the services they need to build a good life.
Over the past few months, both the federal and state governments have called on businesses to consider how they might assist with supply challenges caused by network disruptions. Distilleries across Australia have made hand sanitiser to assist in response to a nationwide shortage, while manufacturers and 3D factories have come forward to make ventilators and face shields. There is no reason this willingness to collaborate should end when the immediate health crisis has passed. We must continue to harness innovation in the private sector to achieve good social outcomes.
Building resilience
Without a vision for what Australia should look like after the pandemic, any stimulus package will fail to reach its potential.
For me, Australia’s path forward is clear. Investment in infrastructure must be focused on achieving two things: driving the reconstruction and, at the same time, lifting our capacity to address long-term challenges such as an ageing population and climate change. It should seek to make Australia a better place, building an economy that works for people—not the other way around. It should unlock further investment opportunities and support the creation of good, secure, local jobs, and provide graduate employment opportunities and training for apprentices. And it should catch up our outer suburbs and regional towns to level the playing field.
With the right investment, government can ensure that all Australians, regardless of their postcode, have access to the social and economic infrastructure they need to build a good life now, and a future they can look forward to with confidence.