Earthmoving Industry Insight, Opinion

Infrastructure spending cuts raises questions for Queensland

With nine Queensland projects cut from federal funding and the burden of funding infrastructure pushed even more onto the state, the question now is how to navigate a billion-dollar loss to the infrastructure pipeline

On November 16 the Australian government released the Strategic Review of the Infrastructure Investment Program (IIP review). A few days before that, the Australian government released the Infrastructure Policy Statement (IPS). It is clear that no matter how the federal government spins the outcome of these, Queensland has just lost billions in funding cuts.

The IIP review found that the nine projects in Queensland did not demonstrate merit, lacked any national strategic rationale and do not meet the Australian government’s national investment priorities.

While Queensland should be satisfied that it wasn’t further on the chopping block, as other states were, there are serious implications within the IPS that present challenging long-term issues that risks the sustainability of Queensland’s infrastructure pipeline.

The IPS establishes that the default funding regime for the IIP will be 50:50 for nationally significant transport infrastructure projects. In order to be considered a nationally significant transport infrastructure project, the project must have at least two of the following characteristics:

  • at least $250 million contributed by the Australian government;
  • alignment with government priorities as articulated in the IPS;
  • situated on or connected to the National Land Transport Network and/or other key freight routes, such as those identified in the National Freight and Supply Chain Strategy; and/or
  • supporting other emerging or broader national priorities such as housing, defence, the development of critical mineral resources and Closing the Gap.

This means that that the maximum funding for a nationally significant transport infrastructure project is 50 per cent and the gateway to even be considered a nationally significant transport infrastructure project has narrowed to such a degree that could mean that Queensland could see many projects in the future without any federal funding at all.

The question isn’t simply what is Queensland going to do now for the projects that have just seen federal funding cuts, the question is, how is Queensland going to be funding the future infrastructure of Queensland without more than 50 per cent federal funding or none at all?

Taking the current projects in the Queensland Transport and Roads Investment Program (QTRIP) 2023–24 to 2027–28 that have an uneven funding (e.g. 80:20) and making them even (50:50), it shows that those 125 projects would need to supplement $4.58 billion of federal funding to complete those projects.

We also think about the regions that will be most impacted by this result. QTRIP shows that funding has already been shifting from regional Queensland to south east Queensland (SEQ). This result could mean that greater amounts of funding will be taken from communities that desperately need the infrastructure in order to supplement projects in SEQ.

It is a bit rich to expect the states to stump up additional funding when they have less ability to increase revenue. It’s even more rich to impose migration policies on the states and yet take away key funding for the essential infrastructure needed to support a larger population.

The uncertainty since the announcement of the review in May of this year has stalled the rollout of projects to tender and in some districts, contractors have had to downsize as a result. The Department of Transport and Main Roads will be required to rebalance the program with the available funding and needs to provide the industry with an updated schedule for tender releases.

While the process needs to happen as quickly as possible to allow the industry to gear up, care must be taken around the timing of tenders as it is critical not to flood the market with new tenders. It is also critical that tenders for Northern Queensland are timed so awards can occur at the end of the wet season, as any further delays could push construction into the next wet season.

The burden is now heavier for Queensland, as it is with other states, as we are now forced to try navigating the future billion-dollar loss to the future infrastructure pipeline. More than ever we need to maintain development of collaborative planning, design, construction and maintenance of infrastructure. We require innovative policies and solutions that increase productivity and increases the confidence of investors to invest in public infrastructure.

Top image: With the funding cuts, rural areas most likely to be impacted as available funding is moved to projects in south east Queensland. Source: 169169/Adobe Stock


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