2014 Federal Budget
The Government continues to focus on long term growth and “nation building” through the contribution of $11.6 billion through its “Our Growth Package” announced in the Federal Budget tonight. This package, which now increases the Government’s commitment to infrastructure spending over the next decade to $50 billion, is forecast to stimulate investment of up to an additional $125 billion in the sector by the end of the decade. According to John Blight, National Head of Major Projects & Infrastructure at Grant Thornton Australia, “This welcome investment will stimulate new jobs and spending and is designed to drive an additional 1% contribution to total national output.”
The Government’s additional commitment to infrastructure comes in three parts. Firstly, $3.7 billion will go mainly to road projects throughout Australia. Secondly, $2.9 billion will be allocated towards the Western Sydney area. The third component of new infrastructure funding is the $5 billion Asset Recycling Initiative. This initiative is designed to encourage State Governments to commit to recycling their own infrastructure investment capital derived through State asset sales and privatisations with funding from this fund, itself the beneficiary of recycling Federal Government Capital from such prospective asset sales as Medibank and other potential future privatisations.
“While this investment is welcome, we query whether the best way to ensure that infrastructure of the highest national priority is developed is to allocate the $5 billion on a “first in best dressed” basis. We would encourage further debate about the structure of the fund and the business case development required by the States to obtain funding. Nonetheless this initiative will stimulate activity in all states and is good for the industry.
“However, there is a significant lost opportunity in this budget from the lack of funding allocated to rail infrastructure. It is unclear why there has been no attempt to stimulate investment in initiatives like high speed rail but some of the cause may with the Asset Recycling Initiative.
“We would encourage the Federal Government to further collaborate with the States and the private sector when assessing Australia’s infrastructure priorities, both now and for our future. In particular, collaboration will be needed to incentivise the spread of the population into regional areas through infrastructure enhancements. We would also encourage the Federal Government to continue to develop ways for the private sector to invest via self-managed superannuation into these projects. This would ensure that all Australians have the opportunity to partner with the Government in the future growth and prosperity of our nation.”
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