The $24.5 billion congestion-busting infrastructure budget

New rail projects and road upgrades are the clear winners in the Federal Government’s 2018 Budget.

In an effort to bust the long-bemoaned congestion of our cities and to combat the shockingly high number of recent road deaths – as well as to improve transport accessibility to jobs and services for the growing Australian population – the Federal Government has earmarked $24.5 billion for new rail and road upgrade projects across Australia over the next decade.

Effectively, this year’s infrastructure budget confirms the continuation of the 10-year $75 billion plan announced last year. It details the projects that are likely to receive funding, as opposed to announcing additional funding.

Key funding commitments include:

Transport
  • Victoria
    • $5 billion for the Melbourne Airport Rail Link
    • $1.8 billion for the North-East link motorway
    • $475 million for a rail connection to the Monash precinct
  • Western Australia
    • $1.7 billion for road projects across the state
    • Additional $1.1 billion for the Perth Metronet project
  • Queensland
    • $1 billion for an upgrade of the M1 motorway, Gold Coast
    • $390 million for the duplication of North Coast rail line between Beerburrum and Nambour
    • $300 million for Brisbane City Council’s Metro scheme
  • New South Wales
    • Almost $1.0 billion for a Coffs Harbour bypass
    • $400 million for the Port Botany rail duplication in Sydney
    • $155 million for Shoalhaven river bridge, Nowra
    • Commitment to part fund ($50 million) the business case for the proposed North-South Rail link, marking the first significant milestone in the Federal Government’s Western Sydney City Deal.
  • South Australia
    • $1.2 billion for North-South corridor, Adelaide
    • $220 million to electrify Gawler rail line
    • $160 million to duplicate Joy Baluch Bridge, Port Augusta
  • Tasmania
    • $461 million for replacement Bridgewater Bridge, Hobart
  • Roads of Strategic Importance initiative – $3.5 billion to support upgrade of key regional road corridors with initial investments to include:
    • $1.5 billion for Northern Australia (Queensland, Northern Territory and Western Australia)
    • $400 million for Tasmania, including Bass Highway
    • $220 million for Bindoon Bypass, Western Australia
    • $100 million for further upgrades of Barton Highway corridor linking ACT and NSW
  • Urban Congestion Fund – $1 billion to support projects to remediate pinch points, improve traffic safety and increase network efficiency for commuter and freight movements in urban areas.
Community infrastructure
  • $206.5 million over four years from 2018-19 for round three of the Building Better Regions Fund
  • $154.3 million over five years from 2017-18 to support the Government’s goal of building a more active Australia
Healthcare
  • $189 million for hospital infrastructure in Western Australia
Housing
  • $550 million for remote Indigenous housing in the Northern Territory

Collaborative funding

The Federal Government is focusing on projects where it is an equity partner, such as the Melbourne Airport rail project where it assumes a 50-50 partnership with the Victorian Government. This provides a clear message of intent for more active collaboration across tiers of government.

Recent examples of infrastructure partnerships across levels of government include:

  • The 20-year multi-billion Western Sydney City Deal (signed March 2018)
  • The 5-year Launceston City Deal (signed April 2017)
  • The 15-year Townsville City Deal (signed December 2016)
  • City Deals currently under negotiation: Hobart, Geelong, Perth and Darwin.

Making it happen – an asset isn’t just for the budget, it’s for life

These funding commitments will provide momentum for an economy currently facing low levels of business investment, modest growth in consumer spending and a slowdown in housing construction. They will also boost employment within the construction, transport and professional services sectors.

However, in order for these commitments to come to fruition, state governments will need to top up the funding. Innovative funding mechanisms and opportunities for value sharing will need to be explored. Long-term funding of these new assets will also need to be considered, with states needing to allocate a proportion of their budget to ongoing operation and maintenance.
It’s also important to remember that this is a pre-election budget. A number of the commitments are for projects without a business case or final costings (e.g. Melbourne Airport link and most of the Western Australian projects). So, as a consequence, it is not clear if the actual spend will be in line with the funding pledged. Let’s watch this space.

Luke will be opening the Australian Financial Review’s National Infrastructure Summit in Sydney on 4-5 June 2018. Visit the Infrastructure pages of our website to stay up to date on key insights from the Summit and beyond.


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