Victoria short-changed more than $11bn in carve-up of federal funding
Victoria will miss out on billions of dollars of federal infrastructure funding despite making up a quarter of the population – receiving less funding than both NSW and Queensland.
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Victoria has been short-changed more than $11bn in the carve-up of federal funding based on its share of the national population.
The state is set to receive 24.1 per cent of total funding over the next four years despite making up 25.6 per cent of the population – and forecasts show Victoria’s share of the national population is due to rise slightly over that same period.
The $11.3bn shortfall means Victoria will receive an estimated $187.1bn by 2027-28 compared to $215.4bn for NSW and $161.8bn for Queensland.
Despite funding increasing overall, the ongoing imbalance is expected to spark anger inside the Allan government, which has long complained of being dudded of a “fair share” of cash from its federal counterparts.
Tensions are also likely to rise after the Commonwealth snubbed a state request to increase its $2.2bn commitment to the controversial $34.5bn Suburban Rail Loop East, set to be built between Cheltenham to Box Hill.
Treasurer Jim Chalmers says the Albanese government needs proof it’s getting bang for buck out of its $2.2bn investment in Suburban Rail Loop East before giving the controversial project more cash.
The federal budget on Tuesday night did not contain any extra funding for the works, despite pleas from the state government for more.
Mr Chalmers said the $2.2bn capped contribution, committed at the 2022 federal election for the early works, was big and important.
But he said the government wanted to ensure it was getting the “value for money that we need out of that”.
“That funding is contingent on the project meeting the relevant conditions and working with Infrastructure Australia to make sure that we’re getting value for money,” Mr Chalmers told 3AW.
Asked if he was confident the state government could afford the rest of the project, Mr Chalmers said the right processes were in place to determine that.
“There’s the Infrastructure Australia process, there’s the relevant acts and rules and national partnership agreement,” he said.
“We’ll make further decisions about funding once we get through all of those processes.”
Allan says Victoria got ‘much fairer share’
Premier Jacinta Allan on Tuesday resisted the temptation to publicly criticise Victoria’s treatment, saying it was a “much fairer share” than what Victoria had received under the Coalition government.
“What we have seen with last night’s budget is … quite a reversal from the budgets of the former Liberal National government,” she said.
“We got a much fairer share, a much stronger share.”
Victorian Treasurer Tim Pallas said the federal budget was a “constructive step in the right direction”, but flagged Victoria hadn’t received as much funding as he would have liked.
“On infrastructure, I think it’d be fair to say that it’s a work in progress and we haven’t got as far as we like,” he said.
He said $5bn worth of new announcements in Victoria out of $16.5bn worth of all federal projects was a “dramatic improvement” on previous budgets.
“Am I satisfied? Well the simple answer is no. But do I recognise that the Commonwealth has made a constructive contribution? Yes. And should I stop asking myself rhetorical questions? Absolutely.”
Asked on budget night if Victoria was getting its fair share of funding in the budget, Treasurer Jim Chalmers said: “absolutely”.
“If you think about the infrastructure spend, for example, you will see really substantial investment in Victoria,” Dr Chalmers told the Herald Sun.
“They will be among the major beneficiaries of this budget and that’s because we understand you’ve got to represent the whole country.”
Asked about the discrepancy in population share, he said the “new infrastructure dollars” were the largest in Victoria.
“The big priorities in the budget for infrastructure are Victoria … Western Sydney … and SE Queensland but every state and territory gets more money for infrastructure.”
Despite $3.25bn in additional funding for the North East Link project, and $437.3m to upgrade suburban roads in south eastern and northern Melbourne, infrastructure is well short of Victoria’s population share.
Victoria will also receive $5.2bn in rail investment – more than any other state – and $6.5bn in road investments.
A 10-year pipeline of infrastructure funding will see $19.2bn flow to Victoria, less than both NSW and Queensland, and only 22.3 per cent of the total pool.
But this includes $5bn kept in the federal budget for the stalled Melbourne Airport Rail Link, which has been mothballed by the Allan government for at least four years.
The Allan government has long argued Victoria fails to receive its fair share of federal infrastructure funding and claims it has been dudded $8.3bn in infrastructure funding since 2014.
Victoria will receive $540m for works on the Australian Rail Track Corporation’s interstate freight rail network, and $150m to upgrade the Maroona to Portland Line in Victoria.
An additional $138.6m remains for the Geelong City Deal while $12m has been committed for the Bridgewater Road and Portland Ring Road intersection upgrade.
State parliament’s Economy and Infrastructure Committee in 2022 released a bipartisan report into Commonwealth funding that found a longstanding gap between Commonwealth infrastructure funding and Victoria’s population.
School funding has been increased to an estimated 25 per cent of total spending or $8.3bn in 2024-25, and increases to $9.2bn by 2027-28.
The Commonwealth will also provide $19.9m over four years to support the new Paula Fox Melanoma and Cancer Centre.
In total Victoria is expected to receive $43.6bn in federal funding in 2024-25, including $23.5bn in GST-related payments.
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