Friday, February 23, 2024

Federal infrastructure policy reveals $250m co-funding caveat

The Federal Government has released an Infrastructure Policy Statement it says will guide Commonwealth funding of “properly planned and targeted” infrastructure across the country.

To be successful under the new framework, infrastructure projects will need to have at least two of the following characteristics:

  • Australian Government contribution of at least $250 million; and/or
  • alignment with Government priorities as articulated in the Infrastructure Policy Statement; and/or
  • situated on or connected to the National Land Transport Network and/or other key freight routes; and/or
  • supporting other emerging or broader national priorities – such as housing or critical minerals.

Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King said the Government had three priorities for investment: productivity, liveability and sustainability.

“It means cutting congestion, ensuring supply chains are resilient, building equity into the heart of where we live, improving prosperity, reducing our emissions and encouraging more sustainable ways to travel,” said Minister King.

“We are committed to working in partnership with the states and territories who are our primary infrastructure delivery partners.”

She said the Government was reshaping how its funds projects, returning to a preference of 50:50 funding with the states and territories for future investments, so that “both levels of government carry an equal share of both the benefits and the risks”.

“This will mean the Commonwealth’s infrastructure spend – which is being maintained at $120 billion – can go further, maximising the benefits of the Commonwealth’s investment and ensuring shared accountability. It will help end the perverse incentives that saw the Federal Coalition throw money at projects that states did not want to build.”

The Minister said the Government may consider funding a greater share of projects in jurisdictions with less capacity to raise revenue on a case-by-case basis.

“We also want to share the benefits of construction. We will seek to encourage local employment and procurement, as well as increase the participation of women, First Nations communities and other marginalised groups in the delivery of these projects,” she said.

“The Albanese Government will invest in the projects that only the Commonwealth can – those which shape our cities, our regions and our nation.

“Together with the states and territories – and with clear priorities and proper planning – we will build a better future for all Australians.”

The policy statement has been cautiously welcomed by the Australian Local Government Association (ALGA).

ALGA President, Linda Scott.

“We welcome Minister King’s commitment to improving productivity, liveability and sustainability through infrastructure spending, but she must explain how her review will result in increased local government infrastructure funding, not cuts,” said ALGA President, City of Sydney Councillor, Linda Scott.

President Scott says the Government needs to do more to address the growing need for local government infrastructure in the face of cost of living pressures.

“Recent SGS Economics research highlighted local government can be part of the solution to increasing Australia’s productivity through increased investment in key infrastructure, workforce, technology, and climate change adaption,” she said.

“New research published by the Grattan Institute this week found taxpayers would receive better value for money if the Government pivoted from funding ‘megaprojects’ to improving our local community infrastructure needs, such as roads.

“This research also highlighted the urgent need for the Government to inject $1 billion per year into local government infrastructure across the country.

“Without increased local government infrastructure funding, the Government risks putting a handbrake on our national productivity.

“Currently, not one of our 537 Australian local governments is able to provide a $250 million co-commitment for a single infrastructure project.”

ALGA has called on Minister King to explain how the Federal Government will partner with councils to improve the resilience, safety and productivity of local infrastructure.

The Infrastructure Policy Statement can be read here.

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