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Abstract

Modern societies have failed to find affordable ways to fund needed infrastructure. Problems have multiplied from ignoring the particular characteristics of infrastructure and assuming the adequacy of the conventional finance of recent times, be this publicly or privately sourced. These failures, compounded by insensitive monetary stances, have led to a lingering economic and financial malaise, one particularly evident in some regions. Such failures have also contributed to the parlous position of many governments and the current global crisis. Infrastructure affordability is a central theme in this paper. Affordability, investment and credit are explored using simple numerical illustrations to highlight important aspects of probably the most pervasive means of finance, debt. Interest rate and other movements over decades can generate significant variations in yields realised from investments. Conditions over recent decades appear to have made debt-financed infrastructure more unaffordable than any time in the century since the States of Australia federated. It is little wonder that all States are currently struggling with infrastructure provision. A new era may be emerging from current crises but its eventual success, or otherwise, will reflect how well (un-)affordability is addressed. Prospective yields on investments need to be sufficiently realisable. Recognition and accommodation of the peculiarities of various forms of investment will be part of any adequate new foundations. The “infrastructure (un-)affordability problem” needs to be much better appreciated, understood and accommodated, by private and public parties alike.

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