Australian Federal budget shows no slowing down on infrastructure

Out-Law Analysis | 10 May 2018 | 4:26 pm | 2 min. read

ANALYSIS: Despite the political backlash, and irrespective of whether the budget represents a decrease in spending on previous years, in absolute terms Australia's Federal budget for 2018-19 is a healthy infrastructure budget.

Coupled with strong state government appetite for, and commitments to, infrastructure spend, we see no slowing down in activity in the sector over the next three to four years at a minimum.

Treasurer Scott Morrison handed down the 2018-19 federal budget on 8 May. The budget sets out the government’s estimated expenditure and revenue for the current financial year, the budget year and three forward financial years.

In Australia, there is a significant demand for infrastructure investment and the budget was preceded by the Liberal government loudly proclaiming its commitment to funding infrastructure initiatives. In his budget speech, Morrison stated that the government has “invested at record levels to build the roads, railways, airports and energy infrastructure Australia needs for the future”.

The budget documents allocate AU$24.5 billion (€15.5bn) funding to “new major transport projects and initiatives that will benefit every state and territory”. The allocations “form part of the government’s AU$75bn transport infrastructure investment over the next decade”.

However, opposition politicians and state governments have accused the government of “accounting trickery”, and suggested that infrastructure investment will actually fall across the four-year budget period.

According to the budget documents, the major infrastructure initiatives that have been allocated funding include:

  • AU$3.5bn to the Roads of Strategic Importance (RoSI) initiative to fund the upgrade of key freight routes;
  • AU$1bn allocated towards establishing an Urban Congestion Fund to address congestion in cities;
  • AU$250 million to the Major Project Business Case Fund for development and planning of nationally significant projects;
  • AU$160m to upgrade sections of Outback Way;
  • up to AU$5bn to the Melbourne Airport Rail Link;
  • AU$9.3bn to the Melbourne to Brisbane Inland Rail project;
  • an additional AU$3.3bn for continuing upgrades of the Bruce Highway in Queensland;
  • a commitment to jointly fund the first stage of the North South Rail Link in Western Sydney with the New South Wales government;
  • an additional $1.05bn for the METRONET rail project in Western Australia.

Opposition leader Bill Shorten’s response on infrastructure in his budget reply speech was disappointingly brief. The speech focused largely on taxation, however Shorten did not miss the opportunity to briefly criticise the Liberal government on its infrastructure commitment.

After criticising the government on the Aged Care programme, he said that the same “accounting trickery” was “at work in infrastructure”. According to Shorten, Commonwealth investment in infrastructure projects will actually fall from AU$8bn to AU$4.5bn across the budget period. He added that the government had only committed money for a study on the Western Sydney Rail Link and Melbourne Airport rail link, and no money for construction. Shadow infrastructure minister Anthony Albanese made similar comments on Sky News Australia.

Unsurprisingly, state Labor governments around Australia were equally critical of the announcements. Queensland deputy premier and treasurer Jackie Trad stated that Queensland had been “left with the crumbs”, and that Queenslanders would be “waiting years” for the government to deliver on its “big ticket promises”.

Simela Karasavidis is an infrastructure law expert at Pinsent Masons, the law firm behind Out-Law.com.