The 2019-20 Federal Budget will again have a significant impact on Australia’s engineers. The budget touts major infrastructure spending, with some $29.5 billion in infrastructure spending allocated over the forward estimates.
However, Professionals Australia remains cautious as to whether we will ever see many of the Budget initiatives come to fruition.
Infrastructure is critical to building a more liveable, more competitive, and more productive nation. Professionals Australia welcomes the ongoing support for infrastructure programs, and challenges the Government to ensure that Australians receive the best value for their investment.
While, major infrastructure projects will provide greatly needed opportunities for engineers, it is difficult to assess the true impact of the announced spending. It is getting harder and harder each year to differentiate between new budget commitments and the reallocation of existing spending.
Additionally, much of the funding announced in the budget is to provide longer-term infrastructure funding and finance over the next decade, beyond the forward estimates (the next four years), and well beyond the next election which will fall in May. Further, it is likely that many of the projects announced will never eventuate in their current form.
Infrastructure spending has been touted as a winner in the current budget by some. Overall, the headline figure of $100 billion over 10 years was pushed heavily, although only $29.5 billion of this spending falls in the four years covered in the forward estimates.
While it is nice to see some planning for infrastructure beyond the forward estimates, the reality is that this spending may well never eventuate, due to a combination of project selection issues, unrealistic costing and the looming federal election.
Adding further doubt to the $100 billion claim, is the fact that several of the projects funded will almost certainly not go ahead in their current form. In Victoria alone, the Budget continues to pledge $3 billion for East-West Link, a project that the Victorian Government has categorically ruled out. With project selection the responsibility of the States, it is disappointing to see budget spending not allocated to projects with State support that are planned and ready to build.
Additionally, there is $2 billion in funding for the Melbourne Geelong fast rail if matched by the Victorian State Government. However, the likely cost of the project is much larger – with some suggestions that the section from Southern Cross to Sunshine alone would cost $8 billion.
Overall, it is concerning that much of the infrastructure spend announced in the Budget is unlikely to ever materialise – and the Government would have been wholly aware of this when allocating spending.
Budget spending around utilities was largely limited to consumer side initiatives. Spending to reduce electricity bills through the Energy Assistance Payment was a key policy – hoping to attract votes from cost conscious consumers. However, it is disappointing not to see this investment go into initiatives that might bring costs down, rather than simply paying a portion of consumers’ bills.
There were however some projects costed in the budget, including funding for Snowy 2.0, however this is some way off, and battling a weak business case. There was also funding for the Climate Solution Package – however it is not clear where this money will eventually go.
Beyond these major initiatives, there was little else to get excited about in the Budget for energy and water, with no additional funding for water infrastructure, only minor funding for drought support, and small investments in microgrid feasibility, the Underwriting New Generation Investments Program, and the Priority Transmission Taskforce.
Manufacturing was a big loser in the Budget, with very little new spending offset by cuts to existing support programs. The budget slashed $48.9 million from the Entrepreneurs’ Programme, Accelerating Commercialisation grants and the Industry Growth Centres. The Budget also cut $1.35 billion from the research and development tax incentive, which comes on top of $2.4 billion cut from the incentive in 2018.
Additionally, $389 million over four years was cut from university research, the CSIRO and Australia’s research grant programs.
While positives were hard to come by for manufacturing. There was $60 million allocated to the Export Market Development Grants scheme, and manufacturers will benefit to some degree from spending in skills and vocational training.
There was very little of interest to Defence in the budget. There were some minor cuts to fringe spending, but overall, the budget was largely a non-event for those in the Defence sector.
Australia’s technical professionals require a strong commitment to real projects, with real timelines, if businesses are to be encouraged to invest in their workforce.
Professionals Australia welcomes any initiatives to encourage a longer-term view of infrastructure management. However, we remain cautious that much of this funding is beyond the forward estimates and well beyond the election cycle, and may never materialise.
And with the Federal Election looming in May and the Government trailing in the polls, this may be the closest this budget ever comes to reality.
If you’d like to compare, you can read or listen to our summary of the 2018-19 budget.