03 May 2016

Australian Federal Budget 2016-17: Infrastructure

The Budget indicates that the Government expects to invest heavily in infrastructure with an expected $50 billion allocated for national infrastructure projects from 2013-14 to 2019-20. These funds will be invested in roads, rail, dams and public transport. Currently 100 projects are under construction with another 80 in the pre-construction phase.

Significant projects that funding has been committed to include the Melbourne to Brisbane Inland Rail, the Western Sydney airport at Badgerys Creek and the Forrestfield-Airport Link in Western Australia

New investments

The Government has allocated $2.9 billion to new investments in essential infrastructure across Australia, including:

  • in Victoria, $1.5 billion of funding previously allocated to the East West Link Road project will be redirected on a matching basis with the Victorian Government to new infrastructure projects (including the Western Ring Road, the Murray Basin freight rail upgrade and the Monash Freeway);
  • in Western Australia, $260.8 million will be allocated towards the tunnel section of Stage 2 of the Perth Freight Link. This brings the total Government commitment to the project to $1.2 billion;
  • in Queensland, $200 million will be allocated to the Ipswich Motorway on a matching basis with the Queensland Government.

The Government will also establish a $2 billion Water Infrastructure Loan Facility to stimulate investment in dams and pipelines across Australia.

The Government has either finalised or committed to agreements under the Asset Recycling Initiative with four States and Territories worth $3.3 billion. These agreements will facilitate additional State and Territory infrastructure investment of $23 billion including the Sydney and Melbourne Metro projects.

We note that changes proposed to the tax treatment of certain collective investment vehicles (CIVs) may be relevant to investors of infrastructure projects. Please refer to our discussion of these budgetary measures here.

For a full analysis of this year's Budget measures, please see Australian Federal Budget 2016-17.

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