2022 Federal Budget: What it means for Infrastructure and Transport

The 2022 Federal Budget featured a record $225bn in major infrastructure investments from governments across the country – plus some significant private sector investments.

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Commentary

A record $225 billion in major infrastructure investments has been committed by governments across the country between now and 2023-24, as well as investments being planned and delivered by the private sector.

Infrastructure Australia (IA) have noted that “many leading infrastructure economies, such as the United Kingdom and Canada were pursuing significant reform to the way infrastructure was delivered and operated in order to ensure they remain attractive places to live and work in, as well as safe and secure places to invest. The competitive pressures have been compounded by the COVID-19 pandemic, which has radically changed existing patterns of use for infrastructure and constrained the availability of international skilled labour”. IA believes that the Australian construction industry has “failed to keep pace with the global transformation of the sector, which is seeing a shift from a focus on manual work on site to digitally enabled, prefabricated production processes delivered off-site”. IA recently released a report providing a roadmap for the long-term reform it argues the sector needs to overcome skills and procurement challenges and deliver the critical infrastructure Australia needs. The report’s key reform recommendations include:

  • Shifting from a focus on manual work on-site to off-site digitally enabled, pre-fabricated production processes, in line with international best practice.
  • Developing and publishing jurisdiction-wide, cross-sectoral infrastructure investment pipelines that outline current, funded, committed and planned public and private infrastructure activity over a ten-year horizon.
  • Shifting from current combative contracting models to longer-term, collaborative models that integrate the supply chain.
  • Supporting the financial sustainability of the infrastructure industry by adopting principles of fair return, improving benchmarking, reviewing payment terms and risk allocation.
  • Establishing and embedding equality, diversity and inclusion objectives through each infrastructure investment.

What did the Infrastructure and Transport sector want?

Infrastructure Partnerships Australia welcomed the commitment by the Government to establish the National Intermodal Corporation, noting it was essential to have the right governance and planning mechanisms in place to facilitate the sector’s continued growth. This will not only support the move towards a more integrated freight network but facilitate critical investment in intermodal terminals in Melbourne and Brisbane. The infrastructure sector welcomed the focus on increasing competition and efficiency by ensuring open-access arrangements across the Australia’s east-coast network and making rail freight a preferred long-haul mode under the new Intermodal governance model. The sector looked forward to further funding clarity for these critical intermodal terminals in the upcoming Budget.

The Australian Logistics Council (ALC) focused their submission on six specific issues including intermodals and rail; critical infrastructure legislation and risk management; funding of SMEs to assist digitisation of information; compliance with Public Health Orders; International Freight Assistance Mechanism (IFAM); and emissions reduction. The ALC noted that “the ability of moving freight from Melbourne to Brisbane in one day could change the way freight is moved in Australia from a ratio of 30% movement by rail, to 62% by 2050”. The ALC also recognised that with transport Australia’s third largest source of greenhouse gas emissions (and the highest rate of growth), a specific and targeted focus on the heavy vehicle sector (with additional funding) would provide added impetus at an early, and important, stage of the transition and help fast track enterprise-level initiatives, (including testing and trialling of zero emissions vehicles for the freight and logistics sector for use in Australian conditions).

The National Growth Areas Alliance (NGAA), which represents Councils from fast-growing areas, noted that “the COVID-19 pandemic had disproportionately impacted growth area communities” and particularly in Victoria and NSW. More than five million people live in an outer urban growth area around our major cities – 20% of Australia’s population. The NGAA believes there is a “new looming infrastructure crisis in growth areas exacerbated by the high take-up of Homebuilder grants, which has seen record building approval rates in all growth area LGAs across the country, which will see development occur long before vital infrastructure is planned and funded, let alone delivered”. Among their recommendations, they called for a financing mechanism to secure current and future infrastructure delivery, and a strong role for national and state infrastructure bodies (with less ad hoc infrastructure funding announcements). The NGAA endorsed Infrastructure Australia’s call for place-based planning.

