“We are in the unique position, as a triple A-rated country, with a very, very low cost of capital globally. We could raise 30- to 50-year money at probably under 2 per cent,” said Professor John Hewson, former leader of the Liberal Party, at the launch of the Crescent Think Tank last Thursday.
“And I know that having looked at those various asset groups – superannuation funds of course, insurance companies – but central banks, sovereign wealth funds, would flood into that long-term asset class – a 30- to 50-year bond at a low coupon government guarantee, we could actually have an infrastructure revolution in this country.”
The comments come as much of the world readies for a potential downturn. A fiscal stimulus could have a substantial positive impact on Australia’s position in such a downturn.
“We think a depression or recession is coming. Cash at any price,” said Bill Kelty, one of the chief architects of Australia’s superannuation scheme under Paul Keating.
“Even if we have to pay discount on cash. Do you not think this is a wonderful opportunity for this country? Invest in infrastructure… have that capital available at 3 and 4 per cent, 2 and 4 per cent. Build the projects now, while we’ve got this opportunity,” he said.
The Morrison government has repeatedly discounted the prospect of fiscal stimulus in the form of infrastructural spending, opting to focus on an increasingly meaningless budget surplus. The creation of such a bond might allow them to have their cake and eat it too.
“Can you imagine what would happen to this country, in terms of massive capital inflow that would come into this country, if we even had infrastructure priced and being understood by government at between 2 [per cent] to 4 per cent?” Mr Kelty said.
“We’ve got this huge infrastructure overhang. We’ve got a second-rate railroad system, a second-rate road system… here’s an opportunity to overcome that and invest in it.
“We should have no limit in this country as to what’s achievable except our imagination,” said Professor Hewson.
