Hoops to jump through for infrastructure upgrades

 The Australian Government’s move towards upgrading infrastructure could be hampered by high credit costs and skilled labour shortages, a Citigroup report has found.

According to the Sydney Morning Herald, the report said about $770 billion needs to be injected over the next decade to tackle problems including congested ports and insufficient rail networks, along with around $360 billion expected to be provided by the private sector.

Citigroup’s director of economic and market analysis Shane Lee said the increasing cost of credit could undermine public-private partnerships, forcing governments to take a larger portion of risks from early stage construction.

The Federal Government’s Building Australia Fund should provide $155 billion in the next year, with $250 billion from state governments over the next six years, the report also said.

The looming shortage of skilled labour, particularly engineers, was also identified as one of the major obstacles to upgrading infrastructure.

Mr Lee said: “Over a long period of time, we’ve reduced the number of kids going to university to study engineering. Now all of a sudden we’ve realised we should have been spending more money, and we have started to, but it takes time for the labour market to catch up with that increase in demand.”

Initiatives to address infrastructure bottlenecks have been well received, but it is expected to take several years for them to have an effect.


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