The Budget’s impact on infrastructure

The Budget’s impact on infrastructure

Chris Scougall

By Chris Scougall 
On 15 May 2015

The Federal Government’s infrastructure program is aimed at economic growth, job creation and the development of regional Australia. While Tuesday’s budget drew attention to a number of existing initiatives, it didn’t deliver much in the way of new spending on infrastructure.

Infrastructure spending is key to reconciling some of the competing demands on fiscal policy by boosting demand in the short term while lifting supply over the longer term. With the current low cost of capital, timing is ideal to push for greater infrastructure development.

One area of new spending outlined in the Budget is in Australia’s Top End where $5 billion is to be spent on ports, railways, pipelines, water supply and electricity generation. A further $100 million is earmarked to assist the region’s cattle industry with new supply chain infrastructure and roads.

The $5 billion Northern Australia Infrastructure Facility will provide large concessional loans, to both states and the private sector, for projects through the Western Australian, Northern Territory and Queensland governments.

The Government will also commission a pioneering White Paper on Developing Northern Australia to be released later this year.

Tasmania will continue to benefit from more than $260 million in Federal commitments on freight, surgery waiting lists, irrigation and roads.

Elsewhere, through the National Stronger Regions Fund, which started rolling out in 2014, $210 million has been allocated for 51 projects so far, with more to be announced later this month. In total, the fund will eventually provide $1 billion to infrastructure.

The Government is also looking to make more agreements with States through its Asset Recycling Initiative, whereby infrastructure cash is offered as an incentive for selling State-owned assets, such as businesses, buildings, ports and utilities. So far only New South Wales and the ACT have signed up to the scheme, for two projects, which the Government estimates will generate more than $15 billion of additional infrastructure activity combined.

Among the major works already started are the $3 billion NorthConnex and WestConnex road projects in New South Wales. The Government is also pressing ahead with planning for the proposed Badgerys Creek international airport, despite local opposition to the project.

The Bruce Highway, the Toowoomba Second Range Crossing and the Gateway Motorway North are on schedule in Queensland. In South Australia work has now begun on the Torrens Road to River Torrens project and just less than $1 billion designated for the North-South Road Corridor.

The Perth Freight Link has been slated to break earth in 2016, and midway through next year the $1 billion Gateway WA Project is scheduled to complete. WA is also to receive an additional $499 million from Federal coffers to pay for other road projects, as compensation for the recent GST revenue shortfall.

The Government has committed to a scoping study in 2015-16 on options for the future management, operations and ownership of the Australian Rail Track Corporation. There is an expectation that it will be put up for sale.

As part of a bid to make government services simpler and easier to use, a Digital Transformation Office (DTO) has been set up to redesign services to be digital by default.

In addition, the NBN continues to be rolled out and by September 2016 it is expected that three million homes and business will have an NBN service in place or under construction.

Find out more about the Federal Budget 2015

Things to know before you Can:
This article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. The Budget measures are, at this stage, announcements and may change before they become law. You should seek independent, professional tax advice before making any decision based on this information.