The Federal Government has committed to a $24.5 billion injection in new major infrastructure projects and initiatives Australia-wide over the next 10 years. This commitment is part of - not additional to - the $75 billion commitment to infrastructure over the next 10 years announced by the Federal Government in the 2017 budget.

The overarching objectives of the funding injection into infrastructure is to reduce road congestion, improve safety and create jobs by providing improved transport accessibility to jobs and services for the growing Australian population.

The 10 year plan includes the following areas:

  • transport infrastructure - a $75 billion 10 year infrastructure plan including:
    • national projects - $9.3 billion Melbourne to Brisbane Inland Rail
    • NSW - Up to $5.3 billion Western Sydney Airport, $1.5 billion of funding and a $2 billion concessional loan for the WestConnex project in Sydney, and $2.9 billion Western Sydney Infrastructure Plan
    • VIC - $500 million M80 Ring Road and $500 million Monash Freeway Upgrade
    • QLD - $6.7 billion Bruce Highway
    • WA - $1.3 billion METRONET, including $490 million for the Forrestfield Airport Link
    • SA - $1.6 billion Adelaide North-South Corridor
    • TAS - $400 million Midland Highway
    • ACT - $67 million for Capital Metro under the Asset Recycling Initiative
    • NT - $192 million for the Northern Australia Roads Program
  • new national infrastructure initiatives – including:
    • Roads of Strategic Importance: $3.5 billion, including $1.5 billion for Northern Australia Package, $400 million for Tasmanian Roads Package, $100 million for NSW and ACT Barton Highway Corridor Package and $1.5 billion for future national priorities
    • $1 billion Urban Congestion Fund
    • $250 million for Major Project Business Case Fund
  • community infrastructure – including:
    • $206.5 million over four years from 2018-19 for round three of the Building Better Regions Fund, to support investment in community infrastructure and capacity building projects in regional areas
    • $154.3 million over five years from 2017-18 to support the Government's goal of building a more active Australia
  • healthcare – including:
    • health funding is expected to increase from $78.8 billion in 2018-19 to $85 billion in 2021-22
    • a new public hospital agreement which will deliver more than $30 billion in additional funding between 2020–21 and 2024–25 – a 30% increase over the previous five year
    • Australia's public hospital funding to more than double from $13.3 billion in 2012-13 to $28.7 billion in 2024-25 including $189 million for hospital infrastructure in Western Australia
  • housing – including:
    • establishment of the National Housing Finance and Investment Corporation by 1 July 2018 which will comprise the Affordable Housing Bond Aggregator and the $1 billion National Housing Infrastructure Facility
    • the new National Housing and Homelessness Agreement which will commence from 1 July 2018 and provide $7 billion in housing funding and an additional $620 million for homelessness services over the next five years
    • $550 million for remote indigenous housing in the Northern Territory.

Further announcements with implications for the construction and infrastructure sector include:

  • the Government's Defence Industrial Capability Plan including a $200 billion investment in Defence over the next 10 years
  • extending the $20,000 instant asset write off for small business until 30 June 2019, which would benefit smaller subcontractor entities by allowing them additional opportunities to reinvest in their business or upgrade assets
  • targeting the 'black market' to ensure honest businesses get a fair go. Announcements that will have particular implications on the construction and infrastructure sector include:
    • introduction of an economy-wide cash payment limit of $10,000 aimed at reducing illegal activity and which may have particular impact in the home building space
    • increased focus on supply chains and integrity of Commonwealth procurement processes (please see our Procurement section below)
    • proposed action to prevent businesses claiming deductions for payments to employees and contractors where withholding obligations have been disregarded
  • new 'vacant land' tax measures which will be implemented from 1 July 2019 to deny tax deductions for certain expenses associated with vacant land. Aimed at addressing concerns that tax deductions relating to vacant land are being improperly claimed for expenses, the new measures will preclude property owners and developers from claiming expenses such as council rates and maintenance costs for vacant land in their tax returns. This may have significant impacts where a developer is delayed in achieving final completion due to a contractor's fault, with the inability to claim certain expenses possibly falling within liquidated damages regimes.

Procurement

$3.6 million has been allocated over four years to an Anti-Slavery Unit within the Department of Home Affairs. It is predicted that the Anti-Slavery Unit will implement a modern slavery reporting requirement to assist in the prevention of modern slavery from occurring in the supply chains and operations of businesses in Australia. Perhaps a surprising announcement to some, this allocation aligns with the recent Modern Slavery Bill 2018 (Cth), expected to be enacted later this year, which is an Act with respect to slavery, slavery-like practices and human trafficking and aims to bring Australia into line with its international counterparts such as the UK.

Another important announcement in the procurement space is a new requirement that, from 1 July 2019, businesses tendering for Australian Government procurement contracts over $4 million must obtain from the ATO certification that they have complied with their tax obligations. $9.2 million has also been allocated to the ATO to develop and consult on a Procurement Connected Policy over four years from 2018 – 2019. These two announcements demonstrate a clear push from the Commonwealth Government to increase the integrity of Commonwealth procurement processes, also evidenced by the Government Procurement (Judicial Review) Bill 2017 (Cth) which was introduced into Parliament last year and is expected to be enacted in mid to late 2018.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.