By Professor Christine Smith, Griffith Business School
The 2016-17 budget is above all else an election budget and we can anticipate further details of the infrastructure expenditure program to be announced at key points and locations within the election campaign in order to shore up votes in key regional electorates.
The majority of media attention has focused on the proposed tax and superannuation changes and the youth jobs initiatives that are the central pillars of the budget. These measures, while they may have differential impacts spatially, are not designed to benefit particular regions.
The defence expenditure plans announced previously, but included in the budget, around building submarines in South Australia in partnership with French business interests will help boost jobs in that state and the Whyalla region in particular. There are other smaller scale initiatives to upgrade defence facilities, particularly in the north and the west, that could benefit local regions should businesses in these regions be the successful tenderers for aspects of these upgrades.
Other initiatives that will impact on regions are focused primarily through the infrastructure spending program announced in the budget. A high proportion of this expenditure is focused on improving public transport and road networks in metropolitan regions with the intent of reducing commuting times for residents.
New initiatives
However, there are a number of new initiatives proposed for consideration that will impact non-metropolitan regions — for example, a new inland railway connecting Brisbane and Melbourne, a number of new dams and some ongoing road infrastructure expenditure. These proposed initiatives are detailed to a limited extent in the Investing in Regional Growth 2016-17 supplement to the Budget released yesterday.
A limited amount of expenditure on these initiatives will occur in 2016-17 however, with the majority of the expenditure to take place between 2018-2020. For example, the expenditure related to the new inland railway during 2016-17 relates to feasibility studies and land acquisition should the feasibility studies demonstrate that benefits of the project exceed the costs. The major benefits to the affected regions will occur during the construction phase, and hopefully when it finally becomes operational with freight trains taking local products to market at lower cost and in a more time sensitive manner.
Road upgrades
The ongoing road infrastructure expenditure proposed includes upgrades to the Bruce Highway in Queensland, the Pacific Highway in New South Wales and the Hume Highway in New South Wales as part of the Smart Cities Plan aimed at ensuring that capital cities and big regional centres — which provide the gateways to international trade for rural and mining regions — function effectively in terms of their transport systems.
This program will require coordination with the states and there have already been local media reports complaining that particular states (Victoria and Tasmania) are not receiving a fair share of the infrastructure budget or being forced to alter their own priorities in order to tap into the promised federal funds.
Water infrastructure
Similarly the water infrastructure (dams, pipelines and managed aquifer recharge projects) proposed require cooperation with states, as the funding proposed appears to take the form of loans from the federal government to states who in turn are being encouraged to become involved in public private partnerships (PPPs) to deliver this infrastructure. As a result the details relating to where this infrastructure will be rolled out and when is non-existent at this point. It is not clear which states would be prepared to take out loans or enter into PPPs in the water infrastructure area — especially given recent experiences with PPP-based transport sector infrastructure.
The water made available to end users of the proposed infrastructure would involve user pay charges and it is not clear under these circumstances that rural businesses would as enthusiastically embrace the promises in this area once this becomes apparent to them. It is also not clear that the environmental lobby would positively embrace initiatives once further details, including the location, of the proposed infrastructure becomes public knowledge.
There are other initiatives, such as the further roll out of the national broadband network and delivery of improved mental health and aged care programs through enhanced primary health networks aimed at improving facilities in outer regional towns and remote regions. These are comparatively small cost items that will nevertheless make a difference to the lives of residents in these regions.