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Fast rail has long been a pipe dream that many have given up on in Australia but one expert believes the timing could finally be right for the country’s first projects.
Demographer Simon Kuestenmacher believes there’s a real likelihood of fast rail becoming a reality in Australia as cashed up foreign investors look to put their money into safe assets.
The co-founder of The Demographics Group said there was a lot of cheap money around thanks partly to low interest rates at the moment, but there were not enough investment opportunities.
Pension funds in countries like Canada and Japan, which are responsible for investing hundreds of millions of dollars, often search for investment opportunities around the world but their ageing populations meant they didn’t want to put their money into projects that were too risky.
“They are looking for low but predictable growth,” Mr Kuestenmacher said.
He said there were increasing numbers of funds in this position, and they were all looking for investments in slow-growth economies like Australia.
“If you had money to invest and you were young, you would invest into countries like Bangladesh and Ethiopia because they are growing at a very fast rate so you get higher returns but they are very volatile,” he said.
Basically investing in Australia is like investing in shares in one of the big four banks – it’s the safe place to put your money if you want to withdraw it sooner rather than later. This makes it attractive to pension funds that want to preserve their funds as their members near retirement age.
Mr Kuestenmacher said there were not that many countries or projects that fit the criteria of being democracies, with stable governments that had consistent growth.
“For example, if you look at democracies you could look at Europe but their growth is quite stagnant,” he said.
“It’s hard to find growth opportunities but in Australia and New Zealand, everything is growing at stable rates — even if it’s not a breakneck speed — and there will probably be more growth once immigration resumes.
“So we are an increasingly attractive investment location.”
Mr Kuestenmacher said foreign investors could be looking at investing in privately owned assets including Australian real estate, infrastructure including fast rail, businesses like child care centres, or even in the country’s marinas.
“These are attractive assets for international buyers to buy and they are already looking, there’s very high competition, that’s why property hasn’t plummeted — because of all this cheap money out there,” he said.
In the post-covid world Australia's geographic isolation is also counting in its favour.
RELATED: Why very fast rail could be Australia’s covid cure
Foreign investors are looking to Australia for safe projects and this could include fast rail.Source:Supplied
“It’s quite an interesting turnaround in fortunes,” Mr Kuestenmacher said.
“In the 1960s we suffered from the ‘tyranny of distance’ as we were too far away from all the delicious growth happening globally but in times of uncertainty, being a bit more removed from things makes us more interesting.
“Geography is playing in our favour.”
‘We’re racing to create enough workers’
However, there are barriers to Australia taking advantage of the opportunities on offer.
Mr Kuestenmacher said in order for investors to fund the projects, developers or governments must first be willing to build the infrastructure, and there is a skills shortage in the country that makes this harder.
“There’s an appetite, but the risk is not being able to build the infrastructure because we have very low unemployment rates,” Mr Kuestenmacher said.
“We’re racing to create enough workers.
“So we want to open our borders just to capitalise on our potential for growth.”
Mr Kuestenmacher said there was a national need for projects like fast rail because it would be an opportunity to upskill many workers and pull them into middle-skill jobs — a group that has shrunk with the loss of jobs like industries like manufacturing for example.
In order to support this, he believes TAFE courses should be free, so Australia can create more skilled workers in manufacturing and engineering.
Currently some students can enrol in a HECS-style scheme to pay back the costs of their courses once they earn a certain amount. There are also some low-fee or fee-free apprenticeships and traineeships available.
“It’s important for Australia to make TAFE free and we will get this back in increased GDP, otherwise we could miss out of these infrastructure opportunities, which unlocks so much economic growth opportunities,” Mr Kuestenmacher said.
“We would be mad not to utilise the growth opportunities we have at the moment.”
Mr Kuestenmacher said moving lower-skill workers like a forklift driver into better quality jobs in construction would take the burden off the pension system and the infrastructure itself would also provide benefits after it was built.
“If this was to eventuate and if most workers were to be trained in Australia then this would solve so many problems at once.”
This article first appeared on www.news.com.au
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