Budget Review 2021–22 Index
Rob Dossor
As Australia recovers from the impact of COVID-19, the
Government is set to make $54.3 billion of payments to the states and
territories for infrastructure spending over the forward estimates, including $12.1 billion
in 2021-22 as shown in Table 1 below. This represents an increase of almost $4.4
billion over the forward estimates, compared to the 2020-21 Budget.
Table 1: total payments to the
states for infrastructure projects over the forward estimates
$ million
|
2020–21
|
2021–22
|
2022–23
|
2023–24
|
2024–25
|
Total
|
2021–22 Budget
|
-
|
12,065.10
|
15,959.90
|
14,744.10
|
11,569.50
|
54,338.60
|
2020–21 Budget
|
10,398.70
|
12,630.70
|
12,753.60
|
13,013.90
|
-
|
48,796.90
|
Difference
|
-
|
-565.6
|
3,206.30
|
1,730.20
|
-
|
4,370.9
|
Source:
Australian Government, Federal Financial Relations: Budget
Paper No. 3: 2021–22, p. 54, and Australian Government, Federal Financial Relations: Budget
Paper No. 3: 2020–21, p. 44.
New funding
Budget
Strategy and Outlook: Budget Paper No. 1: 2021–22 (p. 18) states that an additional $15.2 billion
in funding had been allocated to infrastructure projects over the next ten years.
This comprises:
- $13.2 billion in new infrastructure spending—including $8.0
billion over the forward estimates
- $1.0 billion in 2022–23 for small
scale safety road projects and
-
an additional $1.0 billion over two years to extend the Local
Roads and Community Infrastructure program (Budget
Measures: Budget Paper No. 2: 2021–22, pp. 151–161, 166).
The state and territory
breakdown of the new funding is shown in Table 2.
Table 2: new funding over the forward
estimates and beyond
$ million
|
2021–22
|
2022–23
|
2023–24
|
2024–25
|
Total
over the FE
|
Total
new committed
|
NSW
|
44
|
383.5
|
472.6
|
504.5
|
1,404.60
|
3,300.00
|
Vic
|
5
|
76.3
|
197.6
|
118.8
|
397.7
|
3,000.00
|
Qld
|
18.8
|
161.3
|
285.3
|
342.1
|
807.5
|
1,600.00
|
WA
|
81.1
|
348.3
|
347
|
328.8
|
1,105.20
|
1,300.00
|
SA
|
130.8
|
341.6
|
823.6
|
807
|
2,103.00
|
3,200.00
|
Tas
|
4
|
17.2
|
20.3
|
55.7
|
97.2
|
322.6
|
NT
|
0
|
0
|
0
|
4
|
4
|
323.9
|
ACT
|
3.2
|
15.6
|
13
|
2.9
|
34.7
|
167.3
|
Not specified
|
0
|
400.7
|
1,600.70
|
0
|
2,001.40
|
2,001.40
|
Total
|
286.9
|
1,744.50
|
3,760.10
|
2,163.80
|
7,955.30
|
15,213.80
|
State share of infrastructure spend
Table 3 shows the state and territory distribution of
infrastructure expenditure over the forward estimates. NSW receives around 32%
of infrastructure grants, largely due to its larger population and number of
existing projects. Victoria and Queensland both receive around 26%. Victoria’s
share is in line with its population, while the Queensland share can be
explained, at least partly, by Queensland’s more dispersed population.
All other states receive more than their population share,
except the ACT, which receives less than its population share, but
significantly more than in the
2020–21 Budget.
