NSW infrastructure budget could be at risk after China snub

NSW was promised new rail and road projects but could all that be under threat after AusGrid’s sale to China was blocked?

Could the Sydney Metro be scaled back with the loss of the cash from China’s blocked bid for AusGrid? Picture: Supplied.

MULTI-BILLION dollar major projects across NSW could be in jeopardy following the Federal Government’s unexpected decision to block two Chinese companies from bidding for the state’s electricity assets.

Chinese state-owned China State Grid and Hong Kong company Cheung Kong Infrastructure were set to take a majority stake in AusGrid which provides electricity to Newcastle, the NSW Central Coast and much of Sydney.

The two companies were thought to be prepared to part with as much as $10 billion for the controlling stake in the utility until Treasurer Scott Morrison stepped in stating the Chinese firms had failed to prove the sale was in the national interest.

With the Baird Government having a $20 billion shopping list of infrastructure projects — from new railway lines to motorways, hospitals to schools — the knock back raises questions about whether there will be enough cash in the bank to pay for it all.

NSW Treasurer Gladys Berejiklian is being bullish. “This is a very valuable asset with much interest from many different parties,” she told reporters on Thursday.

“I anticipate the money for this transaction will be banked in the next state budget.”

NSW Treasurer Gladys Berejiklian on Thursday faced questions over how NSW would pay for its infrastructure shopping list.

Labor is not so sure. “(Mr Baird’s) entire plan has been on selling AusGrid to the highest bidder,” Opposition Leader Luke Foley said. “Inevitably this state will receive billions of dollars less than Mr Baird was counting on.”

By some estimates, NSW could receive $4 billion less than it was hoping for.

The Baird Government has an ambitious infrastructure agenda with $73 billion earmarked over four years. Of that, $20 billion is dependent on the sale of government assets.

The sale of Transgrid, the state’s electricity “poles and wires” has already netted $10 billion.

But there is still a chunk to find, so if NSW can’t top up its coffers to at least $20 billion, what projects could be at risk?

Artist impression of the M4 East at Parramatta Road at Haberfield entry.

ROADS

Construction has just started on phase one of the government’s controversial $17 billion WestConnex project which will see the current motorways to the city’s west widened and build a new tunnel to bring the road closer to the CBD.

This is budgeted for, but a further $1.1 billion could be saved by scrapping further phases including a tunnel under Sydney’s inner west and huge above ground motorway junction.

The project is a flagship for the NSW Government who may be loath to cut it back but the road is deeply unpopular in the inner west who would welcome it being axed.

The WetConnex project has now gone down well in all parts of Sydney.

More likely would be a scaling back of more than $1 billion for so called “smart motorway” improvements, clearways and investigations into a new highway through the city’s southern suburbs to the Illawarra.

The government might be tempted to cut back funding on regional roads but that is unlikely to go down well with rural Coalition voters.

Completed tunnel sections of the Sydney Metro North West rail project. Sydney Metro South West is yet to begin construction.

RAIL AND LIGHT RAIL

There’s no fear for Sydney Metro North West — the tunnels have been bored and stations are being built. But no less than $7 billion from the $20 billion has been pencilled in to connect the new line to the CBD and through to the south west.

But without this, the Metro will end up as an awkward branch line isolated in the suburbs.

But costs could also be saved from the yet to be started Sydney Metro South West. Perhaps a few less stations to save some coin?

The CBD and South East light rail will be completed but what of the proposed Parramatta light rail? It must be tempting as it could save at least $600 million. But after raising expectations in Sydney’s second CBD, scrapping this would be political poison.

Artist impression of the light rail in Parramatta CBD.

The half billion dollar Newcastle light rail hasn’t been started yet and some doubt it’s the right answer to the city’s transport needs. But it’s probably too late to stop it now with construction imminent.

If the purse strings tighten, what’s more likely is some less exciting projects will be pared back. Bus priority projects to Sydney’s northern beaches could fall down the list of must-complete items, particularly as that region is likely to vote Liberal come what may.

Regional rail fans have more to worry about. Given the choice, MPs in regional areas are likely to fight harder to improve their roads than their rails.

HOSPITALS AND SCHOOLS

There is $2 billion due for schools and hospitals. It’s always difficult to cut in these areas but any cutbacks to plans for new hospitals, in the growth areas on Sydney’s fringe, will bitterly disappoint locals.

However, $600 million for “new and innovative school designs which rethink how schools work,” seems far more vague and may be an area where it’s easier to reduce costs.

Allianz Stadium (Sydney Football Stadium) and the SCG at Moore Park.

NEW STADIUMS AND MUSEUMS

The NSW Government made a pig’s ear of allocating money to upgrade the city’s stadiums, with Sports Minister Stuart Ayres publicly backing a new stadium in Moore Park against the wishes of Premier Mike Baird who favoured a revamp of the Olympic stadium. Too much political capital has been lost here already.

An easier option would be to save a few hundred million by halting the move of the Powerhouse Museum from the CBD to Parramatta. Admittedly, it won’t please the community in Sydney’s west but the WestConnex road project, rail improvements and Parramatta light rail engender far more passion than a museum of art and design.

It’s all academic say Mr Baird and Ms Berejiklian: “This in no way hampers our ability to deliver the biggest infrastructure program our state has very seen,” the Treasurer said of the botched sale.

Indeed, bidders who had dropped out of the running, including Westpac, Queensland Investment Corporation and one of Canada’s largest superannuation funds, could be tempted to get their chequebooks out again.

But with the players with the deepest pockets out of the picture, it’s inevitable NSW will get less bang for its power buck.