Statement 1: Budget Overview
Nation Building Infrastructure — building blocks for the recovery
Investment in nation building infrastructure is the centrepiece of the 2009‑10 Budget. Representing the most significant infrastructure package in Australia's history and spanning the nation, the Government is investing $22 billion to improve the quality, adequacy and efficiency of transport, communications, energy, education and health infrastructure across Australia — the building blocks of the future economy.
Investment in these critical economic infrastructure projects will provide a sustained boost to the economy now. In the longer term, it will enhance the productivity of the economy. These projects are widely distributed across major metropolitan centres, regional and rural Australia.
The National Broadband Network will commence roll‑out in Tasmania, while investment in Australia's road network and, in particular, along the Network 1 (N1) linking Melbourne to Cairns, will support the more efficient movement of people and freight along one of Australia's busiest road networks and most important freight routes.
Improving the liveability and sustainability of our cities, the Government is investing in nine metropolitan rail projects across six major Australian cities: Melbourne, Sydney, Brisbane, Adelaide, Perth and the Gold Coast. The Government is investing $27.7 billion through the Nation Building Program and Building Australia Fund, including $3.4 billion as part of this Budget, to enhance the safety and efficiency of the national road network — this includes construction of a new bypass at Kempsey on the Pacific Highway. Demonstrating the Government's commitment to improving our export and freight infrastructure, the Government will set aside $339 million towards the development of Oakajee port and rail common use infrastructure, near Geraldton, in Western Australia, (subject to further work and consideration of the project by Infrastructure Australia) to support growing demand for internationally competitive export infrastructure.
The Government is also committed to improving Australia's social infrastructure ― our schools and hospitals. The Government is modernising every Australian school with $14.7 billion being invested in education infrastructure such as multi‑purpose halls, science laboratories, language learning centres as well as small‑scale maintenance and refurbishments.
The Government is committed to delivering better health care and better health outcomes across Australia and is undertaking a range of projects to improve health and hospitals infrastructure. For example, the Government is committing $250 million for the Townsville Hospital in Queensland, $200 million for a Health and Medical Research Institute at the new Royal Adelaide Hospital and $28 million for the Northern Territory Medical School. In Australia's west, the Government is investing $256 million towards the rehabilitation unit at the Fiona Stanley Hospital in Perth.
Table 3: Summary of nation building infrastructure projects
Infrastructure investment represents the next phase of a comprehensive strategy for Australia's recovery from the global recession and will provide the building blocks for future productivity and growth. Investment in infrastructure will help bolster the economy by creating and supporting employment and providing opportunities for businesses.
Sustained investment in and reform of Australia's economic infrastructure and infrastructure markets is critical to boosting national productivity. It will also drive a more diverse, competitive and sustainable economy that generates substantial and lasting economic, social and environmental benefits. Infrastructure investment will be the cornerstone of the recovery of the Australian economy going forward. As the global economy recovers from the current crisis and China and other emerging economies in Asia continue to expand and grow, it is vital that Australia is positioned to take advantage of the many opportunities and benefits that will emerge.
Before the global economic downturn, capacity constraints and infrastructure bottlenecks were evident in some of Australia's key export supply chains. Addressing critical infrastructure gaps, reform of planning and regulation, improved coordination of logistics chains and better use of infrastructure through appropriate pricing all have important roles to play in ensuring that we avoid the re‑emergence of these problems.
The importance of investing in Australia's physical infrastructure was confirmed in the latest OECD Going for Growth report (released in March 2009), which found that among OECD countries investment in energy, water, transport and telecommunication networks can boost long‑term economic output and productivity to a greater extent than other types of physical investment.
The Government will continue to provide leadership in the planning, financing and provision of significant nation building infrastructure projects while encouraging private sector involvement. Going forward, Infrastructure Australia will continue to play an important role in the provision of advice to guide government and private sector decision‑making on infrastructure investment.
Roads, rail and ports
Investment in critical road and rail infrastructure is essential. The OECD's report, Going for Growth, has noted that past investment in Australia's roads has been associated with higher GDP, relative to other types of investment. Similarly, investment in Australia's rail network has gone hand‑in‑hand in the past with higher aggregate output levels in comparison to other types of investment.
The Government is committed to building world‑class infrastructure that enhances the amenity and productivity of our cities. It is investing $4.6 billion to improve metropolitan rail networks in six of Australia's major cities: Melbourne, Sydney, Brisbane, Adelaide, Perth and the Gold Coast. As Australia's capital cities continue to grow and expand, investment in nation building infrastructure, including our metropolitan rail networks, is urgently needed to support sustainable urban development and renewal.
Congestion imposes a real and substantial economic and social cost on our communities. These costs include longer travel times, higher greenhouse gas emissions, higher vehicle operating costs and road trauma. The avoidable cost of congestion is estimated to rise to around $20 billion per year by 2020. The cost of congestion is real and substantial — it includes traffic delays, increased greenhouse gases, higher vehicle running costs and more road accidents. Through this investment, the Government is taking action to reduce these economic and social costs to make our cities more productive and prosperous.
