The crazy priority and economics of Gladys Berejiklian's new stadiums

While there's no doubt that knocking things down and rebuilding them creates some construction jobs, there is also no doubt that spending the same amount of money on much needed transport, energy or housing infrastructure would deliver much larger economic and social benefits.

Our phoney debate about whether Australian governments spend "too much", or "not enough" has stifled the more important debate about what kind of projects governments should be spending money on. I would have expected the "small government" brigade to be screaming the house down over the Berejiklian government's profligacy but perhaps their cries have been muffled by the sound-proof glass in the corporate boxes.

Since Sydney hosted the Olympics in 2000 at Stadium Australia in Homebush (now ANZ Stadium), Australia's population has grown from 19 million to almost 25 million and our leaders expect it to double its 2000 level by 2052. But while a booming population means that children have been banned from running in some overcrowded school playgrounds, the National Rugby League (NRL) has failed spectacularly to convert rising population into rising numbers of paying customers. Indeed Sydneysiders are so disinterested in watching NRL matches that they couldn't even sell all the tickets to the 2017 NRL grand final (although admittedly neither team was from Sydney). Needless to say the AFL had no problem selling out the much larger MCG despite Melbourne's smaller population.

Rugby league isn't the only pastime suffering as a result of cultural and technological change. There are far fewer cinema theatres with far fewer seats in Australia. This has happened over the past 17 years, but unlike the NRL the big screen industry is not blaming the design of the movie theatres. And just imagine the response if a state premier offered to spend $2 billion of taxpayer money to knock down movie theatres and build new ones in the hope it would boost cinema attendance.

It is hard to think of a public asset that would do less to boost private sector productivity than a football stadium. While it is easy to see how well-targeted investments in schools, transport and energy might deliver long-term benefits of a better-trained workforce and lower input costs for business, the link between new football stadiums and long-term prosperity is somewhat weaker, to say the least.

It is the shape of our economy, not its current size, that will determine whether our state or national economies will prosper in the decades to come. Spending tens of billions on a copper wire broadband network instead of a fibre one will still create lots of jobs, but in the future it will simply not deliver the speed of communication enjoyed by those investing more wisely. Similarly, if Australia wants to build some more coal-fired power stations that too will create some more jobs, but countries that invest in renewables will have much lower energy costs in the decades to come.

It is hard to predict the future, and hard to know whether investment in schools, roads, rail or energy should take precedence. But it should be pretty easy to decide how much money should be spent on building new football stadiums. We should simply ask the NRL how much of the $1.8 billion it got from selling the television rights to its games it would like to bet on the idea that bigger stadiums will draw bigger paying crowds.

If the future of football is so bright, and the link between building new stadiums and attracting bigger crowds is so strong, then why doesn't the private sector bet its own money on that idea? And if the answer is "but football stadiums are a public benefit that need taxpayer support" then all the NSW government needs to do is release the analysis that shows that the best way to boost the NSW economy and improve the lives of its citizens is to build a few big football stadiums. I can't wait to read it.

Richard Denniss is chief Economist at The Australia Institute @RDNS_TAI