Federal-state unity the key to our infrastructure

Building and maintaining Australia’s infrastructure is a responsibility shared between all three levels of government and the private sector.

One important role for the commonwealth is working with state and territory governments to co-fund significant infrastructure projects.

The Turnbull government is doing this at unprecedented levels.

In 2017-18 we will provide more than $10 billion for infrastructure projects around Australia. The range of projects is extraordinary.

There is $1.1bn going to the Queensland government for the Toowoomba Second Range Crossing, more than $200 million for M1 improvements between the Gold Coast and Brisbane and a $6.7bn Bruce Highway program.

Another $5.6bn is funding the NSW government to deliver a four-lane Pacific Highway from Sydney to the Queensland border and there is $1.7bn for the massive Sydney Metro City and Southwest rail project.

There was a $1.5bn package for Victoria in 2016 (including $500m to widen the Monash freeway and $350m for the M80 — Ring Road Upgrade) and another recently announced $1.6bn regional rail package (including a $150m contribution from the Victorian government).

The commonwealth is spending more than $1.6bn in South Australia for the Darlington, Torrens to Torrens and Northern Connector  Projects, and recently committed $1.6bn to Western Australia for a $2.3bn road and rail package.

But funding state and territory governments is only part of the commonwealth’s job.

The Labor shadow minister likes to imply that the amount of commonwealth funding going to state and territory governments is the measure of commonwealth spending on infrastructure.

That has never been true — and in the 2017 budget it is less true than ever, with the commonwealth making substantial direct investments into commonwealth-led projects on top of our large payments to state and territory governments.

Labor state governments are similarly misleading when they argue they are being “short changed”. This argument wrongly assumes the commonwealth government has only one job when it comes to infrastructure policy: to act as a postbox, collecting taxpayers’money and dividing it up between state and territory governments.

As this year’s budget powerfully demonstrates, the commonwealth government has a critical role to lead infrastructure policy for the nation — including national projects which no state government could deliver.

The inland rail project, funded in this year’s budget with an $8.4bn equity contribution, will link three states, Victoria, NSW and Queensland, and bring a much more reliable and rapid rail freight connection between Melbourne and Brisbane. It will also boost communities along the route, given them more efficient routes to market for agricultural and other produce.

Western Sydney Airport, funded by the Turnbull government with a $5.3bn equity commitment in this year’s budget, will deliver vitally needed additional aviation capacity for Sydney and the nation (with 40 per cent of international passenger traffic coming into Sydney).

Claims that a particular state is underfunded typically gloss over the question of the proper basis on which to share funds.

The Victorian Labor government compares Victoria’s share of commonwealth infrastructure funding with its share of the national population.

But other states would argue for different criteria such as landmass. In reality, the commonwealth government must make infrastructure decisions that serve the national interest, including giving consideration to how more lightly populated parts of Australia can be economically and socially integrated with the rest of the country.

These comparisons also overlook the reality that big infrastructure projects are very lumpy. When a multi-billiondollar project gets the go-ahead, particularly in a smaller state, that inevitably moves the needle on the proportion received by each state in the nation.

But putting aside some of these more technical arguments, it is no surprise that Labor governments want to make big promises and get the commonwealth to pay.

There is an instructive comparison with the O’Farrell, Baird and Berejiklian Liberal governments in NSW, which did the hard work to win public support for a strategy of withdrawing public capital from state-owned infrastructure assets in ports and electricity.

This has allowed the proceeds to be reinvested in vitally needed transport infrastructure such as the WestConnex motorway project, Sydney Metro City and Southwest rail project and the Parramatta Light Rail project.

There is significant commonwealth funding supporting many of these projects.

By contrast, the Queensland Labor government cancelled well-developed plans, inherited from the previous Liberal National Party government, to similarly withdraw public capital from electricity assets in that state — which unsurprisingly leaves it struggling to fund significant infrastructure projects.

The commonwealth government, and state and territory governments, have clear and complementary roles in delivering the infrastructure Australians need.
When both levels of government perform well we will get the best possible outcomes for Australians.