The Reserve Bank of Australia governor Glenn Stevens has given a speech calling for extra infrastructure spending by governments.
The speech noted the economy has followed a different track from the one expected a couple of years ago.
"That is partly because conditions in the world economy were different from what had been expected and partly because several domestic factors were different," he said.
"As things stand, the economy could do with some more demand growth over the next couple of years.
"As often remarked, infrastructure spending has a role to play in sustaining growth and also in generating confidence.
"I am doubtful of our capacity to deploy this sort of spending as a short-term countercyclical device.
"The evidence of history is that it takes too long to start and then too long to stop.
"But it would be confidence-enhancing if there was an agreed story about a long-term pipeline of infrastructure projects, surrounded by appropriate governance on project selection, risk-sharing between public and private sectors at varying stages of production and ownership, and appropriate pricing for use of the finished product.
"The suppliers would feel it was worth their while to improve their offering if projects were not just one-offs.
"The financial sector would be attracted to the opportunities for financing and asset ownership.
"The real economy would benefit from the steady pipeline of construction work – as opposed to a boom and bust. It would also benefit from confidence about improved efficiency of logistics over time resulting from the better infrastructure.
"Amenity would be improved for millions of ordinary citizens in their daily lives.
"We could unleash large potential benefits that at present are not available because of congestion in our transportation networks.
He said the impediments to this outcome were not financial.
"The funding would be available, with long term interest rates the lowest we have ever seen or are likely to.
"And it is perfectly sensible for some public debt to be used to fund infrastructure that will earn a return.
"That is not the same as borrowing to pay pensions or public servants.
"The impediments are in our decision-making processes and, it seems, in our inability to find political agreement on how to proceed.
"Physical infrastructure is, of course, only part of what we need.
"The confidence-enhancing narrative needs to extend to skills, education, technology, the ability and freedom to respond to incentives, the ability to adapt and the willingness to take on risk.
"It is in these areas too, where there are various initiatives in place or planned, but which often do not get enough attention, that we need to create a positive dynamic of confidence, innovation and investment."
While he left open the door to further official interest rate cuts, Glenn Stevens said policy makers expected too much from monetary policy, warning that it could lead to "much bigger problems".
He told an audience of economists in Brisbane today that economic growth was likely for the year to June to be "a bit below" than what the central bank's forecast two years ago for growth of between 2.5% and 4%.