Leading economists have expressed unease about a budget change that would allow the government to all but eliminate the deficit within two years while borrowing to help build projects including a rail link to Sydney's second airport and a rail line from Melbourne to Brisbane.
The change, unveiled by Treasurer Scott Morrison on Thursday, will prioritise a measure known as "net operating balance", which excludes borrowing for infrastructure, and is on track to fall from a deficit of $37.5 billion in 2016-17 to $1.3 billion in 2019-20.
Infrastructure will be a major feature of the May 9 budget, but it will only contain a limited pot of new money for grants for projects. Instead, the focus will be on leveraging private sector investments for major new projects.
The projects at the top of the government's infrastructure list include the Badgerys Creek airport rail line, a $10 billion inland freight line between Melbourne and Brisbane – with an initial allocation of $1 billion expected – and the cross-river rail project in Brisbane.
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In the years to come, new dams, the Metronet project in Perth and a train line to Tullamarine airport in Melbourne – if the state Labor government agrees – could be in prospect, with the federal government to provide some finance and use its balance sheet to help get private companies on board.
Asked on Thursday if the government would, for example, use the change in accounting to borrow $6 billion to build the airport at  Badgerys Creek, Mr Morrison said people weren't entitled to draw that conclusion.​
Labelling debt for such projects as "good" and debt for recurrent spending as "bad", the Treasurer said he wasn't trying to suggest recurrent spending on health and education was unimportant.
"Medicare is important, education is important," he said. "That's why you need to ensure that your current expenditure can be met by your current earnings, and that you ensure the dollars that you bring in each year from the taxpayer cover everyday expenses on education and health and things like that.
"For major capital investments and things of that nature, just like in your own private, personal experience, you leverage your balance sheet."
Labor leader Bill Shorten said the government was moving the goalposts by defining debt as either "good" and "bad"
But shadow treasurer Chris Bowen confirmed the opposition was itself considering making a similar change and would "look at these changes in detail".
Mr Shorten said the government couldn't "get on top of the debt, so they will redefine the debt". Mr Bowen said Labor was "open to new ways to better invest in infrastructure, given the Turnbull government has slashed infrastructure spending".
Former treasury modeller Stephen Anthony, who works as an adviser for Industry Super, said the change could open the way for even worse "bad debt".
"Why would I trust them to select the projects and generate the debt when all they have been doing so far is running up bad debt," he said.
"We need to seriously institutionalise Infrastructure Australia. It should present a properly scoped-out priorities list to the Parliament, which the government would override at its peril. It looks like we are in for boondoggles."
Deloitte Access director Chris Richardson said the planned change in budget accounting was "arguably a better way to do it", but it ran the risk of funding projects that did not "comfortably pass a cost-benefit test" at the expense of spending on things such as education that did.
Mervyn Tang, an analyst for ratings agency Fitch – one of the three big agencies closely watching the budget, to assess its impact on the AAA rating – said his firm used "our own fiscal balance number calculated through based on IMF's Government Finance Statistics framework".
"A change in the way the government reports will not by itself have any rating implications. However, if the change of reporting leads to a substantive change to targets and policy direction based on new numbers, we will make an assessment of how it affects our forecast for the metrics we calculated."Â
The Australian Institute of Company Directors welcomed the change. Its advocacy manager, Louise Petschler, said 10-year bond yields had recently traded at their lowest levels in 160 years, making now "a good time to take on good debt".
Greens treasury spokesman Peter Whish-Wilson welcomed what he said was the government's adoption of Greens policy.
"It will allow the public to get a clearer picture of how much the government is investing into infrastructure versus gaining from privatisations," he said.
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