Upgrading Roads Good for the Economy


Spending on roads generates Government income and pays for itself through higher productivity and growth in GDP, according to a new study by EconTech for the Australian Council for Infrastructure Development.


The study identifies $10 billion for road projects “that should be in place today but is not”. The investment to deal with the backlog alone, leads to a gain of 0.8 per cent in GDP.


Commenting on this new research, the Executive Director of the Australian Automobile Association (AAA), Mr Lauchlan McIntosh said “The results confirm AAA research undertaken last year by the Allen Consulting Group which showed the value of economically viable unfunded road projects inAustraliaat over $10 billion, with benefit cost ratios of up to 5:1 for many of these projects.”


“These results demonstrate the need to constantly upgrade and expand Australia’s vital transport infrastructure, including road, rail, ports and airports”, Mr McIntosh said.


“The recent Auslink initiative recognises this need but will require significant additional long term investment from the Commonwealth as well as the States and Territories.


“Investing will also make roads safer and more forgiving and this has clear economic and social benefits for all of us.


“It is a timely reminder to our decision makers that greater investment in infrastructure can lead to lower consumer prices and higher living standards.


Mr McIntosh also expressed concern about the Commonwealth Treasury focus on a simplistic ‘bottom line’ when clearly appropriate infrastructure investment, perhaps even debt funded, can be paid for through productivity gains, often many times over. 


“Road spending is an investment, not a cost and Governments should start to listen to these experts and not continue to resist additional spending which in the nation’s interest”, Mr McIntosh concluded.

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