Infrastructure expenditure

Budget Review 2016–17 Index

Rob Dossor

Infrastructure expenditure in Commonwealth Budgets is usually large and tends to attract attention.

This table sets out total payments to the states for infrastructure under the last two Budgets including $9.18 billion in this year’s Budget for the coming financial year.[1]

Total payments to the states for infrastructure

$ millions 2015-16 2016-17 2017-18 2018-19 Total
2016-17 Budget 6,998.7 9,177.9 8,753.7 5,045.9 29,976.2
2015-16 Budget 6,823.2 9,244.8 7,436.0 4,860.5 28,364.5
Differences 175.5 -66.9 1,317.7 185.4 1,611.7

However, the presentation of the Budget documents can make it difficult to separate new and existing projects and ascertain whether expenditure is growing, or shrinking. The Parliamentary Library’s assessment of several measures is set out below.

New money, new measures

The only new project that has new money is the Forrestfield Airport Link project in Western Australia which will receive $490 million. [2] This project is to compensate Western Australia for its low share of GST revenue.[3]

New money, existing measures

An additional $119 million is allocated, over 2016–17 and 2017–18, for two existing measures; Keys2drive (a learner driver education program) and the Badgerys Creek Airport.[4]

Old money, new measures

A number of projects were announced as ‘new’.

These include Stage 2 of the Perth Freight Link for which $261 million was allocated from the existing resources of the Infrastructure Investment Programme and the Ipswich Motorway in Queensland for which $200 million is allocated from the same source.[5]

Four states have (or will), receive funds from the existing Asset Recycling Initiative (ARI).[6] The ARI was originally included in the 2014–15 Budget and funded through the sale of Medibank Private.[7] Both the Sydney and Melbourne Metro rail projects have (or will) received these funds. While the Budget does not contain details about which projects will receive funding through the ARI, media reports state that the Melbourne Metro will receive $857 million, and the Sydney Metro $1.7 billion.[8]

In June 2014, Victoria received a grant from the Commonwealth of $1.5 billion for the construction of phase one and two of the East West Link road.[9] Following the 2014 Victorian election, the newly elected Labor government cancelled the East West Link project, but retained the $1.5 billion payment from the Commonwealth.[10]

The 2016–17 Budget releases the Victorian Government from the obligation to apply these funds towards the East West link and re-allocates them to various new infrastructure projects including:

  • $350 million for the Western Ring Road
  • $220 million for the Murray Basin freight rail upgrade and
  • $500 million for the Monash freeway.[11]

New money, capital measure

From 2017–18, the Australia Rail Track Corporation will receive additional money of up to $593.7 million over three years in the form of equity to progress the Inland Rail project, including for land acquisition.[12] This figure is not, however, included in the table above, or the chart below, as it is a capital measure and does not affect the underlying cash balance.

Savings

Two savings measures relating to infrastructure are contained in the 2016–17 Budget. The Infrastructure Investment Programme will achieve $162.7 million in ‘efficiencies’ over four years from 2016–17.[13] Savings will also be achieved from the $853.6 million in uncommitted funds from the ARI, which will close on 1 July 2016.[14]

Infrastructure Australia assessments

There has been considerable debate in the last few years about the need to depoliticise infrastructure decision making in Australia and to ensure objective assessments of projects are conducted.[15] However, it appears that some projects contained in the Budget have not been assessed by Infrastructure Australia (IA).[16] For example, the business case for neither the Victorian Monash Freeway nor the Victorian Western Ring Road projects has been assessed (although the IA Priority List, at May 2016, records the Western Ring Road proposal as a potential solution to an identified congestion problem and that a business case is being developed).[17]

State shares

Chart: State/Territory share of infrastructure spending 2016–17 Budget (per cent)

Infrastructure spending shares for each state and territory for 2016–17.

The chart shows infrastructure spending shares for each state and territory for 2016–17.



[1].          The budget figures in this brief have been taken from the following document unless otherwise sourced: Australian Government, Federal Financial Relations: budget paper no. 3: 2016–17, 2016, pp. 48–56.

[2].          Ibid., p. 150.

[3].          Australian Government, Budget paper no. 2: 2016–17, 2016, pp. 150.

[4].          Australian Government, Budget measures: budget paper no. 2: 2008–09, 2008, p. 267 and Budget paper no. 2: 2016–17, op. cit.,
p. 132.

[5].          Australian Government, Budget Measures: budget paper no. 2: 2016–17, 2016, pp. 131–2.

[6].          Australian Government, Overview: budget 2016–17, p. 22. For further details on the ARI, see R Dossor, Asset Recycling Fund Bill 2014, Bills digest, no. 90, 2013–14, Parliamentary Library, Canberra, 2014.

[7].          Australian Government, Budget measures: budget paper no. 2: 2014–15, 2014, p. 114 and ‘Medibank Private sale earns Government more than $5.6 billion: proceeds to be reinvested in infrastructure’, ABC News, 23 November 2014.

[8].          M Ludlow, ‘Turnbull grabs leftover asset recycling funds’, Australian Financial Review, 4 May 2016, p. 6.

[9].          Australian National Audit Office (ANAO), Approval and Administration of Commonwealth Funding for the East West Link Project, Audit report, 14, 2015–16, ANAO, Barton, ACT 2015, p. 7.

[10].       L Keen, ‘Andrews government looks to road project in the west’, Australian Financial Review, 23 April 2015, p. 5.

[11].       Ibid., p. 131.

[12].       Ibid., p 171.

[13].       Ibid., p. 131.

[14].       Ibid., p. 147.

[15].       For example see, M Terrill, Roads to riches: Better transport investment, Grattan Institute, Melbourne, April 2016 and R Dossor, Infrastructure Australia Amendment (Cost Benefit Analysis and Other Measures) Bill 2014, Bills digest, 28, 2014–15, Parliamentary Library, Canberra, 2014.

[16].       Infrastructure Australia (IA), ‘Project Assessment’, and ‘Infrastructure Priority List – May 2016’, IA website.

[17]        Ibid.

 

All online articles accessed May 2016. 

For copyright reasons some linked items are only available to members of Parliament.


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