Projects axed as government makes space for pricey bridges and roads

One in 10 promised major infrastructure projects across the country faces the axe to make financial space for major road, rail and bridge works that have blown out in cost by $33 billion after an independent report found huge problems in the way governments plan key infrastructure.

Infrastructure Minister Catherine King will on Thursday release an overhaul of the 10-year, $120 billion pipeline of projects the government inherited when it took office, and map a new approach to how infrastructure is chosen in a bid to reduce inflation pressures across the economy.

Mega-projects such as Western Sydney Airport have stressed government budgets and fuelled inflation.Credit: Janie Barrett

The overhaul will be based on the review, commissioned in April, that recommends 82 projects yet to get under way be dumped, directing the money saved towards those works that do more to boost productivity and make the economy work more efficiently.

The projects have not yet been identified although some of them may be revealed when the full report is released on Thursday.

While axing projects, King will confirm extra money will be pumped into a range of big-ticket items including $1.75 billion for the Logan-Gold Coast faster rail project in Queensland, $100 million for upgrades to the Western Highway corridor in regional Victoria and $1 billion for Perth’s Metronet rail project.

She will also commit the government to supporting a string of big-ticket items, including the $8 billion-$13 billion Melbourne Airport rail link, the $1 billion Milton-Ulladulla bypass on NSW’s South Coast, and the $700 million Singleton bypass in the Hunter Valley.

The report, which backed the continuation of 100 projects not yet under construction, said there were major shortcomings in the way works had been costed and then added to the original pipeline of work.

“A number of projects were allocated … Australian government funding too early in their planning process and before detailed planning and credible design and costing were undertaken,” it found.

“Too many large-scale projects are receiving funding commitments without adequate planning, costings and programming to sufficiently manage the significant increase in delivery costs within a volatile market.”

This month, the International Monetary Fund recommended all levels of government reconsider the nation’s infrastructure pipeline, saying it was adding inflationary pressures to the economy that could force the Reserve Bank to hold interest rates higher for longer.

Of the $33 billion in cost blowouts, $14.2 billion is on projects not under way, with the review warning full-cost analysis of these works is not yet complete.

The review found many of the blowouts were due to the “ad hoc” way in which the government dealt with projects, noting that it was not responsive to “evidence of looming cost increases or aligned with long-term plans and strategies, and lack transparency and consistency”.

Projects for the coming financial year are already more than $1 billion over budget.

The review estimated that the true cost of projects currently budgeted at $9 billion in 2027-28 was actually more than $18 billion.

It identified 56 projects yet to start that are already showing signs of cost overruns and another 36 that should be “re-scoped”, with savings pumped into other works.

Apart from major infrastructure, the review said the government should significantly increase funding to local councils under the roads-to-recovery program which largely pumps cash into regional areas. This week, the Grattan Institute said councils needed $1 billion more a year to maintain their local road networks.

The review also backed a lift in funding and an expansion of the black spot program.

King said the review had shown the $120 billion investment program the government had inherited could not be delivered in its current form.

But she said the government would deliver infrastructure that boosted productivity and improved the lives of all Australians.

“With the co-operation of the states and territories we now have a forward plan of projects that are properly planned and targeted to unlock significant economic, social and environmental objectives,” she said.

Apart from changes to the timeline of works, the review also backed a move back to a 50:50 funding split for major infrastructure between the federal government and the states and territories.

It also urged that from 2024-25, the states provide an annual infrastructure plan to the federal government which would list priority projects as well as how the jurisdiction would manage cost pressures and other impacts, such as population growth and housing.

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