Federal Gov’s ‘wasteful’ Suburban Rail Loop cash splash behind budget deficit

Cutting “wasteful spending” on major transport and defence projects such as the Suburban Rail Loop project will save taxpayers billions, a new report suggests.

Cutting “wasteful spending” on transport projects such as the contentious Suburban Rail Loop project would save taxpayers billions as Australia faces 25 years of budget deficits, according to a new report.

The Grattan Institute is calling for the Albanese government to slash spending and hike taxes, amid concerns that teens who started high school this year will not see a budget surplus until they finish university.

Redesigning the third tranche of tax cuts to keep the 37 per cent tax bracket, raising the GST, introducing carbon and inheritance taxes are among a suite of controversial measures it is proposing to boost revenue.

An artist's concept of a Suburban Rail Loop train. Picture: Suburban Rail Loop Authority

The think-tank says $15bn in savings could be made by axing Western Australia’s special deal on the GST, abolishing Family Tax Benefit part B for couples and counting more of the family home in the aged pension assets test.

But CEO Danielle Wood says a reduction in “wasteful spending” on major defence and transport projects – which receive about $50bn in federal funding a year – could save a further several billion dollars.

Labor’s $2.2bn investment in the Andrews’ government’s Suburban Rail Loop project is in its firing line, due to its “highly questionable” business case.

The Herald Sun on Tuesday revealed a $250m community grants fund set up as part of the Suburban Rail Loop project was also splashing cash on clubs more than 5km from the route, with some residents in impacted areas criticising the spendathon as “bribery”.

Grattan Institute CEO Danielle Wood suggests cutting costs on major defence and transport projects could save several billion dollars. Picture: supplied

“One of the biggest cost savings available to governments is to stop making bad decisions – poorly conceived, often politically motivated decisions have proved very costly, especially as ‘megaprojects’ have become more common,” the report states.

Infrastructure Minister Catherine King maintains the project stacks up, despite Victoria’s auditor-general warning the state government may have overstated the benefits.

The report also raises concerns about the $15.4bn Inland Rail project, a 1700km freight network between Melbourne and Brisbane, which could blow out to more than $31bn.

Labor invested $2.2bn in the Andrews’ government’s Suburban Rail Loop project. Picture: supplied

The structural deficit is expected to hit about 2 per cent of GDP, or nearly $50 billion a year, by the end of the decade.

But estimates of spending on defence, health and support for the vulnerable suggest that figure could soar to more than $70bn a year.

Ms Wood said Australia should not fall into the trap of thinking “we can simply grow our way out of debt”.

“None of these policy options are easy. But if the government is serious about budget repair, it will need to embrace at least some of them,” she said.