Parliament House, ACT

The 2022-23 Federal Budget has been released and takes the total investment in transport infrastructure in this Budget to $55 billion over the forward estimates for new and existing projects.

Inflationary pressures amid a global economic downturn, coupled with a trillion dollars in national debt has seen the recently elected Federal Government limit spending, instead focusing on improving the quality of government investments.

Australia’s new economic direction follows from a period of significant investment in economic stimulus and social welfare, motivated by the ongoing COVID-19 pandemic and international uncertainty.

The gamble resulted in a projected $28.5 billion reduction to the national debt, though resulting in less spending it was nonetheless broadly supported by infrastructure peak-bodies and representatives.

Despite this, the government committed to significant spending in the infrastructure sector, including most notably:

  • $1.5 billion for the Freight Highway Upgrade Program, delivering significant improvements and sealing works to nationally significant freight corridors in the Northern Territory, Western Australia and South Australia
  • $1 billion toward the 2,700km Outback Way (described as Australia’s ‘Route 66’) spanning from Laverton, Western Australia to Winton, Queensland via the Northern Territory
  • $3 billion to the Road Safety Program, partnering with state and territory governments in delivering nationwide funding opportunities for road safety improvements

Further funding was announced for state-specific projects; including substantial investments in Victoria’s Suburban Rail Loop and Melbourne Airport Rail Link, New South Wales’ Western Sydney Airport, Stage 1 of Queensland’s Coomera Connector, South Australia’s North-South Corridor, and Western Australia’s Perth METRONET.

VICTORIA
Total spend: $7,647,700,000

  • $2.2 billion for the Suburban Rail Loop
  • $5 billion to the Melbourne Airport Rail Link
  • $447.7 million to the Gippsland Rail Line Upgrade

NEW SOUTH WALES
Total spend: $7,150,000,000

  • $300 million for the Western Sydney Roads Package
  • $5.25 billion for the Sydney Metro – Western Sydney Airport
  • $1.6 billion for the M12 Motorway

SOUTH AUSTRALIA
Total spend: $5,124,000,000

  • $60 million to construct on and off ramps for the Southern Expressway at Majors Road, which will reduce traffic on Brighton Road
  • $4.9 billion for the North-South Corridor – Torrens to Darlington
  • $164 million for the Strzelecki Track Upgrade – Sealing

WESTERN AUSTRALIA
Total spend: $4,827,000,000

  • $125 million toward electric bus charging infrastructure
  • $1.002 billion for the Bunbury Outer Ring Road (stages 2 and 3)
  • $3.7 billion for the Perth METRONET

QUEENSLAND
Total spend: $2,052,000,000

  • $586.4 million for a major upgrade of the Bruce Highway through Brisbane’s outer northern suburbs
  • $1.07 billion for the Coomera Connector Stage 1 (Coomera to Nerang)
  • $395.6 million for Gold Coast Light Rail – Stage 3

TASMANIA
Total spend: $1,319,000,000

  • $540 million to upgrade the Bass Highway, the Tasman Highway and the East and West Tamar Highways
  • $629 million for the New Bridgewater Bridge
  • $150 million for the Midway Point and Sorell Causeway

NORTHERN TERRITORY
Total spend: $1,072,000,000

  • $740 million towards the Tanami Road and Central Arnhem Road
  • $332 million of funding for the NT Strategic Roads Package

AUSTRALIAN CAPITAL TERRITORY
Total spend: $223,400,000

  • $218.4 million for Canberra Light Rail – Stage 2A
  • $5 million for the Garden City Cycle Route to encourage active travel

Revising regional investment

The Federal Government will commit $1 billion to regional infrastructure programs in the 2022-23 Federal Budget, and has announced an end to Round 6 of the Building Better Regions Fund introduced by the former Coalition Government.

The commitment will fund two major programs for a period of three years; including the Growing Regions Program and the Regional Precincts and Partnerships Program.

The new programs will replace the previous government’s Building Better Regions Fund (BBRF). 

The Federal Government claims the Growing Regions Program will provide new opportunities for regional local councils and not-for-profit organisations through an annual open, competitive grants process.

The regional Precincts and Partnerships Program promises a strategic, nationally consistent mechanism for funding and coordinating larger-scale projects that transform a place, to benefit communities in regional cities and wider rural and regional Australia.

Establishing a national fleet

Recent disruptions to international supply chains and trade highlighted the vulnerability of Australia’s seaborne-dependent international trade.

In response, the Government has committed to the establishment of a maritime strategic fleet, made of up to twelve Australian-flagged and crewed vessels, that it says will strengthen the country’s economic sovereignty and improve national security.

The Budget has allocated funding toward a new task force appointed to advise the Government and guide its decision making as it prepares to establish the new strategic fleet.

Opposition responds

The Shadow Minister for Infrastructure, Transport and Regional Development, Bridget McKenzie, claimed many of the projects announced by the Federal Government were previously funded by the former Coalition Government in its March 2022 Budget.

“It appears that the new government has re-announced previously announced initiatives simply because it wanted to avoid highlighting all the projects it has axed,” Ms McKenzie said.

