Infrastructure investment addresses population & urban growth

With Infrastructure spending being a key component of the 2013 Federal Budget, our Group Chief Economist, Alan Oster takes a deeper look at the key initiates and what they mean.

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Infrastructure spending was a key component of the 2013 Federal Budget. A major focus of this investment seeks to address some of the problems associated with population growth and urban growth so there’s a heavy focus on urban rail and roads.

The infrastructure sector has done well compared to other areas, but the second round of the Nation Building program is modest in comparison to the first phase, with around half of the funding beyond 2017 (of the $24 billion of funding commitments, only $13.5 billion is allocated in the forward estimates to 2016/17).

In addition, the overall size of the next phase in the Nation Building program has been reduced through a $2 billion reduction in the Regional Infrastructure Fund, largely a result of revenue shortfalls from the Minerals Resource Rents Tax (MRRT). The Government also plans to save $44.3 million over 4 years from other cost savings on existing projects.

Finally, some of these projects also contain conditions around funding which may serve to frustrate the delivery of the funded projects. For example, the Government’s $3 billion pledge towards building the $8 billion Melbourne metro project is contingent on matching funding from the State government (investment in the Brisbane Cross River Rail also requires State funding support). The WestConnex investment is also subject to conditions including no new tolls to be applied to existing roads.

Key initiatives:

  • An additional $24 billion funnelled into nation-building infrastructure.
  • Key urban public rail projects include the Melbourne Metro rail project ( $3 billion) and Brisbane’s Cross River Rail project ( $715 million).
  • Investment in urban roads, including an allocation for the West Connex motorway in Sydney($1.8 billion), as well as the gateway North upgrade in Brisbane($718mn), widening the M80 Ring Road in Melbourne($525 million) and the South Road upgrade in Adelaide ($448 million).
  • Regional areas also benefited with spending on the Bruce Highway and an upgrade to the Midland Highway in Tasmania over 10 years.
  • Other investments projects include upgrades to the Warrego Highway in Queensland and the Perth-to-Darwin National Highway(Swan Valley Bypass) in Western Australia.
  • An extra $12.9 million was set aside to connect more local councils to the National Broadband Network.

For further analysis download the fact sheet.

Our team of leading economists, tax and superannuation experts will continue to unpack the Federal Budget 2013 to help you understand what it means. Visit all the latest articles, fact sheets and video commentary – 2013 Federal Budget – Business Research and Insights.