Building on semantics: Labor debt versus Coalition funding

Executing a 180-degree turn is a tricky manoeuvre for a naval fleet as big as the one sailing into Sydney Harbour this weekend. While there's less danger to life, limb and rigging, it's also difficult for a Coalition that's spent the past four years fighting a phoney war about government debt.

But there are more signs that Joe Hockey is signalling that just such a turn is in the offing. The big bloke is about to attempt a backflip with half twist - everybody stand back.

The AFR reports that Hockey "is considering identifying government borrowings raised to fund infrastructure as separate from debt raised to cover the budget deficit as the Abbott government contemplates an infrastructure spending splurge".

Suddenly I'm running into senior Liberal types wanting to explain what a good idea infrastructure bonds would be, and not just John Hewson expanding on his National Press Club speech in July.

The semantics are wonderful: the Labor Party generated evil government debt that will enslave your children; the Liberal Party will access capital markets to set your children free. And that is a good thing, however galling the about-face might be for those who suffered the fiscal ranting of Hockey as shadow treasurer.

The problem though is the speed of the change of rhetoric. It takes time to prepare the ground, to work out a structure and then to develop a narrative and sell it to an electorate that has just bought the idea that all government debt is bad - but in the meantime the window of greatest need for infrastructure stimulus is already upon us.

The various roads projects being promoted by the Coalition as symbols of its infrastructure commitment are convenient because the projects already exist. They have been in development for years. (And there's another whole question about concentrating only on roads anyway, given the reality of better roads quickly attracting more cars that make them not much better at all. Something about mid-20th century solutions to 21st century transport problems.)

Which is why Hockey has to get on with it, why he has to come back from his trip to the US next week fired up to explain the difference between what he will paint as Labor's "bad" debt and his "good" debt.

There is no end of support available for sensible borrowing for infrastructure. Professors Freebairn and Corden last month provided the economic theology with which to bless it in their paper Vision Versus Prudence: Government Debt Financing of Investment. All that's missing is the hiring of Jennifer Hawkins to be the official ambassador for Infrastructure Australia.

Oh, there also is a little matter of keeping politicians at a great distance from the infrastructure fund Hockey wants to establish. They are not to be trusted with a pile of money and sundry mates and electorates wanting a favour.

And the privatisation thing also has to be sorted. Privatisation-wary states and electors have to be brought along for the ride. That takes time too. Hurry up, Joe.