Infrastructure is perhaps the most boring word in the English dictionary.
Yet good infrastructure is indispensable to modern city and country living – it is needed to connect communities with each other and the outside world.
Australia's biggest economic challenge is to sustain the recent lift in productivity growth, since today's productivity growth is tomorrow's prosperity. However, we cannot be more efficient at producing and selling goods and services without modern infrastructure.
How could we be, with a population of 23 million in a continent nearly twice the size of the EU?
Australia's infrastructure challenge is not only to better connect faraway parts of the country, it is also to ease congestion in our crowded major cities.
When people ask what productivity means, think of motorists struggling through traffic for 1 1/2 hours to and from work each day, arriving stressed and returning home cranky and exhausted.
Losing three in every 18 waking hours to stress and exhaustion is not pleasant, and it is certainly not productive.
While shipping remains the favoured means of transporting Australian exports, air freight is growing rapidly. In the Asian century, Australia has a marvellous opportunity to sell fresh and processed premium-quality food to the three billion middle-class customers who will live in our region by 2030.
But we can be successful in this endeavour only if our air-freight infrastructure and the means of transporting produce from farm gate to processing centre are world-class. Plans are being developed to fly fresh milk from Victoria's dairy farms directly to China. Opportunities for exporting processed food such as cheese and infant formula into China are boundless, which is great news for Australian manufacturing.
Australia is only now making up for an infrastructure deficit accumulated during the 1990s and the first half of the 2000s.
State governments have under-invested in infrastructure and the previous federal Coalition government essentially considered infrastructure to be a state government responsibility. Of a revenue windfall from the first mining boom which ran into the hundreds of billions of dollars, the Coalition invested less than $7bn in infrastructure. It did create a regional partnerships program for small-scale infrastructure spending in marginal electorates, which was the subject of a scathing Audit Office report.
The government is investing $36bn in road, rail and port infrastructure under the Nation Building Program, with projects of national significance identified by Infrastructure Australia.
Last month, Infrastructure Minister Anthony Albanese opened a $1bn, 36km southern Sydney freight line that will reduce costly bottlenecks by allowing freight trains to bypass metropolitan train lines during peak periods. And the government's multi-billion-dollar investment to upgrade the 10,000km interstate rail freight network will lower average transit times between Brisbane and Melbourne by up to seven hours.
The Gillard government is also going ahead with the Moorebank intermodal terminal, which will provide much-needed relief to Sydney motorists by taking 1.2 million trucks a year off Sydney's congested roads by 2020.
The government is rolling out the National Broadband Network, a high-speed enabling technology that will provide a vital boost to the competitiveness of Australia's regions.
In its white paper on Australia in the Asian century, the government has committed to a systematic national framework for developing, financing and maintaining nationally significant infrastructure. This will help governments and the private sector to plan and prioritise infrastructure needs at least 20 years ahead.
Not all of the heavy lifting in infrastructure investment can be done by the federal government. That's why the government is boosting the incentives for private infrastructure investment that will enable companies to use losses generated by infrastructure projects deemed to be nationally significant, even where ownership has changed. And the value of any undeducted losses will be maintained by allowing investors to carry them forward at the government bond rate.
Global infrastructure financing costs are at an all-time low. Now is a good time to be investing in productivity-raising infrastructure. If Australia is to be competitive in the Asian century it's essential that we continue doing so.
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