Over the past few weeks, federal government ministers have congregated in front of a selection of 35,000 construction sites around the country. Looking out of place with suits and ill-fitting hard hats, they extolled to anyone who cared to listen the virtues of infrastructure pump priming for growth and jobs.
With a number of the government's "nation building" projects about to move into top gear, it is timely to ask what might be the economic impact of infrastructure spending?
Will it boost sufficient jobs and growth to steer us out of economic difficulties? Is it likely that the projects will deliver a reasonable return for taxpayers, boosting our productive capacity?
There are grounds for concern that the public infrastructure boom, financed largely by the Federal Government and mainly delivered by state and local governments, will have a limited impact in stimulating the economy.
It must be borne in mind that not all infrastructure projects are created equal. An examination of projects under the Rudd national building plan shows a clear hierarchy of spending in terms of its value-added attributes.
About 5 per cent of the total $42 billion economic stimulus is to be allocated to road and rail projects. Most economists would argue that infrastructure developments that allow goods to be delivered more quickly and traffic congestion to be eased would improve our economic functioning.
Even so, it is troubling that there has been precious little information, if any at all, released by governments about the expected returns from these projects.
Next in line comes the wave of projects that are unlikely to create additional productive value in our economy to repay the initial expenses. These include up to $26 billion for subsidised pink batt installation, new perimeter fencing, electronic whiteboards, cricket nets, canteens and plumbing under the National School Pride program, and toilet blocks under the Primary Schools for the 21st Century initiative.
Even school sector representatives who would normally welcome more money are questioning the merits of the government's stimulus package for schools.
Some of the biggest infrastructure boondoggles are reserved for the $800 million program for local governments. This includes federally borrowed money for skate parks, iPod docking stations, athletics jump pits, garden beds, car parks, kitchens, retaining walls, reshaped creek banks and, aptly, a new home for a circus troupe.
The proponents of the big infrastructure spend might insist that the composition of infrastructure does not matter as much as their employment impacts.
Governments, unions and other vested interests are likely to see public infrastructure works as akin to a giant jobs creation machine. According to this view, the sooner governments arrange for shovels to start digging the sooner that new jobs can flood into the economy.
ABS labour market statistics show that over 42,000 jobs in the finance, insurance, real estate and professional sectors have been lost since the middle of last year. It is most unlikely that these accountants, finance brokers, real estate agents and supervisors will seamlessly move into jobs such as laying down bitumen for new roads or installing pink batts in houses.
The idea that labour are a homogenous service that can be prodded and moulded into whatever shape a central stimulus planner wants simply does not ring true in the real world. This means that the capacity of the Rudd infrastructure stimulus to create tens of thousands of new, permanent jobs for those living in Australia is nothing short of fanciful.
The limited jobs potential of its nation building stimulus could well explain the significant increase in the number of 457 visas granted for the construction industry in recent months.
The outcomes of public infrastructure stimulus policies overseas also raise some concerns about the government's arguments. Despite several attempts to pump prime its economy through infrastructure spending, Japan has only averaged economic growth of 0.6 per cent each year since the early 1990s.
According to Australian historian and East Asian analyst Gavan McCormack, Japan degenerated into a low-growth "concrete kingdom" that was vacuuming in the country's wealth, and using it inefficiently to produce debt, social and environmental devastation.
In the Depression-era United States, President Roosevelt went on a spending frenzy, including new capital works, yet the unemployment rate by the end of the 1930s remained over 17 per cent. As the US Treasury Secretary Henry Morgenthau stated in 1939, "We are spending more money than we have ever spent before, and it does not work."
There is no question that federal, state and local governments are hoping that the seen outcomes of its infrastructure spending spike, such as the hastily laid construction sites and the feelgood political photo opportunities, will amount to something that delivers our way out of the economic doldrums.
However, it is more likely that the unseen misallocation of resources and destruction of economic value from wasteful capital spending will render more harm than good to the interests of current and future generations.
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