Infrastructure spending, a key focus of the 2022-2023 Federal Budget

With its unprecedented 10-year infrastructure investment pipeline now increased to a record total of $120 billion, the Australian Government has committed to extensive infrastructure development across urban and regional Australia.

In this Budget, $81.0 billion will be invested in the ongoing infrastructure pipeline over the next four years, including a step-up in annual investment to $23.9 billion in 2023-2024.  The "profitless boom" in the construction industry, driven by labour shortages and increased building costs, is likely to continue.  This will increase project delivery risk for infrastructure owners and delivery agencies, and influence the shift towards greater collaboration between owners and contractors and delivery models that incentivise collaboration.

This article summarises the key spending and projects for major infrastructure sectors.

Road and rail

Budget: $17.9 billion

The Budget will fund an additional $17.9 billion to road, rail, and community infrastructure projects across Australia.  This includes a commitment of up to $14.5 billion in equity for the Australian Rail Track Corporation to deliver the Melbourne to Brisbane Inland Rail and a new freight corridor between Brisbane and Perth, as well as $400 million for the Botany rail duplication in Sydney.

Other key road and rail commitments in the Budget include:

• $3.1 billion for the Melbourne Intermodal Terminals Package, including delivery of the Beveridge and Western Interstate Freight Terminals, and the Outer Metropolitan Ring Rail South in Victoria.
• $2.7 billion for the Brisbane to the Sunshine Coast (Beerwah-Maroochydore) and Brisbane to the Gold Coast (Kuraby-Beenleigh) Faster Rail projects in Queensland.
• $2.3 billion for the North-South Corridor – Darlington to Anzac Highway in South Australia.
• $1.0 billion for the Sydney to Newcastle – Tuggerah to Wyong Faster Rail Upgrade in New South Wales.
• $441.2 million for the METRONET, including the Thornlie-Cockburn Link, High Capacity Signalling, Morrison Road Level Crossing Removal and the Yanchep Rail Extension in Western Australia.
• $392.0 million for the Tasmanian Roads Package.
• $132.0 million for the Central Australian Tourism Roads in the Northern Territory.
• $46.7 million for the Athllon Drive Duplication in the Australian Capital Territory.

Further, the Federal Government is extending investments to maintain and deliver road infrastructure at the local and regional level.  Local councils will be funded over $500 million via the Local Roads and Community Infrastructure Program, with the largest investments going to NSW ($139.3m), QLD ($101.7m) and VIC ($101.7m).

Telecommunications

Budget: $1.3 billion

The Federal Government's $1.3 billion investment to be spent over 6 years from 2021-2022 in regional connectivity seeks to give more Australians access to reliable telecommunications.  Individuals will benefit from access to education and healthcare, while regional businesses will have more growth opportunities through access to national and global markets.  Key projects to facilitate increased connectivity include:

• $811.8 million (over five years from 2022-2023) to fund the Connecting Regional Australia initiative which will increase open-access mobile coverage on up to 8000km of regional roads and premises.   The Federal Government emphasised this will improve responses to natural disasters, and increase connectivity for Indigenous Australians.  
• $480 million in upgrades to nbn's Fixed Wireless and Satellite networks, which will provide higher quality internet access for up to one million regional and remote households.  The Fixed Wireless network area will be expanded by 50%, while satellite users will have higher data allowances.
• $1.8 million in 2022-2023 to the Australian Competition and Consumer Commission to conduct a review of mobile tower access fees.

The Government will also provide $4.8 million in 2022-2023 to extend the Mobile Network Hardening Program to fund telecommunications network resilience upgrades in regional Australia.

Water

Budget: $7.4 billion

Water security and drought resilience are critical for sustaining Australian primary industries.  This Budget will provide $7.4 billion to improve Australia's water security and open up new land for irrigation.  The Budget will cover approximately 13 key water infrastructure projects which address water security issues, including: 

• $6.6 billion for Queensland dams, including Hells Gates Dam, Big Rocks Weir, Emu Swamp Dam and Paradise Dam.
• $300.6 million for the Darwin regions Manton Dam project.
• $139.9 million for reliable water delivery in the Murray-Darling Basin.
• a further $433.0 million for Tamworth’s $1.2 billion Dungowan Dam which will triple its current capacity.
• a further $13.7 million for Tasmania’s Don Irrigation Scheme, which will deliver 4.8 gigalitres per year to North-Western Tasmania through 53 kilometres of pipeline and 3 pump stations.

Watching this space

The Federal Government's infrastructure investment seeks to address challenges in the global supply chain, and strengthen Australia’s penetration of international markets.  It will be interesting to see how this continued investment in Australia's infrastructure will contribute to achieving those goals as the various economies around the world emerge from the setback caused by the pandemic.  The overheated construction industry will likely demand greater collaboration, risk sharing and alignment of commercial outcomes between infrastructure owners and its contractors to ensure the ongoing financial sustainability of the sector.

Further, it is also worth reminding that the recent reforms to Australia's cybersecurity laws expands the definition of "critical infrastructure sector" to now cover 11 further sectors, including communications and transport, two key areas in which the Budget invests as noted above.