What did the Budget deliver? 

The Budget includes funding for ‘priority road and rail projects’ at a cost of $17.9 billion over 10 years. Water infrastructure projects in regional communities are worth $7.4 billion over 12 years, and there is also $1.3 billion in new spending on regional communications over 6 years. A new ‘regional accelerator program’ will cost a further $2 billion over 5 years.

New South Wales is set to receive $3.3 billion for infrastructure, of which $1.33 billion is in the Budget and forward estimates period. Key projects include (but are not limited to):

  • $1.0 billion for Sydney – Newcastle faster rail
  • $352 million for the Milton – Ulladulla bypass
  • $355 million for the Pacific Highway
  • $300 million for grade separations
  • $232.5 million for the Newell Highway
  • $232.5 million for Mulgoa Rd stage 2
  • $100 million for Southern connector Rd
  • Other projects below $100 million in value

Victoria is set to receive $3.4 billion for infrastructure, of which $208.4 million is in the Budget and forward estimates period. Key projects include (but are not limited to):

  • $1.2 billion for the Beveridge Interstate Freight Terminal
  • $920 million for Outer Metropolitan Ring Rail South
  • $740 million for the Western Interstate Freight Terminal
  • $280 million for the Beveridge Interstate Freight Terminal road connections
  • $109.5 million for Mickleham Rd
  • Other projects below $100 million in value

Queensland is set to receive $3.3 billion for infrastructure, of which $446.5 million is in the Budget and forward estimates period. Key projects include (but are not limited to):

  • $1.6 billion for the Beerwah-Maroochydore rail extension
  • $1.1 billion for Brisbane – Gold Coast faster rail
  • $190 million for the Mount Isa to Rockhampton corridor
  • $114.4 million for the Tennant Creek to Townsville corridor
  • Other projects below $100 million in value

Western Australia is set to receive $1.7 billion for infrastructure, of which $1.05 billion is in the Budget and forward estimates period. Key projects include (but are not limited to):

  • $441.2 million for METRONET
  • $320 million for the Bunbury outer ring road
  • $200 million for the Tonkin Highway
  • $178 million for the Pinjarra Heavy Haulage Deviation
  • $145 million for the Thomas Road Dual Carriageway
  • $140 million for regional road safety
  • Other projects below $100 million in value

South Australia is set to receive $2.8 billion for infrastructure, of which $229.3 million is in the Budget and forward estimates period. Key projects include (but are not limited to):

  • $2.3 billion for North – South Corridor
  • $200 million for Marion Road – Anzac Highway to Cross Road
  • $120 million for Adelaide Hills roads
  • Other projects below $100 million in value

Tasmania is set to receive $639.9m for infrastructure, of which $185.3m is in the Budget and forward estimates period. Key projects include:

  • $336m for northern roads
  • $100m for the Great Eastern Tourism Drive
  • $96.0m for Tasmanian rail freight.

The Northern Territory is set to receive an additional $237 million for infrastructure, of which $105 million is in the Budget and forward estimates period. Projects funded are:

  • $132 million for Central Australian tourism roads
  • $55 million for Tiger Brennan drive
  • $50 million for Alice Springs – Hall Creek road upgrade.

How did business react? 

Infrastructure Partnerships Australia Chief Executive Adrian Dwyer said:

“We welcome the significant $9 billion increase in funding for infrastructure, lifting total spending to $66 billion over the next four years. We are particularly pleased to see a sensible focus on freight in Victoria and faster rail in NSW and QLD. Our freight sector plays a vital role in keeping Australia’s economy moving, so it is essential we have the infrastructure in place to make rail freight a preferred long-haul mode over the longer term.”

But Mr Dwyer also added: “While we welcome these well-considered rail infrastructure commitments, there is still taxpayer money chasing sub-economic projects in this Budget.”

For more information read the full  Federal Budget 2022-23 – What does it mean for Infrastructure & Construction report