Australia – Infrastructure Developments.

Despite vocal scepticism emerging from most stripes of the political rainbow surrounding whether the spending pledges can actually be delivered on, the recent Federal Government 2021-2022 Federal Budget announcement firmly pins its colours to the infrastructure sector as being among the central planks in the nation’s economic response to the COVID-19 pandemic.
 

The Australian Government has previously announced a $110 billion investment in nationwide transport infrastructure, occurring over a 10-year delivery programme. The Budget allocates a further $15.2 billion expenditure stimulus, over the same period, for projects predominantly in the rail, road and community infrastructure sectors.  Not only is this a wholesale effort to boost Australia’s economy and support upwards of 30,000 jobs in the pandemic’s wake, the spending commitments are geared to ensuring that Australia is better equipped as a country in which to live, work and move around (in terms of both logistical efficiency and connectivity reach) for years to come.
 

The infrastructure rollout involves numerous projects slated across the entire country, with some particularly eye-catching in terms of their ‘megaproject’ capital expenditure allocations.  By each state and territory, the Government’s overall investment breakdown broadly amounts to the following:
 

State / Territory	Budget Allocation	Flagship Project
NSW	$3.3 billion	Great Western Highway Upgrade – Katoomba to Lithgow ($2 billion)
SA	$3.2 billion	North-South Corridor Roadway – Darlington to Anzac Highway ($2.6 billion)
VIC	$3.0 billion	Melbourne Intermodal Terminal ($2 billion)
QLD	$1.6 billion	Inland Freight Route Upgrades – Mungindi to Charters Towers ($400 million)
WA	$1.3 billion	METRONET upgrades ($379 million)
TAS	$0.3 billion	Bass Highway Safety and Freight Efficiency Upgrades ($80 million)
NT	$0.3 billion	National Network Highway Upgrades – Phase 2 ($150 million)
ACT	$0.2 billion	William Hovell Drive Duplication ($27 million)

 

Whilst the transport sector is undoubtedly the main beneficiary, it is worth noting that some $2.5 billion is allocated for the water infrastructure sector, and other multi-billion amounts reserved for various infrastructure project investment support measures designed to optimise the effective delivery of the nationwide projects.
 

As with all facets of the Budget, some caution must be heeded.  Major projects industry commentators will cite previous Federal Budgets where similar significant Government capital expenditure pledges have not been fully realised.  Therefore, the potential for spending shortfalls to once again arise leaves the $15.2 billion cash injection open to careful scrutiny over the next decade.  As indeed does the inevitable spectre of contentious delays and overspend occurring on many of the Government’s earmarked infrastructure projects.
 

Nonetheless, for all participants along the entire construction project value chain, the Government’s ambitious infrastructure agenda is surely welcome news.  Particularly so, if the related infrastructure project investment support measures can eliminate some of the labour force, procurement and regulatory impediments that regularly plague the timely and budgeted delivery of major infrastructure projects – and all of which will be intensified in a pandemic impacted working environment.  Already, many construction projects globally are suffering colossal labour and materials shortages, so the mountainous scale of the Australian infrastructure delivery challenge, converting capital expenditure into physical assets, cannot be underestimated.
 

 

For further information, please contact:

Damian Watkin, Partner, Clyde & Co

damian.watkin@clydeco.com