It may feel like the Queensland Government is investing heavily in infrastructure projects, but will it be a more significant boom than that of 2006-2007 before the global financial crisis? Facts and figures on the current annual government spending on infrastructure in 2021 and 2022 versus 2006 and 2007 show some interesting results
Where does Queensland rank in terms of government investment?
Queensland is now in seventh place for infrastructure spend rankings, just ahead of Western Australia, which remains at the bottom of the list.
The steepest drop in general government infrastructure spending occurs in Queensland. There is a 9% proportionate drop over the next four years. In fact, Queensland will get $37.6 billion in general government expenditure devoted to infrastructure up until 2025. That is a $5.7 billion increase over the previous year’s budget.
Who is currently getting the most significant slice of the infrastructure pie?
Victoria and New South Wales. Together, they are getting $175.8 billion of the total of $248.0 billion allocated for infrastructure funding over the next four years for the entire country. Although the country’s total infrastructure budget may be 10% higher than the previous year’s budget, still, for Queensland, it does not amount to a considerable increase as Victoria and NSW are getting 70% of the national allocation.
When we compare the current figures with the 2006-2007 spending on infrastructure, there may be an increase, but it is not off the charts.
Spending remains well within the expected parameters. What is substantially different is that in 2006-2007 Australia was debt free. With the pandemic and slowly rising debt levels, Queensland is currently in debt to the tune of over $17.5 billion. In comparison to other Australian states, Queensland’s debt is relatively low. New South Wales, with 1.5 times the population of Queensland, is projected to reach around $100 million in debt by July 2025.
Significant infrastructure projects
While Queensland, with its projected population of 8 million by 2050, is not getting the majority of the government infrastructure spending, there are certainly some significant projects currently in progress.
These infrastructure projects provide employment and increased economic activity when one considers them at the macroeconomic level. However, they have a vital role in microeconomics as when suitable projects are selected, they lead to a growth in productivity.
Some of these projects include Brisbane’s Cross River Rail, the Gympie Bypass, the upgrades to the M1 between Varsity Lakes and Tugun, and Caloundra Road to Sunshine Coast motorway. The majority of the infrastructure budget is allocated to road and rail upgrades in Queensland. In the long term, the productive capacity of the Queensland economy will benefit from these infrastructure projects as smaller companies have a chance to get involved in the enhanced economic opportunities provided by large infrastructure projects.
So, will it be a bigger boom? Only time will tell, but considering how well Australia weathered the 2008 GFC and the current low unemployment rate of only 3.5 % in Queensland, there is hope that the boom will not necessarily be followed by a bust but a gentle readjustment for Queenslanders.
