Australia cancels fifty infrastructure projects due to cost pressures

ACA, australia, Catherine King, IIP, infrastructure investment program, infrastructure pipeline, infrastructure review,

November 20, 2023

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In response to the $120b Infrastructure Investment Program (IIP) review, the Australian Government announced that funding for 50 road infrastructure projects will no longer be provided.

The independent strategic review found that the $120b Infrastructure Investment Program inherited from the former Coalition Government was undeliverable.

Following consultation with the State and Territory Governments, the Australian Government have announced the decision to remove funding for 50 infrastructure projects across Australia.

The independent review found while local government programs are a critical funding mechanism for local roads and infrastructure, they are administratively burdensome and lack sufficient funding or certainty.

This includes projects that have made little to no progress over a significant amount of time, and projects that do not align with Commonwealth or state and territory priorities.

The Australian Government also know that there continue to be significant cost pressures in the system and will work collaboratively and proactively with the states and territories to manage these.

Independent Strategic Review: $128b Infrastructure Investment Program

On 1 May 2023, Hon Catherine King MP announced a review of a $120 billion, ten-year Infrastructure Investment Program (IIP), focusing on important national land transport projects.

Government to review Australia’s $120b Infrastructure Investment Program

The Minister initiated the review due to numerous IIP projects lacking sufficient funding and a strong business case. This has led to a clogged infrastructure pipeline that does not reflect current market capacity, particularly when considering that forecast IIP expenditure is projected to continue growing over the forward estimates, and that the current pipeline of projects carries over $32.8 billion in identified cost pressures.

The Australian Government considered that a further review of the IIP, in consultation with states and territories, was necessary to ensure a credible and sustainable pipeline of projects.

Click here to read the key findings.

Over the next ten years, more than 400 individual ongoing projects are expected to be completed or substantially developed, including:

• North South Corridor – Torrens to Darlington
• Logan – Gold Coast Faster Rail
• M1 Pacific Motorway Extension to Raymond Terrace
• METRONET
• Tanami Road in Central Australia
• New Bridgewater Bridge

Through this investment, the Australian Government can grow the economy, improve productivity and take pressure off inflation.

The Government has also acted on the review recommendations to improve efficiency and flexibility in project deliverability on nationally significant road and rail corridors.

Many projects located along strategic national freight routes are now grouped into corridors. This approach will allow State and Territories to more flexibly manage project delivery schedules according to their priorities.

The Albanese Government has guaranteed $27 billion for a range of strategic freight and road safety corridor upgrades in regional Australia, including the Newell, Princes and Bruce Highways. They will work in partnership with States and Territories to deliver these corridors in a way that maximises the benefit of our shared investment.

The Infrastructure Policy Statement defines the Commonwealth’s role, objectives and expectations for the significant investment in land transport projects.

From now on the Australian Government’s investment in infrastructure will focus on productivity, sustainability, and liveability.

This is the long-term reform for the benefit of the nation that is the hallmark of a Labor Government.

The Albanese Government will continue to work with all levels of Government to make it easier to get around our cities and suburbs and unlock the potential of our towns and regions.

Source: © Commonwealth of Australia

Projects that will not receive Australian Government funding

The Review process found that there are projects that do not demonstrate merit, lack any national strategic rationale and do not meet the Australian Government’s national investment priorities. In many cases, these projects are also at high risk of further cost pressures and/or delays.

New South Wales

• Blaxland Road/Balaclava Road Intersection Improvements
• Bruxner Highway – Wollongbar to Goonellabah
• Commuter Car Park Upgrade – T1 North Shore, Northern and Western Line – Kingswood
• Commuter Car Park Upgrade – T1 North Shore, Northern and Western Line – St Marys
• Commuter Car Park Upgrade – Woy Woy
• Great Western Highway Upgrade – Katoomba to Lithgow – Construction of East and West Sections
• Gwydir Highway Improvements – Planning
• M7-M12 Interchange
• Mulgoa Road Stage 2 – Glenmore Parkway to Jeanette Street, Stage 5A Blaikie Road to Jamison Road and Stage 5B Jamison Road to Union Road
• Northern NSW Inland Port – Narrabri
• Oxley Highway Stage 2 – Planning
• Remembrance Driveway Corridor Upgrade – Camden Council
• Southern Connector Road, Jindabyne
• Sydney to Newcastle – Tuggerah – Wyong faster rail upgrade
• Toowoomba to Seymour – New South Wales – Moree Intermodal Overpass
• Werrington Arterial Stage 2 – Planning
• Western City Road Transport Network Development – Planning

