A report commissioned by the Federal Government has recommended that 82 infrastructure projects slated to be completed under the previous government’s $120 billion Infrastructure Investment Program be cancelled.
Commissioned in May by Minister for Infrastructure, Transport, Regional Development and Local Government Catherine King after being endorsed by National Cabinet in late April, the 140-page final report of the Independent Review of the National Partnership Agreement on Land Transport Infrastructure Projects described the previous government’s plan as undeliverable.
It has recommended a raft of cuts to or rescoping of projects not yet commenced to reduce risk to the budget and pressures on inflation.
Ms King said the decisions on which projects to proceed with and which ones to cancel were made in consultation with the states and territories. The government now has a “forward plan of projects that are properly planned and targeted to unlock significant economic, social and environmental objectives”.
In other cases, separate projects located along strategic national freight routes will now be grouped into corridors, an approach it says will allow states and territories to more flexibly manage project delivery schedules according to their priorities.
The review says the projects that will be cancelled “were not realistically going to be delivered with the funding available, have made little to no progress over a significant amount of time, and … do not align with Commonwealth or state and territory priorities”.
The review says, “This has led to a clogged infrastructure pipeline that does not reflect current market capacity, particularly when considering that forecast Infrastructure Investment Program expenditure is projected to continue growing over the forward estimates and that the current pipeline of projects carries over $32.8 billion in identified cost pressures”.
“The 10-year pipeline of projects cannot be delivered within the $120 billion allocation, even with current contributions from jurisdictions,” it says.
“The Australian Government cannot afford within the current program settings to meet the identified cost pressures, nor add any new projects for delivery to the pipeline in the next 10 years, without significant changes taking immediate effect.
The review, prepared by Professor Jane Halton, makes 15 key recommendations.
It says 100 projects that are not yet under construction should proceed, 56 projects that are not yet under construction should proceed but with the caveat that the review has identified risks that need to be satisfactorily addressed prior to delivery, 36 projects that are not yet under construction should be rescoped with complete planning and detailed costings, and 82 projects which are not yet under construction should be “ceased”.
It further recommends that from 2024-25, states and territories, in consultation with local governments, develop and provide the Commonwealth with an annual infrastructure plan and that, based on that plan, the Department of Infrastructure, Transport, Regional Development, Communications and the Arts prepare national infrastructure advice for the Australian Government annually.
It says the Federal Government should implement a gateway assurance process for projects seeking federal funding before being added to the Infrastructure Investment Program and that an independent assurance process examines all project risks.
Speaking to the media yesterday (16 November), Ms King said, “Today is a very important day in reforming the Australian Government’s investment in the nation’s infrastructure to ensure that we’ve got a more integrated, strategic and sustainable and affordable approach. The government’s committed to delivering infrastructure Australia needs, creating jobs and growing the economy while not increasing pressure on inflation”.
“The review has made 15 recommendations, all of which the government has agreed to or agreed in principle to.
“At the start of the review, I said we would not cut funding from the $120 billion pipeline. It was not a savings exercise, and we have honoured that. All states and territories have maintained their funding in the pipeline that they previously had – not a single dollar less for any state or territory over the next 10 years.”
Despite the review and the minister saying the states and territories were consulted on the review, there appears to be some disquiet. Queensland Treasurer Cameron Dick said he “has not and will not cooperate to support Catherine King’s cut”, while Victoria has continued its publish stoush with the Commonwealth over how the Melbourne Airport rail link will be funded.
Ms King said no funding had been cut from Queensland and she will keep in contact with Mr Dick’s office to “continue to work with them”, while the delay to the Melbourne Airport link has been attributed to a dispute between state and federal entities over whether the airport station will be above or below ground.
A list of all the projects considered by the review is available here.