Careful with this investment now …
So I hear that Wellington’s Morrison & Co’s Public Infrastructure Partnership fund is going to start spending the government’s “$500m infrastructure fund” ($100m of which is arbitrarily from the Super Fund).
According to the article they:
see significant potential for the fund because of under-investment in the past and because the Government is facing many years of budget deficits
I find this strange since:
- We haven’t necessarily had under-investment (discussed here and here)
- Spending more makes the budget deficit worse, not better
Now I have no problem with PPP’s, as I have this fantasy that the private sector part of the investment will actually listen to market signals, and do things that provide an economic benefit.
However, I think we need to be careful here. We are in a situation where, as a nation, we have been borrowing to invest (poorly at times) – do we really think that ramping up the number of arbitrary public projects based on sketchy cost-benefit studies is going to help us here. Or will it hinder us?
Change is before us. The investments in this should be made carefully with views from all sides. Improvements need to happen and will hopefully put people back to work.