The Government is investing an additional $3.4 billion from 2008‑09 to 2013‑14 in Australia's road infrastructure. This investment recognises the important role of roads in expanding the productive capacity of the Australian economy and building business confidence.
Each year, the amount of freight carried along Australia's national roads and highways increases. By 2019, it is estimated that 55 million tonnes of goods and products will be transported to domestic and global markets each year. This represents around a 30 per cent increase from 2009 levels.
The Government has committed $8.6 billion to upgrade the N1 through the Nation Building Program. The N1 is Australia's busiest freight route stretching along the eastern seaboard between Melbourne and Cairns. In this Budget, the Government is making a number of further strategic investments in the N1, which will bring the Government's total commitment in this critical road corridor to $12.0 billion. This involves the construction of bypasses, completing duplications, three‑laning, flood proofing, gradient reductions and other safety measures to improve the quality of this vital corridor.
Investment in the N1 will deliver economic benefits through greater efficiency and increased productivity. Lower transportation costs will ensure Australian businesses continue to be globally competitive.
These measures build on the $26.2 billion set aside for land transport infrastructure through the Nation Building Program. Through this program, the Government is contributing $24.2 billion to road building projects across Australia to construct new bypasses, ring roads and duplications. This investment is also widening roads, improving intersections and providing extra overtaking lanes to improve the efficiency and safety of Australia's road network.
Investing in our roads also delivers important social benefits — helping to keep our communities connected, improving access to services and enhancing the amenity of our cities.
In addition to expanding Australia's road network and improving its efficiency, the Government is also committed to making Australia's roads safer and lowering the real cost of road accidents and road trauma. In 2009‑10, the Government is investing $120 million in the Black Spot Program and $100 million to install rail boom gate crossings to improve the safety of our roads and reduce the social costs to the community from road accidents.
Australia's ports act as international gateways for Australian business, opening up access to global markets. Efficient, well‑functioning export infrastructure is essential to support economic growth. Before the economic downturn, capacity constraints and infrastructure bottlenecks impeded access to global markets for Australian commodities. This is why the Government has set aside $339 million towards the development of Oakajee Port and rail common use infrastructure in Western Australia and $50 million towards the Darwin Port expansion in the Northern Territory. Infrastructure Australia has identified these two projects as having national significance and playing a potentially important role in supporting future economic growth. Infrastructure Australia will examine each project as development progresses.
Through this investment, the Government is positioning Australian business to take advantage of future economic growth as the Asia‑Pacific region recovers from the global recession.
Greater connectivity between Australia's rural and urban centres, improved transit times and greater rail efficiency will help unlock critical supply chains and reduce landside bottlenecks at Australia's ports, thus improving the international competitiveness and efficiency of Australia's land transport network including a number of flow‑on environmental and fuel efficiency benefits.
Investment in Australia's transport network, including road, rail and landside port access, will directly increase Australia's capital stock. In addition, it will generate a range of positive spill overs supporting future economic growth, including through the facilitation of trade, greater access to global and domestic markets and lower costs to business through increased efficiency.
Acting now to expand Australia's infrastructure platform will support employment in the short and medium term, while providing the building blocks for Australia's future prosperity. In the long term, this investment will help unlock infrastructure bottlenecks that have constrained productivity growth in the past and ensure Australia is well placed to take advantage of future economic opportunities as they emerge.
National markets
Government action to drive competitive and efficient infrastructure markets and lower regulatory costs for infrastructure development complements the Government's direct infrastructure investment. This action will ensure that the potential benefits created by such infrastructure investment are fully realised. The Government is committed to ensuring that the right regulatory and business environment exists to support increased investment in infrastructure and the timely delivery of major projects.
Through COAG, the Government is working with the States and Territories to develop a more coordinated approach to planning and approvals processes for major infrastructure projects by lowering the costs imposed on infrastructure providers and increasing transparency and certainty around decision‑making processes. Furthermore, the Government is continuing to work with state and territory governments to progress national transport reforms.
Substantial progress has been made in the area of energy market reform including efforts to create an efficient national market. The Government is continuing to build on this success by working with its state and territory counterparts through COAG and the Ministerial Council on Energy so as to ensure Australia has reliable and efficient energy supplies into the future.
Infrastructure Australia
The Government established Infrastructure Australia to drive the development of a long‑term, coordinated national approach to infrastructure planning and investment. Infrastructure Australia provides a strategic perspective on the creation of national markets, competitive export infrastructure and a national freight network. Throughout 2009, Infrastructure Australia will continue to focus on nationally significant infrastructure priorities across a range of areas, including infrastructure planning and investment, integrated supply chain networks and public transport systems.
Clean Energy Initiative
The Government is committed to tackling climate change and encouraging further innovation in low emissions and renewable technologies that will help create the low‑pollution economy for the future.
The Government will invest $4.5 billion in a new Clean Energy Initiative, including $1.0 billion in existing funds, that will deliver a number of substantial measures aimed at enhancing innovation and investment in clean energy generation.
