Budget 2017: How inland rail project is to be funded

BUDGET 2017: THE ambitious inland rail project has received a firm commitment from the Federal Government in the form of $8.4 billion.

BUDGET 2017: THE ambitious inland rail project has received a firm commitment from the Federal Government in the form of $8.4 billion.

The cash is being borrowed and provided as an equity investment over seven years to the Australian Rail Track Corporation to build the 1700km track, with work starting this year and to be completed by 2024.

But budget documents provide no firm numbers on the investment, nor details of the equity arrangements with ARTC.

A Department of Finance official said the Government’s investment would come from “general borrowings”. The equity drawdown has not been published, and it’s understood the final agreement between the Government and ARTC is yet to be entered into.

Under the equity arrangement, the ARTC will leverage increased debt. It’s intended the revenue made from the track’s operation will repay the Government’s equity contribution.

Previous studies have indicated that the “expected operating revenue over 50 years will not cover the initial capital investment”.

In a statement, Infrastructure Minister Darren Chester said the funding arrangements would provide “effective risk management and harness innovative design solutions” for the track.

The remainder of the estimated $10 billion project will come from a yet-to-be determined private-public partnership, which will be used for one of the most complex sections of the track: 126km from Toowomba to Kagaru in Queensland.

The private sector will fund, design, build and maintain this section, which includes 8.9km of large-scale tunnelling.

A Department official said market testing showed there was “very high interest” to invest in this part of the project.

The Government last year provided $593 million in equity for land acquisition.