Aussie budget commits $24bn to infra

The Australian government hopes to draw more private sector partners with its recently announced budget.

In its recently announced budget, the Australian government committed A$24 billion (€18 billion; $23.5 billion) to invest in the country’s roads, rail and ports over the five fiscal years beginning with 2014-2015.

At least A$5.2 billion of that budget is expected to be committed to Australia’s various state governments in 2014-2015, as compared to the A$3.6 billion committed in 2012-2013 and the A$5 billion that will be committed in the 2013-2014 fiscal year, according to the released budget.

Last year, the Australian government’s Infrastructure Working Finance Group (IFWG) released a study detailing how, “across a range of measures, Australia’s infrastructure is not keeping pace with either current or projected demand,” and proposed several financing and funding reforms to close that gap – and increasing the government’s funding capacity was the most central one.

The report concluded that the private sector would not become involved enough in Australia’s infrastructure unless government funding becomes available. “Ultimately, infrastructure investment needs to be paid for regardless of how it is financed,” the report said, and added that funding reforms should lead to greater private sector involvement.

The new budget is a strong indication that the Australian government is implementing these infrastructure reforms as recommended. However, A$24 billion is significantly less than the A$36 billion the government committed to transportation infrastructure over the six years leading to 2013-2014, according to the IFWG report.

However, the Commonwealth and State Government are still in discussions over what kind of private sector partners and what partnership structures they will seek, an Australian Treasury spokeswoman told Infrastructure Investor. The private investors could be domestic or foreign companies, or even consortia of both.

Several public-private partnerships have been announced – including the Brisbane Cross-River Rail in Queensland and the Melbourne Metro – and other structures are being considered. Over 88 infrastructure projects are being planned across Australia, according to the Nation Building Infrastructure budget report. Remuneration details for these projects, however, have not been released.