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Infrastructure Gets $100bn Spend in Australian Budget

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The release of the Federal Budget has put infrastructure in the spotlight. However, many are saying we should acknowledge that transport planning has been inadequate in previous years, and that Australia has failed to plan ahead.

While it’s great news to see this investment in infrastructure, some wonder whether it is not too little, too late. Can we get the infrastructure up-to-date before the population outgrows it again? Can we find the right workers to deliver these projects?

Hans Kunnen, Chief Economist at Compass Economics, told Jobsite ANZ that we are not fighting a losing battle, but an ongoing one. “Cities are rarely static. The built environment evolves. People’s behaviour, including their voting patterns, will respond to the concerns of the day,” said Kunnen.

David Harris, Shadow Minister for the Central Coast, Regional Development and Aboriginal Affairs at Parliament of NSW, explained, “The Federal budget has pledged $100 billion funding for infrastructure over 10 years. $42 billion is projected to be spent over the next four years.”

It’s a big commitment, but let’s remember why infrastructure is so important to our country. Primarily, it drives economic growth by facilitating trade and investment. It also stimulates enterprise opportunities, generates employment and provides people with access to basic services. The flow-on effect provides economic growth through reliable energy supply, better roads, improved water supply, updated railways, and modern telecommunications.

“Both Federal parties are committing extra infrastructure funding over the medium to long term,” said Harris.

Kunnen added, “There is an appropriate emphasis on infrastructure spending in the budget. From a macroeconomic perspective, the spending represents a fiscal stimulus.”

“The extra spending is expected to maintain aggregate demand in the economy. It will help protect jobs at a time when residential construction is faltering.”

He also believes that the slowdown in residential construction will provide the workforce needed for other construction work. However, some specialist skills may be in short supply.

“Our population continues to grow at a solid pace,” Kunnen continued. “Past infrastructure spending has not kept up with this growth leading to gross inefficiencies in our transport system and overcrowding in our schools and hospitals. Living standards in Australia depend, in part, on lifting our productivity. Government spending on a wide range of infrastructure projects should ease congestion and lift productivity.”

So let’s take a closer look at the main highlights from the budget that will have an impact on the construction industry.

Fast Rail, Safer Commutes

With an outcome focused on reducing congestion, a record $100 billion investment will deliver faster and safer commutes across Australia and ensure our towns and regions are better connected.

Key initiatives include:

  • $2 billion to help deliver fast rail between Melbourne and Geelong,
  • A fourfold increase in the Urban Congestion Fund to $4 billion,
  • $500 million to establish the Commuter Car Park Fund,
  • An additional $571 million for bridge renewals and safety including heavy vehicles.

Investment in our cities sees $5.7 billion allocated to Townsville, Launceston, Western Sydney, Darwin, Hobart, Geelong and Adelaide.

Road and Rail projects include an extra $15.6 billion in addition to increased commitments for safety, fast rail, urban congestion and roads of strategic importance. Moreover, local councils will receive funding for vital road maintenance, bridge renewals, and heavy vehicle safety projects.

According to Harris, improving public transport is of utmost importance. That’s why the money allocated for the improvement of the Sydney to Newcastle rail line, for example, is vital.

A Boost for Regional Australia

Regional Australia will benefit in several ways. For instance, $96 million is allocated to several regional Councils to support infrastructure and drought relief projects under the Drought Communities Program.

Another $200 million will go to Round 4 of the Building Better Regions Fund, which aims to create jobs and build stronger regional communities. Projects set to receive significant funding include the Great Ocean Road upgrade and improvements to visitor facilities in Kakadu National Park.

There is also money in place for upgrades to infrastructure at Regional Airports.

Programs that Provide

Since 2013, the government has provided more than $3 billion by way of programs. This includes the Building Better Regions Fund, Stronger Communities Program, Regional Growth Fund, Community Development Grants Program, National Stronger Regions Fund, and Regional Jobs and Investment Packages.

More investment in these programs will further stimulate the workforce, drive economic growth, and boost regional communities through improved infrastructure and community development.

Building the Skills of the Future

The federal government has also promised to create an extra 80,000 apprenticeships over five years—a $525 million budget package has been announced. Its purpose is to fix industries with skills shortages.

Employers who decide to take on apprentices in areas such as plumbing, carpentry, tiling and bricklaying, can receive incentives worth $8,000 per placement.

That’s double the amount offered before.

Looking ahead, Kunnen says, “While lauding infrastructure spending, governments must ensure that they get value for money. Cost blowouts, excessive margins, poorly written contracts, and poor execution can lead to delays and litigation.”

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