Table 3: total infrastructure
grants to states and territories
$
million
|
NSW
|
Vic
|
Qld
|
WA
|
SA
|
Tas
|
ACT
|
NT
|
Total
|
2021–22
|
3,298.00
|
2,812.80
|
2,425.30
|
1,879.10
|
918.2
|
325.2
|
83.7
|
309.6
|
12,065.20
|
2022–23
|
4,024.60
|
3,668.40
|
3,312.90
|
2,672.50
|
1,050.20
|
524.2
|
145.1
|
285.6
|
15,959.90
|
2023–24
|
3,576.20
|
3,359.40
|
3,264.60
|
1,924.80
|
1,157.20
|
542.5
|
179.5
|
242.2
|
14,744.20
|
2024–25
|
3,463.80
|
2,627.60
|
2,470.20
|
930.2
|
1,069.20
|
253.1
|
103.1
|
246.8
|
11,569.40
|
Total*
|
17,243.40
|
14,320.60
|
14,304.40
|
8,641.80
|
4,948.30
|
1,924.40
|
559.7
|
1,354.20
|
54,338.70
|
Population
|
As of September 2020
|
8,166,369
|
6,680,648
|
5,184,847
|
2,667,130
|
1,770,591
|
541,071
|
431,215
|
246,500
|
25,693,059
|
State share
|
31.8
|
26
|
20.2
|
10.4
|
6.9
|
2.1
|
1.7
|
1
|
100
|
Share of spending
|
31.7
|
26.4
|
26.3
|
15.9
|
9.1
|
3.5
|
1
|
2.5
|
100
|
*Figures do not
sum due to rounding, and the inclusion of the National Water Grid fund in the
totals, but not against all states.
Source:
Australian Government, Federal Financial Relations: Budget Paper No. 3 2021–22,pp. 54–65;
Australian Bureau of Statistics, National State and territory population, September 2020.
Re-announcements, existing projects
Compared to previous budgets the 2021–22 Budget does not
include many new projects. While unusual, this would seem to be an appropriate
response to the infrastructure construction situation.
As far back as 2019, Infrastructure
Australia identified that the volume and scale of infrastructure
construction, particularly in NSW and Victoria, had grown considerably,
consuming and in some cases exceeding industry capacity (p. 213). In response
to the COVID-19 pandemic, Australian governments fast-tracked infrastructure
projects and the Commonwealth dramatically increased investment in existing and
fast-tracked projects. This led to further capacity constraints.
Access Economics’ latest Business
Outlook (March 2021) stated:
… a ridiculous $316 billion
worth of [transport construction] projects are currently underway or in
planning across Australia. A total of $135 billion worth of projects are under
construction, and that figure is set to swell further in 2021 … All up, a total
of $58 billion worth of projects are set to get underway in 2021, with only $13
billion slated to wrap up over the same period … There are some concerns about
this sector’s ability to deliver this pipeline of work on-time and on-budget,
with reports emerging of skilled labour shortages (p. 44).
In light of this, the 2021–22 Budget has largely allocated funding
to existing projects. This will not increase the strain on the industry but
will ease pressure on state and territory government budgets, as most of these
projects are already committed to and funded.
This will help stimulate the economy (as it allows states to
spend funds on other priorities), without causing further industry constraints.
New projects
Despite largely focusing on existing projects, the Budget
funds a number of new projects. These include:
- Northern Territory National Network Highway Upgrades (Phase 2)—$150
million
- Gold coast rail line capacity improvement—Kuraby to Beenleigh—$178.1 million
- Great Eastern Highway—Coats Gully, Walgoolan to Southern Cross
and Ghooli to Benari—$200.0 million and
- Inland Freight Route (Mungindi to Charters Towers) Upgrades—$400.0
million (Budget
Paper No. 2: 2021–22, pp. 153–154, 159).
One other project, the $2.0 billion Melbourne intermodal
terminal, is notable among the newly announced projects. This is due to its cost
and its link to the Inland Rail Project. The estimated cost of Inland Rail
project has recently been revised upwards, from $10.0 billion to $14.5 billion (according
to Access Economics latest Investment Monitor). The intermodal terminal
thus further increases the cost of the Inland Rail Project and associated
infrastructure. The Department
of Infrastructure, Transport, Regional Development and Communications
states that this is necessary as Melbourne does not have capable infrastructure
to accommodate the 1,800 metre double stacked trains the inland rail project
will deliver.
It is positive that
several of the new projects, including the Inland Freight Route and Gold Coast
rail line capacity improvement projects, have been independently assessed by
Infrastructure Australia, and added to the Infrastructure
Australia Priority List.
The latest Infrastructure
Australia Audit 2019 presented opportunities and challenges for
Australian infrastructure, while the Infrastructure Priority List presents a
long pipeline of nationally significant proposals. Questions remain, however,
whether the industry has the capacity to deliver them; according to the Gratton
Institute capacity constraints have the potential to cause delays and create
cost over-runs.