National

Infrastructure key to future growth: RBA

By AAP Newswire

Australia's major infrastructure has a vital role to play in enabling future economic prosperity but the nation faces challenges ensuring such assets keep up with population growth, a key Reserve Bank official says.

Reserve Bank of Australia assistant governor Luci Ellis says infrastructure, rather than being a new engine of growth that can kick in after the mining and housing booms, plays a key role ensuring economic growth can be delivered in other quarters.

"By its nature, infrastructure is justified by its contribution to the public good," Dr Ellis told an Infrastructure Partnerships Australia lunch in Sydney on Friday.

"It is not so much an engine of growth as an enabler of growth."

Dr Ellis said that although Australia was fairly well served by current infrastructure, such as roads, utilities and communications assets, investment would need to be ramped up in the future.

"With a strongly growing population, we face a challenge of ensuring that the stock of infrastructure keeps pace with expanding needs," she said.

"Utilities such as electricity and water, as well as transport links, need ongoing investment to accommodate a rising population."

In the May budget, the federal government announced a $75 billion, 10-year infrastructure program, including $25 billion in new projects.

The program included $5 billion for rail lines to the new western Sydney airport and Melbourne's Tullamarine and almost $2 billion for Perth's Metronet project.

Ms Ellis said that, at more than one per cent of GDP, road and rail infrastructure investment has almost returned to the levels in the years immediately after the global financial crisis.

Renewable energy projects had also recently become more attractive to private sector investors as the cost of the technology has fallen while the costs of generating power through traditional means has climbed,.

"Renewable energy projects are becoming increasingly commercially viable," she said.

Ms Ellis said a few years ago much of the investment in renewable energy was small-scale rooftop solar but more recently larger scale solar and wind projects were underway.