Budget Hub 2021
Infrastructure Partnerships Australia's analysis of infrastructure funding commitments by jurisdictions for the current Budget year and forward estimates. This analysis collates information from the latest Budget papers from Federal, State and Territory Governments to provide insights into their infrastructure investment programs beyond the headline figures.
Jurisdictions
OVERVIEW
The 2021-22 ACT Budget includes an infrastructure investment of $4.3 billion in general government expenditure over the four years to FY2024-25. This capital commitment to infrastructure is $21 million less than the 2020-21 Budget. With the total general government expenditure increasing by $2.6 billion, the share of total government expenditure on infrastructure is now at 13.1 per cent, down from 14.3 per cent. While the interim outcomes show the previously forecast deficit of $603 million for FY2020-21 improving by $240 million, this year’s Budget forecasts a $951 million deficit for FY2021-22. This increase is a consequence of the Government’s ongoing fiscal support for the economy in response to COVID-19.
In a first for the ACT, the 2021-22 Budget has moved to a five-year budgeting and reporting cycle for its capital works program, including for general government sector infrastructure spending. This approach has a stated aim of providing a longer-term view in planning and delivery of the Territory’s capital works program. The five-year total commitment for infrastructure is $5 billion. However, to maintain comparability of commitments – both as a share of total spending, and across State, Territory and Federal levels – Infrastructure Partnerships Australia’s Budget analysis will continue to focus on a four-year reporting cycle, accounting for the current Budget year and the three forward estimate years.
OVERVIEW
The Government of Western Australia handed down its 2021-22 Budget, allocating $13.1 billion in general government expenditure to infrastructure spending over the next four years, including $3.5 billion in FY2021-22. This represents a $2.2 billion jump in funding compared to last year’s four-year projection and equates to 9.3 per cent of general government expenditure over the next four years. This year’s Budget includes few new major funding announcements. Among the highlights is $490 million over the next four years for planning, enabling works and land acquisition for Westport and a new $750 million social housing fund, while the METRONET program has been allocated an additional $817 million. There are also no notable reforms, with the WA Government opting not to follow the lead of other jurisdictions in introducing road user charging, stamp duty or infrastructure contributions reforms.
The WA Budget highlights the significant impacts of COVID-19 on the local infrastructure construction market. The state’s hard border to other jurisdictions has caused serious labour and material shortages, which the government indicates has caused delays in delivery of the pipeline. A total of $2.6 billion in infrastructure funding has been reprofiled from FY2020-21 and FY2021-22 to later years, and the Budget indicates factors including market capacity, skills shortages and supply chain constraints could cause further delays in project timelines and increases in project costs.
To help manage these factors and oversee delivery of the pipeline, the WA Government has established a Major Projects Directorate within the Department of Finance. This will be in addition to an Office of Major Transport Infrastructure Delivery, which will oversee the delivery of the transport pipeline. The WA Government’s forward and historical infrastructure spending levels are illustrated in Figure 2. This includes the reprofiled spending for the forward estimates period, with an underspend of $325 million registered in FY2020-21 highlighted in red. Despite the increase in funding over the next four years, the 10-year average share of infrastructure expenditure continues to decline – down from 10.5 per cent last year to 9.9 per cent for this Budget period.
OVERVIEW
The Tasmanian Government handed down its 2021-22 Budget, allocating $3.8 billion in general government infrastructure spending over the next four years, including $828 million in FY2021-22. This four-year infrastructure spend is around the same level as the previous Tasmanian Budget, with the lack of new stimulus spending reflective of an economy that has shielded itself from the worst effects of the COVID-19 pandemic. The 11.7 per cent of general government expenditure apportioned to infrastructure remains significantly higher than the ten-year average of 8.6 per cent. However, the government registered an underspend on its planned infrastructure expenditure in FY2020-21 of $431 million, representing 40 per cent of last year’s expected total. This underspend will have artificially inflated funding figures for the coming years.
Funding allocations in this year’s Tasmanian Budget include $2 billion for roads and bridges, $504 million for hospitals and health, $405 million for human services and housing and $336 million for schools, education and skills over the next four years. The vast majority of funding is for previously announced projects, though the Budget provides $110 million for an expanded Stage Two of the Royal Hobart Hospital Redevelopment. Initial funding allocations have been included in this year’s Budget for the $667 million Launceston General Hospital Redevelopment and the $270 million New Northern Prison, but the bulk of the funding for these projects lies outside the forward estimates.
OVERVIEW
The Budget papers outline a continuation of an already significant pipeline of works, with the NSW Government set to invest $85.6 billion of General Government Expenditure into public infrastructure over the next four years. This represents a slight increase on last year’s figures, and means NSW sets a new high watermark for total infrastructure spending by any Australian jurisdiction. Despite the substantial capital outlay, the Budget provides few spending surprises, with much of the pipeline already under procurement and delivery.
On the reform front, the Berejiklian Government is set to be the second jurisdiction in Australia to legislate a road user charge for zero and low-emissions vehicles (ZLEVs), with a charging scheme, aligned to the Victorian model, to be introduced in July 2027 or when zero-emissions vehicles (ZEVs) represent 30 per cent of new light vehicle sales – whichever is sooner. Alongside this reform package, and consistent with Infrastructure Partnerships Australia’s advocacy, the NSW Government will fund a $490 million package of measures to encourage uptake of ZEVs over the next four years, including the removal of stamp duty on ZEVs and sticker price subsidies.
