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2015 Federal Budget: Infrastructure highlights

News

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Posted by PlantMiner
"This is a budget that unleashes our nation's potential" claimed the Treasurer Joe Hockey. The 2015 Federal Budget committed to "sensible savings, prudent spending and redirected funding to small business, child care, infrastructure" in order to boost growth and jobs.

The lead-up to last night's budget was filled with anticipation and the nervousness may have to do with the impossibility of the task. The government's fight to cut the deficit has been the cornerstone of the past year, but the number keeps rising.

Peter Martin, economics editor of The Age, shared:

Labor forecast $18 billion for 2013-14, the Coalition forecast almost $30 billion for 2014-15, and [last night it] forecast something north of $40 billion for 2015-16. That's because the price of the stuff Australia sells keeps sliding. When Labor drew up its last budget iron ore was $US124 ($157) a tonne. A year later it was $US102 a tonne. [Yesterday] morning it was about $US61 a tonne. The Treasurer says every $US10 that the iron ore price falls adds about $2.8 billion to the deficit, a rule of thumb which would suggest that, all other things being equal, the government has lost $17 billion since the last budget as iron ore exporters pay it less tax. However, all other things are not equal. The dollar has slid from US93¢ to US79¢. Meanwhile, iron ore exporters churn out more product, and the net effect has been to drain the budget of revenue.

 

He claims that with "a deficit that is growing by the day, a strong budget has never been more necessary". Let's delve in to the good news and bad for our industry:

Northern Australia business and States

A $5 billion loan facility will be set up to promote infrastructure investment across northern Australia, in one of the major new initiatives unveiled on Tuesday night.

"We will partner with the private sector and governments of Western Australia, the Northern Territory and Queensland to provide large concessional loans for the construction of ports, pipelines, electricity and water infrastructure that will open our northern frontier for business"."

The region is considered vital to Australia's economic growth because of its proximity to international trading partners.

"This is an exciting frontier of economic development that is filled with abundant resources and talented people. “It’s tropical climate is shared with two thirds of the world’s population and of course its closer to our key trading markets than any other part of the country. But the north needs infrastructure to get things moving - we need to build in order to grow.”

The northern states, as well as private companies, will be able to appeal to the government for access to the loan account, which will lend at cheap interest rates.

The thinking behind the initiative, government officials said, was to help stimulate developments that may not have been able to win approval without assistance.

The government will encourage private companies to partner with state governments and then request access to the fund, which will be open for five years. Depending on the terms of the loans, state governments and their private partners could be given decades to repay the loans.

Beef Roads in the north

Cattle farmers in the north of the country will also benefit in $101.3 million in funding over four years to improve road infrastructure for cattle supply chains.

A new Northern Australia Beef Roads Fund will make targeted upgrades to key roads necessary for transporting cattle. This will underpin the future viability of the cattle industry which has long been a pillar of the northern economy.

Moving cattle in the north, from farm gate to market, involves some of the longest land transport distances of any Australian commodity where land transports costs in the northern beef industry make up to 35% of the market price of livestock. These improvements will also benefit other road users, boost regional communities and improve the profitability of a range of businesses - including pastoralists, livestock transporters, processors, and live exporters.

The northern agricultural sector

Farmers battling drought will get a lifeline with $250 million set aside to continue the Drought Concessional Loan Scheme for another year.

In recognition of the drought's effects on farming businesses and regional communities, the Commonwealth will provide:

  • $35 million for shovel-ready, local infrastructure and employment projects. Funding will be targeted at projects that offer the greatest potential to stimulate local spending, use local resources and provide lasting benefit to the community.
  • $25.8 million for programmes to manage pest animals and weeds in drought-affected areas. This measure will provide work for rural contractors while assisting landowners to deal with the impact of feral animals on livestock and pasture.
  • $20 million to expand existing social and community support programmes. This additional funding will improve access to mental health support and counselling services for drought-affected families and communities.
  • $1.8 million to fund additional rural financial counsellors in drought-affected areas.
  • $250 million in 2015–16 to continue access to existing drought specific concessional loans schemes.
  • $70 million to enable primary producers to claim more favourable accelerated depreciation for water facilities, fodder assets and fencing, allowing farmers to more effectively store and use water and fodder to better manage periods of drought and fully d​educt the cost of fencing in the year it is purchased.

South-west Sydney motorists

The WestConnex motorway, roads around Badgerys Creek and a commitment to finishing the duplication of the Pacific Highway by the end of the decade remained the government's major transport commitments for Sydney and NSW. Prime Minister Tony Abbott announced $2.9 billion in new roads spending over the next eight years to support the construction of a new airport at Badgerys Creek, with NSW pitching in 20 per cent of the cost.

The funding pledge confirms Mr Abbott's 2014 declaration to build the much-debated airport at the site 50 km west of Sydney's CBD.

Construction of the airport is expected to begin in 2016 and will spur the creation of up to 4000 construction jobs at its peak.

Businesses eyeing privatisation of interstate rail tracks

Australia’s national rail network will reportedly be privatised, possibly through a share market listing, under plans to be announced in the federal budget tomorrow night.

Treasurer Joe Hockey outlined a plan to sell the Australian Rail Track Corporation as part of a suite of measures to shrink bureaucracy and provide an exit for government from some areas of operations where the private sector can step in.

The ARTC manages over 8,500kms of interstate track across South Australia, Victoria, WA, Queensland and NSW. It maintains the national rail network, runs its capital investment, and sells access to rail operators.

Urban projects

Struggling with declining revenues, the Abbott government failed to find extra money for new road and rail projects in the country's major cities.

Tony Abbott is demanding Victoria hands back $1.5 billion of East West Link cash as a major saving to pad out his second budget, paving the way for a bitter federal-state showdown over infrastructure funding. The $1.5 billion clawback from Victoria represents almost 14 per cent of the total $11 billion worth of major savings announced by the Abbott government over the next four years. Despite booking the road cash as a saving, the government remains adamant the road must be built as a job creating, congestion busting project for Melbourne.

"The Victorian government will waste over half a billion dollars not to build this world class project but the East West Link may still be reinstated at a later date by a government willing to do the right thing by the people of Victoria. To this end, the Commonwealth government has revised the forward estimates, including the return of $1.5 billion of unspent funding from the Victorian government," the statement says.

Hopes for a rail line to Badgerys Creek Airport in Sydney have dashed despite renewed calls. Mr Abbott is committed to spending federal funds on urban road projects only, not public transport.

Final thought

Despite there being limited additional spending on new infrastructure, it's good to see the Government is committed to improvements across the nation. Fifty-five road projects will start construction this year, opening opportunities for plant hire companies to get their gear on these infrastructure upgrades. Make sure you don't miss out on the opportunity by listing your plant hire business on PlantMiner. Contractors looking to procure hire quotes for the works can do so by submitting a request for quotes through PlantMiner, or by calling us on 1300 550 434 for assistance.

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