Article: PM's $25bn infrastructure fast track to recovery

[ozbob]

From The Australian click here!

PM's $25bn infrastructure fast track to recovery

PM's $25bn infrastructure fast track to recovery

Adele Ferguson | May 09, 2009
Article from:  The Australian

TUESDAY'S federal budget will invest more than $25 billion in key road, rail and port projects, including a heavy rail freight corridor linking Melbourne and Brisbane, aimed at hauling the nation out of recession.

The biggest overhaul of national infrastructure since the end of World War II - shifting the Rudd Government's fiscal strategy from short-term stimulus to boosting long-term productivity - will be funded by a variety of sources.

The unprecedented nation-building investment program will empty the existing $8.4 billion Building Australia Fund and tap new sources of cash, including borrowings, state government contributions and partnership with the Australian Rail Track Corporation.

The 2009 budget is expected to encourage private involvement in delivering new infrastructure and also offer incentives to superannuation funds to invest.

The Weekend Australian understands the budget will include funding for up to 12 projects of national importance compiled by Rod Eddington's advisory body, Infrastructure Australia.

Among the projects to receive funding will be:

* A $7.2 billion north-south inland rail freight corridor from Melbourne to Brisbane;

* A $1.2 billion extension to Sydney's F3 freeway to Branxton, providing about 40km of dual divided carriageway between the F3 Freeway at Seahampton and the New England Highway west of Branxton;

* Completion of the long-awaited upgrade to the Pacific Highway between Sydney and Brisbane, estimated to cost $6.6billion, to improve long-haul traffic between the two capital cities;

* A $3.5 billion east-west metro rail tunnel in Melbourne, designed to relieve pressure on the City Loop.

There is also speculation that the Queensland Government will get seed funding for its multi-billion-dollar urban rail project, which is aimed at upgrading inner-city capacity.

But the flood of cash into nation-building will be, in part, funded by an attack on middle-class welfare, with the Government set to claw back $1.9 billion over three years from high-income earners by means-testing the taxpayer-funded 30 per cent subsidy on private health insurance.

The measure, to take effect from July 1 next year and revealed in The Australian yesterday, will partially offset the promised tax cuts over the next two years which favour high-income earners.

Wayne Swan also yesterday refused to rule out means-testing childcare subsidies as he warned the budget was likely to be unpopular.

The Treasurer's budget infrastructure package will also contain key hospital projects in conjunction with state governments, using the health and education funds to create an even bigger national infrastructure headline spending figure.

Infrastructure Australia's full list of national-interest projects is expected to be released with the federal budget. It will include priority projects the Government will implement immediately, and a second list, which includes more than 20 projects that require more scoping work. This secondary list is expected to include the $3.8 billion regional rail express line in Victoria.

Sources close to the Government said the list of projects would be presented as fulfilling the Rudd Government's promise to alleviate congestion in cities, break economic bottlenecks, combat the rapid ageing of the nation's road, rail and ports infrastructure, lift the delivery of health and education services and provide confidence for future business investment.

The Government's commitment to allocate billions towards transport infrastructure comes as lobby group Infrastructure Partnerships Australia released a report exclusively to The Weekend Australian yesterday, warning that the freight industry faced significant challenges.

The 61-page report, Meeting the 2050 Freight Challenge, calls for major reform to the freight industry.

Using projections from economic forecaster IBISWorld, the report estimates the country's volume of freight will triple in size by 2050.

It predicts transport infrastructure investment will need to nearly quadruple from current levels to $62.5 billion a year to meet the increased demand.

The IPA report calls for the Government to establish a national freight co-ordination body charged with developing and delivering a national freight policy, identifying key reforms and taking strategic control of ongoing funding.

It recommends a new national pricing scheme and a review of the structure and operation of the freight market to ensure there is competitive neutrality between modes of transport and the market is able to function efficiently.

IPA chairman Mark Birrell said: "For too long, Australia has fiddled around the edges. The time has now come for the bold reform that will deliver an integrated national logistics network - underpinning Australia's future economic growth and productivity.

"Failure will increase cost of living, cost jobs through constrained economic growth and leave Australia with worsening congestion."

He said the IPA's modelling showed Australia's freight task would triple over the next 30 years, at a time when the nation's freight networks were already stretched beyond capacity.

"These research results reveal that Australia will need to build capacity equivalent to our entire existing network twice over," Mr Birrell said.

Mark Rowsthorn, the chief executive of Australia's biggest rail and port operator, Asciano, warned that the future investment required in freight-related infrastructure was phenomenal.

Mr Rowsthorn said current and future governments, at all levels, would find it difficult to fund this investment alone.