Coalition snubs Victoria in $7 billion fund for regions

The federal government has overlooked Victorians on two key spending initiatives, with a $7.1 billion regional investment fund controlled by Deputy Prime Minister Barnaby Joyce allocating nothing to the state, and billions promised in previous years for Melbourne infrastructure and urban development failing to materialise in the budget.

The Age can reveal that this year’s budget contained nothing about two so-called “city deals” for Melbourne’s south-east and north and west, announced in May 2019, which were intended to bring together local, state and federal governments to invest in projects to improve liveability and economic growth.

Melbourne trafficCredit: Wayne Taylor

The then minister for cities, Alan Tudge, said it would take between 12 and 18 months to finalise the agreements. But three years later, no agreement has been reached and no funding has been allocated. Melbourne is the only capital city in Australia without a city deal, though Geelong has secured one.

Victorian Treasurer Tim Pallas said the state government would continue to engage in talks on the city deals in good faith, but accused the Morrison government of “crass cynicism” on infrastructure promises.

“They promised Melbourne two city deals on the eve of the last election and have failed to deliver,” he said.

The budget has also revealed that Victoria has been left out of the federal government’s Energy Security and Regional Development Plan, a $7.1 billion fund planned to “turbocharge” the economies of four key regions over 11 years from 2022 to 2033.

The fund – set up to secure National Party support for the Morrison government’s net zero emissions promise – includes cash for manufacturing and renewable energy projects in the Northern Territory and water infrastructure and supply chain projects in north and central Queensland. It also includes money for infrastructure investments to support mining, mineral processing and manufacturing and renewable energy in the Pilbara region of Western Australia and transport infrastructure projects for the Hunter region of NSW.

But Victoria’s Latrobe Valley, which has also been earmarked as a future renewable energy hub as it transitions away from coal, received nothing.

Acting Premier James Merlino said the federal budget was deeply disappointing but not surprising.

As The Age reported on Wednesday, Victoria received just 5.9 per cent, or $208 million, out of a total $3.56 billion worth of new infrastructure funding over the four-year budget period, despite having one-quarter of the nation’s population.

That compares with $1.3 billion of new money in NSW, $1.1 billion in Western Australia and $447 million in Queensland.

“If you look at regional Victoria specifically, the story is just as bad,” Mr Merlino said. “The federal government have a $7.1 billion regional development fund – nothing for Victoria. It’s all gone to areas that they want to win in an election in a couple of months’ time.”

“The Treasurer [Josh Frydenberg] might come from Victoria, but he’s not for Victoria. Once again, we’re seeing that in this year’s budget.”

On Wednesday, Mr Frydenberg defended the budget carve-up for Victoria, saying the total infrastructure investment in Victoria amounted to more than $35.5 billion since the Coalition came to government.

“Over the next 10 years, Victoria has 26 per cent of infrastructure commitments, in line with their population share,” he said.

These commitments, some of which stretch well beyond the budget’s four-year forward estimates period and have not been factored into the bottom line, include the Melbourne Airport Rail Link, Geelong Fast Rail and two intermodal freight terminals.

The federal government argues the budget also includes significant funding for regional Australia more broadly, money that will help create jobs in Victoria, including a $2 billion regional fund for business opportunities.

Senior Morrison government sources have blamed Victoria for putting all its eggs in the one basket with the Suburban Rail Loop. The first section alone, connecting Cheltenham to Box Hill, is expected to cost as much as $34.5 billion and the Commonwealth is refusing to stump up, at least until there is more detail.

The federal government has indicated it will only go ahead with a city deal for Melbourne’s south-east once a north-west agreement, which is still being negotiated, has been finalised. Infrastructure Minister Paul Fletcher said on budget night that discussions on the north-west deal were progressing on how best to leverage the Commonwealth’s investments in the region, including the Beveridge freight terminal and Melbourne airport rail.

But former Labor premier John Brumby, who has helped spearhead the north and west deal in an area expected to have a larger population than South Australia by 2036, said city deals were “still very much on the agenda and we hope in these circumstances the federal government will make further announcements”.

Kingston mayor Steve Staikos, a Labor Party member and spokesman for the Greater South East Melbourne coalition of councils, said the Morrison government was unlikely to deliver the city deal it promised in 2019.

“I think there’s a big black hole in the south-east of Melbourne when you look at the budget … we need to ask ourselves why,” Cr Staikos said. “Why is the federal government ignoring greater south-east Melbourne? Is this budget designed to deliver productivity? Is it designed to deliver a rebound? Is it designed to deliver infrastructure? Or is it designed for electoral success?

Kingston mayor Steve StaikosCredit: Penny Stephens

“I’m sorry to say, but the message it’s sending us is that it’s just basically a cynical exercise for winning votes. If they don’t think they’re going to be electorally successful in this region, they’re not going to put the money in the key infrastructure that’s needed in our region.”

Cr Staikos pointed to the higher unemployment rate in the south-east and booming population as arguments for an urgent city deal.

Andrew Giles, Labor’s spokesman for cities and urban infrastructure, criticised the “weasel words” of the Morrison government on city deals.

“After more than three years of opportunities to sign these deals, [they] have claimed that work is still in progress for Melbourne’s north and west, but failed to even mention the city deal for Melbourne’s south-east,” he said.

“The Morrison-Joyce government is clearly uninterested in engaging with state or local governments to address Melbourne’s infrastructure challenges. The only thing they’ve actually delivered is endless reannouncements, cost blowouts and cancelled projects.”

Data from the Australian Bureau of Statistics on Tuesday revealed Melbourne residents were packing up and moving to the regions, and Rural Councils Victoria chair Mary-Ann Brown said the federal government should be pumping in resources to help communities cope.

Regional Cities Victoria chair Kim O’Keeffe, a councillor in Shepparton, welcomed the $7.1 billion investment for the regions but agreed Victoria had missed out.

The Victorian Nationals declined to comment.

Jacqueline Maley cuts through the noise of the federal election campaign with news, views and expert analysis. Sign up to our Australia Votes 2022 newsletter here.