“According to the Federal Government’s Budget documents, it has axed $2.8 billion of infrastructure projects and delayed a further $6.5 billion in infrastructure projects in this Budget.

“The new Minister, Catherine King, claimed there would be transparency on decision-making in her portfolio.

“However, communities around Australia are scrambling to find out what has happened to their local projects, and we’re left with no detail on which projects were canceled, delayed, rescoped, or which may be continuing.”

Industry reacts

The budget was received well by industry bodies and advocacy groups, many of which labelled the investments as being both sensible (if not exciting) and reflective of infrastructure’s importance in driving national economic growth.

However, the changes have received criticism from some for failing to fund several already-tendered projects, including the Rockhampton Ring Road.

The Australasian Railway Association’s (ARA) Chief Executive Officer, Caroline Wilkie, said the $14.2 million commitment to establish a National Rail Manufacturing Plan would help further build Australia’s rail manufacturing sector.

“A national focus for local manufacturing is essential to strengthen the Australian rail supply chain as the industry prepares for significant growth over the coming decade,” Ms Wilkie said.

“The experience of COVID-19 has highlighted the value of a productive and efficient local supply chain.

“Tonight’s funding provides an opportunity to build on the significant rail manufacturing capability that exists in Australia to establish a strong focus on the innovation and technology that will be required to meet our future infrastructure needs.”

Roads Australia (RA) CEO, Michael Kilgariff, said investments in road infrastructure and safety were welcomed, but reiterated its position that Infrastructure Australia (IA) should be given responsibility for coordinating the national project pipeline.

“The Federal Government has been very clear in the weeks leading up to tonight’s Budget that it would need to reprioritise some transport infrastructure projects due to capacity constraints in the economy, particularly around labour shortages and supply chain challenges,” Mr Kilgariff said.

“While some of these impacts are undoubtedly due to the effects of COVID-19 and the war in Ukraine, they also partly result from the absence of a nationally agreed long-term project pipeline, meaning jurisdictions are effectively competing with each other in a race to deliver projects. 

“RA has been consistent in its call for Infrastructure Australia to be given a remit for the development, management and ongoing coordination of a national pipeline of infrastructure projects in partnership with the states and territories.”

The Infrastructure Sustainability Council said the commitments reflected infrastructure’s role as an enabler of social, economic and environmental benefits, and was welcomed by its CEO, Ainsley Simpson.

“This Budget represents a sensible first step in addressing climate change, but with only seven years to 2030 and the need to reduce our emissions by at least 43 per cent, it’s time to make every dollar count,” Ms Simpson said.

“While integrated climate, industry and infrastructure policy work is underway, immediate action is needed to deliver wider benefits from the $248 billion infrastructure pipeline and avoid locking-in decades-worth of harmful emissions.

Describing the 2022-23 Federal Budget as ‘boring and no-frills’, industry think-tank Infrastructure Partnerships Australia (IPA) nonetheless welcomed the announcement, suggesting that Australians and the sector at large would welcome the restrained if not responsible spending commitments.

IPA Chief Executive, Adrian Dwyer, said the budget did well to allocate a proportionate spend that acknowledges current supply-chain pressures and labour shortages.

“While tonight’s Federal Budget slightly moderates infrastructure spending to $61.3 billion from the pre-Election Budget, crucially it right-sizes investment to meet the reality of current labour demand and supply chain pressures,” Mr Dwyer said.

“It’s also pleasing to see the Albanese Government provide confirmation of their infrastructure election commitments by setting out the funding profile for their investments in Suburban Rail Loop, and High-Speed Rail corridor acquisition and reaffirming their commitments to other major road and rail projects.”

Engineers Australia CEO, Romilly Madew, said the organisation welcomed the targeted investment, acknowledging measures such as fee-free TAFE and the forthcoming Migration Strategy that could ease the industry’s current skills shortage.

“Addressing the engineering skills gap will be important for the successful delivery of these projects and Engineers Australia looks forward to working with the Government to overcome this challenge,” Ms Madew said.

“Collaborative long-term planning of infrastructure is vital to economic prosperity.”

The Australian Constructors Association (ACA) said the decision not to invest in several major projects, including the Rockhampton Ring Road, was symptomatic of ongoing mismanagement in the sector.

ACA CEO, Jon Davies, said the decision to defer several already-tendered projects stoked further uncertainty for construction businesses.

“The public sector is the largest single buyer of major projects in Australia, so decisions of this sort really do deter industry from investing and create uncertainty that prevents increased direct employment,” Mr Davies said.

“There was no shortage of bidders for the Ring Road and two joint ventures have already been shortlisted so scarcity of resources should not be cited as a reason for deferral.

“Contractors incur substantial bid and tendering costs which in many cases are only partially reimbursed with contractors expected to absorb the costs as part of doing business.

“The construction industry already operates on razor thin margins and accounts for 26 per cent of all insolvencies, despite making up only 17 per cent of all businesses.”

The Australian Constructors Association considers the most likely reason for the deferral in the case of the Ring Road is the significant increase in the cost of the project from what was budgeted, most of which it says was avoidable.

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