NSW to get $600m in extra road projects as government boosts economy

The Sydney Morning Herald Politics 2 weeks ago

The Morrison government will pull forward almost $600 million worth of infrastructure projects across regional NSW as it seeks to safeguard the national economy and provide a financial boost to drought-hit parts of the state.

As economists warned the government's $3.8 billion nationwide infrastructure program would be  too little to prevent the Reserve Bank using unconventional policies to boost the economy, Mr Morrison will on Thursday reveal $530 million worth of projects to be brought forward.

Prime Minister Scott Morrison says the extra infrastructure spending will deliver long-term benefits.

They include $200 million on safety upgrades along the Newell Highway to start from next financial year. Ahead of the election, the government had promised $400 million worth of work with none of it starting until 2024-25.

Almost $185 million will be spent to bring forward spending on road-widening and safety works on NSW roads linking Toowoomba in Queensland and Seymour in Victoria, with another $145 million to go into upgrading the Princes Highway including the Milton-Ulladulla bypass.

The government had already promised $500 million on the Princes Highway with most of that to be spent between 2024 and 2029.

Another $41 million in new money will go into small-scale projects including $20 million to complete a section of the Pacific Highway between Woolgoola and Ballina.

Doubts have been raised that the Morrison government's $3.8 billion infrastructure package will be large enough to prevent a further fall in interest rates.

Prime Minister Scott Morrison said the acceleration of $530 million on three major regional projects would improve safety, increase freight productivity and help boost tourism. Of that money, $212 million will be spent in the next 18 months.

"We're bringing forward these important projects to cut travel times and make roads safer while boosting jobs and the economy," he said.

The extra funding for NSW is part of $2.7 billion that will be pulled forward nationally on planned projects and an additional $1.1 billion to be spent on road or rail works.

AMP Capital chief economist Shane Oliver said while the overall decision was in the right direction,  the extra cash amounted to just 0.1 per cent of GDP spread over two years.

"Put simply it's not enough to make a difference to the overall economy, which remains a long way from full employment and the Reserve Bank's inflation goals," he said.

"In the absence of more significant fiscal stimulus soon this just puts all the pressure back on the RBA – which came close to easing two weeks ago – to do more, probably as early as next month and possibly with a combination of rate cuts and quantitative easing to lower bank funding costs."

Financial markets believe the Reserve will take the official cash rate down to a fresh all-time low of 0.5 per cent early next year. RBA governor Philip Lowe is due to give a speech next week on unconventional monetary policies such as the purchase of government debt.

The Education Department's skilled vacancy index, released on Wednesday, showed its 10th consecutive monthly drop, in another sign the jobs market is slowing.

Vacancies in Sydney have now fallen by 16.1 per cent over the past 12 months, the biggest annual decline in seven years. Across Victoria, vacancies have dropped by 11 per cent since the start of the year.

Ads for labourers, those most closely linked to infrastructure, are now at their lowest level since the middle of 2015.

Ads for labourers, those most closely linked to infrastructure, are now at their lowest level since the middle of 2015.

In another sign the government's income tax cuts are being saved rather than spent, NAB's tracking of cashless sales via its EFTPOS network points to a 0.4 per cent lift in retail sales through October with almost all of that due to higher prices.

"Higher unemployment, sluggish wage growth and elevated debt is likely to put the brakes on spending growth," NAB chief economist Alan Oster said.

Opposition Leader Anthony Albanese said by bringing forward infrastructure spending, the government was admitting its economic plan was failing.

"This is a government that says that everything's all hunky-dory. They've been on a victory lap since May 18. What they haven't been doing is governing properly," he said.

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