Victoria

• Business Case for Melbourne Inland Rail Intermodal Terminal
• Calder Freeway – Gap Road to the M80 Ring Road
• Camberwell Road / Monteath Avenue / Redfern Road Intersection Upgrade
• Frankston to Baxter Rail Upgrade
• Geelong Fast Rail
• Goulburn Valley Highway – Shepparton Bypass Stage 1
• Improving connectivity to Port of Melbourne – Business Case
• McKoy Street – Hume Freeway Intersection Upgrade
• Mornington Peninsula Freeway Upgrade
• Rutherglen Heavy Vehicle Alternative Route
• Victorian Faster Rail Corridor Investigations
• Western Freeway Upgrade – M80 Ring Road to Ferris Road

Queensland

• Beenleigh Station commuter car park, Beenleigh
• Emu Swamp Dam Supporting Infrastructure, Stanthorpe
• High Road and Easterly Street, Waterford Upgrade
• Kenmore Roundabout Upgrade
• Loganlea Station commuter car park, Loganlea
• Mooloolah River Interchange Upgrade (Packages 1 and 2)
• New England Highway upgrade, Cabarlah
• Nicklin Way-Third Avenue Connection, Caloundra
• Tennant Creek to Townsville Corridor Upgrade – Dingo Park Road Intersection Upgrade

Australian Capital Territory

• Inner Canberra Corridor Planning Package

Tasmania

• Old Surrey Road/Massy-Greene Drive Upgrade

South Australia

• Hahndorf Township Improvements and Access Upgrade
• Main South Road Productivity Package
• Old Belair Road upgrade, Mitcham
• Onkaparinga Valley Road – Tiers Road – Nairne Road Intersection Upgrade
• Truro Bypass

Western Australia

• Future Road and Rail Connections for Perth
• Great Southern Secondary Freight Network
• Marble Bar Road Upgrade
• Moorine Rock to Mt Holland Road Upgrades
• Pinjarra Heavy Haulage Deviation – Stages 1 and 2

Click here to view the projects that will be built and continue as planned.

Source: © Commonwealth of Australia

Queensland’s response to Infrastructure Investment Program review

Media Release

The Australian Government’s announcement claiming a so-called ‘boost’ to roads in Queensland is misleading.

The decision to reduce Australian Government funding splits on regional roads from 80:20 to 50:50 has been estimated by TMR to cost Queenslanders between $600 million and $1 billion per annum.

This is on top of cuts made elsewhere in Queensland such as the decision to cease funding projects including the Mooloolah River interchange, the cap on funding on road corridors and changes to funding splits on existing projects.

Queenslanders will therefore still be significantly worse off.

Although Queensland has only the third largest population of any state, the state has the largest regional road network in the nation so the proposed change from 80/20 funding to 50/50 has the largest impact on regional Queenslanders than regions in any other jurisdiction. 

Queensland is the only state in Australia with more people living in regional areas than the capital and there is a disproportionate number of fatalities on regional roads.

Queensland will not be deterred from their campaign to maintain current funding arrangements of 80:20 from the Commonwealth as clearly Queensland should have a different regional roads funding formula to other states given the decentralisation and largest road network in the nation.

Queensland has a forward infrastructure and roads program that is based on the booming statewide population and the Olympic and Paralympic Games in 2032.

Source: © The State of Queensland 1997–2023

Australian Constructors Association (ACA) responds

The Australian Constructors Association (ACA) welcomes the publication of the findings of the Independent Strategic Review of the Infrastructure Investment Program, but a cloud of uncertainty still hangs over the industry.

Australian Constructors Association CEO Jon Davies said the review has provided some answers, but there’s still much more to figure out.

“The critical question remains: How will state governments respond to the withdrawal of funding on some projects and the new equal funding split going forward? There is also a big question concerning when the Melbourne Airport Rail Link will proceed,” says Australian Constructors Association CEO Jon Davies.

“The uncertainty has to end. It’s time to redirect focus from the rearview mirror where we question past decisions and instead concentrate on improving industry productivity to deliver these projects more cost effectively and without the need for additional resources,” says Australian Constructors Association CEO Jon Davies.

In a positive step forward, a review of the funding mechanism for transport infrastructure between the federal government and the states, the National Partnership Agreement (NPA), was also released, setting clear signals to drive better value to taxpayers.

“It is encouraging to see the Federal Government plans to use its buying power to drive improved outcomes on all projects,” says Australian Constructors Association CEO Jon Davies.

“Moving away from focusing on lowest price at tender and transferring as much risk to the contractor to achieving best overall value will have significant positive flow on effects to both industry and taxpayers,” says Australian Constructors Association CEO Jon Davies.

