the treasurer\u2019s second budget paper<\/a> (161-page \/ 2MB PDF).<\/p>\nThe largest single infrastructure investment in the budget is earmarked for the Suburban Rail Loop (SRL) East in Victoria. The A$3.8bn of additional funding over four years brings total federal support for the project to A$6bn.<\/p>\n
Continued funding for the High Speed Rail Authority was also announced, comprising A$659.6 million over three years for development and early works on the Newcastle to Sydney corridor.<\/p>\n
The narrowing of the scope of the Inland Rail project was confirmed in the budget, however, with the announcement that funding will only extend to the construction of the new rail link up to Parkes in New South Wales. The project was originally envisaged to provide a new, more direct, link for freight to be moved between Melbourne and Brisbane as an alternative to the coastal rail line where freight services and passenger services currently compete for capacity, but the new line will now stop around half-way between the two cities. The savings from this move are expected to be around A$4.4bn.<\/p>\n
One major new project that has not been allocated funding in the latest budget is the Melbourne Airport Rail Link. However, the federal government has indicated that its rail infrastructure project finance costs will increase from 2028-29 to account for funding to be allocated to that, and other, rail projects.<\/p>\n
Our view<\/p>\n
The headlines about huge investments in infrastructure don\u2019t give the full picture as, on the whole, funding will be spread across a large number of smaller projects and new packages of projects already announced. While the budget includes significant funding for SRL, investment in rail projects overall has reduced slightly in this budget with the expectation that investment will increase again in 2028-29 \u2013 largely reflecting the delivery schedules for major projects such as SRL, METRONET in Perth, and the Melbourne Airport Rail Link. Conversely, investment in road projects has increased in this budget with the expectation that this will slow in 2028-29.<\/p>\n
Investment in the High Speed Rail Authority suggests that there will be near-term opportunities in planning, geotechnical and early\u2011stage advisory work.\u00a0However, the future of this project still feels somewhat uncertain – while the \u2018expressions of interest\u2019 phase for two major works packages is currently open, key details around funding and procurement timetable are yet to be decided and a final contract award will not be made for two years.<\/p>\n
Defence infrastructure<\/p>\n
The federal government has followed up on the publication of its updated national defence strategy and integrated investment program earlier this year with increased funding commitments for defence. In total, additional funding of A$6.8bn over four years from 2026\u201327 \u2013 and A$35.6bn over 10 years from 2026\u201327 \u2013 has been pledged to deliver the strategy and program, which, among other things, envisage the strengthening of the country\u2019s defence industrial base.<\/p>\n
Included within the funding commitments is A$12bn of investment for the Henderson Defence Precinct, a new naval shipbuilding and maintenance hub to be developed to the south of Perth.\u00a0 <\/p>\n
The budget includes funding to support early works for interim facilities at Henderson and further provides for an equity injection into Commonwealth-owned company Australian Naval Infrastructure Pty Ltd, to support the construction of a nuclear submarine construction yard in South Australia.<\/p>\n
Our view<\/p>\n
As in other countries around the world, defence will be a major focus of infrastructure investment in Australia for the next 10 years and will offer opportunities for contractors in all parts of the supply chain.<\/p>\n
Other infrastructure projects<\/p>\n
Other notable infrastructure funding commitments included in the budget include up to A$1bn in Commonwealth funding to support the Boyne Island Aluminium Smelter in Queensland to transition to aluminium production using renewable energy.<\/p>\n
The project is part of a wider initiative to decarbonise metals production in Australia, with the federal government\u2019s funding to be matched by equal funding from the state government. The public funding commitments are expected to drive a further A$7.5bn in further private investment for the project.<\/p>\n
The budget also provides for A$222.6m to continue providing support and stabilisation of the Whyalla Steelworks during administration, a commitment to Australian manufacturing which benefits the infrastructure sector.<\/p>\n
A further major infrastructure funding pledge has been made in connection with housing. Under the budget, A$2bn of federal funds have been pledged, over four years, for enabling infrastructure such as sewerage, water, electricity, gas and roads, to unlock new housing developments. The funding will be allocated via states and territories in support of local government and state utility initiatives. Allocation of the funds to states and territories will be contingent on those state authorities \u201ccommitting to reforms to improve productivity in the housing sector, including faster and simpler approvals, releasing more land ready to build homes, and delivering a genuinely national construction code\u201d.<\/p>\n
Our view<\/p>\n
As well as providing a short-term opportunity for contractors and renewable energy original equipment manufacturers, the Boyne Island project signals continued Commonwealth willingness to underwrite major industrial decarbonisation projects.<\/p>\n
The housing-related commitments should provide a pipeline of smaller to mid-scale civil, utilities and connection works to support the Commonwealth\u2019s key focus for this budget \u2013 new housing \u2013 and will be particularly relevant to tier-two and tier-three contractors and service providers.<\/p>\n
As Australia\u2019s only structural steel manufacturing facility, producing approximately 75% of the nation’s structural steel, the closure of the Whyalla Steelworks would potentially have serious implications for construction projects already underway, so the continued federal backing will be welcomed.<\/p>\n","protected":false},"excerpt":{"rendered":"
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