Jim Turnour (Leichhardt, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Infrastructure, Transport, Regional Development and Local Government. Will the minister outline for the House the economic benefits of infrastructure investment?

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

I thank the member for Leichhardt for his question. Tackling infrastructure bottlenecks is indeed part of the government’s five-point plan to fight inflation. Bottlenecks put upward pressure on inflation, which then flows through to higher interest rates. For example, the lack of dedicated rail freight lines through Sydney means either more trucks on our city streets or containers left sitting on the wharves. This adds to the cost of doing business, which flows through to higher prices. If businesses cannot rely on reasonably priced and efficient infrastructure they will think twice about increasing production or investing in their business.

The previous government’s wasteful spending of budget surpluses, instead of investing in our economy’s potential through infrastructure, added to inflation and put upward pressure on interest rates. Before in this House I have spoken about the Reserve Bank’s 20 separate warnings, but today there is further evidence from the Reserve Bank. In the statement by Glenn Stevens, the governor, on monetary policy that he released less than one hour ago, the governor said in the second sentence:

Inflation in Australia has been high over the past year in an environment of limited spare capacity and earlier strong growth in demand. In these circumstances, the Board has been seeking to restrain demand in order to reduce inflation over time.

There you have it, Mr Speaker: the Governor of the Reserve Bank today, less than one hour ago, saying very clearly that the Reserve Bank, which has increased interest rates 12 times in a row, did so because of the environment of limited spare capacity. It goes straight to the issue of infrastructure and the failure of the previous government to address infrastructure bottlenecks.

Compare those comments with the comments of the shadow Treasurer, who said that infrastructure bottlenecks ‘have little to do with inflation’. He may not understand the connection between infrastructure bottlenecks and capacity constraints in the economy and increases in inflation and in interest rates, but the Governor of the Reserve Bank understands, and so does the Rudd Labor government. That is why we have established Infrastructure Australia. That is why we have put $20 billion into the Building Australia Fund.