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The economic and political reckoning that is infrastructure electoral inflation has been building for years.
While it culminated in the announcement of Infrastructure Minister Catherine King’s decision to axe 50 projects, nominally worth almost $11 billion, the reckoning was evident in March last year.
Bridging the infrastructure spending divide will test minister Catherine King.Credit: State Library of New South Wales
That was when then-treasurer Josh Frydenberg ate political crow by killing four railway station car parks he had promised to his Melbourne electorate. For $65 million, they were going to deliver about 2000 extra parking spaces.
It quickly became apparent that the car parks would struggle to ever be built. Never properly planned (one was for a railway station that the state government planned to close) or costed, they were a prime example of governments trying to use infrastructure to woo voters.
Another five commuter car parks were axed by King on Thursday. There’s unlikely to be a political cost as voters have largely come to the conclusion they could never be built.
But getting rid of five imaginary car parks is the easy part for the government.
King now has to explain how a country, groaning under the weight of record rates of migration, will trim almost $11 billion worth of infrastructure spending, pump more money into a select few projects and put a question mark over the future of more than 30 other road and rail proposals.
On the economic side, everyone from the Reserve Bank to the International Monetary Fund has been saying the avalanche of projects on the books of the federal government, the states, local councils and the private sector is a crushing burden.
The independent review commissioned by King to look at the federal government’s infrastructure pipeline came to the same conclusions.
It determined there was a better chance of connecting Victoria to Tasmania with a bridge than there was of 800 separate federally supported projects worth $120 billion being built, on time and on budget over the next decade.
But that is a bridge too far.
Too many projects were too expensive, had no real rationale and did not deserve federal taxpayer support.
While the budget papers showed the 50 axed projects were worth $11 billion, there was no way that was their true cost. There is no chance, for instance, of upgrading the road between Katoomba and Lithgow in NSW’s Blue Mountains for $2 billion or building a fast rail between Melbourne and Geelong for $4 billion.
But that’s the economics. The politics is much trickier.
While happy to confirm extra spending for a host of projects, King was less forthcoming about the timing of those projects.
She reckons the Commonwealth can spend between $10 billion and $12 billion a year. This year, the plan is to spend about $14.1 billion.
Infrastructure Minister Catherine King faces more political problems as she attempts to slice spending.Credit: Alex Ellinghausen
So the mid-year budget update will have to confirm the timing of many projects will slip.
King is also picking a huge fight with the states. Queensland, where the Palaszczuk government is at long-odds to retain power, showed what to expect when state Treasurer Cameron Dick used social media to tell King that she should “treat Queensland more like Qantas and less like Qatar”.
To be clear, Queensland got an extra $2.1 billion in funding for 15 projects (including $1.8 billion for a rail project to the Gold Coast). It lost nine projects worth $400 million including two railway station car parks and a $25 million roundabout.
More tension is likely to come. King has identified a number of projects where funding for planning purposes has been confirmed as it tries to get a handle on the true construction costs. There has to be question marks over the future of those works.
For far too long, infrastructure has been used by governments of all persuasions to win over voters in marginal electorates. Political parties have become engaged in an electoral war where roundabouts and car parks are the arms of choice.
King has just opened a new front in the infrastructure war.
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