The Clean Energy Initiative will comprise three new core elements:
- a $2.0 billion investment over nine years in carbon capture and storage (CCS) projects under a CCS Flagships program;
- a $1.5 billion investment over six years in a new Solar Flagships program that will demonstrate large‑scale solar thermal and solar photovoltaic technologies; and
- a new independent renewable energy innovation body, Renewables Australia, resourced with initial funding of $465 million over four years to support renewable technology research, commercialisation and deployment.
Carbon Capture and Storage (CCS) Flagships
The new CCS Flagships program will deliver $2.0 billion over nine years to support the development of industrial‑scale demonstration projects for CCS technology in Australia. The projects are expected to include a carbon dioxide storage hub and projects to demonstrate a range of technologies to capture carbon dioxide from coal‑fired power stations. Projects will be subject to a competitive process, with the Australian Government contributing funding of up to approximately one‑third of the cost.
Together with the existing $400 million National Low Emissions Coal Initiative and the Cooperative Research Centre for Greenhouse Gas Technologies, the CCS Flagships program will accelerate the development and deployment of CCS in Australia and will complement the recently launched Global CCS Institute. The successful deployment of CCS will facilitate Australia's transition to a low‑pollution economy, generate the low‑pollution jobs of the future, and help preserve the value of Australia's coal exports.
Renewables Australia
The Government will establish Renewables Australia with $465 million over four years, including existing funding of $365 million from the Renewable Energy Fund, to promote the development, commercialisation and deployment of renewable technologies. Renewables Australia will be overseen by an expert board and will support focused, collaborative, high priority research and investment with the ultimate aim of progressing new technologies to the market while also lowering the cost of existing renewable technologies. Renewables Australia will also support and advise government, industry and the community in the promotion and development of renewable technologies and relevant research and development in essential renewable‑related systems, including renewable energy transmission infrastructure.
Solar Flagships
The Government will provide $1.5 billion over six years, including existing funding of $135 million from the Renewable Energy Fund, for a new Solar Flagships program. The program will establish large‑scale solar electricity generation equivalent to the generation capacity of a coal‑fired power station. The program will comprise up to four solar projects operating in the national grid, with an additional capacity of 1,000 megawatts. An energy market participant will be selected by a competitive process to manage Solar Flagship projects.
This program will help accelerate the deployment of promising solar energy technologies, including solar thermal and photovoltaic, whilst also building skills and capacity in the solar industry. Together with the existing $100 million Australian Solar Institute, the new Solar Flagships program will help position Australia as a world leader in solar energy generation.
National Broadband Network
The Government has established a company that will invest up to $43 billion over eight years to build and operate the biggest single nation building infrastructure project in Australia's history, a new National Broadband Network (NBN) in partnership with the private sector.
The NBN will be a national, wholesale‑only, open‑access broadband network. The Government's objective is to provide broadband services to 90 per cent of all Australian homes, schools and workplaces that will allow speeds of 100 megabits per second based on fibre‑to‑the‑premises (FTTP) technology. Next‑generation wireless and satellite technologies will be able to deliver 12 megabits per second or more to people living in more remote parts of rural Australia. The NBN will also include the backhaul network, that is, the fibre optic transmission links connecting cities, major regional centres and rural towns.
The Government will be the majority shareholder of the network company but intends to sell down its interest within five years after the network is built and fully operational, consistent with market conditions and national and identity security considerations. The Government will make an initial investment of $4.7 billion.
Telecommunications play a vital role in Australia's increasingly knowledge‑based economy, and are important for the nation's productivity. The NBN rollout will address a history of underinvestment in key telecommunications infrastructure.
Significant investment is required now to ensure that Australia is well placed to meet future demand for telecommunications services. Consumption of telecommunications services is increasing substantially, and new applications and greater internet use will increase demand for broadband services.
Rolling out a new national network is a major and complex engineering task that will take time to deliver. To provide benefits in the short to medium term, the Government is undertaking measures such as:
- fast‑tracking negotiations with the Tasmanian Government, to commence the rollout of the new network in Tasmania this year;
- investing up to $250 million to immediately address regional backbone 'blackspots' throughout Australia; and
- requiring, from 1 July 2010, all new estate developments to install FTTP technology.
Investment in this nation building infrastructure project will stimulate jobs in the short‑term, and enhance productivity and innovation in the long term. It is expected the project will support 25,000 jobs every year, on average, over the life of the project (with a peak of 37,000 jobs).
The Government is undertaking an implementation study that will determine network operating arrangements, detailed network design and the means by which to facilitate private sector investment (including from rollout of the network in early 2010) and provide procurement opportunities for local businesses.
The NBN is an investment in a world‑class telecommunications network that will provide the capacity to meet future demand and support productivity and innovation. The Government's investment, coupled with changes to the existing telecommunications regulatory regime, will also fundamentally transform the competitive dynamics of the telecommunications sector that underpins Australia's future productivity growth and international competitiveness.
If www.budget.gov.au responds slowly or you are having trouble downloading a document, try one of the Budget Website Mirrors
Note: Where possible, Budget documents are available in HTML and for downloading in Portable Document Format(PDF). If you require further information on any of the tables or charts on this website, please contact The Treasury.
