The $11.6 billion Infrastructure Growth Package, including a $5
billion Asset Recycling Initiative (see below), has a large focus
on big road projects in NSW, Victoria and WA and is being touted by
the government as a much-needed benefit of a controversial revenue
raising budget measure – the re-introduction of indexation of
the fuel tax excise. This is part of the federal government's
commitment to spend $50 billion over seven years on transport
Mr Hockey labelled this expenditure "the biggest increase
in road expenditure in Australian history". This comes after
successive years of growth in the construction of roads, bridges,
railways and harbours in Australia.
Growth in Transport Engineering
* Includes roads, bridges, railways and harbours. Break in
series between Dec 06 and Mar 07. Source: Engineering Construction
Activity, Australia, Dec 2013 (ABS cat no. 8762.0)
Norton Rose Fulbright partner
James Morgan-Payler says that the "roads projects in the
populous eastern states have attracted the most direct federal
funds, with Victoria's East West Link and NSW's Badgerys
Creek airport-related road projects receiving the lion's
The second stage of the East West Link in Victoria will receive
$1.5 billion, while $2.9 billion of federal funds will be spent
connecting Sydney with the long-awaited second airport to be built
at Badgerys Creek. This is on top of a $2 billion concessional loan
for the NSW WestConnex Stage 2 project, an extra $866 million for
the Perth Freight Link, $500 million for the North-South Road
Corridor project in South Australia and funding for the Toowoomba
Second Range Crossing in Queensland.
As promised before the 2013 election, the federal government
will also establish a new $1 billion National Stronger Regions Fund
to provide grants for the construction, expansion and enhancement
of infrastructure across Australia.
"The federal government's direct investment in roads
projects will add further impetus to the construction and
infrastructure sector, which is reeling from slower investment in
mining and commodities," Mr Morgan-Payler said.
"A critical issue for state governments now will be to
program the proposed mega projects, especially road and rail
projects in Melbourne and Sydney, to avoid resourcing shortages and
price hikes. Some industry commentators have suggested that it
would be better to stagger these mega projects to maximise
competitive bids and efficient resourcing."
Builders, project sponsors and other private sector
organisations wishing to participate in new government
infrastructure projects should "undertake due diligence and
planning for the relevant projects, keep abreast of the
government's announced plans for the projects and, if possible,
maintain direct contact with the relevant state government
representatives to understand their plans, timing, scope and
budgets for upcoming projects," Mr Morgan-Payler said.
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