2019 Federal Budget: What it means for Infrastructure and Transport

The budget announces $100b of infrastructure spending over the next 10 years.

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What did business want?

Since the end of the mining construction boom, public infrastructure become has become an important support for the Australian economy, particularly in NSW and Victoria, driven by rapid growth in population, particularly in Sydney and Melbourne. Infrastructure spending is already at a high level, although there is a large backlog of transport projects announced by state governments that need a Commonwealth contribution to proceed, allowing the Commonwealth to further ramp up funding.

Most transport infrastructure is built for the public sector and is with the exception of ARTC and Western Sydney Airport, generally delivered by the states. Due to Australia’s vertical fiscal imbalance (in which the Commonwealth raises a large share of taxes, but states deliver most of the services), the states generally seek more funding in Commonwealth budgets.

To support increased infrastructure funding, private sector infrastructure lobby group Infrastructure Partnerships Australia had called for reform at the state and territory level, including reopening the Asset Recycling Fund to encourage greater asset recycling as well as other programmes to encourage broader reforms such as franchising or introducing contestability into public service provision.

What did the Budget deliver?

The budget announces $100b of infrastructure spending over the next 10 years, although it appears that a good deal of the money is either scheduled beyond the forward estimates period or already committed from the previous budget, which committed to around $75b of infrastructure spending.

The government will provide an additional $3b for the Urban Congestion Fund (of which $1.6b will be provided over the budget and forward estimates period), bringing the total commitment to $4b.

New South Wales is forecast to receive an additional $6.1b, with projects including $3.1b for the Western Sydney North South Rail Link (already provided by government), $1.6b for the M1 Pacific Motorway, $405m for the M12 Motorway, $400m for the Newell Highway and $200m for an additional Hawkesbury River crossing. There will also be $496m for the state under the Roads of Strategic Importance initiative and $253.5m, under the Urban Congestion Fund. The Infrastructure Investment Program – New South Wales infrastructure investments expense line shows $266.5m of additional funding over the budget and forward estimates period.

Victoria is forecast to receive an additional $2.8b, including $1.1b for suburban roads, $700m for the South Geelong – Waurn Ponds Rail Upgrade, $360m for the Western Highway, $300m for the Dandenong Ranges, $208m for the Shepparton Bypass and $110m for the Wellington Rd Duplication. There will also be $490m under Roads of Strategic Importance, $396.3m through the Urban Congestion Fund and $162m under the Victorian Congestion Package. The government has also committed $2b to Geelong fast rail under the Population Package, although almost none of the money is in the forward estimates and the Victorian government has been very critical of the project. The Infrastructure Investment Program – Victorian Infrastructure investments expense line shows $266.5m of additional funding over the budget and forward estimates period.

Queensland is forecast to receive an additional $2.6b, including $800m for the Gateway Motorway, $500m for the M1 upgrade, $425.4m for the Bruce Highway, $320m for the Warrego Highway, $287.2m for the Cairns ring road, $170m for the Cunningham Highway, $100m for the Gladstone Port access road. There will also be $1b for the state under the Roads of Strategic Importance initiative and $378.8m under Urban Congestion Fund. The Infrastructure Investment Program – Queensland infrastructure investments expense line shows $1.2b of additional funding over the budget and forward estimates period.

Western Australia is forecast to receive an additional $932m, including $348.5m for the Tonkin Highway, $207.5m for level crossing removals, $140m for the Albany Ring Road, $121.6m for the Bunbury Outer Ring Road and $115m for the Freemantle bridge. There is $535m under Roads of Strategic Importance and $121.8m under the Urban Congestion Fund. The Infrastructure Investment Program – Western Australia infrastructure investments expense line shows $443m of additional funding over the budget and forward estimates period.

South Australia is forecast to receive an additional $1.8b, including $1.5b for the North-South corridor, $260m for rural roads and $40m for local roads. There is $341m through the Urban Congestion Fund and $220m through Roads of Strategic Importance. The Infrastructure Investment Program – South Australia infrastructure investments expense line shows $134.8m of additional funding over the budget and forward estimates period.

Tasmania will see an additional $68m for freight rail modernisation – all provided within the forward estimates. There is $210 under Roads of Strategic Importance and $35m under the Urban Congestion Fund.

The Northern Territory will see an additional $60m in the forward estimates for Tiwi Island road upgrades, $492.3 under Roads of Strategic Importance and $70m for road infrastructure for Kakadu. The ACT will see an additional $50m, of which $35m is in the forward estimates period.

Road safety will see $2.2b in additional funding, although only $800m of this will be provided over the budget and forward estimates period.

How did business react?

Infrastructure Partnerships Australia said that the Budget delivered a welcome boost to infrastructure, noting that “the Government has taken the sensible step of reversing the recent decline in funding for critical projects, ensuring the heavy lifting on infrastructure investment isn’t left to state and territory governments”. While welcoming the increase in funding, they also noted that “funding alone won’t solve our longer-term challenges”, including “big issues like settling energy policy to end the investment strike, dealing with our looming road funding crisis, and driving big ticket infrastructure reforms to boost productivity”.

To find out more about what the budget means for business, read our 2019 Federal Budget  – What the budget means for small and medium sized businesses.