The NSW Government is also pushing ahead with its proposed overhaul of the property tax system, as signalled in its recent Progress Paper. Other reform commitments in the Budget papers include overhauling Infrastructure Contributions in line with the NSW Productivity Commission’s advice, and moving ahead with the government’s major package of planning reforms
VIDEO SNAPSHOT
OVERVIEW
South Australian Treasurer Rob Lucas handed down his government’s 2021-22 Budget, allocating $14.7 billion in general government infrastructure expenditure over the next four years, including $3.4 billion in FY2021-22. The four-year infrastructure spending represents a $1.3 billion increase on the previous SA Budget. The 14.4 per cent share of total government expenditure apportioned for infrastructure over the next four years is significantly higher than the 10-year average of 10.7 per cent. The SA Government has reported an improved fiscal position, estimating a deficit of $1.8 billion for FY2020-21, an $800 million improvement on the forecast in last year’s Budget.
The SA Treasurer also announced his government will introduce a bill in the coming weeks for a road user charge for zero and low-emissions vehicles (ZLEVs), consistent with its commitment in the 2020-21 SA Budget. While last year’s Budget indicated the charging regime would come into effect from 1 July 2021, the introduction of the proposed road user charge has now been delayed until next year. This would make SA the third jurisdiction to commit to legislating a road user charge for ZLEVs after Victoria and NSW.
OVERVIEW
The 2021-22 Queensland Budget outlines $31.9 billion in general government infrastructure spending over the next four years. This includes few surprises, with the vast majority of funding for projects previously announced and under delivery, including the final stages of Cross River Rail, and continued funding for upgrades to the M1 Pacific Motorway and Bruce Highway. In social infrastructure, the Budget includes $1.8 billion over four years for new and upgraded social housing stock.
However, the Budget reduces overall four-year public infrastructure investment, with a projected $3.3 billion reduction in spending relative to last year’s Budget. While the initial phases of the economic recovery are strong in Queensland, this is likely to be viewed as a potentially premature withdrawal of infrastructure stimulus – particularly in the context of growing demand from population growth and the infrastructure requirements of the potential 2032 Olympics.
The move to withdraw some aggregate infrastructure stimulus also puts Queensland at odds with the approach of other Australian governments, which are stepping up their infrastructure investment levels again this year.
VIDEO SNAPSHOT
OVERVIEW
Following on from last year’s big spending announcements, the 2021-22 Victorian Budget raises the bar even further, delivering the State’s highest infrastructure spend on record. The vast majority of spending over the next four years will flow to priorities that have previously been announced or are under delivery, including Metro Tunnel, West Gate Tunnel, North East Link, Melbourne Airport Rail, Suburban Rail Loop and Level Crossing Removal Project.
The Budget also reveals signs of market strain in procurement and delivery, reflected in projects running over cost and over time across the pipeline. This mirrors recent analysis by the Victorian Auditor-General, which found an average 30 per cent increase in costs, and 30 per cent delay in time on projects with an estimated total cost of more than $100 million. These cost over-runs and time delays are not unique to Victoria and reflect similar challenges in other parts of the Australian infrastructure market and around the world.
However, this is set against the somewhat conflicting challenge of an overall projected Budget underspend for this financial year of $4.9 billion.
In response, the Victorian Government highlights forthcoming guidance from the Department of Treasury and Finance on procurement and packaging for major projects. This guidance will include new advice on improved cost management for projects delivered through collaborative contracts, as well as the development of standard form contracts for each type of procurement model.
VIDEO SNAPSHOT
OVERVIEW
The 2021-22 Federal Budget maintains and builds on the historic high of infrastructure funding set last year, with a continued focus on stimulus measures to support Australia’s economic recovery from COVID-19. While infrastructure wasn’t the centrepiece of the Budget, the Treasurer has used an expanded infrastructure program to support a broader jobs and recovery agenda.
Despite the scale of spending, the Budget includes few surprises, with the bulk of funding flowing to previously announced major road and rail commitments. Headlining the additional funding commitments are $2.6 billion for the North-South Corridor in Adelaide, $2 billion for the Great Western Highway, west of Sydney, and $2 billion for a Melbourne Intermodal Terminal – set aside as a contingent allocation and potentially delivered as an equity investment.
Beyond transport, the Budget sees around $2.5 billion over four years for water infrastructure, $774 million over four years for health infrastructure and $216 million for recycling infrastructure. In energy, the Budget includes a range of previously announced measures to support the Federal Government’s Technology Investment Roadmap.
While this is not a reforming Budget, there was a welcome signal from the Treasurer that the Government will consider streamlining visa processes to target highly skilled individuals ‘when circumstances allow’. Targeted well, a change in the migration settings can help address emerging capacity constraints in the economy, including the infrastructure sector.
VIDEO SNAPSHOT
OVERVIEW
The Northern Territory Government released its 2021-22 Budget this week, allocating $4.4 billion in general government infrastructure expenditure over the next four years, including $1.3 billion in FY2021-22. The projected spend maintains the elevated level of investment outlined in the 2020-21 Budget. The 15.1 per cent share of total government expenditure apportioned for infrastructure over the next four years is higher than the 10-year average of 13.4 per cent – representing a $479 million boost over the long-term trend. The NT Budget also shows some green shoots for economic recovery, a $577 million improvement since the last Budget in the projected deficit, and a continued decline in the unemployment rate.
The NT’s capital program includes a continued focus on transport, comprising 46 per cent of committed infrastructure expenditure. Investments in housing and community assets account for 27 per cent of infrastructure spending, with other social infrastructure sectors making up roughly 15 per cent. Regional and remote projects will receive 60 per cent of total infrastructure spending, including $615 million over four years to build and refurbish remote Aboriginal housing.
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Mollie Matich
Director, Policy and Research
Infrastructure Partnerships Australia
[email protected]
+61 2 9152 6017
Jack Bateman
Project Analyst
Infrastructure Partnerships Australia
[email protected]
+61 2 9152 6017
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Michael Player
Director, Communications and Engagement
Infrastructure Partnerships Australia
[email protected]
+61 2 9152 6017