On 1 May 2023, the Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King, announced a review of the Government’s 10-year, $120 billion infrastructure pipeline. The 90-day review will be undertaken by former federal and state bureaucrats Mike Mrdak, Reece Waldock and Clare Gardiner-Barnes.

Under the measure ‘Building a better future through considered infrastructure investment’,Budget measures: budget paper no. 2: 2023–24 states (p. 173):

The Government will undertake an independent strategic review of the Infrastructure Investment Program (IIP) to ensure the $120.0 billion pipeline over 10 years is fit for purpose and the Government’s investment is focused on projects which improve long-term productivity, supply chains and economic growth in our cities and regions.

This ‘pipeline’ is the Australian Government’s Infrastructure Investment Program (IIP). The IIP funds mainly road and rail infrastructure – but also other infrastructure, such as City Deals, Olympic Games venues and dams – through payments to the states and territories to support their infrastructure services. The funding is intended to assist economic and social development in both cities and the regions. The Australian Government has a $120 billion 10-year funding allocation for the IIP.

A summary of projects funded under the IIP, and other infrastructure-related payments to the states, can be found in Table 2.8 ‘Payments to support state infrastructure services’ in Federal financial relations: budget paper no. 3: 2023–24 (pp. 59–60). A state-by-state breakdown for the budget year (2023–24) is provided in the data annex (Table 1) at the end of this article.

Purpose of the review

In a media release on Budget night (9 May 2023), Minister King stated:

A 90-day independent review of the Infrastructure Investment Program will ensure that we are investing in projects that are truly nationally significant …

Under the Liberals and Nationals, the number of infrastructure projects in the pipeline blew out from 150, to almost 800. Projects were left without adequate funding, resources or genuine commitment …

This review will allow all levels of government time to consider the projects that are actual priorities, and assess their cost and deliverability in the current climate. The process will help to lay firm foundations to build a more sustainable, credible pipeline of investment.

Updated IIP project schedules will be finalised following the review, with the Australian Government working with states and territories to determine priorities.

In an interview with ABC Radio National on 1 May 2023, Minister King outlined what the Australian Government wanted from the review in relation to each infrastructure project in the pipeline:

…can it be delivered, are states and territories stumping up the money and their share of the money to do so, when can it be delivered and if it can’t be delivered, then realistically we’ve got to be upfront with people and say, ‘Look, we can’t deliver this project …’

Minister King also indicated that following the review, all large projects that remain in the pipeline will be subjected to a ‘proper cost–benefit analysis’:

…one of the things we’ve asked the reviewers to look at is whether there is a cost benefit analysis for these projects … there may be … smaller projects … where that sort of level of cost benefit analysis won’t be warranted … but certainly it is my preference that when we proceed with these [larger] infrastructure investments that there is a proper cost benefit analysis done with each of those.

In a similar vein, Budget paper no. 2 also indicates that the Australian Government will spend $200 million over 2 years from 2023–24 for the Major Projects Business Case Fund, to support the planning of land transport infrastructure projects (p. 172). According to Budget paper no. 3, this ‘funding will support a range of scenarios relating to business case development, including supporting joint state, territory and Australian Government planning processes’ (p. 62).

Implications for the IIP funding envelope and specific projects

In an interview with Perth radio station 6PR on 1 May 2023, Minister King committed to maintaining the 10-year funding envelope at $120 billion – but re-profiling the existing funding by abolishing poor projects and replacing them with new, more productive projects:

I’m absolutely committed to keeping the pipeline at $120 billion over the next ten years … this is not about finding savings. What this is about trying to do is make sure that every project that is sitting within that pipeline is able to be delivered, has a funding partner to deliver it with us, is actually costed properly so we know how much that is going to cost but also create headroom within that infrastructure pipeline for new projects.

This sentiment was reinforced by Treasurer Jim Chalmers in a radio interview after the Budget:

…what we’ve said to the states and territories, including the Victorians, is the $120 billion pipeline over 10 years for infrastructure is safe and we need to work out the best way to spend from that pipeline. And that’s why my colleague Catherine King and others in the Cabinet are working with the Victorian Government and other state governments to make sure we’re getting maximum value for money for that.

Minister King indicated when announcing the review that the Australian Government remained ‘committed to delivering our election commitments and following through on projects already under construction’. Nonetheless, responding to the announcement, the Shadow Minister for Infrastructure, Transport and Regional Development, Bridget McKenzie, expressed concern about potential cuts to road and rail infrastructure projects:

Minister King has made it clear she plans to hollow out or ‘streamline’ the list of infrastructure projects and is gearing up to implement a partisan purge of planned road and rail upgrades funded by the former Coalition Government.

It is still not entirely clear which projects are included and which projects are exempt from the review process, despite the terms of reference and the documents provided in response to a request from Senator Canavan being tabled at Senate Estimates on 22 May 2023. However, it appears that 3 nationally significant rail projects, one of which was initiated by the former Coalition Government, will not be scrutinised as part of the review:

• Minister King confirmed at a press conference on 1 May 2023 that the Suburban Rail Loop project in Melbourne will not be part of the review.
• The High Speed Rail project will also not be part of the review, because it was an election commitment.
• Following the release of the independent review of the Inland Rail project’s ‘regrettable situation’ in terms of costs and timelines (p. 5), Minister King indicated in a media release and at a press conference on 6 April 2023 that the project would continue.

Some infrastructure stakeholders supported the need for the infrastructure pipeline review, but others raised risks with the approach and urged further consultation:

• The Australian Automobile Association said in a media release that it ‘supported efforts to improve the integrity and transparency of government spending’.
• Infrastructure Partnerships Australia supported the review in the context of supply chain issues, labour demand pressures and rising costs, but urged the Government to ‘work with industry to provide certainty and clarity while also ensuring that Federal taxpayer dollars go to projects that maximise value and productivity’.
• The Australian Constructors Association expressed concerns that the review would result in significant cancellations and deferrals, which would impede the industry’s ability ‘to plan and invest for the future’.

Commentary in leading Australian newspapers was generally positive about the direction of the review – if it improves the quality of infrastructure spending:

• The Australian said in an editorial that the review ‘will be worthwhile if it helps concentrate infrastructure spending towards productive investment with the capacity to build economic growth’ and that ‘given revenue shortfalls and high deficits, no side of politics should under-estimate the value of thorough cost-benefit analyses of proposed projects’.
• The Australian Financial Review’s national affairs columnist said ‘it makes good policy sense to do a quick 90-day audit of Australia’s clogged infrastructure pipeline … But although a review should clarify choices and raise the standard for continued funding, it doesn’t guarantee all the infrastructure projects likely to be ticked off will be the best choices for taxpayers’.
• The Courier Mail said in an editorial that ‘There’s nothing wrong with reviewing the direction you are going, trimming unnecessary projects and making sure priorities don’t need to be adjusted’, but that ‘Road and rail projects promised by one party should not be scrapped for the sake of it, particularly while shoring up pet projects’.

The review will be a useful litmus test of the extent to which the Government will expand the productive capacity of the economy by improving the quality of the infrastructure pipeline, and ensuring it is focused on projects that will generate appropriate returns on investment for taxpayers.

Data annex

Table 1     Payments to the states for infrastructure services budgeted in 2023–24 ($m, nominal)

Source: Australian Government, Federal Financial Relations: Budget Paper No. 3: 2023–24, 59–71.

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