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Westpac chief calls for more govt spending

AAP logoAAP 8/12/2016 Stuart Condie

Westpac chief executive Brian Hartzer has reiterated his call for federal and state governments to respond to uncertain global growth by boosting the Australian economy through increased infrastructure spending.

Mr Hartzer will tell the lender's annual general meeting in Adelaide that, with any benefit from likely interest rises possibly offset by slow global growth, the local economy would be lifted by increased government investment in infrastructure, particularly in roads and transport.

"Our experience shows that where governments invest in infrastructure projects, business investment - and particularly small business investment - soon follows," Mr Hartzer will say on Friday.

"In other words, infrastructure investments have a multiplier effect on economic growth."

Mr Hartzer said that guaranteed long-term investment would give businesses the confidence to spend, which in turn would lead to broad economic benefits.

"With interest rates near all-time lows, we believe there is a strong argument for governments to borrow to fund projects that expand economic capacity," Mr Hartzer will say in his speech to shareholders.

Westpac economists still believe the Reserve Bank will keep the cash rate on hold for an extended period, but the election of Donald Trump in the US has raised expectations of higher US inflation.

Mr Hartzer said those inflationary expectations are flowing through to higher interest rates both in the US and domestically.

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