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The Budget context
The Albanese Government has used its first Budget to provide some clear indications of what its priorities will be around infrastructure projects, transport services and decarbonisation of transport during its first term in office.
The Government has explicitly used the Budget as an opportunity to start the process of ‘smoothing out’ the infrastructure project pipeline.
The Minster for Infrastructure, Transport, Regional Development and Local Government, Hon. Catherine King MP, noted in an interview prior to the Budget being delivered:
“What we’ve done is bring the budget and the money and the flow of money for the infrastructure portfolio in line with where the states are saying realistically, this is when we think these projects can start. We’re trying to make sure that we keep that investment pipeline strong and sustainable, both in our regions and between cities. But we really want to make sure it’s also realistic I’m not going to pretend to people that this project is going to start tomorrow when it’s not you know, that’s the reality of the economy we’re dealing with at the moment.”
This re-profiling exercise represents a shift of around $6.5 billion in infrastructure spending from what was announced by the previous Federal Government in its final Budget in March this year.
The Albanese Government is characterising the changes as a reprioritising of spending towards projects that better reflect its priorities and industry’s capacity to deliver, rather than a reduction in overall size of the pipeline.
The Budget maintains a $120 billion pipeline of investment in transport infrastructure over the next 10 years.
This includes $250 million to expand the Local Roads and Community Infrastructure Program.
Encouragingly, the Budget also notes the Government’s commitment to renew the role of Infrastructure Australia and reprioritise the infrastructure investment program to make the pipeline real and deliverable.
RA’s response to the Budget
RA issued a media release following the release of the Budget which reiterated our consistent call for Infrastructure Australia (IA) to be given responsibility for coordinating a national project pipeline, so there is greater certainty for industry, governments and communities.
The re-profiling of projects in tonight’s Budget is similar to what has occurred in several state Budgets over the past year, where projects that had been previously announced were delayed due to capacity constraints in the economy.
Although some of this is undoubtedly a flow-on effect from the pandemic, it is also symptomatic of the failure to establish a clear, coordinated national pipeline of infrastructure projects.
Such a pipeline – developed with input and cooperation between all jurisdictions – would allow industry participants to plan their resource allocations and determine areas of high skill demand more effectively. This would help to avoid the community disappointment that can result when projects have to be significantly delayed or abandoned due to capacity constraints.
RA called for IA to be given this remit in our recent submission to the independent review of IA, and the Budget makes that recommendation even more salient.
Changes to regional grant programs
The Budget abolishes two programs that were used under the previous government to fund some infrastructure projects, including smaller scale road projects. The Community Development Grants program and the Building Better Regions Fund have both been scrapped.
In their stead, Minister King has announced the Budget includes $1 billion over three years for two new regional programs:
- A new Growing Regions Program will provide new opportunities for regional local councils and not-for-profit organisations through an annual open, competitive grants process; and
- The creation of a regional Precincts and Partnerships Program that will provide 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.
Key transport projects supported
The Federal Budget makes investments in a number of significant transport infrastructure projects and agencies nationwide. These include:
- $300 million for Western Sydney Roads Package and $500 million for the High Speed Rail Authority;
- $2.2 billion for the Suburban Rail Loop in Victoria;
- $586.4 million of additional funding for a major upgrade of the Bruce Highway to widen a 13-kilometre stretch through Brisbane’s outer northern suburbs;
- $1.5 billion for upgrading important freight highways, sealing the Tanami, and upgrading Central Arnhem Road, as well as the Dukes, Stuart and Augusta highways in SA;
- $540 million to upgrade Tasmania’s important road corridors, including the Bass Highway, the Tasman Highway and the East and West Tamar Highways; and
- $125 million funding to help build an electric bus network in Perth.
For an expanded list of projects broken down by jurisdiction, click here.
Reprioritised projects
The Federal Government has identified several transport infrastructure projects funded in the March 2022 Budget which will now not be proceeding, with the funding being directed to other priorities. These include:
- Several commuter car parks in Sydney and Melbourne under the former Government’s Urban Congestion Fund;
- Wellington Road duplication (VIC);
- Glenferrie Road level crossing removal (VIC);
- Upgrade of Napolean Road, Rowville (VIC);
Skills and Capacity
The Budget lifts the cap on skilled migration by an additional 30,000 places, to a total of 195,000. This measure is particularly targeted at areas currently experiencing acute labour shortages, with engineers a specific priority.
There is also a $1 billion investment in fee-free TAFE and vocational education places, designed to focus on vocations where skills shortages are currently being experienced.
Decarbonisation
The Budget invests $800 million in the Federal Government’s Powering Australia Plan.
This includes several elements relevant to the transport sector:
- Reducing taxes on electric vehicles. The $345 million Electric Car Discount will exempt eligible electric cars from fringe benefits tax (FBT) and the 5 per cent import tariff. The removal of customs duties from eligible EV imports will also help purchasers save up to an additional $2,500;
- $500 million in funding to support delivery of a national electric vehicle charging network (at 117 highway sites), as well as hydrogen refuelling stations on significant highways to support the transition of the heavy vehicle sector;
- Providing solar battery storage for up to 100,000 homes.
The Federal Government is also committing to ensuring its fleet purchases and leases will be 75 per cent electric vehicles by 2025.
Workplace Diversity
The Government has allocated $530 million in the Budget to progressively scale up Paid Parental Leave, eventually building to an entitlement of six months paid leave in 2026.
For two-parent families, a portion of this leave will be reserved for each parent – to encourage families to share caring responsibilities so that women can continue to build their careers.
Industry development
The Budget will establish a National Reconstruction Fund to provide $15 billion of capital to transform and strengthen priority industries. This Fund will provide loans, guarantees and equity, partnering with the private sector to unlock further investment.
It will invest in 7 priority sectors focusing on opportunities to add value to primary products and leverage Australia’s natural and competitive strengths.
Transport is identified as one of the priority sectors, and there is a focus on investing in manufacturing technologies to help the transition to net zero emissions.