Governments should be able to borrow to build infrastructure without falling foul of the ratings agencies and putting credit ratings at risk, new Reserve Bank of Australian governor Philip Lowe says.
Dr Lowe, appearing before a parliamentary economics committee in Sydney, said governments borrowing for recurrent spending would find it "hard to have a good story".
But Dr Lowe said borrowing for investment in productive assets that would generate a return for society was essential and something that governments should be able to convince ratings agencies to support.
"If you can do that and you can do it in a structured, disciplined, rigorous, process with good governance, I'm hopeful that you could have a conversation with the ratings agencies about that," Dr Lowe said.
