Investment waste land follows commodities boom

The economic hole dug by Australia’s biggest commodities boom is not being filled.

The latest figures on the capital expenditure plans point to a national economy face even tougher days ahead.

Investment in mines, oil and gas has kept afloat the economy over the past four years. Projects like Gorgon, Wheatstone, Roy Hill and the Solomon Hub have been this nation’s economic bread and butter.

But a combination of increased supply and lower prices means these projects aren’t being replicated.

The hope, the policy expectation, was that this gaping investment hole would be filled by the non-mining sector.

Yet outside of housing, which is going gang-busters on the back of interest rates at their lowest level ever, it’s effectively an investment waste land.

That translated into the March quarter figures on capital spending showing the biggest fall in business investment since September 2009 when the world was confronting the Global Financial Crisis.

Total investment is at a four year low and headed down. It’s a near $50 billion hit in a single year.

It’s not surprise UBS economists described the result, and what lies ahead, as “recessionary” levels of investment.

The Abbott Government’s Budget policy to deliver a $20,000 instant asset write-off to small business is a step towards getting business to spend.

The energetic Small Business Minister Bruce Billson wants the policy, which at this stage has a two year lifespan, to be extended. Based on the capital expenditure figures, it will need to be.

But thousands of new coffee machines, as tasty as their produce may be, is not a replacement for major investments that will widen Australia’s economic base over coming years.

It’s not a government policy failure. The community as a whole is failing – to take a punt on the nation’s future.