Inland rail will make money back on $8.4bn investment, Mathias Cormann says

An $8.4bn equity investment for the inland rail project in last year’s federal budget has been defended by Finance Minister Mathias Cormann.

The rail corridor, with sections of new track linking Melbourne and Brisbane, was a pet project of the former Deputy Prime Minister and Infrastructure Minister Barnaby Joyce.

An $8.4bn equity investment for the inland rail project in last year’s federal budget has been defended by Finance Minister Mathias Cormann who has “guaranteed” a senate estimates committee the commonwealth will make its money back.

The seven-year equity investment — unusual for infrastructure projects which are usually funded by government grants — does not hit the government’s budget bottom line. Senator Cormann told a Senate Finance and Public Administration Legislation Committee estimates hearing today the federal government acted on departmental and independent advice from Macquarie Capital and has followed the charter of budget honesty in doing so.

“I am guaranteeing, I am very confident that the Australian Rail Track Corporation will continue to deliver a real rate of return,” he said this afternoon.

“And compared to the traditional way of funding these things, the taxpayer will be much better off.”

Finance Minister Mathias Cormann during a Senate estimates committee hearing today. Picture Gary Ramage

The rail corridor, with sections of new track linking Melbourne and Brisbane, was a pet project of the former Deputy Prime Minister and Infrastructure Minister Barnaby Joyce.

Labor Senator Kimberley Kitching quoted ARTC chief executive John Fullerton who told a senate committee earlier this month that the incomings and outgoings don’t stack up.

“From a strict ARTC point of view, no, the revenues that flow to us wouldn’t cover the full capital cost and provide a return,” he said.

Senator Cormann accused Ms Kitching of trying to “embellish” the quotes before she tabled the Australian Financial Review article from which she was reading.

“Well I’m not confident of the accuracy,” Senator Cormann told the hearing before reading the article.

“From a Commonwealth perspective the project that matters is the inland rail for the purposes of our budget treatment and obviously the ARTC has a number of projects and businesses operating on the books.”