Infrastructure and energy key focuses of Victoria 2023-24 state budget

Premier Daniel Andrews stated that the budget represents a commitment by the government to meeting its election promises, with a key focus on the removal of level crossings and the building of hospitals, schools, public transport and roads.

With this budget, Victorian government infrastructure investment is projected to average A$19.6bn a year over forward estimates, significantly higher than the 10-year average to 2014-15 of A$4.9bn. While part of this large increase in investment can be attributed to Covid-19 disruptions and labour shortages, the Victorian government is signalling that it remains committed to a strong and sustainable infrastructure pipeline.

Capital expenditure is also forecast to reach A$22.5bn for the 2022-23 financial year, and the government noted that labour shortages and supply chain disruptions continue to impact delivery of infrastructure projects.

Transport

Arguably, the most significant allocation of funding from the budget is towards upgrading transport infrastructure in the state. A$2.8bn will be invested over 10 years for road maintenance and renewal, including flood recovery works, improving road safety and increasing productivity of the road network. A$674 million will be provided to upgrade key roads and intersections as part of a ‘road blitz’ plan to improve network efficiency.

The government has also allocated A$650m to upgrade the Melton line to allow for longer trains, as well as A$601m to purchase 23 new VLocity trains to run on the upgraded line. A$339m will be allocated to preparing the Metro Tunnel for opening, and the Kananook train stabling facility on the Frankston line is also set to be expanded with a A$353m investment.

Notably, the Western Interstate Freight Terminal, which is the government’s preferred connection site for the Inland Rail project, was not mentioned in the budget despite the $6.1 million that was proposed as a business case in last year's budget. Other key transport investments include:

• A$322mn to increase the capacity of the South Dynon maintenance facility;
• A$219mn for service uplifts across the State’s rail network;
• A$111mn to support regional rail network operations, reliability and punctuality;
• A$60mn to upgrade Boronia Station; and
• A$47mn to undertake critical maintenance works and rebuild the Dromana Pier, St Leonards Pier and the Warneet North and South Jetties.

Transitioning to clean energy

With renewable energy being a prominent focus of the recently announced Federal budget, it is no surprise it was a key area in the Victorian budget.

The previously foreshadowed revival of the State Electricity Commission (SEC) has received a A$1bn initial investment. The SEC is part of the Victorian government’s plan to transition the state to cleaner, cheaper renewable energy and reach 95% renewable energy by 2035 and net zero by 2045. Other funding aimed to help the state’s transition to clean energy includes A$42m to be invested in neighbourhood batteries, which will provide extra energy storage capacity for local communities regardless of whether they have solar panels, and A$16m has been allocated for Solar Victoria to provide interest-free loans to eligible households to install solar battery storage systems.

Health

The budget provides investments aimed at improving the health system in Victoria, which the Covid-19 pandemic revealed needed expansion.

The state government aims to meet this need with an initial investment of A$320m for the Hospital Infrastructure Delivery Fund. This investment is to be directed towards the development of a new hospital and residential agreed care facility in West Gippsland, as well as upgrades and renovations to the Monash Medical Centre, Dandenong Hospital, Northern Hospital, Austin Hospital, Queen Elizabeth II Hospital and Wonthaggi Hospital.

Education

Education capital investment was another focus of the Victorian budget. Over A$1.3bn is to be provided for new schools, upgrades to existing schools, and maintenance. The government has allocated A$573m in funding for the building of nine new schools across the state, with an additional A$21m provided for land acquisition for future new schools. A further A$1.1bn was allocated to early childhood learning.

Other education investments in the budget include:

• A$913m to continue the delivery of infrastructure targeted at early learning;
• A$450m to support the delivery of new and upgraded low-fee independent and Catholic schools;
• A$266m to upgrade 43 government schools across Victoria;
• A$208m to continue delivery of new kindergarten facilities on government school sites to increase capacity for Three-Year-Old Kinder;
• A$201m to deliver new and upgraded community sport and active recreation infrastructure; and
• A$147m for relocatable buildings to relieve pressure at schools that are reaching their capacity.

Co-written by Stacey White and Jack Merlo of Pinsent Masons.