Big infrastructure builds and the migration surge are adding to inflation pressure on the Reserve Bank.
The big infrastructure build by state governments and the migration surge are adding to inflation pressure on the Reserve Bank of Australia.
Businesses and governments are competing for finite resources – labour and capital – and pushing up prices. These forces are helping fuel inflation at a time the economy is being stretched beyond full capacity, asDeloitte Access Economics analyst Sheraan Underwood says government spending is “propping up” infrastructure investment and has pushed the value of definite project investment – work under way or committed – to within a hair of the high recorded in late 2014.
Treasurer Jim Chalmers says $225 billion of additional investment by the public and private sector will be required. “Just pumping capital into the transformation won’t be enough,” Chalmers says. Skills shortages, infrastructure plans, supply chains and cumbersome regulation that is creating bottlenecks for clean energy projects will need to be addressed, he says.
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