16-May-2009
Portfolio Media Releases, Infrastructure, The Economy
The Rudd Labor Government has lost control of the nation’s finances by looking to raid superannuation funds to plug the $60 billion “black hole” revealed in their much vaunted infrastructure program.
The true cost of the government’s infrastructure program is not $22 billion as inferred in the Budget on Tuesday night, but a whopping $80 billion, with nearly $60 billion unfunded.
After presiding over the biggest collapse in the value of Australian’s superannuation savings in our history, the Rudd Government is now looking to raid these superannuation funds to pay for a massive three quarters of the cost of infrastructure projects announced in Tuesday’s Budget.
The raid on superannuation funds follows revelations by infrastructure experts KPMG that in addition to the $22 billion of Government funding over four years a further $60 billion will need to be borrowed, or raised from the private sector, if many of the Government’s 15 road, rail and port projects are ever to be built.
At a time when the Federal and State Government’s are issuing hundreds of billions of dollars of government bonds to pay for their unprecedented debt, private investment is highly problematic as it is being crowded out.
Mr Rudd is proving to be long on promises and debt, but hopeless on delivery.
If the Government is forced to borrow this $60 billion to deliver on its infrastructure promises, the debt mountain created by this government will exceed a quarter of a trillion dollars.
Mr Rudd is proving to be a debt builder, not a nation builder.
These infrastructure projects should stand on their merits as an investment.
Artificial incentives and pressure on superannuation funds to invest poses great risks, with the already hugely diminished value of these hard earned superannuation savings further undermined.
The Government must resist putting pressure on superannuation funds, especially trade union run super funds, to cover their $60 billion funding “black hole”.
If Mr Rudd wants to do something constructive to attract private investment he should use the crisis to cut through the mountains of federal, state and local government red tape.
The economic crisis provided a unique political opportunity to reform highly complex and expensive tendering processes, the myriad of planning and project approvals and the financial instruments and risk sharing for major projects. Nothing of any consequence has occurred.
Media Contact: Stuart Eaton, 0433 298 620