“If there is to be an upside to the reviews, it must be that Australia finally has a more transparent and stable pipeline of projects, but we must also improve how these projects are delivered,” says Australian Constructors Association CEO Jon Davies.

“We’re calling on the Federal Government to work with the states, industry and unions to create a 10-year National Construction Strategy to improve the productivity and financial sustainability of the industry that is critical for Australia’s future prosperity,” says Australian Constructors Association CEO Jon Davies.

Source: © Australian Constructors Association 2023

Infrastructure Partnerships Australia’s response

The Albanese Government’s response to the Review of the Infrastructure Investment Program (IIP), provides welcome clarity to a sector that has been hanging under a cloud of uncertainty, but it also poses new questions which must be answered, says industry think tank Infrastructure Partnerships Australia.

Infrastructure Partnerships Australia is the nation’s industry think tank providing independent policy research focused on excellence in social and economic infrastructure.

“The Government has delivered much needed clarity for the infrastructure sector to get back on track, identifying the projects and programs it will prioritise over the next decade,” says Infrastructure Partnerships Australia Chief Executive Officer Adrian Dwyer.

“Reviewing the program was always a prudent move, and the Government has rightly concluded that the core aspects are vital to meet Australia’s economic aspirations and population growth demands,” says Infrastructure Partnerships Australia Chief Executive Officer Adrian Dwyer.

“This announcement answers some important questions on the pipeline, but it also poses new questions that will need answering,” says Infrastructure Partnerships Australia Chief Executive Officer Adrian Dwyer.

“Australia has enviable population growth and unmet demand for infrastructure. That’s a high-quality problem to have, but it’s a problem nonetheless,” says Infrastructure Partnerships Australia Chief Executive Officer Adrian Dwyer.

“You need to build the infrastructure for the economy you want, not the one you’ve got. Where a project remains necessary, but the Commonwealth will no longer contribute to delivery, that leaves an unmet demand on state dollars,” says Infrastructure Partnerships Australia Chief Executive Officer Adrian Dwyer.

“Australia’s states and territories have acute fiscal constraints and severely limited capacity to raise revenue – in short, they don’t have the big wallets, but they do have big responsibilities,” says Infrastructure Partnerships Australia Chief Executive Officer Adrian Dwyer.

“If the practical effect is to transfer an ever-greater share of necessary infrastructure funding demand to the level of government that can least afford to pay, then the net outcome is less infrastructure,” says Infrastructure Partnerships Australia Chief Executive Officer Adrian Dwyer.

“Ultimately, taxpayers care little which pot of their money investment comes from – but they care greatly that they have high quality infrastructure,” says Infrastructure Partnerships Australia Chief Executive Officer Adrian Dwyer.

Source: Infrastructure Partnerships Australia 2023

Roads Australia – Response to IIP

Roads Australia (RA) has welcomed the release of the Strategic Review into the Commonwealth Government’s Infrastructure Investment Program (IIP).

While the review includes road projects that will not receive Australian Government funding at this point in time, recommendations made by the independent reviewers are aligned with the need to transition to a more sustainable 10-year rolling infrastructure pipeline.

RA’s CEO, Ehssan Veiszadeh, said industry and government can now look forward with a greater degree of certainty.

“The IIP Review has placed some strong guardrails around future infrastructure funding, providing some much-needed clarity to transport stakeholders,” Mr Veiszadeh said.

“We must continue building transport infrastructure to meet population demand, matched with industry capacity.

“The core principles of productivity, resilience, liveability and sustainability at the heart of the Commonwealth Government’s policy statement support this need.

“RA has previously called for a nationally coordinated pipeline, and we look forward to seeing stronger collaboration across jurisdictions and between industry and government.”

Further recommendations have been welcomed by RA including in pipeline planning, managing escalation costs and safety.

“States providing annual infrastructure plans to the Commonwealth will hopefully allow for greater cohesiveness across infrastructure pipelines and less competition for skills and supply between jurisdictions,” Mr Veiszadeh said.

“Recommendations that focus on managing project escalation costs and risk allocation are crucial to the ongoing health of the transport.

“We’ve also seen recommendations to boost funding for regional councils and road safety which will make a difference to the quality and safety of infrastructure across rural areas.

“While delivering on all these recommendations will require a lot more work, RA will remain engaged with our members, including the Australian Government and individual jurisdictions, to ensure that the outcomes of this review leads to lasting improvements to the delivery of new transport infrastructure as well as the upkeep and maintenance of our road network.”

Source: Roads Australia

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