Tony Abbott has promised to be an 'infrastructure prime minister'. In particular, the Coalition plans to build more modern infrastructure to boost productivity. The eastern States are the big infrastructure winners from the Coalition's election victory, with over $17 billion in funding for road projects in Queensland, NSW and Victoria. Western Australia, South Australia, Tasmania and Northern Territory also received significant funding commitments. The Coalition has also committed funds to significant freight rail projects and promised further measures to facilitate infrastructure project investment and delivery.
New infrastructure funding commitments
Road projects
The Coalition has committed over $20 billion to road projects, including $11.5 billion over the four year forward estimates period. Below is a summary of the most significant infrastructure funding commitments.
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Rail projects
The Coalition also promised $300 million in funding to finalise a $5 billion plan to build an alternative 1800km inland freight rail track between Brisbane and Melbourne. It includes extending the standard gauge rail north from Illabo (NSW) to the Port of Brisbane, and may include an underground freight tunnel through Brisbane's southside.
However, the Coalition has made no financial commitment to urban rail projects.
Additional infrastructure policies
As well as its infrastructure funding commitments, the Coalition has promised to:
- deliver a 15-year rolling plan for national infrastructure projects, by working with Infrastructure Australia and State governments to establish project priorities and timetables
- strengthen the role of Infrastructure Australia, including ensuring all Commonwealth-funded projects worth over $100 million undergo a cost-benefit analysis by Infrastructure Australia and ensuring projects are prioritised on a proper cost-benefit analysis
- encourage more private investment in infrastructure projects, including examining an Infrastructure Partnership Bonds Scheme
- deliver the Coalition's NBN, which it says is more affordable and will be rolled out faster
- investigate building more dams: the Coalition's Dams Taskforce is looking at potential investments in dam capacity across Australia, and
- delivering an annual infrastructure statement, which will set out the construction status of major infrastructure projects, the amount of Commonwealth money spent on major projects over the preceding 12 months and whether milestones have been met.
The Coalition has also announced industrial relations reforms to limit the power of unions in the building and construction sector, including reinstating the Australian Building and Construction Commission and rewriting the National Code to overturn changes made by former Workplace Relations Minister Bill Shorten in January 2013.
Road and freight projects prioritised
The Federal Coalition has clearly prioritised funding to major roads and freight projects. While the Coalition supports urban rail projects, Tony Abbott has made it clear that the Coalition does not intend to fund urban rail. Notably, the Coalition has not promised funding for the Brisbane Cross River Rail Projects identified as "ready to proceed" in Infrastructure Australia's 2013 infrastructure priority list, nor the Melbourne Metro Project listed as a "threshold" project.
In contrast, Labor's 2013-14 Budget delivered in May allocated over $4 billion in total to the Melbourne Metro Project, Perth Light Rail Project and Brisbane Cross River Rail Project, as well as further funding for freight rail projects. During the election campaign, Labor also promised funds to investigate high-speed rail along Australia's east coast.
The Coalition's budget impact statement released last Thursday made it clear that it will not fund the urban rail projects earmarked by Labor. The Coalition confirmed that it will reallocate over $6 billion of existing funding allocated by Labor under the National Building Program and funding promised by Labor for several major urban rail projects. For example, the Coalition will not proceed with funding the Melbourne Metro project, Brisbane Cross River Rail project or Perth urban rail projects. Instead, it will use those funds for its commitments to the Bruce Highway, Pacific Highway, East West Link and Perth road projects. The Coalition has also confirmed that projects under way will continue.
Further, not all the projects funded follow the priorities identified by the States themselves, particularly in Queensland and Western Australia. However, the Liberal governments in those States have accepted the Federal Coalition's funding commitments, on the basis that is more important that there is strong commitment on transport projects.
Conclusion
The Federal Coalition has made strong funding commitments to road and freight rail projects. It will also implement further policy changes to facilitate investment and delivery of major infrastructure projects. This significant pipeline of projects will be welcomed by the building and construction sectors and will likely deliver productivity dividends in future years.
In the case of urban passenger projects, the relevant State governments will need to rethink their funding models to enable them to proceed with those projects.
There remains a risk that further pressure on the Federal budget bottom line will necessitate changes to the government's funding commitments and priorities. However, consistent with its assurances during the election campaign, the Coalition will likely take all possible measures to avoid potentially embarrassing changes to its core infrastructure commitments.
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