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Westpac CEO calls for govts to up spending

AAP logoAAP 7/11/2016 Stuart Condie

Westpac chief executive Brian Hartzer has called on federal and state governments to boost the economy by borrowing big amid historically low interest rates for an infrastructure splurge.

Mr Hartzer said "a longer-term road map of committed infrastructure investment" could break the deadlock between consumers and businesses, who are currently looking to each other for cues on whether to spend.

Businesses have the means and will to invest but are waiting to see if consumers will spend, while consumers are waiting to spend because they're not sure about the outlook for the economy, Mr Hartzer said on Monday.

"Our experience increasingly shows, where infrastructure projects are announced, business investment - and particularly small business - investment follows," Mr Hartzer said.

"A longer-term road map of committed infrastructure investment would give businesses in those areas the confidence to invest in their capacity ... (and) with interest rates at historic lows, it makes sense for governments to borrow to fund transport and other infrastructure projects that boost the long-term productive capacity of the economy."

Nonetheless, Mr Hartzer, unveiling Westpac's annual cash profit of $7.822 billion, said he remained confident in the prospects for the Australian economy.

"Unemployment is low, interest rates are low, commodity prices have actually increased and we're beginning to see a pick-up in investment intentions," Mr Hartzer said.

"The transition to a more service-based economy is clearly happening and the drag on GDP (gross domestic product) from the reduction of investment in the mining sector has largely rolled through."

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