When the Federal Government announced its highly anticipated 2020-21 budget this month, it came as no surprise that domestic infrastructure was at the top of their COVID-19 recovery plan.
Already contributing approximately $137 billion to the economy each year and employing 1.2 million people – almost 10 per cent of the total workforce – infrastructure has been hailed as critical to the post-pandemic economic recovery.
The government has allocated a $14 billion funding boost for both new and fast-tracked infrastructure projects. This is in line with the previously announced commitment to smaller ‘shovel-ready’ projects and ‘shovel wielding’ jobs which can get off the ground quickly and stimulate the economy.
The funding supplements the $100 billion already allocated to infrastructure projects over the next ten years and is expected to create an extra 40,000 jobs.
Treasurer Josh Frydenberg has announced further additional funding for state governments on a “use-it-or-lose-it basis”.
“If a state drags its feet, another state will get the money.” said Mr Frydenberg. “We need works to start, not stall.”
Nevertheless, there are concerns the budget overlooks big-ticket mega projects in favour of funding projects that might stimulate economic activity sooner.
“It would be a shame if this meant opportunities for longer term planning, structural reform and economic transition were not fully realised,” says Allens Construction and Engineering Partner, David Donnelly. “Or if a shared longer term vision for future Australians (those bearing the burden of paying for the stimulus) wasn’t carefully considered.”
Transport is the biggest beneficiary with $7.5 billion allocated to various transport infrastructure projects around the country, the majority being funnelled into road and rail projects. This takes the government’s transport infrastructure program to $110 billion since 2013/14.
A significant proportion of the transport infrastructure funding has been allocated to projects in rural and regional Australia. This includes over $500 million for regional rail upgrades in Victoria, regional highway upgrades and faster rail planning in New South Wales, and rural highway upgrades for regional communities in other states.
Significant new commitments include:
- QLD: $750 million for the Coomera Connector (Coomera to Nerang)
- NSW: $1.8 billion for the Sydney Metro-Western Sydney Airport rail line and $603 million for the New England Highway (Singleton Bypass)
- VIC: $528 million for the Shepparton and Warrnambool rail line upgrades. Funding has also been brought forward for a number of projects, including $605 million for the South Geelong to Waurn Ponds Rail Upgrade.
Meanwhile, those hoping for a social housing-led economic recovery – including some of Australia’s top economists – have been left disappointed by the budget, which offered nothing extra for community housing.
Advocates say the federal government has missed an opportunity to create thousands of jobs while also creating affordable housing and tackling the rise in homelessness caused by the pandemic.
There are currently 180,000 people in Australia on the social housing waitlist, including more than 45,000 Victorian households. In Melbourne, almost 2,000 people are living in hotels funded by the state government during the pandemic.
However, the Federal government has rejected calls to fund large scale social housing projects, saying it is a state responsibility. Victorian Premier Daniel Andrews has hinted that his state government would look “very, very closely” at social housing in its upcoming budget.
The budget has also been criticised for overlooking the possibility of a green recovery. Some say that in prioritising roads over renewables, the government has missed an opportunity to leverage Australia’s renewable energy sector to kick-start the economy and create tens of thousands of sustainable jobs in rural Australia.