Tens of billions of regional funds at risk in search for budget cuts

Tens of billions of dollars of infrastructure slated for the next decade, much of it in the regions, could be under threat in the next two budgets as Treasurer Jim Chalmers searches for savings ahead of the October 25 budget.

A suite of regional programs promised to then-Nationals leader Barnaby Joyce in return for his party’s support to the Coalition’s net zero carbon emissions by 2050 policy are also being reviewed by the government as it combs through past Morrison’s pledges.

Joyce boasted in June he had secured nearly $30 billion.

Former prime minister Scott Morrison promised tens of billions of dollars for infrastructure projects that are yet to begin construction.Credit: Kate Geraghty

Few of the funds and projects announced in the March budget were officially signed off before the swift move to an election campaign – and none had begun construction. The government’s ongoing rorts and waste audit is scrutinising all these funds alongside grants and infrastructure pledges.

Prime Minister Anthony Albanese told business leaders last week that the October budget would see cuts in discretionary funding that had been allowed to surge under the Coalition.

“The budget in October will see some of the funds, that were just on the whim of a minister, wiped out as part of the savings that are required to help send the budget in a better direction than the way it was headed,” he said on Thursday.

The March budget included $7.1 billion on an “energy security and regional development plan”, a $1.5 billion commitment for “priority regional infrastructure” projects and an extra $2 billion into the Northern Australia Infrastructure Facility.

The budget also put $2 billion into creating a Regional Accelerator Program, which was to deliver cash to regions so they could “access programs targeted to local priorities”.

Labor pledged at the election to axe a $500 million “regionalisation fund” that was supported through the regional accelerator program.

A spokeswoman for Infrastructure Minister Catherine King signalled further cuts to the accelerator program and the energy security plan were likely.

“There are a few elements of both the regional accelerator fund and the energy security and regional development fund that were matched during the election or, in a subsequent decision, will be funded in some form,” she said.

“All other parts of the proposed programs will be subject to review and to decisions made in the 2022-23 October budget.”

Deputy opposition leader Sussan Ley said reports the government was looking to make budget savings by cutting investment in regional areas were concerning.

“The regions are key to our national prosperity, so Labor need to be upfront about what they are looking to cut and where,” she said.

“Of course the Labor Party thinks investment in our regions is waste.”

Ahead of the election, then-Nationals leader Barnaby Joyce warned Labor was a threat to the regions because it had refused to commit to billions of dollars of infrastructure he had promised, saying that “regional Australia is the gum stuck to the Labor Party’s shoe”.

Labor made its own set of infrastructure promises during the election. Only six of these overlapped with the Coalition’s list: upgrades to the Bendigo and Newcastle airports, rebuilding Paradise Dam near Bundaberg, upgrading an intersection in central Queensland town Calliope, the Nowra bypass and removing a level crossing in Adelaide.

Out of the projects promised by the Coalition in the 2019 budget and election campaign, $16.9 billion worth – or three-quarters – are yet to have a sod turned. Just 46 projects, collectively costing the federal government $457.2 million, promised at that election have been completed.

Infrastructure projects worth $63.5 billion announced since 2018 are still in the planning stages, new Infrastructure Department data shows.

In the March budget alone, $11.7 billion worth of new infrastructure projects was promised. The Coalition made further pledges during the election campaign, which are not captured by the department’s figures.

These included projects Labor has previously said it won’t back, such as the $1.9 billion Beveridge freight rail terminal in Melbourne’s north.

Two projects, a faster rail upgrade between Sydney and Newcastle and road improvements in northern Tasmania, have money allocated out to 2031-32.

Labor has also previously said it would review millions of dollars worth of car parks at railway stations in suburbs in key marginal electorates, under the Urban Congestion Fund.

Both major parties promised commuters relief during the 2019 election. But the Coalition’s plan was plagued with problems, to such a point that then-treasurer Josh Frydenberg was forced to abandon the four promised in his own Melbourne electorate of Kooyong.

Figures from the Infrastructure Department show of the $674 million in federal funding set aside for car parks, just $50.9 million worth of projects have been completed. Another $192 million worth is officially underway.

There is still an outstanding $431 million in projects that are “in planning”, more than three years after they were promised. One of those, a $7.3 million project in outer suburban Melbourne, is not slated to be completed until 2026-27.

Treasurer Jim Chalmers has warned since assuming office that he must look for savings in the October budget. Credit: Alex Ellinghausen

Reporting the economic outlook to Parliament in late July, Chalmers said the government would have to make hard decisions to repair the budget.

“Right now, every household has to make tough decisions about what they can and cannot afford – and it shouldn’t be any different for their government,” he said.

The government has consistently said across several ministries, including treasury, finance and infrastructure, that it will use the October budget to detail which Coalition programs will be axed. Many have already been flagged.

This year, Labor plans to slice the contentious Community Development Grants program by $25 million, with another $240 million in 2023-24 and $85 million the year after that.

The October budget will also outline Labor’s plans to save $142.5 million a year by cuts in advertising, public service travel and legal expenses.

In March, Frydenberg forecast a deficit this financial year of $78 billion after a shortfall of $79.8 billion in 2021-22. Deficits were expected for the rest of this decade, pushing gross government debt beyond $1 trillion by the 2023-24 financial year.

Partial data suggested last year’s deficit will be much lower than Frydenberg forecast, due largely to the surge in commodity prices that has delivered a windfall to resource companies. Higher inflation, while increasing many government payments, also generates higher tax returns.

The jobs market has also been much stronger than anticipated. The number of people holding down work, and paying income tax, will deliver a strong return to federal coffers.

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