The upgrade of a suburban road bridge in Perth will get $16 million in federal funding brought forward to start in 2021 for a project that won’t be finished until 2026.
On the Gold Coast, the government is bringing forward more than $200 million for the third stage of the city’s light rail which will take four years to complete.
AMP Capital chief economist Shane Oliver said while the overall decision was moving 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.
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.
Prime Minister Scott Morrison said there were “tough challenges” facing the economy at present, noting the impact of the drought on overall farm production.
He said he was following through with his post-election commitment to get work done across the country.
“This is investment for the day with benefits for the future,” he said.
But 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.
Australian Industry Group chief executive Innes Willox said the government’s spending would help the economy.
“Extra spending on infrastructure will complement stimulus measures already in the pipeline from interest rate reductions and income tax cuts to underwrite higher incomes for, and spending by households and business,” he said.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.