Three new ‘nation building funds’
- $20 billion – Building Australia Fund (BAF) – see below.
- $5 billion – Education Investment Fund (EIF) to fund capital in higher education and vocational education and training facilities. EIF will absorb the existing Higher Education Endowment Fund giving it total funding of approx $11 billion.
- $10 billion to the Health and Hospitals Fund (HIF) to fund long-term hospital renewal and refurbishment and major medical research facilities and projects.
Each of these funds will be managed by the existing Future Fund (which will also receive an additional $3.9 billion from the Budget) and will be allocated by the Future Fund and the Federal Government in conjunction with COAG (the council of Australia’s Federal and state governments). Both the capital and earnings of each fund will be used to fund projects.
Roads, rail, ports and broadband
$20 billion has been allocated over the next two years to the BAF to spend on infrastructure projects (roads, rail and ports) with ‘high social value’, but not being undertaken by states or the private sector. It is envisaged that much of this funding will be combined with or encourage private sector investment.
- Immediate plans to spend $3.2 billion for road and rail transport, with about $560 million brought forward from 2009–10.
(It is anticipated that New South Wales and Queensland will receive the biggest portion of this spending and that Western Australia will get the quickest acceleration of projects.)
- The Future Fund’s newly-created Infrastructure Australia (IA) unit will assist in the identification of projects to be funded by the remainder of the fund. IA is a 23-member advisory council chaired by Sir Rod Eddington, comprising members from industry and all levels of government:
- End of October 2008 – IA will provide to COAG draft 'best practice guidelines for Public Private Partnerships'. These are to be published by end 2008.
- End of 2008 – IA will conduct an infrastructure audit and produce a strategic priority list to 'guide' public and private investment. This list will be presented in March 2009 at COAG.
- Feasibility studies (which will feed into the strategic priority list) are already underway for the following projects:
- upgrading key sections of the Bruce Highway in Far North and North Queensland and the Gateway Motorway in southeast Queensland
- upgrading the M5 roadway in Sydney
- constructing the Western Metro rail link in Western Sydney
- upgrading the Western Ring Road and constructing designated projects in the East-west transport corridor in Melbourne
- developing an integrated transport plan for Perth airport, and
- developing a transport sustainability study for Adelaide.
- Up to $4.7 billion for the National Broadband Network (also, the Communications Fund will be closed and its capital of $2.4 billion absorbed into the BAF).
In addition to the BAF, the government has scheduled an investment of $22.3 billion in land transport infrastructure from 2009/10 to 2013/14 under AusLink 2 including:
- $900 million for the Western Ring Road upgrade (Victoria)
- $1.1 billion for the Ipswich Motorway Upgrade (Queensland), and
- $2.5 billion to upgrade New South Wales’ Pacific Highway.
Water, energy and climate change
A total of $2.3 billion over five years—targeted at 'climate change' initiatives.
Water
The water initiatives are conditional on state and territory governments meeting agreed water reforms. An estimated $12.9 billion will be spent over 10 years on the 'Water for the future plans', including:
- National Urban Water and Desalination Plan – $1 billion in tax credits and grants to eligible projects—this funding is intended to attract up to $10 billion of investment in desalination, water recycling and major stormwater capturing projects
- $400 million for water efficiency measures and for purchasing water entitlements from Murray Darling basin sellers
- $255 million National Water Security Plan for practical water saving projects in cities and towns
- $250 million for the installation of rainwater tanks and other water saving measures
- Adelaide and Geelong will receive additional funding of $50 million for two recycling projects.
Renewable Energy projects
Consistent with the 20 per cent by 2020 renewable energy target, the following funding has been allocated (over the next eight years) to renewable energy:
- $860 million to develop low-emission technology
- $500 million over six years for a Renewable Energy Fund
- $500 million over eight years for a National Clean Coal Fund, with a potential $275 million for six new clean coal projects, and
- $240 million over four years.
Energy efficiency incentives
In preparation for the 2010 introduction of an emissions trading scheme, the Budget includes a number of energy efficiency incentives:
- $150 million over four years for the Energy Innovation Fund (EIF), and
- intention to allocate $500 million over five years for the Green Car Innovation Fund to develop low emissions vehicles. It has been reported that this fund will not be available until 2011–12.
- Energy efficiency incentives:
- $240 million over four years for the Clean Business Australia Program for businesses to improve their energy efficiency
- $300 million over five years for the Green Loans Program to assist households to switch to solar power
- $14 million over four years to encourage households to choose energy-and water-efficient products
- $150 million over five years to encourage rental accommodation owners to install insulation, and
- farmers to receive $130 million over four years to help prepare for climate change.
Asia-Pacific infrastructure support
- $150 million over three years to assist countries in the region prepare for and adapt to the effects of climate change and to work with Papua New Guinea to reduce emissions from deforestation and forest degradation
- $300 million for clean water and sanitation in the Asia-Pacific
- $127 million to establish a Pacific Region Infrastructure Fund to improve basic infrastructure, and
- $200 million to the United Nations to support global efforts to reach Millennium Development Goals.
Environmental systems and natural resources
$2.2 billion over five years to 'Caring for our Country Program' to focus on six priority areas, being a national reserve system, biodiversity and natural icons, coastal environments and aquatic habitats, natural resource management in remote and northern Australia, and community capacity, knowledge and engagement.
Social infrastructure
- Housing Affordability Fund funded at $500 million over five years to improve housing supply and reduce home buyers' red-tape and the cost of new housing-related infrastructure
- $623 million over four years to the National Rental Affordability Scheme to provide investors with $8,000 per annum for 10 years for each new dwelling that is rented out to low income tenants at a 20 per cent or more discount to market rates
- $30 million has been allocated to an Electronic Development Assessment project to speed up planning approval processes, and
- a new Housing Supply Council is to be established to assess housing supply adequacy over the next 20 years.
More information
For information regarding possible implications for your business, contact a member of the Infrastructure team.