Aus & NZ: Budget 2018: Australia pledges AUD 24bn to infrastructure

07 May 2018 - 12:00 am UTC

Australia’s federal government says it will announce AUD 24bn (USD 18.1bn) of investments in infrastructure when it releases the budget on Tuesday (8 May).

This includes AUD 400m on duplicating a 2.9km rail line to Port Botany announced on Monday (7 May). Port lessors, NSW Ports, have long called for the extra rail capacity to cope with a big increase in freight movements.

Other projects already announced include an AUD 5bn equity investment to build a rail line to Melbourne Airport and AUD 1.75bn towards the AUD 16.5bn North East Link motorway in Melbourne. The tunnel aspects of the latter will be procured as a PPP.

The AUD 24bn is part of the AUD 75bn in infrastructure spending over ten years announced in last year’s budget, but the projects to be funded are newly announced.

Construction on the biggest single investment – the Melbourne Airport rail line – is unlikely to start before 2022, for example.

The Victorian government has been asked to match the federal government’s investment in this project, out of the AUD 2.1bn it received for selling its share of Snowy Hydro to the federal government.

But in its 1 May state budget, Victoria said it would prefer to see the business case completed first, which will canvass various options. The state government said it would spend AUD 50m to look at further options to extend high speed rail to regional cities. It has allocated the Snowy Hydro money to various regional transport, health and education improvements.

Infrastructure industry group, Infrastructure Partnerships Australia (IPA), has argued the government is in fact reducing its outlays on infrastructure since last year’s budget as it has shifted its spending on infrastructure to investments rather than grants. 

Equity and loans do not count towards total government debt because the liability has a corresponding asset to offset it in the budget. Using investments and loans spread out over a decade has allowed the federal government to keep on track to fulfill its promise to get the budget back to surplus by 2020-21, despite allocating tens of billions of dollars to infrastructure.

A spokesperson for IPA said it would likely need to wait until the budget is released on Tuesday before it could comment on the level and type of funding and financing on offer and where it is being spent.

Other spending promises already announced include AUD 1.05bn towards suburban rail improvements in Perth known as Metronet. This is in addition to AUD 490m the federal government promised to help extend the existing rail network to Perth Airport from Forrestfield.

In March, the federal government also announced AUD 50m towards a business case and market sounding with private land owners on helping to pay for the planned North-South rail line from north west Sydney to the yet to be built Western Sydney Airport. New South Wales will provide another AUD 50m.

Both governments have said it is possible this will be procured as a PPP.