Population boom needs transport and infrastructure investment

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August 14 2019
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$600 billion in spending is needed over the next 15 years to avoid congestion and overcrowding in capital city transport networks, as Australian cities feel the strain of population growth.

A new report from Infrastructure Australia has flagged that, every five years, the nation must spend $200 billion on new projects just to keep up with rising populations.

Infrastructure Australia’s comments align with that of the Reserve Bank of Australia’s governor, Philip Lowe, who has repeatedly called for greater fiscal stimulus.

Unsustainable growth

Despite Australia’s major cities requiring record spending for the next 15 years at least, Infrastructure Australia’s chair, Julieanne Alroe, said it is getting harder for Australians to fund such growth.

Analysis of the household expenditure survey used in the audit found the average household spent just $314 each week on infrastructure in 2015–16 — or $16,000 annually.

“Australians earning the lowest 20 per cent of incomes across the country spend around a third of what they earn on infrastructure”, which is above a level that would be considered affordable, according to Ms Alroe.

Despite rising electricity costs gaining notoriety, Ms Alroe said lack of transportation is costing lower-income earners more.

“While concerns about rising energy prices are widely held, the proportion of household income spent on energy is relatively low, [at] 2 to 6 per cent, in contrast to transport which accounts for between 10 and 22 per cent,” she continued.

Cost of inaction

Despite the fact that Australians are feeling the pinch from funding these projects, a lack of funding today creates a larger problem tomorrow, the report considered.

Calling the cost of inaction “significant”, Ms Alroe said that “if investment were to stop, the cost of road congestion is projected to grow by $18.9 billion to $38.7 billion in 2031”.

She said this will impact on Australians’ quality of life as well as our economic productivity and competitiveness as a nation.

Acknowledging the issues contained within the report, the Australian Prime Minister has noted current action on new projects in response to the same information as is contained in the report.

“The report predated the 2019–2020 budget which had $23 billion specifically extra in projects, including 160 congestion budget projects, so there has already been a significant addition in terms of what the Commonwealth is doing to the information the report is based on,” Mr Morrison had outlined.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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