Budget 2017: Find out where the money is going
The Turnbull government has embarked on a $75 billion infrastructure spending spree, including $8.4 billion for the Melbourne-to-Brisbane inland rail link and $5.3 billion for a second Sydney airport, in an attempt to kick start economic growth.
Although the federal government has allocated $10 billion towards a "National Rail Program" to help fund metropolitan and regional rail projects, state governments will be disppointed no money will be allocated for big-ticket infrastructure projects, like Brisbane's $4.5 billion Cross River Rail, until 2019-20.
The $75 billion over the next seven years - which will be funded through increased borrowing - includes a $1 billion infrastructure package for Victoria (including $500 million for regional passenger rail), $1.6 billion in new projects for Western Australia and $844 million for additional projects on the Bruce Highway in Queensland.
Prime Minister Malcolm Turnbull has flagged the Commonwealth stepping in to building a new airport at Badgerys Creek, but there was no indication in the budget papers about plans to sell the airport to the private sector when it was finished in 2026.
The private sector baulked at taking on the risk of building the new airport, but some companies are expected to circle if it is put up for sale in the mid-2020s. Sydney Airport earlier said it was not interested in building the new facility 50 kilometres west of the CBD.
The federal government will create a investment vehicle to allocate $5.3 billion in equity to be invested over a decade to ensure the airport - which will have a capacity for 10 million passengers a year - is open by 2026
The federal government will make an $8.4 billion equity investment to the Australian Rail Track Corporation for the 1700-kilometre rail link from Melbourne to Brisbane - the Commonwealth's biggest rail project in 100 years.
Building the rail link, is slated to get underway next financial year, is expected to support 16,000 direct and indirect jobs at the peak of construction.
The budget outlines scope for private sector involvement, in the form of a public-private partnership, for the most complex parts of the project, including major tunnelling from the 126-kilometre Toowoomba-to-Brisbane section.
"Under this delivery arrangement, the private sector will design, build, finance and maintain this section of the railway over a long-term concession period," Infrastructure Minister Darren Chester said.
Some industry pundits have described the inland rail project as a "white elephant", which could only ever be funded by taxpayers.
The financial risk of the project, especially the risk of a major cost blow-out, was noted in the budget papers.
"Project costs will not be finalised until procurements, alignment and reference designs are completed," Treasury said.
"The project is sensitive to increases in project cost and lower revenues from users, and these risks could decrease the returns on the govenrment's investment in the project."
As foreshadowed by The Australian Financial Review, a new infrastructure and project financing unit will be established within the Department of Prime Minister and Cabinet to help with new innovative funding models for infrastructure projects. It will cost $17 million over the next four years.
Although state governments have already submitted proposals on their metro rail projects to Infrastructure Australia, the federal government said they would need to be further evaluated before any Commonwealth funds were allocated.
Treasurer Scott Morrison said projects such as Adelink, Brisbane Metro, Tullamarine Rail Link, Cross River Rail in Brisbane and the Western Sydney Airport rail link, all had the potential to receive money from the $10 billion fund subject to a "proven business case".
"It is important to invest in infrastructure, but we have to make the right choices on projects, as part of a broader economic growth strategy," he said.
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