News from the front desk Issue 480: Politicians around the country are gearing up to pull the lever on big infrastructure projects to boost the economy.
NSW Transport Minister Andrew Constance labelled a second wave of mega transport projects a “silver bullet” to kickstart the NSW economy. Victorian Premier Daniel Andrews said the state would need to “go to another level” on road and rail to claw itself out of economic turmoil.
But there’s a growing chorus of voices urging governments to be more selective and to pause a bit before the habitual falling upon the shovel and the bulldozer every time there’s an economic downturn. Perhaps the economic logic isn’t as obvious at it first seems when you do the numbers, they say.
Perhaps this time it might be wise to consider that more fine grained thoughtful projects – among community groups for instance – might create wider benefits with bigger ripple effects than those going to the same ‘ole same ‘ole (mostly) boys club, say these voices.
Among those urging caution have been respected outfits like SGS Economics and Planning that in late April flagged uncertainty around the need for some of these projects given that population numbers were pointing downwards due to coronavirus.
Unless the economy rebounds quickly, Sydney could see 200,000 fewer people than expected by 2025, the group said.
Terry Rawnsley, principal and partner of SGS and author of the population report, “Some of the city’s major transport projects including WestConnex stage three, the Western Harbour Tunnel and northern beaches link are predicated on additional population growth and increased car travel”.
“If there is lower population growth for three or four years and maybe a shift away from daily commutes in the car you might start to ask whether some of those projects are the best way for the state to spend $10 billion or $15 billion right now.”
Nationally, it looks worse. Residential analyst Louis Christopher of SQM Research told The Fifth Estate on Thursday that population growth last year was around 370,000 people; this year it will rise by just the natural increase of 90,000 people.
Another worry is how far we want to burrow further into debt.
Rawnsley’s team recently also crunched the numbers on the economic impacts of both COVID-19 and the summer bushfires and while it doesn’t rule out a “bounce back” economic recovery, it says this is not exactly certain. Other commentators say the so called V-shaped recovery is looking increasingly like a pipedream. What happens after the government subsidies are withdrawn and the banks’ six month mortgage holidays come to an end is the big unknown.
What is certain is that Australia is looking at a 6.7 per cent drop in GDP in 2019-20 compared with the 2018-19 financial year, with cities among the hardest hit areas.
This means there is a new ruler being applied to some of the eye-watering budgets for major projects already underway. Melbourne’s $50 billion Suburban Rail Loop for instance, and Sydney’s 33-kilometre $16.8 billion WestConnex motorway.
Some of these major projects were never such good idea in the first place. What’s wrong with a bit of congestion? It sends a signal you need to get out of your car and catch public transport, or walk, or ride a bike. Like it does in New York or London.
Sydney University economist and transport professor John Stanley says in The Age that Australians have been “conned” into a major projects approach.
He says some major projects are worth doing but something like the Suburban Rail Loop is overcooked in its design, and smaller projects to improve mobility for Melbournians are more sensible and would deliver jobs and economic stimulus more quickly.
Dean of Design, Architecture and Building at the University of Technology Sydney, Elizabeth Mossop, wrote in The Conversation this week warning the government not to commit taxpayers to further debt by relying too heavily on transport mega-projects – notorious for their cost blowouts and delays – to stimulate the economy.
While big infrastructure projects might create jobs, economic stimulus and improved mobility, they often fall short on other value points such as improving community value, reducing inequality and combating climate change, she says.
Smaller, targeted projects such as water-management infrastructure, new cycleways, renewable energy projects and retrofitting and improving schools offer the same job creating and economic stimulating benefits while ticking off on a host of other issues at the same time.
Curtin University’s Professor Peter Newman, was calling for a similar approach with his recent article in The Fifth Estate on fast-tracked planning, calling for a “triaging” of planning considerations so that projects that address multiple problems at once jump to the front of the line.
Inevitably, there are always alternatives to kick start a lagging economy.
With some of the most creative minds in the design world about to lose some or all of their work, it’s a great opportunity to harness some fabulous ideas. Perhaps it’s in community projects or social and affordable housing, as an innovative program in Philadelphia is showing.
A bevy of commentators we’ve spoken to around our upcoming TFE Live panel on housing (13 Wednesday at 1 pm) is leaning heavily into the wisdom of pumping up the desperate construction sector and focusing on social and affordable housing in particular.
But the growing call is that this should be done with a view to the future, to better social and environmental outcomes (as well as economic before that other big existential threat comes back to bite us, again).
As for need, given that housing prices are falling and rents have already dropped 30 per cent because of lower immigration, don’t bet on this lasting a long time, says Professor Jago Dodson of RMIT, who will be on the housing panel.
Population numbers are down right now, he says, but he’d be mighty surprised if our numbers were not back to pre-Covid levels within five years or so.
Airports in a tough spot
One of the biggest infrastructure projects under scrutiny is Sydney’s second airport at Badgerys Creek.
Katherine O’Regan, executive director of the Sydney Business Chamber, says that the epic $5.3 billion aerotropolis and its vast network of connective infrastructure should be slowed to allow smaller infrastructure projects that get money flowing faster to be prioritised.
“There is no doubt that Sydney needs a second airport at Badgerys Creek, and it’s not a project to stop, but it’s a legitimate question to ask around sequencing of the project itself, and that includes the $4.1 billion on the associated roads,” Ms O’Regan said.
“We want the airport to happen – it’s just when.”
Another SGS report released this week found that the closure of domestic and international air travel was being felt by local government areas in Sydney, Melbourne and Perth with airports declines of between 11 and 13 per cent due to passenger air traffic dropping by over 90 per cent.
But there are other views.
Although the airline sector is likely to be in bad shape for a number of years, Western Sydney Leadership Dialogue executive director Adam Leto imagines it will recover well before 2026 when Sydney’s second airport at Badgerys Creek is expected to be open for business.
“I don’t think construction will be impacted significantly, there’s no reason it won’t still be delivered by 2026,” he tells The Fifth Estate.
In Western Sydney, mega transport projects are part of a broader recovery strategy
Leto understandably doesn’t agree major transport projects should be slowed down in his area. He says they will play a role in the western Sydney region’s recovery as part of a broader plan that also delivers short term gains.
“Government needs to be doubling down on infrastructure, it’s the massive lever they can pull.”
He says projects like Sydney Metro West, which has a business case ready to go and contracts deployed, should progress as expected. The Greater West metro rail that will link western suburbs to the Badgerys Creek airport is another project worthy of prioritising.
“These are two of the major ones that would be a significant catalyst for the region.”
The group also wants to see the NSW government deliver on its commitment to Powerhouse Museum, ANZ Stadium and Parramatta Light Rail Stage 2, with arts and sport important for breathing life back into the region once it’s safe to do so.
Other opportunities need to focus on job creation and social and affordable housing, he says. Jobs in health and education will also take precedence.
Leto says the region is at greater risk of economic losses around manufacturing services. While global supply chain disruptions might stimulate more onsite manufacturing, western Sydney is dominated by traditional manufacturing and that will need “significant retooling” to benefit.
And while some people are starting to lose hope that Western Sydney can indeed house 1.3 million more people as the state government has strongly flagged, Leto is keen to make sure there is no loss of the hard work to integrate strong social and environmental outcomes – including mitigating the urban heat island effect.
Green infrastructure projects such as regenerating and reactivating the rivers of Greater Western Sydney need to be priorities, he says.