New debt ... the Australian Government will borrow money for the first time in more than a decade / Renee Nowytarger.
Debt to fund infrastructure
Borrowing for the first time in 12 years
Money to come from loans, possibly bond sales
THE Federal Government is prepared to become a borrower for the first time in more than a decade to fund its ambitious infrastructure building program.
Kevin Rudd is considering becoming the first Prime Minister in more than 12 years to take on net debt,The Daily Telegraphhas learned.
Mr Rudd wants to fund massive improvements to city and regional transport systems, and he wants the "nation building" projects running as quickly as practically possible.
The Government has already outlined projects to be paid for from the $20 billion Building Australia fund coming out of consecutive Budget surpluses.
Extra money could come from loans, possibly through bonds sold to the public.
The Daily Telegraph has learned that Mr Rudd has discussed the potential for capital works loans with senior colleagues including Infrastructure Minister Anthony Albanese.
Government has not borrowed in net terms since the Howard government, soon after its election in 1996, started paying off $96 billion in debt.
Former Treasurer Peter Costello declared the government debt-free on April 21, 2006, ending interest payments which had reached $8.4 billion a year.
The Rudd Government believes borrowing is necessary for infrastructure which it argues has been delayed too long, such as port and urban transport developments.
Mr Rudd believes long commutes caused by clogged roads and unreliable public transport produce major social problems. And he thinks there are significant economic costs from failed urban transport networks.
However, getting private industry partners for these projects could be difficult as the global financial turmoil has made investment money scarce.
Yesterday, Finance Minister Lindsay Tanner acknowledged the problems with public-private partnerships but said the cash would not be needed for "a couple of years".
"Clearly, the world is different now but whether we return to the availability of capital that we`ve seen in the past five to 10 years for private investment in big infrastructure projects is yet to be seen."
He said the Government was, "committed to ensuring that we invest for the long term, that we pursue long-term sustainable growth for the Australian economy, and building and rebuilding our infrastructure`s central to that".
