THE FEDERAL government has cut 50 projects from the national infrastructure pipeline.
Federal minister for infrastructure Catherine King on Thursday announced the government would withdraw funding from the “high risk” projects to deal with $32.8 billion in cost pressures across the $120-billion Infrastructure Investment Program.
In May this year Ms King announced the government had commissioned an independent review of the program – a review that deemed the program undeliverable.
“That review undertaken by Clare Gardiner-Barnes, Mike Mrdak AO and Reece Waldock painted a sad and frankly sorry picture about the health of the infrastructure investment pipeline,” Ms King told reporters.
“The inescapable truth is that the previous government under the Liberals and Nationals failed to manage this incredibly important program during their decade.”
She said the number of projects in the pipeline increase from nearly 150 to more than 800 under the previous government.
“Many projects lacked proper planning, didn’t have informed costings and weren’t ready for Commonwealth investment.”
A “more attainable” pipeline
The review made 15 recommendations on, for example, whether or how projects should proceed and transitioning the program to a sustainable pipeline.
The government has agreed to all the recommendations, outright or in principle.
“The government has also acted on the review recommendations to improve efficiency and flexibility in project deliverability on nationally significant road and rail corridors,” Ms King said.
“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.”
Australian Industry Group chief executive Innes Willox said it supported the commitment to concentrate on “high benefit” projects.
“In view of the combination of cost overruns, capacity constraints, the limits to public sector borrowing and insufficient rigor in the evaluation of projects, the infrastructure pipeline had become unsustainable and resources were being directed to sub-optimal projects.”
Mr Willox said the government’s reprioritisation was a “necessary and decisive” improvement offering the potential to reduce cost pressures and set out a more attainable pipeline.
“The biggest potential obstacle is federal co-ordination with the infrastructure plans of the states and territories and we urge all governments across the federation, in supporting the recommendations of the review, to adopt a similar approach and to commit to transparent, rigorous and ongoing audit and review.”
Thoughts from the road transport sector
Roads Australia welcomed the release of the review, despite funding being pulled from some road projects.
The industry peak body found recommendations made by reviewers aligned with the need to transition to a 10-year rolling infrastructure pipeline.
Roads Australia CEO Ehssan Veiszadeh said industry and government could 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.”
State government “disappointed” with outcome
The Western Australian government noted the federal government had withdrawn more than $300 million from the state’s projects, including $6.4 million from the Great Southern Secondary Freight Network.
It said several of the impacted projects involved an innovative cost share model between the state and federal governments and private sector.
According to the state government, the road projects were helping unlock key resource projects, and the withdrawal of funding may impact their delivery timelines.
“We are naturally disappointed with the outcomes of this review,” WA transport minister Rita Saffioti said.
“We’re not immune from cost pressures – but the escalations being experienced here are significantly less than projects on the East Coast,” she said.
“We don’t have projects worth tens of billions of dollars like Inland Rail – which is now estimated to cost more than $30 billion, or the suburban rail loop in Melbourne – which is now expected to cost well in excess of $100 billion – even the North-South Road Corridor in Adelaide is now costing well over $16 billion.
Ms Saffioti said the government did not want to see any projects cut, and its preference was to work co-operatively on smoothing the pipeline of projects, rather than cutting support entirely.
“We remain committed to these projects, and will now engage with key proponents to look at funding and delivery options,” she said.