Road, rail projects need to be cut to take heat out of inflation: Treasurer

Cameron Dick issued a clear warning to his federal counterpart after learning some of Queensland’s biggest road and rail projects may have to be cut. VOTE IN OUR POLL

A warning from Treasurer Jim Chalmers that road and rail projects will have to be cut to help deal with soaring inflation has seen tensions dramatically flare between the state and federal governments.

Queensland government ministers have warned the cuts “better not be in Queensland”, ahead of the delayed release of the federal government’s 90-day infrastructure audit.

Mr Chalmers issued the stark warning on Sunday that infrastructure projects will have to be cut to deal with cost blowouts and take the heat out of inflation, as the nation faces the prospect of another interest rate rise on Tuesday.

It prompted Queensland Treasurer Cameron Dick to warn his counterpart to look to southern states for savings, in the first escalation of tensions between the state and federal governments since the Albanese government’s election in May last year.

It follows the International Monetary Fund warning last week that to tame inflation state and federal governments needed to scale back infrastructure spending and that interest rates should rise again.

Mr Chalmers said the government had “to be upfront” regarding the future of infrastructure projects and the steps needed to be taken to rein in cost blowouts and inflation.

Treasurer Jim Chalmers has warned that ‘difficult decisions’ may need to be made about some of Queensland’s big infrastructure projects. Picture: Aaron Francis / The Australian

“I do think we’re going to need to make some difficult decisions about the infrastructure pipeline, which factors in those $33 billion of blowouts from projects announced by our predecessors and which factors in our inflation challenge,” he said.

“Because of the pressures in the labour market and pressures on building costings and other costs, we’ve seen big blowouts in the program.”

Mr Dick issued a warning to his federal counterpart, saying Queensland was Australia’s growth state and needed more infrastructure, not less.

“If infrastructure cuts are needed, they should be made to southern states with low growth and high debt,” he said.

State Police Minister Mark Ryan hit out at Mr Chalmers over the comments.

“I’ve got a clear message for Jim. Jim’s a mate of mine. Jim, those projects better not be in Queensland,” he said.

Federal opposition infrastructure spokeswoman Bridget McKenzie said the government should be better prioritising and co-ordinating projects with the states, while state opposition deputy leader Jarrod Bleijie accused the state of manufacturing a “fake fight” after having been silent for months.

While details of the list of Queensland projects at risk of being scrapped as part of the 90-day review into the infrastructure pipeline have been kept under wraps, more than 130 projects worth a combined $15bn were expected to be in crosshairs.

Some upgrades to the Bruce Highway, the $3.2bn Sunshine Coast Rail, as well as upgrades to the Centenary Highway, Gateway Motorway and regional roads were expected to be under review, but Labor’s election commitments and Olympic Games venues were exempt.

Senator McKenzie said the results of the 90-day review were already 100 days overdue and that contractors were laying off workers.

“The responsible approach is to have better collaboration and co-operation between the states and the federal government on prioritising projects, not cutting them,” she said.

Mr Bleijie said the Palaszczuk government had not stood up for Queensland throughout the entire review process.

“They were in on the whole plan and are trying to manufacture an 11th hour fake fight,” he said.

Queensland Treasurer Cameron Dick. Picture: Dan Peled / NCA NewsWire