$120bn in infrastructure faces axe as Anthony Albanese orders review

Hundreds of infrastructure projects across the country will be probed by the Albanese government and potentially axed.

Labor will fund only infrastructure projects that are ‘genuinely nation-building, economically sustainable and resilient to our changing climate’.

Hundreds of infrastructure projects across the country – including new traffic lights and water drains under roads or railways – will be probed by the Albanese government and potentially axed, amid revelations that Australia’s core inflation rate is higher than any G7 country.

Infrastructure and Transport Minister Catherine King will on Monday announce a 90-day independent review of the 10-year, $120bn infrastructure pipeline, saying it blew out under successive Coalition governments from nearly 150 projects to nearly 800.

As Labor faces opposition accusations that it has embraced the wrong policies to tackle cost-of-living pressures, the make-up of the infrastructure pipeline is set to change substantially, with an ALP background briefing document claiming that the Coalition used the infrastructure investment program as a “massive electoral pork barrel fund”.

Under a new government direction, and with an estimated shortfall of 95,000 workers to build public infrastructure, Labor will fund only projects that are “genuinely nation-building, economically sustainable and resilient to our changing climate”.

Katy Gallagher. Picture: Martin Ollman

Government sources said there was no savings target for the review, to be conducted by former federal infrastructure secretary Mike Mrdak, who worked with Anthony Albanese when he was a minister in the Rudd-Gillard governments, Western Australia’s former transport chief Reece ­Waldock and former NSW deputy transport secretary Clare Gardiner-Barnes.

When the ALP won the 2022 federal election, just 19 per cent of infrastructure projects with a commonwealth government contribution under $50m were located in seats that Labor held before polling day, according to the briefing document.

The infrastructure review, which the Coalition is expected to condemn, came as Finance Minister Katy Gallagher on Sunday pledged to deliver billions of ­dollars in savings through Labor’s second so-called waste audit.

Senator Gallagher, who would not rule out a budget surplus after recording a $1bn surplus in the year to March, also vowed to provide Australians with “ongoing” cost-of-living relief and not just one-off incentives, intensifying speculation the government will increase the $49.50 a day JobSeeker payment.

“In terms of the savings and the reprioritisation (of budget measures), you will see a significant ­effort again in doing that in this budget. It’s part of our fiscal strategy … I don’t think we’ll get to quite where we were in October ($22bn in savings). It’ll be less than that, but it will be significant,” Senator Gallagher said.

“We’re not only putting in additional investments where they’re needed, but we’re also making sure that the money that exists in the budget is going to where it needs to go.”

Opposition Treasury spokesman Angus Taylor said “any responsible and credible treasurer” should set their sights on a surplus, given the strong economy, as analysis from his office of last week’s CPI figures shows Australia’s core inflation (the price change of goods and services minus food and energy) had ­worsened since the June quarter.

Australia’s core inflation is sitting at 6.6 per cent compared with Italy at 6.26 per cent, Britain and France at 6.2 per cent, EU countries at 5.7 per cent, the US at 5.6 per cent, South Korea at 4.81 per cent, Canada at 4.3 per cent and Japan at 3.1 per cent.

In the second quarter of last year, Australia was fourth highest among the same list of countries with a core inflation rate of 4.9 per cent and 3.7 per cent in Q1.

“Labor has been in government for almost a year and during that time, cost-of-living pressures have only worsened,” Mr Taylor said.

“Australia’s stubbornly high core inflation shows Labor is embracing the wrong policies to tackle inflation. Inflation comes from Canberra and the government must use the upcoming budget to take pressure off prices and the impact on Australian families and businesses.”

Rich Insight principal Chris Richardson said Australia’s fight against inflation was going well enough but was running somewhere between three to six months behind what was happening in the rest of the world.

“The rest of the world peaked and has been heading down for a while and Australia peaked more recently and is only just beginning to go down,” he said.

“It doesn’t mean we shouldn’t do more, it doesn’t mean the fight isn’t important.

“Could the government do more by raising taxes and cutting spending? It could. But that is a tough trade-off.

“You’d have to take at least $6bn out of the economy this year through policy decisions in order to take a quarter of a percentage point off where the Reserve Bank would otherwise have interest rates.

“Can that be done? Sure, but the politics of it are challenging.”

Senator Gallagher said the government had been mindful of the “inflation challenge” while considering whether to increase JobSeeker payments and the thousands of other budget decisions across the board.

“There’s no doubt there is an inflation challenge that this budget has had to be mindful of, so as we’re making decisions across the board, we are ensuring that we’re working hand-in-hand with monetary policy and not against it,” Senator Gallagher said.

While refusing to speculate on whether the government will return the budget to surplus, she said: “We will see significant improvement when we release the bottom line that you’ll all be very interested in on budget day.

“The focus of all of our efforts and our work, and some of the reform work we’re doing, is really about those longer-term structural pressures.

“The budget remains in structural deficit, the pressures coming towards us are increasing, not decreasing, in those areas that you’ve all been writing about and finding stories on in NDIS and defence, in health, in aged care and servicing Australia’s debt burden.

“That remains the budget challenge and that won’t be solved in one budget.”

Ms King said the Albanese government remained committed to delivering its election promises and following through on infrastructure projects already under construction, declaring the review would put confidence back in the investment pipeline.

“(The Coalition’s) appetite for announcing projects wasn’t matched with a commitment to deliver,” she said.

“Projects were left without adequate funding or resources, projects without real benefits to the public were approved, and the clogged pipeline has caused delays and overruns in important, nation-building projects. Many projects under the Liberals and Nationals never even started. Some 160 projects had a commitment of $5m dollars or less.”